Growth. Policean ominous term, drawing guns and firing a shot as a ministrations turned violent again in hong kong. Shery looking at where markets are trading, we see u. S. Futures kicking off down 1. 2 . Is a big plunge after the regular session it is a big plunge after the regular session friday, and respond to retaliatory tariffs. In the regular session we saw the dow fall 623 point and tech and energy, some of the big losers on the s p 500 while the nasdaq fell 3 . We have of the recession indicators like a 210 yield curve goes to inverting while the threemonth tenure was the deepest inversion since march 2007. At the moment we continue to see the downward trend with u. S. Futures down 1. 4 which is a big plunge given futures at the open dont move much. Lets see how we are shaping up for the markets in asia with selena in beijing. We are seeing red across the board, new zealand opening and nikkei futures down. Kospi pointing down. Sox stocks are absorbing the escalation ahead of the weekend, trump escalating as well as telling companies to pull out of china. We see the all out economic war after the tumultuous august for the financial markets. Can see the yen following. Towardsontinued moves haven assets. Earlier we saw the yen strength in past the january flash crash of 104. 87. Looking at Economic Data we are expecting later this hour, we tradingect mainland data and singapore production after a week gdp. A weak gdp. And the philippine markets are closed. Thank you. Lets take a look at the first word news. Hong kong police are defending an officers decision to fire his gun as the best option area clashes with protesters escalated overnight. At a press briefing, police said the action was necessary as protesters were charging them. Police have arrested 36 people following sundays protest, including several violent crashes. Clashes. A new businessman leader after a political process that featured no other candidates. He will be the third leader since macau was handed back to china in 1999 after centuries of rule by portugal. There is little public controversy, highlighting the proposition movement. The tax on global tech and potential duties on french wine were on the menu as the g7 wound up in biarritz. The proposal for Tax Companies to Tax Companies that make more than a certain amount infuriated the trump administration. He promised 100 tariffs on wine imports. Macronpresident emmanuel raised eyebrows at the g7 by inviting the Iranian Foreign minister for a lastminute sideline meeting. France said the arrangement was to diskette deescalate tensions with iran. They met for 30 minutes before he left. The french teams of the other g7 leaders were told in advance he was coming. French team said the other g7 leaders were told in advance he was coming. Shery we saw President Trump after the regular close on friday confirmingshery he will boost tariffs on chinese imports as china impose retaliatory tariffs. You are seeing brent falling after two weeks of gains. Now we are seeing concerns over Global Demand rising as we see the u. S. China trade tensions escalate, offsetting some of the speculations of the Federal Reserve cutting rates after fed chair powells commentary. It is about pessimism over the global economy. Thanks. President trump has sharply escalated the trade war and has one regret. He said he is having second thoughts, but the white house clarified saying he meant his only regret is not imposing higher tariffs from the start. China is not backing down. State media saying beijing is seriously making preparations for a breakdown in relations. Andkrasny is in washington, correspondent Tom Mackenzie is in beijing. What is the latest . Ros it is as you described it. On friday President Trump foreshadowed a big move against china, sending the stock market tumbling and it came after the close, not into the market just yet very futures are down. There is concern among businesses and President Trumps aides including his economic director and suggested the u. S. Should be preparing for a long trade war against china with no real kind of sign of life at the end of the tunnel. We are seeing strong words from beijing. They are not backing down. Was they are not, and it the action from china that triggered the latest trump tweet storm friday when he or when china outlined its retaliatory measures, which it had planned three weeks ago. It should not have come as a big surprise to the white house. We saw the chinese saying they will put tariffs on 75 billion worth of u. S. Goods including , oil and beef, pork autos. They are dividing those tariffs between the first of september and september 15. Matching and mirroring the plans tariffs from the u. S. Trump had outlined on 10 on 300 billion worth of goods. It is raised to 15 . That was the response in terms of the chinese side. After tweets from trump, you had the state media saying we are as you said now very seriously preparing for a further escalation in the trade tensions between the two sides. Thehave the editor of influential global Times Newspaper saying, pointing to issues beyond the tariffs, talking about taiwan and hong kong, saying the u. S. Was at risk of losing china. On saturday we had a statement from the Commerce Ministry accusing the u. S. Of protectionism, trade protection and the state media saying china would fight the trade war until the end. Shery we have seen Business Leaders in the u. S. Not stay silent as this trade war rages on, but we see President Trump taking a harder stance against corporate america. His directive or tweet on friday that u. S. Companies should get out of china, make alternative arrangements, has rattled the Business Community more than anything else so far. They have seen tariffs as a negotiating tip, and they will be put on and taken off. The idea President Trump could invoke a kind of obscure law to National Security emergency to Order Companies out of china has rattled corporate america. We have seen the Consumer TechnologyAssociation Call the tariffs the worst mistake since a measure in the 1930s which triggered the great depression. Businesses which really crave predictability are rattled by all of this from technology to aviation, retail. They are feeling the pinch. It is kind of unclear what happens next. Certainly doesnt seem like good news. Interesting polling about it regular americans by cbs. 25 feel like President Trump is taking the right moves in china and that was before the latest tariffs escalation. The support for him on china trade policy could be lower now. How about reaction from china . How seriously is china taking the threats of u. S. Corporate investment . Tom they are looking at Companies Like ford and starbucks that are investing billions of dollars and continue to in the chinese market. Tesla, building out a factory that helps and it hopes to be up and running by the end of the year. But it is also taking seriously the suggestion that there are very serious concerns in the u. S. About decoupling with china. President trump is vocalizing some of it. It strengthens the hardliners who suggested we need to take this decoupling very seriously and continue to invest in homegrown champions and indigenous innovation. You will expect more pressure from the hawks to make sure there are subsidies. And you can get additional measures to open up the markets here to companies outside of the u. S. Whether from the european union, japan and other places. What we are waiting for beyond the retaliation is if they will be nontariff barriers china will impose on u. S. Corporations here , something they take seriously here including unreliable entities list, banning companies from operating here. These are things we are looking out for as tensions continue. Shery angie Tom Mackenzie shery Tom Mackenzie and ros krasny, thank you. President trump, paired with the escalation on friday, another series of tweets attacking Federal Reserve chairman jay powell, and he did it after jackson hole, which puts comments by powell which pushed stocks higher. It was interesting because investors took positive cues from mr. Powells comments at jackson hole but trump reversed that. Kathleen this is the speech everyone was waiting for, fed chair, traditionally as the fed chair, kicking off the symposium with a speech people will say, will he signal a rate hike . You can see him walking with mark carney, still president of the bank of england. He did open the door to a rate cut. He cited global slowing Global Growth and looked ahead, even if the economy looks solid now. There is a focus on trade that apparently got donald trump. Trade policy uncertainty is playing a role in the global slowdown. That is no surprise. Everyone agrees. And then the thing he said before, which is that we will act as appropriate to sustain the economic expansion. People take this as a sign he is on the side of the fed getting ready for a rate cut. What happens next . Trump blasted powell in a way we have hardly ever seen. This was as stocks had been rallying. Lets look at what trump tweeted out. What he said, as usual the fed did nothing. E wasbody at jackson hol going, donald trump have thought this was a fed meeting. He confused jackson hole in the speech. He went on to say we have we a strong dollar. The u. S. Will do great. This is what got peoples attention. Who is our bigger enemy, jay ell for chairman she . Chairman xi . People,thing, uniformly their mouths were hanging open. It was a really interesting morning at jackson hole and something the markets are paying attention to. Were paying attention to. Paul so the reaction was one of shock. Where do we go from here . Kathleen shock, concern because people talk about the fact it will not change the fed policy course, but it does undermine the credibility of the institution. Lets listen to what president Patrick Harker told us friday morning. The concerns fed independence is being threatened, everybody i talked to said the fed even though we are not perfect, we dont always make perfect decisions, independence of the Federal Reserve is critical for the american economy. Kathleen what will really matter is Interest Rates. All that point Patrick Harker thinks they can hold. Jim bullard of see st. Louis, a voter, had this to say. He thinks the yield curve is one of the big issues. You have a yield curve that is massively inverted. You have the funds rate as the highest point on a whole new curve. That doesnt make sense. We have to react to the fact there has been a downdraft in global yields area selina in the interview in global yields. Kathleen in the interview, he thinks there could be a lively debate on the Interest Rate cut. It will be interesting to see what the other heads of the fed say when you step back. Powell gave donald trump what donald trump has been saying the economy needs, opens the door to a rate cut, ands stock rally turns into a big stock decline. Maybe the president is misunderstanding, goes ahead on the fed side. That is something the fed has to with. The more trump does that, the more they have to cut. Who knows. Paul kathleen hays, thank you for joining us. Still to come, greg sorry and joins us. He said trade is the most important factor in the markets for the next 12 months. We will look at how this could play out. This is bloomberg. Paul we have asian futures unsurprisingly pointing down quite a bit since the trade war between china and the u. S. Ramps up. Seeing how investors should be playing volatility. We have the sorry a Strategic Partners founder with us. That was quite an interesting weekend, wasnt it would work the fed committing to easing and President Trump taking that as a signal to double down in the trade war. Where does this leave us . Investors need to brace for more volatility. We are flat on the markets over january 18 months since 2018. Investors need to be prepared for more of this, take advantage of market rallies, rate cash, gift securities, and look at the wealth accumulating to look at the by. This is going to be with us for some time. Paul you say you prefer u. S. Markets but is the trade war pushing u. S. Equities into dangerous territory now . Way to look athe it, there is more challenges in the overseas markets. Germany just issued 30 year bonds at a zero yields. Acceleration is affecting europe and asia more than the u. S. There are private pockets of opportunity. M a. Is organic we think this will drive prices in certain sectors of the market. Shery because of the challenges europe faces, they are talking about stimulus potentially that , china and other parts of the economy have more ammunition. Doesnt that feel attractive . Are lear if valuations the valuations are attractive. Until we see volatile talent until we see more with the trade war, that is the key. Until we get a plan, there is an entry point in markets that are more fairly valued than our own. It would be prudent we until we get that visibility rather than catch a falling knife. Shery you say you like missable bonds. We have seen this 4 trillion market, stability with low risk returns actually play up more risk. The highyield segment gaining traction. Is this sector at risk here . For investors in a high income tax bracket, and then the 10 year with 1. 25 on a taxable basis, it is worth taking risk. If you stay with states with relatively low without room to increase, and there is still good collection of revenues from turnpikes and buildings, i think there is better value in Municipal Bonds for higher wage earners. Paul you mentioned a minute ago in terms of stocks you like , biotech, Things Health care. How serious are you taking this threat from the president that u. S. Companies engaged in china should no longer engage in china. Does that mean you have got to be selective . Is pervasivereat across all industries and why we , sector andility where you are placing assets. With the threat over the weekend, the hesitation. We have already been seeing upex of leading indicators last year. Last year it was. 6 . We had the roundtable leaders it is not good, because when they spend and money gets invested, it is reflected in better earnings which reflect higher stock prices. That threat has a bigger concern than any one industry. Are you say the bonds overbought but the last 72 hours show global risk is intensifying. If we look at some havens, we have a chart indicating the japanese yen continuing to strengthen against the u. S. Dollar. If you are looking around and thinking of getting defensive, are there haven trades in the u. S. . People have started to look at gold and as you look at financial markets, Precious Metals represent a safe haven place. I have not outperformed the stock market. We would stick with plain vanilla ons because they are the safe haven and that is where risk assets move in times of stock market volatility. Shery shery with us. Great to have you with us. You can get a roundup of stories you need to know in todays edition of daybreak. Go to dayb on your terminals. You can customize settings so you only get news on industries and assets you care about. This is bloomberg. Shery lets get a quick check of business flash headlines. Sinopec reported a fall in firsthalf earnings in a fuel glut and rising competition. Net income dropped to 4. 5 billion in six months through june down from 6 billion a year earlier. Operating profits slumped 51 . Sinopec is the most exposed among chinas top three oil companies. Worldsme of the biggest banks and Advisory Firms are making their case for a role in the biggest ipo. Saudi aramco has revived a much aftered share shelving plans to buy a 70 stake in one company. Will compete for a role in the offering that could come as early as next year. Still to come on daybreak australia, tensions between protesters and police intensify in hong kong. China signals it may intervene. The latest coming up. This is bloomberg. A. M. Here in sydney, gloomy monday morning. The market open 90 minutes away and futures looking weaker by 1. 3 after a heavy slowdown in the u. S. Friday. I am paul allen. Ahn. i am shery lets get to first word news with Tom Mackenzie. Tom President Trump has further slowed trade tensions when his saying he regrets not putting higher tariffs on china. Said the mediaam misinterpreted the president s initial merit remarks about having second thoughts. She says he does not regret starting a trade war but thinks he should have hit china party from the start. The u. S. And japan agreed in principle to a trade deal that will include higher purchases of american arm products. President trump and shinzo abe announced a this in biarritz, saying they have agreed on every point of contention. Abe said there is work to be done by the two sides aim to slight just signed a deal during the you and meeting in new york next month. North korea has followed up a string of person recent missile tests with a new super large missile test. Kim jongun saying it is a great weapon. President trump says he is not happy with continued weapons tests but short range launches are not a violation. He said he expected to meet kim again soon. Rocket carrying a humanoid robot failed to dock with the International Space station. They say the failure is because of problems in the docking system and a second attempt will be made tuesday. This took off thursday with the robot in the pilot seat area cosmos said the robot had been taught how to manually conduct a docking. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journa