You know what, it is a reprimand from the Federal Reserve system and the office of comptroller. That is what is speculated. Francine this is what is getting a lot of attention today. Later on bloomberg, we will hear from ray dalio, bridgewater founder and chief executive officer, at 2 30 p. M. In new york, 7 30 p. M. In london. Lets get to first word news with ritika gupta. Ritika the west coast wildfires have become a campaign issue. President trump and california state officials sparred over whether Climate Change is contributing to the blazes. The president insists that poor management is the culprit, joe biden called him a corporate arsonist. Mexico, the hurricane has now been downgraded to a category one mexico. Sally will make landfall tonight or early tomorrow, but where is difficult to say. Hurricane warnings extend from new orleans to the florida panhandle. There he kaine is feared to bring deadly storm surge and flooding. Boris johnsons lawbreaking brexit bill has cleared its first hurdle in the house of commons. He plans to renege on part of the divorce deal. If a move has been denounced by members of his own conservative party, they warned it could damage the u. K. s reputation. Citigroup will resume job cuts. Its global reduce workforce to 2000 employees. It will have to increase its reserves this quarter. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i ritikacountries, gupta. This is bloomberg . This is bloomberg. Tom on the data, a churn to the market. I want to mention the vix at 25. 60. You mentioned the timely interview with mr. Dalio, and i what it emphasize that finally the definitive article is out. Catherine bloomberg has been covering this from bloomberg four catherine has been covering this for bloomberg. That will be front and center with mr. Dalio. It has been a very difficult set of quarters for the gentleman from long island. Francine it will be interesting to get his take on debt. It will also be interesting to get his take on euro, if you look at some of the currency strength, the ecb has been trying to grapple with euro strength, which we are seeing today. We are seeing a bit of a lift to equity markets, and a lot of the focus is also on positive data out of china. That is giving a bit of a lift not only to renminbi but giving a lift to the market because they seem to be getting out of the covid economic slump may be a bit quicker than expected. Onlyng us to talk fx, not renminbi but pound, is dominic fx senior strategist. Without talking about the politics of brexit, i dont know what happened to sterling right now given the uncertainty. Dominic good morning. Politics is front and center clearly, and the market will be very much focusing on whether the latest developments in the u. K. Create more challenges to agreeing to some kind of freetrade deal or not by the end of the year, but ultimately the thing that politics, the impact on the currency ultimately comes through the impact on economics in our view. What we are seeing in the u. K. , the way we look at it, whether this is a deal or no deal, and of this year, whether we get a freetrade agreement or not, the trade, will be free higher in 2021 than they are now, and that requires a level of adjustment in our view, so from our perspective, it is not so much whether a deal or not will be made and how good or that or bad that will be for sterling, sterling needs to fall regardless due to those fundamental structural changes we are seeing in the economy. Francine to what kind of level doesnt need to fall, dominic . Dominic that depends on the nature of the agreement, but our basic rate scenario is we will get some kind of limited freetrade agreement focused on goods, not on services, not a huge amount on nontariff barriers. Therefore, our base case is that it needs to fall down to around 1. 20 versus the dollar. It is quite a system shall fall, that is quite a substantial fall. About a week and a half ago it is quite a substantial fall. Inflow or outflow, when it falls it falls hard and fast, and thats what the market needs to be aware of and needs to be were concerned about. If it is a no deal, we could go even further. Tom good morning to you. I want to congratulate you and david blum. You really lead the charge on a resilient dollar. Go through the why again. What is the why of a resilient dollar . Dominic i think in terms of the dollar view, we tried to have more than nuance this year, certainly in the last four or five months. The dollar should be more resilient versus the euro, versus sterling. Because of the underlying growth story, the underlying centralbank story. A lot of the focus this year it has been the dollar needs to weaken because the fed is doing lots of qe or the dollar needs to weaken because u. S. Growth is slowing and it is uncertain. If you look at the growth picture in europe, the u. K. , it has been worse. If you look at the Central Bank Response from the ecb, from the bank of england, they are doing more qe than the fed. These arguments dont stack up against the euro and sterling, and the rally we have seen with the euro is not justified by the fundamentals, it is not justified by asset price performance, and you are already seeing the ecb get much more uncomfortable about euro strength. That is interesting because when you compare it to some other currencies australia and new zealand, for example those rallies we think can continue versus the dollar because they do lineup at her with the economics. With terms of trade and those factors. Tom does renminbi lineup with the economics . Dominic i think it does. If you look at the background in happening recovery is faster. We have seen a rising yield differential, a surplus, rising debt flows as china internationalize us. We think the renminbi can go lower down to 6. 60 through the course of next year. That is because the fundamental picture matches up with currency strength in a way that is not the case with some of the cheaper currencies. Francine when you look at some of what the Chinese Consumer has been saying, they have been enjoying this industrial recovery post covid19. Are we going to see a significantly different chinese economy in 12 months, 18 months from now . Dominic i think every time we have had effectively a growth slowdown or a deeper recession in the last crisis and we had that chinaled recovery, it has looks different each time. The more recent rebounds have not been may as infrastructure focused as they were previously, post the previous crisis, and i think that is what we will see as well. We will start to see changes in the dynamic move more toward a consumer led society, a consumer led economy to some extent. Export are doing relatively well in china, and that is boosting the current account of the import stories. When you look at the changes china is trying to make to its economy, i think we will see a shift away from some of that previous sense of everything going into infrastructure investment, and may be more focused on the consumer side over time. Dominic bunning stays with us. At 2 30p ray dalio, p. M. In new york, 7 30 p. M. In london, and this is bloomberg. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Catherine burden on a definitive article on mr. Dalio, who will appear on bloomberg later today. It speaks to the challenges of the moment, the challenges of the pandemic. With us, Dominic Bunning of hsbc. I saw somebody yesterday in the zeitgeist say fixed income is so dead, everybody is going to the dominic running world because it is so much fun and it is so easy to make alpha. Is that true . Dominic i certainly hope so. I have always said we are the place to be, the stories of the bond market vigilantes, they have been completely curtailed by central bank by. I think fx is to some extent becoming the new battleground in some respects. I think you see that in terms of central banks. We mentioned just before about the euro strength and the ecbs discomfort with that. I think that is something we will have to expect more of because the move to move on rates is so low in terms of loosening policy and loosening financial conditions. That is the challenge the ecb faces. They cannot loosen that much through the rate side, and when the euro strengthens, it has a real impact on tighter financial conditions, so i think fx is going to be much more in play with rates zero bound, and fx is going to be, if anything, or a dominant force in the market. Today,looked at the dxy bloomberg dxy, bbdxy, all blended in, and then i looked at the alphabet soup that Dominic Bunning lives. What is the partition now between em currencies and how do you play that for again . Aboutc it is all grouping currencies into different buckets, but i think there is room for differentiation across the board. If you look at g10, the more these sort ofes, currencies can actually do quite well because they have lots of policy flexibility, particularly on the fiscal side. They are growth stories, their growth dynamics should be stronger than some of the bigger currencies. Em, there areinto similar differentiations being made. If you look at places like the renminbi, spoken about the fundamentals looking more resilient, those sorts of places stand out. But if you look at indonesia, india to some extent, south africa, turkey, is ill, the stories that dont brazil, the stories that dont match up turkey is a good example with high levels of inflation, low nevels of rates, a dollarizatio story going on domestically. South africa, massive physical debt and deficits. Large Foreign Ownership and a reliance on the foreign inflows. To be there is a lot of differentiation and you need to be able to say this currencys fundamentals justify strengthening, but these are the currencies and they look more structurally challenge and it will be hard for them to rally in a sustained way. Francine is there anything in central or Eastern Europe that looks attractive at the moment . Dominic i think the way the Eastern European currencies are performing is largely a reflection of the euro rally. We know that story always kind of plays out when you get euro strength, the likes of the check and the polish zloty tend to do well. Concerned a bit more with those stories because the kids economies are facing much these economies are facing much higher levels of inflation. You have a big negative rates story and places like poland and hungary, and you have a shift where the policy dynamic has become less conventional, so both in terms of the communication, in terms of utilizing qe, these are not things that we are used to in emerging markets, and therefore to some extent i do worry about the sustainability of those recent rallies. This lottie in particular looks quite vulnerable given the central bank starts and where inflation is, and to a lesser degree, i think they have benefited from what has happened to the euro, but looking at the individual stories, they be they are not quite as bright. Francine thank you so much for the insight, Dominic Bunning, hsbc senior fx strategist. Catch up with the bloomberg green festival. The weeklong event gathers scientists and practitioners. There will be the neighbor drove chief executive. This is bloomberg. Ritika this is bloomberg surveillance. Estimateding its that sony is cutting its estimated playstation 5 production because of problems with the chips. The japanese Production Company is projecting it will make 11 Million Units this fiscal year, down from 50 million. Sony is expected to reveal launch and plans tomorrow. For the first time, one of the four biggest railroads in the u. S. Will be run by a woman. Warren buffetts railroad see nfs has named catherine farmer its new ceo. Federal regulators may take action against citigroup over deficiencies in its risk and control functions. The scrutiny sped up the timing of ceo michael corbats announcement he is stepping down next year. Bloomberg learned that he wanted fresh leadership because it could take years to resolve the issue. That is your latest Bloomberg Business flash. Chinas economic recovery, led by the first growth in retail sales since the pandemic first hit and an acceleration in industrial outlook. Joining us from hong kong is our chief north asia correspondent, stephen engle. When you look at the data first of all, thank you for joining us. When you look at the data, Industrial Production is not doing bad and the consumer may be more than a specter is this going to be a trend . Are we on better footing, or could it reverse quickly . Stephen china is definitely on better footing as far as the tackling of the coronavirus and the opening up of many municipalities and the approval people need to travel between different provinces. From my friends and associates in china, they are saying life is getting pretty much back to ofmal, so you have had lots stimulus and efforts by the Chinese Government to open up and get commerce going because the backdrop of all of this is the tension with the United States, so they really must use consumption they really must boost consumption. Of course consumption went down to Single Digits in the early going, if not negative, of the pandemic. So china has opened up, they have contain the virus. The number of new cases was 14 or 15 or Something Like that come up which of 30. I have seen two different numbers. That is a really small number for a large country like china. Right now it is fairly sustainable, but the big elephant in the room is the u. S. China relationship. Tom i think we cannot get by on a tuesday without a talk tick update. What did you think of the news it bout tiktok and what in what seems to be an arranged marriage with mr. Mnuchins comments yesterday . Stephen the big question, is shotgunastily raised wedding . Will it fall apart in the next hour . Beijing does not want to see the sale go to the sale, the partnership even, and i cannot even say that for sure because this arrangement with oracle is different than what microsoft was proposing. Clearly, they did not want the microsoft outright takeover, but, you know, there are just a few more days until september 20 until the United States deadline comes to fruition. The chinese have been fairly scion fairly silent of late, but they have basically show their displeasure with the forced sale. Francine overall, what are you reporting on china in the next couple of weeks . There is a lot about the economy, the fact that they want more oil than we think in terms of oil demand, but then yesterday the meeting between president xi and european leaders seems to be more standoff. Will there be more Foreign Policy at the forefront . Stephen the ministry of Foreign Affairs in china is probably one of the lower ministries on the runyon china lower rung ministries in china. I think one of the biggest issues, at least today in the news flow, is of course with Customs Department in the United States issuing this ban on certain products coming out of more onn, ratcheting up the trade front. They are going to ban cotton products, which includes of course apparel. The United States gives 30 of its apparel products tshirts, pants, everything from china. And where these alleged human rights abuses have happened in china, is home to 80 of the cotton market. If you are in the United States banning apparel, textiles, hair products, some computer parts that are made there, this is a big manufacturing part of china that also does petrochemical, tomato, and the like. It is not an outright ban. They withheld from doing that, but it is selective yet another front opened up on the trade war. Tom stephen engle, thank you so much. We appreciate these updates, particularly his perspective on the new Prime Minister of japan, as we heard that yesterday. Coming up in the next hour . Updated on global wall street, without question, mr. Stringer is the comptroller and he has some ideas, like a transaction tax, taxing the rich. This is bloomberg. Good morning. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Trump went toe to toe with california state officials who say Climate Change is making outofcontrol wildfires worse. The president disagrees. He blames poor forest management. Joe biden accused the president ate arsonist. Im he said western states would not be safe from fires as long as the president is in office. Trump and his allies hope he will get a boost ahead of the election. Uae willahrain and the sign the agreements at the white house. The economic recovery in china spat up. Sped up. Industrial production rose for the first time in 2020. In baseball, steve cohen has a deal to buy the new york mets. He reached an agreement with the firm backed by the teams owners. Reported the offer valued the team at over 2 million. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Tom it is a fact we listen to bankers, the sell side and buy side on Financial Services. Listen toers jonathan. He has a report that will shock european banking. We will talk about the depressed book values seen across european banking. Thrilled to have you this morning. Ofant to go to the idea there is goodwill on a balance sheet. It is intangible. Trading below book value, the goodwill becomes bad will. What is bad will and why does it matter . Bad will is important. If you look at european banks, they are trading in aggregates, more than 600 billion below. If you buy an asset below its takesset, you can. Dditional provisions we know why the banks are trading. They think bad debt is going to get worse, your cost basis is too high. It is an unfortunate time for the sector. This discount is going to act as a catalyst to accelerate m a. We saw this with the ubs Credit Suisse story. Now is the time. The ecb is telling you now is the time for domestic m a across european banks. Will it be a tom crossborder or within the country as switzerland discussed . , it has to bent domestic first. There are several things that would stop a crossborder deal. Aossborder at some point, couple of years out, it makes a lot of sense. France, spain, switzerland, a bit of a left field. The capacity for m a, but more boutique. Im not going to hold my breath on a deal. Francine we heard that as a rumor. Would it make sense for Credit Suisse and ubs to merge . Look at the Wealth Management business, a lot of where technology is changing banking, joint investment cost, reducing duplication, there is a lot of synergy. You look at the difference and the acquisition is not a merger. Think ubsCredit Suisse is knocking on two times gdp. They have a problem with ubs as big as they were and the two big to fail concerns. Reasons, it makes sense. Between these when there are other combinations and potential, probably less so. Just to make sure i expecting, you are commerzbank and Deutsche Bank to merge. Crossborderting mergers . What is theoking at market enticing banks to do . You look at the banks trending at the biggest discount. Are investors, the screens pretty forward. Mill willk, the rumor start again and they will have spent the whole time coming up with combinations they can do. Deutsche bank will think we need to do something domestically. We cannot speculate on which names will get together. If you look at what the market is telling you and you start in each of the different markets, it is straightforward to come up with a who is the larger party, where did the synergies come from . The government is concerned sheets. Nking balance closing that into Currency Bank makes a lot of sense for a lot of reasons. You can utilize bad will to increase the provision cover. We are not in a position to say this and this will happen. We can show you what the market speculates. It makes sense. Francine thank you for the insight. Speak to the chief executive of edleman. Homell talk working from next. This is bloomberg. This is bloomberg surveillance. Months of working remotely, companies are encouraging employees to come back to work. Only half of workers surveyed at Office Spaces are safe. Of all of this and how to encourage safely workers to go back to work, lets get to richard edelman. Great to have you on the program. Isn you look at london, it amazing how many people feel comfortable going back to office when you look at france or italy, where they have 80 occupancy. How do you get people back into the office . Richard it is a trust issue. Half the people think workplaces are unsafe. 20 say they will go back anytime between now and christmas. It has a lot to do with getting to work. Only 8 to 10 feel good about going on subway, bus, or train. If they cannot get there, it is problematic. Francine will a vaccine change that . People are confused about the virus because there is too much information and it is contradictory. Surerd you have to make employees understand each employer is going to take four or five steps to change the ecosystem. Less density, wearing masks, making sure there are few people on the elevator, temperature checks. On top of that, we have to make a major effort to get people vaccinated. The antifact data is the antivax data is stunning. I have one more question on this. The trust is childcare. There is a complete failure. What does your survey say about this desperate need across all income levels and salaries . Achard you have identified sore spot. Moms and dads who have little ones are 75 happy to work from home. Our employers are fine with that. They are focused on family, correctly, and they have to make sure kids are going to be ok, particularly with homeschooling. Two daysrk city, it is at school, three days at home. Unless we solve that, we are not going to fix the problem. In the banking business, it has been the pr message since thursday, finally last night, we see the reality of a reprimand by two government agencies. How do you manage that message to maintain trust with all of the institutional relations citigroup has . They have had reputation challenges for the last decade. We did a good job of studying the ship. If you have a problem, you have to address it headon, show progress, be transparent about the cause and be sure you have a game plan that shows the best of the bank. It took quite a while to get there. Instances,n certain it backfires. Richard companies believe personnel change is the solution. Even the ceo cannot make the difference without an explanation of problem and creation of a game plan that people can believe in. Employees. Y, the the most trusted people are your peers. We have to make sure we talk to our people and they can spread the message. Do banks have a trust issue . They are lending in the middle of a pandemic. Richard press scale shows Financial Services at the bottom. 20 . Aceutical is up been important in the jpm andnd making sure other markets change the ecosystem of finance. Look at the work you have done on trust. Trust. Ally released your what does an industry have to do in a pandemic. What do see class officers have to do to provide leadership and governments giving get given this pandemic . The testinghave time for business. The reality we did a midyear study and found the government had become the most trusted institution, 12 points over business. That was a reverse from january. Thechange was government as big actor, a postworld war ii mentality. In this period of return to the workplace is in our hands and in our handson systemic racism, covid. We have lots of things we can prove we are not only making money for shareholders, but also serving society. That is the balance we have to find. Are large corporations ready to do that . Are they trying to be the cause for good or is it happy talk . They changed the jingle on the ice cream trucks because they found out it had origins in the minstrel days. That is a big deal. It is not just a performative behavior. It is actually making a change. Recognizeanies will they can make money, have covidts that solve for but are also responsible on pricing, making sure people understand clinical trials. There is too much history to doubt. Sure theot to be vaccines work. If we have to have a vaccine this andshould explain not have it be some mystery. Tom thank you greatly appreciate it. I am watching the vix, stunning. 25. 55. Onave not done the work yet where it is to return to normal. Not sure where that is, but we are getting there. Yields flat to a little higher. Coming up, there is a fed meeting. Did you know that . We will have a special for you tomorrow. Julia will provide wisdom. This is bloomberg. The securities and Exchange Commission is examining nichola. The electric truck maker deceived investors about its business prospects. They have denied the accusations. Uber is joining companies to lower junkbond interest expense. They sold bonds at an Interest Rate of 6. 5 6. 25 . That is your latest Bloomberg Business flash. Tom there is so much news flow. We have forgotten there is a fed meeting tomorrow. Julia coronado is with us. Talk your wheelhouse. Gauging been brilliant aggregate demand and the economy. What kind of economy is this said going to manage four question is this fed going to manage for . The cisco package, the momentum seems to be evaporated. Losing a lot of fiscal support, which leaves Monetary Policy holding the bag. It is too soon to draw conclusions. They will pundits a little and died there time. With a littleard trepidation that the recovery is losing steam earlier than desired. Tom give us numbers. What is your number forward on the economy now . On balance, the news has been decent. They will be revising it up to a in june. F 5 from 6. 5 that recovery in may and june looks strongerthanexpected on the back of that strength and a stimulus. We have seen a variety of indicators including payroll, still moving in the right direction, but the momentum has slowed. It is too early to see the slowing momentum. The worstll performance since the great recession. It is not good. That is where they are looking. There is not signs of reversal. What they were trying to avoid with the early aggressive action is the slog we went through after the great recession. That slow, grinding recovery. Francine how much of an advantage is it having this target for the fed . Question. A great there are mixed views. That in they have put place, what are they going to do . Frameworky is that , that maximum employment mandate, onesided instead of worrying when unemployment gets too low, that has already been in place, underpinning the actions they took when covid managementree risk rate cuts last year. It has already been in place and what they have done is formalized and codified that new way of thinking. We all understand globally inflation is lower and rates are lower and the tradeoff between unemployment and inflation has changed and that gives Monetary Policymakers a different set of tools and more space with Interest Rates. Tom thank you. Julia coronado with us. The backdrop is certainty on the american economy. Futures up 25, dow up. , the level the dow there. S p 500, we are not quite there. Francine mentioning stronger renminbi. That is a stunning statistic, took four digits. Yuan per dollar. That is an acceleration. Lookg up, we are going to at what the fed will do, but the backdrop will be the equity markets. This is bloomberg. Tom this morning it was not about profit or the breaking of ceiling glass. Exitel corbat will citigroup. They may face reprimand over shoddy risk management. Shareholders shattered. Down 91 since august 2007. Americas data and your cell phone. Thele and friends invent idea of a trusted technology provider. No word on the algorithm. It is something out of man andalorian, the sun sets a fiery orange. The sunset where i live, it was stunning to see how orange it was in new york. The Boston Herald commenting it was an element of the fires from the west all the