Slowing. Is said to be china is trying to funnel more credit to private companies. We will assess the implications in beijing. A quick check of our markets close in the u. S. It was a bit of a mixed picture. We saw the dow gained 50 points. The s p 500 erased this mornings gains. Fed officials with a little bit of caution about future rate cuts. To mention we have some soft manufacturing pmi numbers. That did not help sentiment. Cared materials and Health Leading the declines after fluctuated between gains and losses. That fell 0. 4 . U. S. Futures at the moment not doing much. The focus right now is on jackson hole. Lets see how we are shaping up. Steady as we go. Asian futures not doing much when it comes to the potential for how cash trade may start. We are waiting for cues from jackson hole as well as the g7 meeting this weekend. We also have today a busy day of earnings from china as well as from hong kong. We are going to get a cbi data from singapore. Thise checking on the end morning. The end looking a little changed. 10645 against the dollar, at a 2019 hi. We are seeing bonds remain under pressure with yields up in new zealand. Australia, the aussie 10 year yield rising five basis points. Getting closer to that 1 level here. We are going to see whether this momentum can stick as we hear from jay powell later this weekend. On checking on whats going with bonds, traders on high alert after that inversion between the biggest in a week. We have seen a surge in puts on treasury futures. That is a multiyear high as we have markets anticipating rates could be bottoming out. Thanks for that. Lets check on the first word news. The feds jackson hole symposium threatens to reveal widening divisions between policymakers. Jerome powell is under pressure from President Trump to cut rates. Least three regional fed bosses have told bloomberg they opposed the idea. Andons Eric Rosengren jackson hole host kansas citys all say this is not the moment to cut. As i look at where the economy is, it is not time. Im not ready to begin to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker. U. S. Aviation regulators are said to be using inexperienced pilots to test new Flight ControlSoftware Designed to help the boeing 737 max 8 return to service. We are told the faa wants to find out how pilots with only one year of 737 experience with at least one max flight relate to the reacts to the update. Sources say Simulator Training has been pushed back a week. Sales haveetail plummeted this month. That is as street protests inflict damage on the local economy. Retail Management Association is calling on landlords to cut in half for the next six months and wants the government to provide relief measures. The value of retail sales dropped 6. 7 in june from a year earlier. Cautioning staff amid tha use of social media could be a breach of rules after staffer found to have taken part in hong kong protests. Employees posting or it has told employees it could any employee involved could be fired. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more this is countries bloomberg. Lets head back to wyoming. Kathleen hays is standing by with a guest with decades of experience. Kathleen . Kathleen thank you so very much. Is the former governor of the bank of israel. He is chairman of the board of trustees of the group of 30. Chairman of j. P. Morgan chase international. Importantly, this is his 35th Consecutive Year as a Kansas City Fed symposium at the jackson lake lodge. We think it is a record. So they say. Symposium our annual chat. Donald trump criticizing the fed. Jay powell and his colleagues making a very important decision. About whether to cut rates again. What does this mean . Does it really impinge on them somehow . I dont believe the president of the United States should in thene and interfere conduct of Monetary Policy. The Federal Reserve has had a spectacularly serious responsible record and they know what they are doing. Obviously, it is not helpful. Knowing chairman powell and the rest of the committee, i believe they will continue in their professional analysis and make the decision based on data, based on analysis. The problem is not what they do, but how the markets interpret this kind of intervention. The more there are such interventions, the more the market will realize. Kathleen uncertainties caused by global development. That is the fed speak way of saying the trade war. Worse,a little bit didnt it . Just today after the fed cut its key rate, august 1, President Trump tweeted he is putting more tariffs on china. Economy andk at the the need for the fed to take out an insurance cut because they are worried about that, is the situation still with us . Jacob there is a huge amount of uncertainty. Most of the uncertainty is coming from the trade war or developments in europe. The decline of china. The recession in germany, italy, brexit, you name it. Be andse things cannot should not be by Monetary Policy. The trade war is important because it affects sentiment. If you look at the business sector and you ask, how is your sentiment . They will tell you the trade war or the uncertainty from it is affecting them in a very negative way. When you look to the u. S. Production in general, you will see it is reasonably ok. Manufacturing is not ok. Investment is not ok. Why . There are these degrees of uncertainty. After all, the corporate sector did make a very positive move for business sentiment. Why spoil it . Now youre talking about the next fed meeting. The fed has made a point of having their decision datadependent. Whats the point of announcing today, what do you think will happen to Interest Rates when you know there is a lot of data . You think jay powell will be cautious tomorrow . He should be cautious. In fact, most of his messages in the past presentations emphasized the issue of caution, the issue of going slowly, the issue of data dependence, things of that type. Why to pressure . Why to rush . Think the fedou will cut the key rate . Jacob without question. What the fed should do and what is expected decision of the fed, forecasting what members of the fomc will decide, it looks like there are sentiments to cut rates by 25 basis points, but i would urge everyone to listen carefully to the argument of those who are most skeptical about it. They have serious arguments. The fed today,t it is not equipped very well to deal with the next recession. Low,Interest Rates are so this is not the place you want the most important instruments of Monetary Policy to be. Youre talking about guidance. Youre talking about this and that. Things we defined yesterday is unconventional. You want to make them conventional . After all, they are not as effective as the most important instruments. Insurance against the next recession, i talk about gourance about having to to the battlefield. I trust the fed will settle it. It is not through pressure. Lets face it again. We talked about the fed. We talk about Monetary Policy because we are at jackson hole. There are elements in the market today not determined by the fed. It is the elimination of the uncertainty of trade war, of things that are selfinflicted. Just look at the 1930s. Dont go this way. This increase in negative bond yields, five years ago, there were none. It started picking up. It is quite large now it seems to keep growing. Sell a had germany just 30 year bond with a negative coupon. What is driving that . Jacob it does not seem like normal to anyone. We should ask ourselves, how do we get out of this syndrome . We need to get out by activating other elements of Economic Policy by increasing productivity, by making innovations, tracing growth issues, things of that type. Stop this silly trade war. You are shooting yourself in the foot. Kathleen im also wondering about the Financial Services industry. The monetary transition mechanism transmission mechanism. In a world where weve got the trade war, but just move toward negative yields, how does that affect the effectiveness of Monetary Policy . Or go against its effectiveness . It clearly goes against its effectiveness. Operates inicy transmitted impact on the economy through the financial interchange. You need to have a robust financial industry for this transmission to take place. Nobody in his right mind would think low rates or negative rates or zero rates is something that strengthens the financial industry. Weaker. The system much most of the crisis which we have had recently came from the Financial Sector, came from bubbles, from overextending the Financial Investments rather than investing in equipment. By mispricing risk. All those things clearly are not good. When Interest Rates are very low, the most important discipline that drives is done continue toan finance themselves with low rates. This is not good with the economy. Is not good. Rate on top of it, people say the envy the inverted yield curve is a signal for a sure recession. I am worried when i see that in field inverted yield curve, but by the same token, i argue when the yield curve is inverted as a result of arising shortterm rate, it is a very different story than what it is when it is inverted in the context of a normal shortterm rate and not jumping to the conclusion of this indicating a recession because one of the reasons why longterm rates are so low is that people are shifting their investments towards that end because they cannot do anything in the shortterm and also that the Balance Sheet of the central bank is loaded with longterm assets they purchased earlier. This also contributes to a lower longterm rate. Kathleen jacob frenkel, theres a lot to talk about the next couple days. Jacob thank you. Kathleen thank you for joining us. Chairman of j. P. Morgan chase international. Probably the recordholder of attending Kansas City Feds symposium. A lot more coming up. Keep it right here for now, im sending it back to you. Paul thanks, kathleen. There are plenty more big guests coming up on jackson hole, including an exclusive interview with adrian all in a few minutes time and a string of top fed officials. James bullard, robert kaplan, still to come though, former boj webers joined the show as await key inflation data from japan and ask what the latest reading might mean for Monetary Policy. Chinaortant earnings from after results in telecom and energy. This is bloomberg. Paul this is daybreak asia. A bumpy day on wall street for stocks and bonds in the regular session. We are seeing more volatility in after hours trading. Su keenan has more on this. Quite a busy day trying to keep up with fed speak and also a different series of data. Su very whipsawed. If we look at the snapshot, you did notice what things emerge, we are waiting to hear from jay powell. S p 500 financials were among the big gainers. The cac, the losers. Lets go to the big movers. Boeing getting a big jump from an analyst, they may put the max jet back into service. A lot of investors pleased. Two analysts coming out with positive comments on a possible buyout of alexion pharmaceuticals. Earnings. It seems to be bucking the tide of this Department Store of Department Store woes. Going into the bloomberg real quick, gtv is where you can find our library. We talk about rising yields. The s p 500 dividend yield still outweighs or has recently outweighed the 10 year treasury at this point. Hours, different directions. Whats the story . Both reporting. Gap disappointing if we look at how the stocks have traded this far. Which may translate into the friday session. It has reduced its losses. , sales expectations continuing to decline down 4 yearoveryear, or i should say, store sales. Salesforce. Com, meanwhile, exceeding all expectations. Gap have been a big challenge. The ceo saying the challenging traffic trends continue to be an issue. Look at salesforce. Com. They came in with a projection of profit Going Forward that was much higher than most analysts thought. Applications are continuing to see rapid growth. Paul we saw volatility in commodities as well. Whats going on . Charts, oil,day the story is very much some different views on traders shifting from what happened to the demandsupply equation to really focus on the economics of the trade situation. Oil was lower in the inflated session. Gold was as well. Economic data, we did see a decline in claims, but weaker than expected factory data. Thanks very much for that. Has stalledaign according to private surveys and reports. This is adding to concerns of slowing growth. Selina wang has the story. borrowing costs have remained stubbornly high despite this Government Campaign to get more funding to these private companies. It is reflecting a continued reluctance on behalf of banks to toest in invest and lend private companies. We are seeing that reflect it in surveys as well. The challenges grappling with tos where they are trying find private companies as well as go on this deleveraging campaign. Economists say it is impossible to do all at the same time and that they likely could if one of these areas does not let up, the liquidity crisis is on the rise if they dont incentivize these things. To theseeing adjustments Interest Rate regime, this longawaited reform and the change to the new low and prime rates, but analysts are saying that is not enough to get liquidity to the real economy and that more easing is necessary, including a cut to the reserve ratio. We got earnings reports out of china. What did we see . Selina all the companies we all reports from are from very different sectors. Also surprising growth. China telecom showed a big jump in that income. 5gts on the backs of growth. Thank you so much. Lets get back to Kathleen Hays in jackson hole. We are standing by with a special guest. Kathleen a very special guest indeed. , the kansasson hole city fed symposium Getting Started tomorrow. Officials, central bankers from around the world. This one is one of the farthest to arrive here. Adrian orrs head of the reserve bank of new england of new zealand. I also want to welcome our Radio Audience to this broadcast. Fresh from a Whitewater Rafting trip. It was pretty still. Kathleen then you had a lucky one. Big challenges. The feds challenges whether to cut again. Global trade the war, uncertainty hitting businesses. What about new zealand . You just did that 50 basis point rate cut. Where are you now . Early to tell, of course. The idea is to get people out there investing, spending, feeling confident about the economy. We have maximum sustainable employment. Very low unemployment. Inflation is near the midpoint of our band. Looking forward, everyone is telling us we need to be lower. Everyone is telling us the Global Growth is slowing. Lets get ahead of this. Lets move now. Reduce the probability of having to do more later. Kathleen are the Downside Risks materializing . You just have the bank of new zealand manufacturing index, posted the first drop below 50. It is signaling contraction. Been a lot around the uncertainty. Been good. As our government fiscal position is very good. The government is outstanding. Global trade uncertainty has held everyone back from investing. It is the Business Confidence in here. Vestment that is kathleen people are already talking about the next cut. Some thing like 25 basis points. Are they on the right track . Is that the decision you have to make . Went to cut rather than if . Dont no, we certainly to quote ever it takes. A positive are in position. Exchange rate has come up with ,elatively competitive particularly against the u. S. Likewise, we have government fiscal policy spending government debt. It is a good position. We can afford to watch, wait, and observe what is happening. We have already taken a preemptive double. Cut, 50 basisuble points. That same time. Every economic commentator was near 50 or 75 points. They were all surprised when we went there. Kathleen what are you watching now . What is going to be the trigger you say, ok, we have to go. We have to do another 25. Adrian Inflation Expectations are important. I would far prefer to keep them anchored where they are, around the 2 mark. As long as we can keep people concerned, expecting inflation, seeing that passthrough into wage costs, a good thing for the central bank. Government not being able to spend as quickly as what they are predicted to be able to do. The impulse being slower or later. People talk about november for the next rate cut. Is going to make that much difference between late august and november . Adrian no, which is why we there is government consumption, which they call paying people. There is government investment, of which there is an enormous amount. Very difficult to get in place. Then there is transfer. Theres a lot of moving parts. Its really around the ongoing commitment. Likewise, we dont expect rates to be magically turning spending around. We know things will be uncertain. One fear we had of doing a double cut was that people would think we could see something they havent seen. The answer is no. Saying we agree, lets get them. Kathleen your written hypothesis is the 50 basis point cut was enough. Is that what you are saying . We willorking basis is have to see what the situation is in november and be willing to continue to cut if necessary. We used risk analysis. In a years time, looking back, what we most wish we had done or most regretted .