Everyone. Good afternoon if you are watching from asia. This is bloomberg surveillance. These are your markets. We need to watch out for the u. S. 10 year yield and eurodollar. Augustgetting some services pmi rising to 53. 4, little better than expected. ,ut if you have a breakdown also manufacturing is better than expected, but what you need to are member is germany is not doing so great. France is a little bit better remember is germany is not doing so great about frances olympic better. Great, france is doing a little bit better. You can see our interview with Esther George 12 30 london time. Tomorrow, a stellar lineup. We speak to James Bullard all here on bloomberg tv. That may move the markets overall, but now, lets get straight first word news in new york city. The chosen one. That is how President Donald Trump described himself to reporters. He said it is his job to wage a trade war with beijing. Somebody had to do it. I am taking on china. I am taking on china on trade and we are winning. The president criticized former leaders for failing to take on what he says are chinas unfair trade practices. Trump plans for an additional 10 tariffs on an billion but300 beijing says it is a violation of their trade truce. Hong kong stocks are poised for their worst quarter since 2015. Corporate results are unlikely to save them. Analysts are slashing profit forecasts with an average estimates of a 19 slump in operating income. 2020,llion by fiscal thats what the Congressional Budget Office says. The outlook is quoted challenging and federal debt is unsustainable. It would be the first time the deficit has exceeded the 1 trillion mark. Thats when the u. S. Was recovering from the financial crisis. The Deutsche Bank division now must ask for approval from the chief executive to fill any open position. The memos seen by bloomberg says only critical roles should be submitted. It comes as the lender is undergoing its biggest reconstruction in living memory. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine . Francine thank you so much. The jackson hole economic symposium is about to get underway with jay powells speech. The most closely scrutinized. Art the theme this year is challenges for Monetary Policy. Papers will be presented on how to manage the economy. Real topic on everyones mind is how to manage an economy under assault from within. A u. S. Economy growing at 2 with unemployment at 3. 7 , inflation around 1. 7 , does not seem to need additional accommodation. But the president s trade wars have fueled concerns in the business community. On wall street, which has priced in a series of rate cuts. Constant criticism is also putting pressure on the fed and chairman jay powell. Powell will kickoff the conference with a keynote address on friday morning. Benng the financial crisis, bernanke uses speeches to preannounce qe2 and qe3. Many on global wall street think jay powell will use the same opportunity. This weeks minutes suggest many of the justifications for supplies rate cuts are still in place, but does powell really want to ratify traders views or leave himself some options . Particularly in the if he does not want to appear to be giving in to president ial pressure. Bloomberg,ee, jackson hole, wyoming. Francine so how important is this for the markets . Joining us is Patrick Armstrong from flurry me. He will have to soften his stance to say we are doing well domestically but we are not a closed economy and have to take into account exactness factors, so the global backdrop and the escalation of trade tensions. The market may want him to be more dovish. Patrick i dont think he can get it as dovish as they are implying. That will be too much of a capitulation and it is unwarranted. The u. S. Economy is where you would want it to be. But it is not to be viewed in isolation. Francine why doesnt the market want him to be more dovish . Patrick there are a lot of cheerleaders. If you own bonds, you want them to be dovish. Are not thinking andt the economy as a whole the more dovish you are, that raises all the bets. So the market has got an unsightly view, which is risk assets. Basically, safe havens do well with a dovish fed as well. I think you are getting too much noise out of their. Of there. I dont think what the market is pricing in is warranted unless we do have something falling off a cliff somewhere due to a trade war or a higher brexit. Risk of jay the powell cuts or is it that we have another halfhearted message . Patrick if he comes out not dovish enough, he will probably get an inversion. Futures are pricing in all of those cuts that may not materialize. I think you are well aware of that and they want to create a dovish tone in the message. But they cant be seen as youtulating, totally saying are right. They are really reacting to markets. Justifiably so, they have got the president and they have got markets. Francine this is what we are asking all of our guests. On the mliv blog, which assets will outperform after jackson hole . Sounds like a loaded question. Patrick shortterm, i think you will start to see some strengthen the dollar. I think that is where i would be putting my money right now. Longterm, youre not going to see significant dollar strength. Apart from that, the u. S. Dollar is looking very strong. If not getting a completely dovish statement out of powell, youll probably get some strength from the dollar. Coming up, our interview with the Kansas City Fed president at the annual jackson hole symposium. See that interview at 12 30 london time. This is bloomberg. Francine economics, finance, politicsfrancine , this is bloomberg surveillance. Lets get straight to your Bloomberg Business flash. Osram licht is supporting a takeover bid, ramping up pressure on carlisle to raise their joint offer. Financial regulators must now sign off on the decision. If approved, shareholders will have to choose between the two competing offers. This is a very sincere and professional agreement. We had very productive discussions with them. Rest assured, we look at all stakeholders. We support it, we think it is a very credible offer. Kilroy will be profitable in canada in the next quarter or two, europe, not long afterwards. Is according to the chief executive reported a wider than expected loss, say the industry is still in a growth phase. When we look at europe in a place like germany and portugal, they could be profitable in the next two or three quarters. They will continue to invest in new regions and new countries. , we seen existing basis profitability within the next half year. That is the Bloomberg Business flash. Francine thanks so much. We have had pmi for the euro area for august, services coming in at 53. 4, but manufacturing remains in contraction. Next up is the account of the latest ecb meeting, which could give us clues. Is the global mac os x just at a been tech startup and Patrick Armstrong from lurimi. Me p looking at the minutes, how difficult is it to read . There are a lot of strategies already priced into the markets. Where they may be experimental is potentially with the asset program. So that is what we are looking for today. It could spur markets into pricing a little more at the back end of the curve. Is madamepatrick, how lagarde going to differ from draghi . Patrick its hard to say, but unlocking fiscals out of germany will be the thing. That has been draghis bugbear. Monetary stimulus has run its course and you need some fiscal thrust. Hopefully, the politician lagarde is may be able to facilitate that. It is the only differentiator you could imagine the. Now. Francine i have a good chart looking at services and these economies. Can see pmis in front. How much do you worry about germany . Are you worried about recession and is at almost a given that fiscal spending is the only way out . This economy is slowing rapidly. In termshful thinking of hopes for some sort of fiscal policy to come through. It has to be big to take germany out of anything. It just seems there is no political will at all. It seems like a catch22 situation. As we said, they are looking for pick up. Of with the white house controlling the negative, it is a difficult sell. If you look at a metric, you got manufacturing and contraction indicating a recession. That is definitely here in those economies, pretty Resilient Services across not just europe and china. Services remain resilient, so that ongoing trend is likely to continue. Maybe given the whole Global Economy in terms of aggregate demand. But services are the bright spot if you want to be the optimist. Francine this is the chart you were tweeting about. Where does this go from here, and doesnt spell trouble for the rest . It is just telling of the Global Environment we are in. For us and currency markets, ands great for the yen gold, thats why the signal we take from that turns premiums back up. When you got the global qe engines turning up, potentially , thats a turnan from the negative. Francine do you agree . Patrick 100 . I like the yen right now. We are buying with Japanese Companies to get yen to the yield, which is hard to do. And gold is a nobrainer as a beneficiary of the low Interest Rate policies. Francine what do you do with the italian elections . Patrick its not that high. We are not playing it right now. Its funny, last year, we are buying when it yielded at 3. 2 and feel scarier than it does right now. Going from an unholy coalition to something that might be better, you might get some more functional coalition and an election. But we will likely end up with a similar mess to what we have. Not attractive. Francine what does this all mean for euro . What is euro . Is it a funding currency . It will play that role, especially in september. Especially if the ecb does frontload over what the markets expect. Weve got eurodollar neutral with the fed playing this dovish game of pingpong. Its very hard to call a direction here, especially with enough negativity priced in. Francine if you look at what we are saying with italy, do just look elsewhere . Patrick in fixed income, its hard to find anything in europe. The momentum is strong. Hard to beery attractive to anything in fixed income space. Francine thank you both. Both stay with us. Up next, hong kong faces and earnings recession not seen in a decade as businesses warn they see ongoing protests dampening demand. We have the latest as students hold a rally for political reform. This is bloomberg. Francine this is bloomberg surveillance. Hsbc has broken its silence on the protest roiling hong kong. Local businesses and tycoons have spoken out about the unrest. Hsbc is amongst the first global banks to publicly address the crisis. In a fullpage advertisement, the bank said they are very concerned about the recent social events and strongly condemn any violent actions that disrupt social order. Sayse meantime, qantas flights to the city have fallen as protest that have dragged on have dampened demand for travel. Groupke with the chiefs chief executive the groups chief executive. We have the flexibility of moving to slightly smaller very essentially, same aircraft and same product for with less seat but with fewer seats. We will take that capacity out in anticipation of this continuing for a few months. Are seeing in similar situation is that when the issue resolves itself and there is a rapid rebound and they maintain flexibility, it will move the aircraft to other markets. I take advantage of the demand their. It is a good way of managing this issue. You are obviously aware of the controversy around your ceo having to step down around what many view as pressure from beijing. Given the importance of the Chinese Market to qantas, if pressured by beijing, when you consider firing members of your own staff if they did launch or were involved in antichina protests . Are you concerned about that kind of pressure . First of all, i know him very well. He is a very good guy and i wish him all the best. This, everyto company has its own code of conduct and its own belief. And i wont go into hypotheticals about what could ispen, the reality for us that we have a big operation to hong kong the big operation in shanghai and china. It is a very important trading partner for australia and i think nothing has changed in relation to that. But we have seen not just protests in hong kong, we have seen it in cities in australia and other places. Policy if some of your staff do joined those protests . Joined those protests . When you approach of the same did . Ap they did cathay we have a code of conduct which determines what people can and cannot do. It is fairly clear out there. There is a range of spectrums people can get involved in. Some of that would be within the code of conduct. Some of that would depend on the individual cases. That was the qantas chief executive trying to not answer the question. This is what the yuan is doing. We have seen a little bit of a move, the most since august 7, trading at 7. 0845. What does the one do from here . Patrick i think you get a continuation. Until we get some resolution on a deal on trade is tariffs increase, you get a weakening of one weakening won. They will not want to great massive outflows, but the weakening is titfortat. Asymmetric risk management. You will probably see it nudged the 7. 1 or 7. 2 area, taking into account the delayed christmas tariffs. And when the dollar does weaken or you get risk back on, itll probably to stay there. Francine thank you both. Up next, brexit. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Francine off to the mountains. Fomc minutes site a midcycle adjustment and President Trump blast the fed again. Its all about Jerome Powells speech in jackson hole tomorrow. Investors wait for stimulus clues. French pmis, in sunnier than expected. German manufacturing remains deep in contraction. Hsbc breaks its silence on the unrest in hong kong as the city not seen since the financial crisis. Lets check in on the biggest stock movers. Good morning. We have to kick it off with ambu this morning, plunging, down some 13 . Plunge falls on the fact that endoscope sales though short. Osram licht giving the green light for a miss to go ahead with ams to go ahead with their takeover offer. Nmcking of bidding wars, health the biggest again on the stoxx 600, up almost 29 on reports that two companies are competing for a 40 stake in its company. Francine thank you very much. Lets get straight to the bloomberg first word news in new york city. Headwindsce against from the trade war and lowinflation. Thats how the Federal Reserve saw its Interest Rate cut last month. At the time, chairman Jerome Powell called it a midcycle adjustment. Minutes from the july meeting reinforced that. The fomc sees a quarterpoint rejection as part of its the british bank among the first global banks to publicly address the crisis. It drew half of its pretax profit from hong kong. 2020 ision by fiscal what the u. S. Congressional Budget Office says the u. S. Deficit will widen to two years earlier than expected. It says the outlook is challenging, the federal debt unsustainable. It would be the first time the deficit has exceeded the 1 trillion mark since 2012. Thats when the u. S. Was recovering from the financial crisis. Deutsche Banks Division had now has to ask for approval from the chief executive deputy ceo and cfo to fill any open positions. The memo says only critical rules should be submitted roles should be submitted. It comes as a lender is undergoing its biggest restructuring in living memory. 18,000 jobs are set to be cut. Is a pilot strike. The pilots today walk out two day walk out beginning right before the countrys busiest traveling holiday of the year. Global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine . Francine thank you so much. Lets get the latest on brexit. Angela merkel has sent Boris Johnson a challenge to solve the irish border backstop within 30 days. U. K. L says its up to the put forward Workable Solutions to the back step. The u. K. Prime minister agreed the onus is on us. Boris johnson prepares for talks with Emmanuel Macron, as france says a no deal brexit is the most likely scenario. Joining us now is Hussein Kassim , a senior fellow at the u. K. In a changing europe. Still what this is Patrick Armstrong with us is Patrick Armstrong. Professor, lets kick it off with you. Can the u. K. And Boris Johnson really find a solution on the backstop that would be palatable for the eu and for the u. K. And ireland . This has essentially been the eus lien, show us the backstop, line,s on alternative show us the backstop, show us an alternative. Francine will Technology Help us or is it too slow to come to the rescue . Are a couplee kinds of issues that have to be dealt with. One is simple customs. ,he other is sanitary controls other types of controls that are much more difficult to monitor through technological means. Emmanuel macron was saying yesterday that the base case is not no deal but is also saying that the u. K. Can revoke article 50 at the last minute and cancel brexit. Do we just say, throw that away . Is that possible or are we looking at no deal . No deal i would say is the base case right now. Boris johnson basically said yesterday that as long as the eu thinks its a possibility, we will remain. There will be no movement from t