francine: more pain ahead. fresh lowsends to and japan overtakes china to become the world's second-biggest stock market. governorrisks, the hints that further risk hikes. the pound falls. and hitting $1 trillion, the apple comes the first u.s. company to join the four, club. -- four comma club. good morning, everyone.

these are your markets, we are also getting data out of the euro area. 54.2, a touchmi, below estimates. i am not seeing a big move on the euro. i am seeing a big move on pound. yesterday we spoke with mark carney. he told me he is not done with interest rate hikes but also spoke on a radio in the u.k. that there is a chance of brexit turns ugly. so markets just do not seem to believe the fact that the boe can hike again. yuan, we did have volatility. 6.8933, and the stoxx 600, a lot earnings. gaining some 0.3%. yesterday, apple hit the $1 trillion market cap. its cap over the

last five years, the first company to be worth over $1 trillion. we have an exclusive conversation with a chief executive of the italian bank. we will talk to him about the bank but also about the italian banking landscape and the budget. first, let's get to new york for first word news. taylor: francine. u.s. commerce secretary wilbur ross signaled more pain ahead unless china changes its economic system. he told fox news that the administration will create a situation where it is harder for the people's republic to continue what he called "bad practices" than it would be to reform. beijing has repeatedly pledged to respond in kind while the foreign minister said tariffs also hurt american companies. >> the u.s. is trying to put pressure on china, but we do not think such an approach will work. china is ready to speak to

anybody who is ready to talk to us. dialogue has to take place on the basis of mutual respect and equality. in the u.s., a bipartisan group of senators has introduced a legislation to introduce new sanctions on russia. it includes penalties involving sovereign debt and energy projects, and requires a report on vladimir putin's assets and net worth. republican senator lindsey graham said the goal is to quote impose crushing sanctions and other measures against putin's russia until he ceases meddling in the u.s. electoral process, stops cyber, and removes russia from ukraine. u.k. prime minister theresa may meets french president emmanuel macron today as part of a diplomatic drive to win european leaders over to her brexit vision. with just 11 weeks until a divorce accord is meant to be signed, may needs to chart a path to a deal.

meanwhile, mark carney discussed brexit with bloomberg after raising interest rates for only the second time since the 2008 financial crisis. mark: the important thing is that this is the right decision for the economy given the track that it is on. obviously, there is a wide range of brexit outcomes possible. we all hope by the end of the year, we will all be better informed on which path the u.k. and eu are taking. taylor: zimbabwean election officials say the president won the election with 50.8% of votes, but the opposition mdc is alleging vote rating and at least six people were killed this week in postelection protests. the violence may underline -- undermine efforts to reunify the nation and rebuild an economy battered by almost two decades of misrule under robert mugabe. global news 24 hours a day, on-air and tictoc on twitter,

powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thanks. let's focus on financials. , italy'shis week biggest bank posted second-quarter profits that beat estimates, but the stocks fell as investors digested the figures. executive, the lenders share price has posted gains ahead of peers. this, as they make strides to improve the quality of its books , taking 10 point 8 billion euros of nonperforming loans off its balance sheets. joining us now for an exclusive interview is the chief executive. as always, thanks for giving us some of your time. first of all, there is some movement in markets in italy what does it feel like being on

the ground? do investors ask you about the political situation? carlo: the first question is absolutely on italian political situations. i want to start from fundamentals in the country. what is important is to understand the situation. italy is continuing to grow. the wealth of italian families is improving, so we have an increase in terms of savings. consumption is good, export related companies are strong and continue to invest. looking at the fundamentals, in my view, italy is and continues to be strong. from a point of view of the investor, what is important is the budget. september will be an important moment to understand the kind of political, economic decisions

that the government will take on the growth and debt. because the debt is the real point of tension. and the real point under which we may be having to work. francine: let's go to this chart. it shows the 10 year bond slumps ahead of the budget meeting. we're also hearing from la stampa saying that there will be a top level meeting on the budget. smoothly, whether that is the case or not, will it take risk off of italian equities? meeting between the ministers is important, but it is also important to the institutional framework and the rules of the game. in italy, you cannot make expenditures without inflows. so it is not constitutional to make something that can increase

debt without allowing increase in growth. in my view, they will focus on production of debt and will tie to accelerate investment for growth in terms of infrastructure. so trying to work on the real point of weakness of the country, unemployment, especially young youth unemployment and in the south. but, there are no other possibilities. ,here is a lot of social media but we have to go back to reality. and reality is that you cannot make spending if you do not have inflows. francine: i know it would not make sense, but if you look at what president trump, which in certain regards, has almost been a beacon of what you want to see. he is spending. is that why investors are concerned about the fiscal situation? carlo: they are in a different

situation compared to italy. italy is a strong country, we are smart with possibility, but not the usa. so we have to consider we have to leverage on the real point of strength. that is 10 trillion euros of savings from italian families. the same time, where the strongest exported related companies, much stronger than germany. at the same time, we have weakness, debt. within the assets, we have a lot of data. so we have to work to make disposal of real estate. in the same time, investing in the growth, infrastructure, and especially in the south. italy is the best country to be. in the south, you can spend your holiday. you can have a lot of attraction in italy. in my view, there is a lot a possibility to do something that

is not the usa, but in italian style. francine: is there a concern that populist measures would hurt growth? upsow italy is very used to and flows when it comes to political aspirations. what does it mean for the equity markets? the equity market will react on the dynamic of the spread. the spread is related to the ability to manage the public debt in relation to the possibility to have investment. if they are in a position, and that is my personal opinion, they can have the authority station not to consider investments into the deficit. if it is possible to make investments for the infrastructure, reducing debt while increasing the deficit. not a big measure, but because you are investing for growth, it could also be positive. we have to wait for the final time,al, because in this

you will have meetings, twitter, politicians saying ah, we will spend a lot. but they cannot, because the republic will not authorize expenditures. so the framework is strong, but it is not possible to have deviation from the right value of managing financial conditions. in the past, you told me you wanted to grow your asset management business. how will you do that? carlo: it can grow organically. through the work we are doing with our clients in italy. we still have 500 billion euros of deposits that we can't convert into asset management. but on the other side, we can consider the possibility to make a combination with other big players in your. try to find some possible idea

of creating a big asset management company. to do this, you need a target. at the same time, and alliance. we are italian, domestic. we have very strong people in eurizon, so you need something managing these potential targets. so we are looking to possible opportunity to make alliances with big global players in the world. the real point is we have no target. so the project cannot start, because we do not want to sell a minority stake. francine: out of the question. carlo: absolutely. so we want to create a combination. so we are ready to make an alliance with a partner that can bring it product and competencies to new big companies. but today, no targets. francine: there are rumors you

would sell to blackrock and create a joint venture. is that -- carlo: look, we are making a lot of conversations. relationship with all of these big candidates, that is for sure. but we are working in a world in which we have to find the best solution for the company to create value for all. the first step is to find a target, and today, we are not in a position. francine: if you find one, would you consider it? carlo: yes. it depends. creating the dimension of the asset management steps is in terms of internationalization. we are not an international asset management company. but from the 49% stake we have pingua, 80t -- million euros. we need to have something.

if you want to play champions league, you need somebody who can help you in this game. francine: is it taking longer than expected? is it frustrating? carlo: no. the real point is that we concentrated the first part of the plan on creating the deal with interim. it was a masterpiece, in my opinion. a fantastic job in making the disposal. today, in terms of nonperforming loans, at the same level of 2009. so it is very important. it takes time. i devoted myself to working in this transaction. riskingdelivered on the and now can concentrate on possible growth. but is it something we can do in the next months. francine: i asked every time, but are you thinking of the asian markets, the wealthy asian

millionaires? is it for europe? carlo: the possible concentration could be a champion in europe. ,ut we are focusing on asia especially china. we have such strong relations with the local government. few banks authorized to have a 100% owned company in wealth and management. and we are starting with significant investment. so we can also consider opportunity in china. francine: what worries you about the next half of the year? you had good results, investors may be expecting more. i do not know if you think shareholders are used to you overdeliver or if you are worried about trade. elaborate, can just we delivered growth in terms of revenue for 6%, number one amongst all european competitors.

it is true, they are waiting for more. but being number one is something already. 8%, homed yield of of equity ratios of of 13.6%. we are a unique case. being italian, we are a strongest bank in europe. having said that, it is clear that if you are used to delivering good performance, we are in a unique position to be in a situation in which investors are waiting for more and more come and we will deliver. that is life. [laughter] francine: and for things outside of your control. do you worry about trade? global growth? that is for sure a possible slowdown related to trade wars. that is for sure. and also in a country like italy, you can have impact.

italy is a country of export related companies. in a significant way, with diversification with china. so we have a possibility. and the possibility of having a devaluation of the euro compensating for this type of trade war. so i am not so negative. there are a lot of tactical moves, and we will see what will happen. francine: as always, thanks for coming on. esa chiefthe int executive. central banks, after the boe unanimously voted to raise interest rates for only the i sat down with governor mark carney and asked him if markets are skeptical about his ability to raise rates. daytrading with central bankers is never a great idea. i will not read too much into

that. i think the important thing from the decision today is the decision. rates appropriate to take and we unified on that. see a requirement for a few more rate increases over the next few years. if the economy remains on this track. certainly, and we had an exchange at the press conference on this, but it bears repeating, which is that many in the market recognize this. it is certainly our view that the equilibrium interest rate globally is lower than it was previously. wedge betweena that overall level of equilibrium and where the rate is in the u.k.. caused by the is uncertainty around brexit.

if you just look at what is happening to business investment , it should be on fire. it is just tentatively moving along. take away that uncertainty, one would expect they would adjust quickly. investment comes in, and you move up between the equilibrium level, and practice, and global rates. if you are sitting in the market, you have to make a judgment. but the crucial thing is what do i think will happen with the brexit and that uncertainty and the impact on the economy. lots of the risk premium that exists in u.k. assets and a lot of the shorter term in markets are being determined by different views on this crucial negotiation. francine: is this likely your last interest rate hike?

possibly -- i [laughter] why would i hand away this possibility? there will be a number of important decisions we need to take in the upcoming months. francine: last question. secretary mnuchin tweeted you had a brexit meeting. what was discussed? >> a lot of respect for him. particularly in terms of how he has piloted the adjustment to u.s. financial reforms. it made it a much more coherent package and a more effective package. we had a broad ranging discussion, not just of the global economy, but of the trade environment. particularly, around trade and services and potential financial services. but look, it is an important time for all of us to keep talking. i can finish with this, the

united states, and extended by the treasury secretaries efforts and the fed efforts, have made tremendous reforms to their financial system. as has most of the g20. the challenge for the opportunity, to put it a better way, is to take full advantage. the quality, the resilience of the systems has gone up so much there is a lot more he can do it together. certainly, the bank of england, u.k. writ large, is committed to having an open system. important,d this is an important part of brexit negotiations continuing europe. appropriate to the new relationship. francine: so what is next? joining us now is chairman of the international everything. that, heut prior to

was an investment officer at allianz. when it comes to central banks, is there a policy mistake being made? >> i do not think there is any mistakes. the fed has to race. i think they will stabilize, so no problems there. the ecb will probably go to zero year. and the boe, you could argue it is a mistake. i just think they want to raise, but will not be raising too fast. francine: if you look at pound and the boe, the market is just not believing what governor carney is telling them. that they could hike again. >> not much growth is what i should be saying. not much inflation, uncertainty around brexit, i think the market believes they will not hike. logical. let's say brexit,

first of all, what is your best case scenario? there will be a brexit -- francine: not a disorderly brexit. nikhil: i think what brussels has to give. it has been unfair how they have been dealing with britain so far, and they will start to change their tune. they started to change this morning. they will become more accommodating and there will be some sort of agreement. i think you will have a brexit. it will not be as dramatic as people suggest it might be. francine: but this is what, the eu making concessions? nikhil: the eu being left dogmatic. and allowing the u.k. to get some of what it was so it can satisfy requirements politically. at the same time, not compromising too much. i think there is a middle ground, and both parties have to

get there. the europeans will get there now. i think it is time. they have started to be more accepting. francine: what does it mean for your u.k. assets? nikhil: i do not like assets anywhere, frankly. the best assets to like our u.s. dollars, u.s. treasury's. precious metals. everything else, i am on the back foot. francine: why? nikhil: there is a lot of and certainty -- uncertainty. i think the u.s. is going great, but it will slow down. and europe is not doing as well as people would like it to. francine: so why are the markets not seeing what you are saying? nikhil: they are starting to see it. asian markets are down today again. european markets have been arranged for the last year. francine: equities are up. nikhil: today, yes.

but overall, it is a range and will continue to be. in today's world, people are always sort of a binary in their views. that, ithink it is think it is a price range. francine: are you expecting volatility? nikhil: yes, i am. francine: like in february? nikhil: i think so. you have got copper breaking down, the chinese currency trying to hit seven. there are lots of reasons. francine: you are not wrong about a range, but if you take a longer view, this is the s&p 500. does it correct significantly? nikhil: i would say it is a top. what i can say is that the onus to non-tech, defenses, utilities, financials.

anything not driven by technology. i can say that with confidence and also say that chart looks top-notch -- toppish. francine: thank you very much. up next, more trade pain ahead. the conflictignals with china has more room to run. more details on that. this is bloomberg. these are what your markets are doing. stocks a little mixed. asian equities flipping. worries about protectionism at the forefront. ♪ phones have made our lives effortless.

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which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. francine: economics, finance, and politics. this is "bloomberg surveillance." let's check in on what is trending across bloomberg on tictoc. disney is suffering from sellers

remorse. the company is said to be trying to buy back tv rights to star wars so it can offer them to his new service. apple has become the first u.s. company to reach a market value of $1 trillion. and our most read stories on the bloomberg terminal: wilbur ross signals there is more tariffs pain ahead. china has just lost its ranking as the world's number two stock market. up tough, cohen has been named to goldman sachs allegiant management and -- elite management panel. some moves in the u.k., on the back of what we heard from governor carney. this is just services pmi by market. of july the month instead of the 54.7. 1.2981.see the pound at

first word news. bipartisan group of senators has introduced legislation to impose new sanctions on russia. the plan includes penalties affecting russian sovereign debt and energy products and requires a report on president vladimir putin. republican senator lindsey graham says the goal is to quote impose crushing sanctions on putin's russia until the ceases meddling in the u.s. electoral process, stops cyberattacks, and removes russia from ukraine. the u.k. prime minister met emmanuel macron, part of a drive to win leaders to her vision. with just 11 weeks until a divorce accord is meant to be signed, may needs to chart a path to a deal. meanwhile, mark carney discussed brexit with bloomberg after raising interest rates for only the second time since the 2008 financial crisis.

mark: the important thing is that this is the right decision for the economy given the track that it is on. obviously, there is a wide range of brexit outcomes possible. we all hope by the end of the year, we will all be better informed on which path the u.k. and eu are taking. taylor: global news, 24 hours a day on air and on twitter. powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. francine: thanks. the royal bank of scotland investors have had a decade after the financial crisis, the bank has increased plans to resume dividends. rbs shares are higher after lenders said they will pay a dividend to a final agreement. we spoke to their chief financial officer and asked him about the plan.

>> it is a huge event for the bank. 2007 was the last time we paid a dividend. we do need to sign the agreement with rbs we announced a few months ago. once that is signed, we have the attention to pay our first dividend. i think it is a really great sign of the progress of banks have made to be back at this point. >> two pounds a share, could that increase? >> we expected to. our capital ratios continue to be healthy. i ratios after this dividend are still above 16%. not only are we sitting on a lot of surplus, the bank is back to earning regular earnings and producing capital. >> and could there be a special dividend? >> we do not know. that is something we will start to look at. we willsee today is

start to work towards regular payout ratios of 14%. on top of that, we will look to do special dividends. >> you have talked about the capital and the doj settlement out of the way. that was a big stumbling block, so congratulations. what about more prospects of turning capital to shareholders? could we see one before next year? >> i do not think we will see anything beyond what we have announced. we certainly still have to pass the stress test, but those results will not be out until november. on top of that, we would like certainty on our outcomes around brexit. cfo.ine: that was the rbs let's focus on trade and tariffs. wilbur ross signals more pain ahead unless china changes its whole economic system. comes after beijing

repeated it will never surrender to u.s. threats. meanwhile, investors are expecting and other solid set of figures. so how should investors be positioning? still with us is our guest from hps. about thet optimistic future of the world. will trade escalate? nikhil: it will. germany and china are in the crosshairs of the u.s., and that will continue. they will continue poking these two countries to come to their terms. to be more open and spend more money. francine: but by doing so, they risk jeopardizing its economic growth. is that fair? nikhil: it is ambiguous. if you look at germany, they have not spent enough money on its own people. they are fair points being made. francine: writes, except it is part of the eu. nikhil: some countries are

spending, others aren't. china, they have to deal with trade and a slowing economy. and they have to reflate their debt situation. the best way is to start by letting the currency go. francine: but this is not been the relation. -- manipulation. nikhil: i do not think so. francine: trump does. nikhil: i think they have good information and probably know it is not. what's the chinese are not doing is actively managing currency. they are letting the market to take it where it wants to. francine: at what point does a trade war deescalate? every two days is that they are willing to talk, this is not fair. who do i listen to? nikhil: listen to the chinese government and see what they are saying. so far, they are saying we are not going to do anything. we have got many issues, debt, local, creating jobs.

francine: yesterday they said they would retaliate. if they start hitting the redneck american states, what happens? nikhil: retaliation with what? they do not settle as much. francine: tax on financials and technology. nikhil: you are fighting a war without the best weapons. and the best think they can do is just to open the economy. allow more imports, run a bigger deficit. and that will help everybody. francine: they said they would do that. how much more do they have to accelerate? nikhil: they have to accelerate because people are not sure about timelines. armany says they will get to spending targets, that is just not good enough anymore. and that is what americans are saying. china says they will spend more money, they need to show it.

there is an impatience in the american administration, driven by their strategy. and you cannot argue if you're on their side. francine: by gold or go to cash? i would hope on short treasuries if i did not have to speculate. and i would buy precious metals. they are oversold. they are ignored, and it is not a bad time to own some precious metals. and a mixture. francine: thank you so much. stay with surveillance, plenty coming up. including apple's road to $1 trillion. bornecades after they were in a silicon valley garage, it becomes the first u.s. company commaa four, -- four market cap. and the lira response positively to the news, so plenty of analysis. this is bloomberg.

♪

francine: this is bloomberg. looked likeek, it the tech sector was in for a massacre thanks to a disastrous showing by facebook. but then apple came, they searched this week after their earnings report. and on thursday, it happened. , theillion in market cap first u.s. publicly traded company to cross that milestone. but just how did they get there? our reporter breaks down the details. >> after months of waiting, it

finally happened. the first u.s.e publicly traded company to hit a $1 trillion valuation. leaving the likes of amazon, alphabet, and microsoft in its wake, but not far behind. apple's milestone is significant and a testament to the rapid growth spurred by the success for products. as well as ceo tim cook's leadership after taking over for the visionary cofounder steve jobs in 2011. but, let's not forget. the company was on the brink of bankruptcy as recently as the late 1990's. that was until steve jobs returned. since then, it was one success after another. and in the seven years since his death, cook has steered apple to

its new heights. he has pushed the company deeper into new services like apple music, a key revenue driver. and cook and his team are not stopping there. they are keeping apple on the technological edge, delving into self-serving cars, augmented reality, and health care. cook told bloomberg in an interview quote i do not think about it, that is the truth. i still view apple as a small company in the way that we operate. i know it is not numerically, but the way we function is like that. and to grow beyond $1 trillion, apple has to keep churning out cutting edge smartphones while still finding its next big hit and growing digital services. a larger version of the iphone x, and a cheaper model are on the way. that, augmented reality could revolutionize personal computing, while a big online video push coming soon to an

apple screen. so, what next for the tech sector? and could amazon cross the market? still with us is our guest. you like commodities, metals, what do you make of tech stocks? nikhil: we are moving from growth to value. we have had to corrections in tech. facebook in netflix. i have no doubt amazon will continue to do what it is doing. but i would rather not own tech stocks. francine: why? nikhil: overall, they are done. they have done fantastically well, but market sentiment is shifting. i am not a millennial, but all the millennials are anling me that i will have application that connect to my parties, to my house key, that will let people in.

how do you see the future in 10-15 years? it is it too soon to look at artificial intelligence? i think millennials are right to make those assumptions, i would only make one comment. i think we are trying to front run tech development. i think this will happen, but maybe not within the timeframe's we are expecting. francine: even a driverless cars? nikhil: even driverless cars. i need a broad reduction. electric cars, driverless cars, all that stuff. it is further away than people think. it could be infrastructure, logistics, legal, regulatory issues. it does not have to be technology, it is already there. it is there for a lot of things. a less what blockchain promises it can do, tech can do that. francine: bitcoin, doctrine? -- block chain? nikhil: no. i like blockchain as an institution.

but i think they companies will do better with tech. francine: how do i look at apple with a $1 trillion cap? nikhil: will you buy apple music, use more itunes? francine: but the answer is what? nikhil: yes and no. huawei just beat them out. competitorsher offering you the same at a better price. know enough about these companies to give you in-depth comments on them, i just say that competition is increasing across the consumer products space in telephones. so we should assume that apple will continue to bar ahead. i would rather not own non-tech -- tech. francine: thanks very much.

next, turkish inflation accelerates as tension with the u.s. continues. becauseatching the lira it's regression chart, depreciation chart, and three standard deviations. this is bloomberg. ♪

>> the outlook is positive. in relation to china, we see it. and we have multiple entry points. clear they could be easing out as forecast. >> we are not immune to geopolitical situations. for us to stay focused is important. and that is what we are doing. >> it is completely different. it is about growing further and improving our profitability. 200 basis points over the current. promise to a massive the markets and our shareholders. >> to adapt to new trade policies, new manufacturing footprints for us is hugely costly. so i would really be very happy

if trade and tariffs could remain on the same level. i am thankful that those parties are looking for a solution. >> so far, there has not been much impact, but of course, in terms of our position overtime, we have been for free trade and lower tariffs. that said, there are differences between market access, regulatory standards, localization requirements, and pricing. so there are probably trade in our industry. thecine: those were some of executives we were speaking to about the challenges in the second half of the year. let's get straight to our business flash. apple has become the first u.s. based company with a market value of $1 trillion. other tech giants are not far behind with amazon, alphabet, and microsoft worth more than $800 billion each. the milestone was reached four decades after apple was cofounded by steve jobs in a

silicon valley garage and later revolutionized the world's computing and mobile communications. petrol china crossed the market in late 2007, but slumped as oil prices collapsed in the financial crisis. heineken is buying a $3.1 billion stake in china's largest beer maker that will allow it to expand in a lager market dominated by local brands. the dutch brewer, which is making a global push into emerging markets, will take a 40% stake in the chinese holdings, maker of china's best-selling brand. china, the world's largest beer market is facing competition as drinkers with rising incomes look to switch to premium and foreign brews. john studzinski, an international dealmaker and fixture at davos, human rights advocate is leaving blackstone.

he told bloomberg he is ready for new challenges after 12 years at the company, including three as vice-chairman. he made his reputation as an investment banker initially with morgan stanley and later hsbc. that is your business flash. francine: thank you. let's look at turkey. inflation increased by less than had been expected. erased lastthe lira growth's while investors weighed tensions. president trump has threatened turkey with large sanctions over the detention, so what's next? our guest from hps investment partners is still with us. let me bring you over to my turkey chart. the standard deviation, the lira depreciation, when does this and -- and -- end?

nikhil: when they put controls. it is an entrepreneur country and cannot survive with this regime. i think the government needs international support, because it runs a current deficit. i think that is the inevitability when i look at a chart like that. francine: what happens next? you believe they need outside help, from whom? nikhil: typically, the imf. i do not know if that is the case, but if not then, another country or group to provide them with the international currency, forcing it to be able to bring on capital controls. i think that is the ultimate outcome. francine: do you like any of the you havemarkets? political standoffs, then the president wanted to be in charge of the central bank, so central bank independence. , a it is also a fed story

country that issued a lot of debt in dollars. nikhil: many have done that. it has not worked in the emerging markets favor. and if they continue to raise rates, it will not be good for emerging markets yet. so when you ask if i like any, at this point, i would say no. i will, in due course, when they start to reflate. there is a time for everything. francine: what do you like apart from commodities and metals? treasury's.ke u.s. i like the dollar, you know. i'm trying to find things, francine. i'm struggling a bit. francine: [laughter] private markets are good, because they do not give you volatility. do notreas are where you feel volatility and have the

time to do your due. private markets, they have grown a lot. , prefer credit versus equity that there is a reason why money has gone back, and fortunately, the reason why it will continue. but public markets look difficult. i caution investors. there is a time to invest, to sell, and to wait. and this is a time to wait. francine: thank you so much. chairman of international at hps investment. we continue in the next hour. guy johnson joins me in london sitting in for tom keene. we talk markets, turkey, apple. plenty more to come. this is bloomberg. ♪

♪ francine: more pain ahead. the u.s. commerce secretary's terrorist threats -- secretary's

tariff threats hit china. bank of england governor mark carney hints at a further rate hike in the face of ongoing uncertainty. the pound falls. and apple becomes the first u.s. mampany to join the four com club. will amazon be next. "bloomberg surveillance." francine and guy today. tom is off. guy: there's this big meeting coming up in rome, and the market is getting pretty freaked out about it. the markets clearly concerned about the risk. francine: we had an exclusive

conversation with the chief executive of italy's biggest bank. we will bring you his comments. let's get straight to the bloomberg first word news with taylor riggs. taylor: bank of england governor mark carney has jumped back into the brexit debate. bank's chief told the bbc the chance of the u.k. jumping out of the eager european union -- out of the european union without a deal is high. commerce secretary wilbur ross signaling there is more tariff pain ahead in the battle of china. foxbusiness the u.s. has to create a situation where it is more painful for china to continue his trade practices than to reform. president trump ramped up by orderings week his trade-off is to consider imposing a 25% duty on $200 billion of chinese goods. economists expect the u.s. jobs

report for july to show the labor market is still strong. to median estimates, payrolls rose by $193,000 and the unemployment rate fell by 1.1% to 3.9%. details of the full the jobs report at 8:30 a.m. new york time. in zimbabwe, the ruling party has won the presidential election. the vote was overshadowed by deadly protests and opposition charges that it was rigged. the president's job will be to miss ruled forry 20 years by robert mugabe. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. guy, francine?

francine: thank you so much. this is what i'm looking at. as guy was saying, a lot going on when you look at italian bonds slumping for a third day i had of a third meeting -- i had of a meeting -- ahead of a seeting between the country' populist ministers. looking at the rest of the market, it is a little bit of a rough week for stocks. dollar maintaining gains. the yield on the 10 year treasury taking back below 3%. guy: this is what is happening with the turkish lira, continuing to fall despite that inflation data coming in a little softer than expected. it is still incredibly elevated, so let's not beat around the bush on that one. in terms of where we sit with the u.s. payrolls later on, this slightly negative story

later when new york opens. dollar looks pretty strong this morning. you got the pound, the euro, the turkish lira. francine: this is why this chart matters. this is italy. thee been talking about tenure italian yields that broke 3% for the first time in nearly two months. there's a lot of question about what happens to the finance minister. frictions between the finance minister and the deputy prime minister have rattled the market since the formation of the country's government. they are meeting today to talk about the budget law. the president of the republic always has a say on budget matters. i guess the worry is

whether or not he will sustain his job. but have a look at the turkish lira. this is the one-month risk reversal on the dollar-turkish lira. goes, basically to signaling the markets still believe the turkish lira has further to fall. see, apparently, according to the risk reversal, we still have a way to go. what are the turkish authorities going to do? i talked to a number of people early this morning suggesting they are going to have to do something in size. francine: we look at earnings, bonds, turkey. it's been quite a week. just last week it looks like a lot of these tech companies were in a massacre in the earnings season thanks to a disastrous showing by facebook, but then came apple. it is the first u.s. company to hit $1 trillion. other tech giants aren't fall behind. microsoft.mazon, and

in tim craig. great to have you. talk to me about $1 trillion. do we care? is it psychologically a game changer? >> the quick answer is no. you have a great company is executing on a great product. momentum is behind technology as we are in a paradigm shift of how people use this and everything else. , and they are the middle of it. as are some of the internet peers. but the $1 trillion makes good headlines and something to talk about. francine: we have an iphone. there are other great phones out there that give you a great camera and lower pricing.

at $1 trillion come does that mean investors are expecting too much? do you see a correction coming because it is worth too much? reporter: i wouldn't say the weight of money is going to break apples back -- break apple's fact. i think -- break apple's back. i think momentum is quite important. when valuation gets extended, you can't disappoint. we saw that, obviously, with facebook. whether it is $1 trillion or $800 billion or whatever the number is, it doesn't really matter. it is when you get into a momentum mood, what happens with energy over the past couple of .onths even though the numbers are big, the stocks are down. up'salberto, where is your -- where is europe;'s $1 trillion tech company?

guest: unfortunately europe has been lagging on this. there's been so much focus on migration so far, and before on austerity. europe needs to fix its growth strategy. that is important for greece, portugal, and italy. italy is going to be the biggest question in the next five years. you didn't take long to go to btp. so how do we do it? we don't have a company like that. apple, in many ways, is a dividend company and looks more like microsoft then facebook or alphabet. it is a $1 trillion company. how do we get companies like that? has beene tech sector

transforming from a pioneering sector to a very mature sector really start to have monopolies or concentration of a few companies, and you start having barriers to entry. this means large companies in tech are buying smaller company that a very high premium like .acebook you seen skype, instagram. the real key here is a tech companies remain monopolies with large barriers to entry in the this is going to create a problem for growth and productivity. you will have a concentration of information and data. --ortunately the native is the narrative is changing. how they manage personal data is coming under more scrutiny. at some point competition should also come under more scrutiny. francine: i found a link between apple and italy, but first, when

you look at regulation, is this the main concern for tech? reporter: i think it is certainly a key concern for tech. many companies have built their on advertising basis, and advertise personal information. and advertising you love his personal information. -- and advertising utilizes personal information. facebook, going forward, it is about messaging. how do you transform a messaging and pay service into the next gross leg for apple -- the next growth leg for apple? francine: i guess there's also a question about whether apple is socially beneficiary. growth in italy asks the same questions, which is what the populists are seeing. that the finance minister stay in italy, or will he be kicked out?

guest: i think the issue in the short-term, what we are focusing on is that there's only one adult in the room, which is the finance minister. everyone else is a very unsustainable plan for growth. then obviously you have the president. the real issue apart from this meeting is that growth is decelerating towards 1%. is italy doesn't grow in the next three to five years, then you have an issue with debt stability. maybe two or three years down the line when you will have a slowdown, you could have a slowdown in the u.s. cycle or in germany. 's above 50,l pmi but they are getting closer to 50 across europe. if that happens you're going to have to raise taxes, and that is very unpopular. that opens up a lot of new questions on italy's euro membership. italy has benefited from the euro like everyone else because of lower interest rates, but benefiting much less than france

and germany because the currency is higher than it would be. hasou look at how the pie been distributed, germany and france take some an but 60%, 70% of the benefit of being in europe. calling for different distribution of the benefits, a redistribution and progrowth pact, is necessary and something that is to be addressed, as well as the reforms in the country. guy: i want to come back to this issue of what europe does next. ish obviously, alberto hinting this is a closed-door now as we have struggled to make headway there. europe has done some things quite well. one of them is luxury. lbmh is up 20% this year. where is your up shining, and

how do we do it -- where is europe shining, and how do we do it better? reporter: that is a critically good example. sweden is industrials. look at the base of the scenery --panies that is machinery look at the base of machinery companies that are global machinery companies. it has done quite well in the second quarter. europe,and others in autos. autos already critical inflection point from the standpoint of an overall global cycle that has peaked and started to roll over a little bit. at the same time, they are having to invest in next-generation technology. 2020,y get that right, 2021 could be quite important for these. if they get it wrong, it is a big problem. that is core. those are examples. financials, broadly, are important here, relatively more

than in most other economies even though financials are always important. ,ou look at global insurance the core of that is german. there are pockets of interesting places. last but not least, look at the consumer area. you've got major pharmas, major consumer global franchises that are a european core. interesting enough, since the turn of the quarter, it's been an extensive move in the market, and european stables and health care are helping lead that move. , timine: thank you so much craighead. alberto gallo will be staying with us. this is bloomberg.

♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. royal bank has resumed a plan to start paying dividends a decade after the government bailout. issuance is still subject to a final agreement with u.s. regulators. bloomberg's nejra cehic spoke with the banks had best the bank -- with the bank's head. we do need to sign an agreement. the that is signed, we have attention to pay our fair 2 pence per share.

nejra: could that increase? >> we have a long-term target of 13. not already sitting on a lot of best not only are we sitting on a lot of surplus at the moment, the bank is back to regular earnings. taylor: british posted second-quarter earnings that missed estimates -- british airways posted second-quarter earnings that missed estimates. shares fell the most in five months. says advanced bookings are helpful, particularly on the lucrative north american route. cohen's apartment at

goldmans it -- is the latest in her rise. she leads the team that sides were the bank should pursue new areas of business or acquisition. that is your bloomberg business flash. guy, francine? francine: thank you so much. let's get back to italy, the 10 year yield top 3% earlier this morning have a budget meeting between the country's populist leaders in the finance minister. last hour i spoke to the chief executive of italy's biggest bank and ask him about the budget and public debt. the meeting is very important, but it is also important the institutional framework and rules of the game. in italy, you cannot make expenditure without having inflows, so it is not possible, it is not constitutional, to make something to increase debt without allowing increasing

growth. in italy they would focus on reduction of debt. they will try to accelerate investment for growth, so trying to work on the real point we could this -- the real point of weakness in the country, which is unemployment, especially younger unemployment and in the south of italy. twitter, a lot of facebook, something related to social. we have to go back to the reality that is you can't make expenditure if you're inflows can't allow you to make expenditure. francine: i know it wouldn't make sense, but if you look at what president trump which, and certain regards, has been the begin of what mr. southey me -- mr. salvini wants to become he is spending. italy is a strong

country. we are smart with a lot of possibility, but we are not usa. we have to leverage 10 trillion euros of savings. at the same time, we are the strongest exporter in europe. at the same time, we have the public debt. between the assets of the public, we have a lot of real estate. we may have to work to make disposal of real estate with a big action over public debt. that was a little earlier on in an exclusive conversation. of algebris is still with us. joining us is they must be attack us -- is see mostly fiotakis.-- is themos

>> what can you do to boost towth or manage reforms avoid economic slowdown? we know italy's debt is getting close to the high 130%, 140% of gdp. if you don't have enough growth in the next three to five years, you will get to the next slowdown in an unsustainable amount of debt, meaning you will need to tax people. you will need to tax part of that $10 trillion of assets. italy is a very asset rich country. the public sector is in a lot of debt. but when it comes to paying higher taxes, you can have a spiral of higher taxes like the one you had in the monte inernment or increase -- or greece.

the government has scared investors off with a very wide range of promises, many of which are unsustainable. you've got to adults -- you've got two adults in the room, the and the minister president. the five-star is getting less and less votes. there's a chance at some point he will have new elections and a potential split. if you want to be reform, a gives you a get out of jail free card in terms of taxing people and potentially keeping the debt low, but the reforms are missing. attraction of investment is still missing. francine: the big concern is that some point the populists turn to wanting to get italy out of the euro. is this a 30% possibility, a 50% possibility? >> i think in the next 12 months

it is less than 10%. but if you look at the next three to five years, if you don't have that growth and those reforms attracting investment, you get to a point or you will need to tax people more. if you have a populist government which blames everything on europe or the ecb possiblerozone, it is that this potential populist government will blame the euro for their failure, which is a typical pattern of government that make very strong promises with a sustainable policies. at some point, selling people a dream -- in this case flat taxes, universal basic income, and still without increasing if this dreamt -- is not sustainable, we've seen these governments in other countries blaming external .nemies the euro, the ecb. they've already been doing it. it is possible if you have the

same government in place, they may blame the euro and may advertise a referendum on the euro. guy: the last three days have sb landing --ding a big lending. give us the numbers as to where you think that's going. >> is a tricky question. curve woulde flatten when you have denomination risk or people thinking about the fall risk. whenever these episodes happen -- and they will happen again -- guy: it feels like a pre-shock warning signal. >> it is a warning signal as to how volatile and sensitive the market is with these things. tohave recommended investors hedge for the next three to six months. thisnk it is a risk with

-- a risk which is still worth hedging. the main point discussion with my former colleague and friend is whether this is a structural issue or a tactical issue, an issue for the next three to six months. anefly i think we still face issue that changes the outlook. guy: you're going to stick around. steve whiting is going to be coming up. that conversation is at 6:00 a.m. in new york, alvin :00 a.m. -- 11:00 a.m. in london. this is bloomberg. two, down and back up.

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disney is suffering from buyers .morse be trying too regain star wars tv rights. u.s. commerce secretary wilbur ross signals there's more tariff pain ahead. china has just lost its ranking as the number two stock market. stephanie cohen has been named to goldman's elite management. inflation quickening less than expected in the turkish lira. so, definitely keeping pressure on the central bank to

tighten policy. the lira hitting fresh record lows as investors remain on it over washington's decision to sanction two turkish moller-maersk best turkish ministers. -- turkish ministers. still with us, alberto gallo of iotakis ofand themos f ubs. >> i think the market will always speculate about these things quite intensely. i had to say the first line of defense to the clintons to be the central bank communication. we have seen that in -- defense tends to be the central bank communication. we have seen that help a number of currencies to stabilize. obviously the risks in turkey are high and very volatile. they also come with a higher real rate, which since to be --

which tends to be stabilizing. there is a level at which these kind of pressures will stabilize as well. >> i think there is still more downside. we've been talking about this in the past. turkey have a lot of private debt in the country. has been giving cheap funding to corporate and banks, and banks of the lending to consumers. there's a lot of corporate with foreign currency debt. if you think of government debt, it is relatively low. spreads are still constrained, just about 300 basis points in hard currency. but you can find yourself in a situation where the government these to bailout some companies or banks or infrastructure projects. that is really the worst case scenario, that you have to use the government balance sheet to cover for some private losses because so far the government priority has been keeping

political consensus and low unemployment. however, if things get worse, you have very little from the central bank to raise real rates because of this private leverage. at the moment you don't have the willingness to do it. the ability is limited. it is a country with a lot of debt at the consumer and corporate level. you really need a lot of change at institutions. francine: was the rationale for investors still being into lira? -- what is the rationale for investors still being into lira? >> i think we are beyond the point where it is investable. what we are really avoiding is hard currency debt from corporate, banks, and the sovereign because it is at very close levels to other emerging market countries that are less risky. also, turkey's big. it's not like argentina or

greece. with ary large country multiple of greece's gdp. i don't think you are getting points for basis turkey's government debt at the moment. >> i would agree that you need a higher risk premium for this country, and definitely that has been the case for the number of years that we've had a week fundamental set up leading to depreciation. we havehat trend, accelerated recently for a number of different reasons. obviously we need a higher risk premium for investors to get back in. i've looked at turkey for a very long period time. the level of hard currency debt, the typical stuff that leads to default risk, is not i think immediate.

it is a risk if things escalate a lot, and we are far from that kind of level yet. it could happen, but we are not at that level yet. the main question is do investors get paid enough for the kind of risks. for a time that was the case. when you have fresh risk reemerging, investors are reassessing whether they get paid enough for that risk. francine: stick around. we will be back with alberto gallo and themos fiotakis. here's taylor riggs. taylor: president trump's intelligence chief warns that russia is one keyboard click away from a major election hack. intelligenceor of to coats says they have yet reach the intensity of the kremlin's campaign two years ago. the white house is looking to tamp down criticism that president trump is reluctant to hold russia accountable. trade wars haven't heard one

part of the u.s. agricultural economy. american farmland values just hit a record. according to the agricultural department, the average value of an acre of farmland grew 1.9% this year to more than $3100. the gain signals that investors are focusing on farmland as a long-term investment. china just lost its ranking as the world's second-largest stock market. the value of chinese equities fell to less than $6.1 trillion after a slump thursday. japanese stocks are valued at a little less than $6.2 trillion. -- the. stock market chinese market moved into second place in 2014. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. let's focus on the ukip bank of england. the central bank you -- the u.k.

and the bank of england. the central bank unanimously voted to raise rates for only the second time in a decade. i spoke with governor mark carney. carney: i think the important thing is that this is the right decision for the economy even the track that it's on. obviously there's a wide range of brexit outcomes that are possible, and we all hope that by the end of the year we will all be much better informed on which path the u.k. and the eu are taking. a variety of his potential outcomes, they would be consistent with rates at their current level, if not higher. certainly there could be circumstances where it would make sense to adjust policy. but i think we will all know what those circumstances are and at that point will take them into account and make a decision.

it doesn't automatically follow. certainly a set of circumstances like what happened post-referendum where the balance of what happened to the future supply of the economy demand, which was more of a business hit than a consumer sense tothe rate made support the economy. ist forward to today, and would say it does look like the right call. we have got inflation coming back to target. we have record employment growth. we have real wages starting to grow. we are in a better position. but there are circumstances where the balance of those three factors would be too inflationary for the tolerances of the mpc. we can stretch the horizon. we can support jobs in activity, but up to a limit.

we have to make those judgments at that time. francine: still was us, alberto gallo of algebris investments and from ubs limited, themos fiotakis. >> we have become a lot more worried. i think the market is right to do so. i think the pound reaction straight after the mpc meeting was quite telling. the bank of england is facing growth which is slowing, very low levels of productivity, very low levels of investment growth, , consumer that is lowered inflation coming down, and all of this without considering brexit risks. over the last few months or weeks even, brexit risks do not seem to be declining. in fact, they seem to be on the rise.

in that sense, the market is not going to go in and say we have slightly higher rates, i might as well by the pound. the market is going to go with a slightly more pessimistic result. having said that, i think what , the very lastd sentence, is very telling about the bank of england's reaction function. they are outcomes even within that if they destroy supply, it may require them to hike. i do not want to consider those outcomes here and now, but they are not the best kind of outcomes. francine: do you think there's a difference between what governor carney is telling us and what markets are telling us? >> this is a policy mistake. that's what the market is telling us, and i agree. it is very hard for the bank of england to continue hiking with at a little bit

of wage growth barely above the level of inflation, low productivity, and generally a lot of uncertainty on brexit and investment already. the optimal brexit is binary. imagine tossing a coin. if you have heads, you may need to do two or three hikes. if you have tales, you may need to cut. guy: there's also a scenario or if you get a hard brexit you will need to hike as well to defend currency. >> that is the worst scenario. that is a scenario where you would also cause a credit crunch domestically because of the very large amount of credit. there's 200 billion pounds of consumer loans, including auto leases, credit cards. if you start hiking to defend the currency, if the u.k. becomes an em type country, we are in a very bad situation and

the pound is a lot lower. is put that aside. let's pretend the u.k. is not an emerging market. ratesard brexit that cuts , a soft brexit you raise rates. what they are doing is let's just hike once a year and hope we are in a middle, but they are going to be 100% wrong. the reality is they want to have a bit of room to cut should things get worse, but they are probably hiking too early because the economy is not accelerating. guy: i understand the argument surrounding the fact the u.k. economy can't drive at the speed it used to be able to without generating inflation. the economy just doesn't tolerate that anymore, so maybe you do have to raise rates. but i was looking at the pmi's this morning. there's not a lot of evidence that things are moving in the right direction. they must have seen this data.

they know what the u.k. economy is doing. why are they hiking in advance of data that shows things sliding down? >> this is not necessarily what you have done. what i would say on top of the data, because some say this is just confidence, if you look under the data at the composition of gdp -- for instance, over the last few ofrs you have a number , allrformance in the u.k. of which have slowed. you have a huge pocket of surplus for the economy which is at risk of basically relocating. all of these things, if they happen a negative scenario, the impact on growth is very unlikely to be positive.

even if the economy, the investors start to see it become a possibility, some of these things may happen ahead of time. so we are seeing investment slows already. that is not necessarily something inflationary. francine: all right. themos and alberto staying with us. markets: on "bloomberg the open," larry kudlow, the u.s. economic council director, interviewed at 9:30 a.m. new york. this is bloomberg. >> bloomberg's first word is brought to you by oppenheimer funds, the right way to invest.

♪ 46 minutes past the hour.

tom keene has a well-deserved day off. the dollar is holding near a two-week high as investors expect another set of solid employment data later today. ully samra,now, k charles schwab u.k.'s managing director. still with us, alberto gallo. anything in here that's going to suppress the market and tell us the u.s. economy isn't on a tear right now? >> i don't think so. an economy n an , the laborclick

market is really beginning to tighten. of the labor force has continually been talking about this tightness in the labor market. i think one of the other areas the bears have been talking about has been productivity. one of the things that was gdp number in the q2 is that productivity has doubled . think productivity is starting to improve. we are starting to get improved average hourly earnings growth. francine: we are expecting a little bit of wage growth increase from construction manufacturing and the two sectors showed pretty strong growth. how much will they be had by trade war's? is that what the fed should be looking at? >> i think everyone is going to be hit by trade wars.

clearly everybody is concerned. remindingwe keep investors, while this is a politicized exercise about the president talking to his base, it is the base that is going to get hurt. the consumer gets hurt by this. you wonder how much of this is rhetoric. we heard steve mnuchin talking about closed-door discussions going on, and we sell it happened at the eu last week as well. one hopes the kolmar heads -- the calmer heads prevail. francine: is this a good month to be looking at it? will the fed be reading that much into it because this is also a month where the auto plants close down. it is an odd month. >> also not much for average hourly earnings. we are talking about it now, so it is widely expected. it is not going to sway the said one white -- sway the fed one way or another. i think it is about the overall picture.

we want to see this longer-term continued strength in the picture. was some great things in there, capex and some of the other things with consumer spending. i think it is a good time to invest. guy: we did spend a lot of time getting in the weeds on this. not to dor jay powell what he has said he's going to do is somewhere up there. >> is on rails for the short to medium term. it is not far from here they will get to a neutral level with rates. don't forget quantitive tightening is also up in the case as well. pace it -- is upping the as well. for the medium-term, things are a little more uncertain.

guy: stick around. when you look at it from a different angle. trade issues are definitely front and center for the markets. this is yours, said -- this is u.s. commerzbank 30 wilbur ross saying there is more pain ahead u.s. commerce secretary wilbur ross saying there is more pain ahead and left the country changes its trade practices. joining us now from beijing is bloomberg's, o'brien -- bloomberg's, o'brien. emma o'brien. -- it is it is a that not a good look to be below the japanese market. moving toen the

easing for lending, liquidity to really try and support that market. what is really interesting about the mainland chinese market, which has fallen below japan today, is that it is dominated by retail investors. this does show how concerns about the trade war, an impact on the economy, how that is hitting hard on everyday people here. francine: yesterday there is a headline crossing the bloomberg terminal saying china will retaliate. because they are propping up their own economy, does it mean they can't retaliate? they have said that they aren't weaponize and the and, but that -- weaponize the 1 -- weaponiz -- weaponizing the yuan. think a lot of people do think they are stepping back and allowing it to weaken.

market forces are pushing a lower. people are more pessimistic than they were before about the chinese economy and hits it could take from the trade war. there's so many unknowns related to the trade war still. there's salvos that can still be fired from both sides. that is reflected in it. but i think they are sort of happy about the decline, but it is a really transferring through to help, for example, exporter stocks. we are seeing equities take a real beating in mainland china. guy: thank you very much indeed. gala and kully samra still with us. and i wast the chart, reading the headline six weeks

ago, are the chinese going to weaponize their currency. it looks like they are ready have. >> they have been boosting lending to the banks, and in turn banks to corporate. this absorbs potentially the credit impact. but it goes against the deleveraging china was starting to work on in the past few years. let's remember that china financing from 2009 while europe and the u.s. were slowing. they cannot do another fiscal stimulus. if you look at the reserves just north of $3 trillion, there's banks, and thee fatal enterprises and losses. you could have the stock market. there's not a lot of. -- and lossest you could have left.

there's not a lot of dry powder left. you have a lot of time. francine: we have a viewer question. actually he's one of our regulars. he's basically asking why italians should not blame the euro for italy's problems. gainsyou think about the the euro generated, the eurozone has created three advantages. one is a free market for goods and free movement of people. that benefits all countries. than there is a lower currency value, which has benefited in particular germany and france. then there's lower interest

rates, which has benefited everyone. all of these things, you can see that italy has benefited, spain have benefited, but france and germany have taken a bigger share of the pie. blaming the euro is wrong. wanting a better does tradition of the gains from the eurozone is right. i think francis talking about it. italy is talking about it. the european budget is too small. it does not redistribute enough of the gains. francine: thank you so much. think is a much. "bloombergn markets," larry kudlow, the economic council director on trade war's and ongoing tension. this is bloomberg.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. francine: more pain ahead. the u.s. commerce secretary's terror said chinese assets.

japan takes over china to once world's biggest -- second-biggest art market. the bank of england governor mark carney handset former rate -- rate hikes. in hitting $1 trillion. apple because the first u.s., -- company to join the four, club. "bloomberg surveillance." we are trying to figure out china, the markets but at this moment, a lot of parties administration the cabinet meeting to talk budget. guy: the big question the market is asking is how long has this got. the finance minister described as one of the only grown-ups in the room area and the market is testing this one a little bit. today's reaction on a meeting

highlights how fragile things are. francine: we are looking at the fry -- the chart of the day in its italian bonds slumming for the third row -- day in a row. let's get the first world news with taylor riggs. taylor: governor mark carney joan akin to the brexit debate. the central bank chief told the bbc the chance of the u.k. dropping out of the european union without a deal is uncomfortably high. that indicates carney is more worried theresa may 1 p.m. to get a deal that would prevent disruption to business and consumers. commerce secretary wilbur ross is signaling this more terrifying ahead in the trade battle with china. ross told foxbusiness that the u.s. has to create a situation where it's more painful for china to continue its trade practices than to reform. up tensions this week by ordering his trade office to consider a 25% duty on

to an billion dollars of chinese goods. economists expect the u.s. jobs report for july to show the labor market is still strong. payrolls rose by 193,000 and unemployment fell by 1/10 of 1% -- 0.1%. hiring in manufacturing and construction may have slowed down. the jobs report is out 8:30 a.m. your time. over in zimbabwe, the ruling party has won the presidential election. the vote was overshadowed by deadly protests. -- munagaless job gwa's job will be to clean up the rule of mugabe. at tictoc on twitter powered by more than 2700 journalists and analysts in more than a hundred

20 countries. this is bloomberg. this is what i'm looking in terms of the markets. there's still quite a long going on. the biggest market moves, we are looking at italian bonds. we were looking at the chart earlier this hour. u.s. futures drifting higher. most asian equities are slipping. european debt gained with treasuries. you will have the jobs report a little later on. turkish lira, it's interesting because it felt today. continuing to fall despite the inflation number being a little bit that are than expected. we are still kind of around the 15 level. the central bank at some point has to do something. , thehis talk of trade energy complex has been

remarkably flat which is worth paying attention to. futures pretty flat as well. the dollar up a little bit on the bloomberg dollar index. it is payroll day. francine: investors expecting another set of solid employment data. join us now from washington is michael mckee. how much is the fed going to look at this number? michael: they won't pay a whole lot of attention. meetings into the next so we will get plenty of data between now and then. the markets really don't care. as long as we don't have a 2.7% on anprise, annual basis over the last several months area unless that accelerates, no one will change their feeling about the fed. we don't have any reason to believe it will go up.

ae bloomberg consensus is 2.7% annual rate and less consumer start to make more money is could go on indefinitely. as long as workers want jobs and companies don't have to pay to get them, this on a regular basis. we talked about central banks being data dependent. how data dependent is the fed right now? there's a lot of data still to come. fed feels like it's on rails. for jay powell and company to change tack of this time, that would take a lot. michael: they are not going very far are very fast. they're looking another rate rise in september and maybe another in december. there's no reason to not do that. they don't seem to have slowed the economy at all.

jobs in theding high 100 thousands every month. you should argue that they might want to speed it up but at this point there's no sign that what they are doing is having a major effect on the economy so they will take every opportunity they can to get rates higher so that we do see a downturn, they have some ammunition to fight. thank you so much. joining us now is steven wieting , with citigroup. let me start with you. can u.s. jobs and you look at trade, how many times with a fed hike next year? will it be a little bit more the markets expect? are in a shock free environment, yes. the federal reserve seems to be moving towards orderly rate hikes. we see this is a rising hurdle for all risk assets.

13e hikes eight through potentially going on through next year. in an environment that doesn't change massively from the perspective of external issues that might affect the federal reserve. where is the biggest risk coming from? there's always the risk of geopolitics. inflation. it's been benign the picking up a bit. you would expect as the job market dues to tighten that inflation would go up. and then of course there is the slowdown around the globe for gdp numbers. i think those three things are pretty -- are there and trade as well. guy: when do is start talking about jackson hole and will there be any divergence? steve: i don't think that will be the one that really shows us.

it will be focused in as what is the neutral policy rate. how to change. there's lots of underlying evidence that the u.s. will head to a classic, if modest overheating. you mentioned the average hourly earnings data. this sort of measure of what the average hourly pay is, the particular type of worker is not at the leading edge. if you take look at very variable compensation, the employment cost index, it's low. it's in a convincing acceleration. you have to take a look at the u.s. economy where you have unfilled job openings higher than jobseekers. to create any type of alarm here for the trajectory over the next couple of years will be bumpy if we continue on that path.

guy: do i need to think about how i price the president's antipathy for higher rates. it's always hard to -- kully: it's always hard to price in politics, especially the president. politics is going to loom large. you are asking about one of the risks on the horizon. it might create some for tall -- volatility. the democrats might win more seats than republicans and are seen as less business friendly. politics are hard-won to predict. is the biggest risk geopolitics, domestic objects, or something economists are getting wrong? steve: -- wrong? focusing on these trade issues is very material and the

congress are scaling tariffs against u.s. gdp are underplaying the economic impact. the impact on disruptions to the supply chain, to profits of companies, companies operate on the margin with fixed costs. haveotential for tariffs some negative impacts on investment and how some significant impact and unintended consequences. you're mentioning the weakness in the chinese currency overnight. these sorts of issues are very important and very material and we eventually have to put this terror spill find us if we really want a clear outlook that is in waiting on business confidence and markets for the next couple of years. francine: it's unclear to me what is priced in. what kind of trade tension or trade war is the market pricing in? steve: it's straddling the middle ground. i don't think a trade war will drive the new american recession

suddenly or knocked on the larger economies of the world. you see this pricing where you globally are 5% lower on a net basis than they otherwise would the but you can see some big disconnects in certain markets. and mexico are markets that for other reasons have risen of the last couple of's. maybe nafta goes well and the on china buted their vulnerability to the united states is very significant. these are economies that together export about 25% of the gdp to the united states. you also see in germany as you would see in china some very big negative effects that are probably a bit excessive. i can't believe we got to the conversation about mentioning a flat on rigid yield curve. let's get to it. when does the curve invert? doesn't matter and do i worry about it? recession in the

past 50 years has had an inverted yield curve but since the 1970's is taken about three years for the economy to turn after a yield inversion. the fed is obviously involved more than it was before. we need to watch the yield curve has flattened a lot over the past year or so but we need to be careful about focusing on one indicator. if i can talk to something steve was mentioning about how much the trade war's price then, one of the stories you have been running is how the chinese stock are could has contracted. the7% year to date whereas u.s. is up 6%. if anything, that tells you who is pricing in what. five weeks -- five weeks in a row there up. francine: thanks to much. it's worth mentioning that two thirds of the suppliers of some the chinese companies

and potentially european companies that may face higher tariffs. two thirds of them are american firms. when we think this all the way through we have to consider a lot of impact including on the united states. francine: coming up on bloomberg markets, larry kudlow reacting to today's job reports and he will talk about trade. it's usually a very spirited conversation. that interview at 9:30 a.m. in new york. this is bloomberg.

taylor: i'm taylor riggs and let's get the bloomberg business flash. resumed to pay

out dividends a decade after a government bailout. it still subject to a final agreement with u.s. regulators. to -- spoke to the cfo. 2007 was the last time he paid a dividend. we need to sign the department of justice agreement that we announced a few weeks ago. we declared today to pay her first dividend of two per share. it's a great sign of the progress banks have made of the last couple of years. nejra: two cents a share, combat increase over time? it still about 16%. new york city mayor a lot of surplus at the moment in the bank is backed with regular earnings.

one of the newest members of goldman sachs management committee is also the youngest. cohen's 41, about 10 years younger than the average man on the committee. year,the start of the cohen is been goldman's chief strategy officer. that decidee teams new areas for business or acquisitions. hit apple's market cap has something of a milestone. inalmost 3% gain from apple the first american company to be worth $1 trillion. other tech giants not far behind. steve wieting is still with us. nice number, is it significant? steve: it significant to show it can be done.

most the firms you mentioned will eventually be there. stoxx are often hated in the trading community because there's a great deal of overweight among clients and they can often have significant drawdowns. through 2q the group has had a 35% growth rate. it's not something that happens and stops. companies that lead their industry have been able to do this over the past years. you might want to think about but the fact risks is, the best companies with the best products ultimately come back and they continue to perform fundamentally very well in the long run. fascinating that is another way of looking at all this and that's china versus the united states or the united states versus china.

it's a tech battle, it's about tech. if you look at how people are positioned, you invest in tech. if you invest in asia, you are investing in tech. this is apple and alphabet and amazon. this is where this war is being thought -- thought. steve: that is not the china five or 10 years ago. china that is innovating. you mentioned china having a smaller market captain japan the domestic market in china has 10 times the size of japan and has a middle-class twice the size of japan. that's not the putdown japan but if you think about the potential here, most of these companies whether you're talking about tencent or alibaba, they are in all likelihood going to dominate and eastern hemisphere in the there and if you look at

western companies, they will not be displaced by chinese companies. there's probably a good deal of performance cap on the asia side that can be made up in the coming years. very large domestic markets including some outside of china. now to the u.k. and bank of england policy. the nestle voted to raise rates. i asked mark carney is the markets are skeptical when it comes to rate hikes. a centraling as banker is never a good idea so i won't read too much into that. i think the important things is thee decision today decision. it was appropriate and the group unified on that. we do see a requirement for a few more rate increases if the

economy remains on this track to be consistent with that. exchange,nd we had an , i think manyting in the market recognize the view of the bank of england, the fed come and others, the interest rate is lower than it was previously. there's also in the view of the , this is where the equilibrium rate is in the u.k.. at what's inook business investment this country right now, it should be on fire. but it's moving along very tentatively. andaway that uncertainty they would adjust quickly to the new realities. up passstart to move

the equilibrium level in practice in the u.k.. that's the other element. if you're sitting in the market, you have to make a judgment. the crucial thing is, what do i think will happen with brexit and that uncertainty. premiumess, the risk that exists in u.k. assets and a lot of the short-term moves where this crucial negotiation will go. is this your last hike at the bank of england? >> it's not my last decision. there will be a number of monetary decisions the policy committee nice to take in the coming months. francine: secretary mnuchin

tweeted that you had a very productive meeting of the g20. what was discussed? >> a lot of respect for secretary mnuchin. particularly in how he has piloted the adjustments to the u.s. financial reform. can made a much more coherent package and a more effective package. we had a broad ranging discussion not just of the global economy but of the trade environment and particularly around trade and services and potential financial services. it's an important time for all of us to keep talking and to think about, if i can finish with this. the united states, extended by the secretaries efforts in the fed's efforts, has major ministry forms their financial system as have most of the g20 including very much the u.k.. the challenge or the opportunity is to take full advantage of that.

the quality, the resilience of the systems has gone up so much. we can dolot more together and certainly the bank of england and the u.k. at large are committed to having an open system with united states and ideally, this is the important part, the brexit negotiations continuing with europe. carney.: that was mark city private bank is still with us. the markets think this is a policy mistake. they believe the boe are not able to raise interest rates. in the united states there is an underpricing of the expectations of the central it isarea markets believe politically contingent and that goes back again to the brexit story and in the issues around how stable with this agreement

be when you have an agreement. but what economic policy be like in the u.k.. that's the issue about feeding back again on the economy. it's difficult for a central banker to make policy contingent on politics. it's not so much an issue for the bank of england, per se. guy: this raising rates to give yourself dry powder stack up as an argument? in the case of the united states view spoke policymakers with good experience, they wouldn't be very interested in doing that. they will tend to say, we want to avoid creating problems of monetary policy and therefore you avoid knocking the economy down so you can try to bring it back up again. the same time, you have to recognize the united states that slow is a convincing, if acceleration inflation and compensation.

you're dealing with an economy which had the employment rate go from 10 to four and is still going to go further. this nothing that the federal reserve is doing that is really stopping the economy from improving further. that wee to be thinking have to make the next recession a mild one. that's why you have to take the steps now. guy: stick around. he will be staying with us. blackrock global cio of fixed income, that's a 9:00 a.m. new york. fair values at the moment. this is bloomberg. s bloomberg.

♪ this is bloomberg. guy and francine from london today. let's get to the first word news and then will come back to your markets. here's taylor riggs.

taylor: president trump's intelligence chief warns russia is one kleberg kick away -- click away from a election hack. they say the efforts have yet to reach the intensity of two years ago. to white house is trying ramp down criticism that president is reluctant to hold russia responsible. theresa may meets today with french president emmanuel macron at his vacation home. the major sticking point in negotiations is to guarantee the border between ireland and northern ireland and it remains open after brexit. u.k. officials say in private they are working on a new proposal. trade wars haven't heard one part of the u.s. agricultural economy. american farmland values have hit a new record. a court into the agriculture the average value

rose 1.9 percent this year to more than $3100. that gain signals investors are focusing on farmland is a long-term investor. china just lost its ranking is the world's second-largest stock market. fell to less than $6.1 trillion after a slump on thursday. japanese stocks are valued at a little less than 6.2. the u.s. stock market is worth five times that. global news 24 hours a day on air and it tictoc on twitter. carbone and 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. guy: fiat has told bloomberg that selling off its car parts business with an estimated 6 billion euros. tommaso, i find the timing of

this interesting. this is one the first things that is come out and indicates they are in -- they are looking to sing -- simple five structure. tommaso: this is something that has been discussed for a while. this is going to help to have a situation where in the future you are discussing the elimination of a competitor. we are looking at a meeting a group that is roach to buy field of the time and they went ahead with the spinoff. guy: the new guy wants to get this done and get it done clean. it was assembled by the structure and get it done soon.

he's coming in and there's a. evans to -- and there is a moment of instability here in the markets and employees and customers all try to figure out where got is going next. in some ways, it settles the ship. it provides a clear sense of direction. i can understand from his perspective why he wants his news out there. tommaso: this is clearly a decision about continuity. the plan was approved in april. that they will go ahead with the board schedule in september, while we heard from sources yesterday, means he wants to complete what they started. t even ifing continua he counter the targets as the first thing he did.

the fact that he will go ahead for me means continuity. francine: how do they fix their catch-up plan china? how did they price their deal with they need to do in china? tommaso: this is one of the biggest challenges. issue,e this week in the china has never managed to get the proper job in china. they have a plan which is jeep, cheap, cheap, cheap localize production. have therstood they wrong approach in china and now they are trying to build a jeep in china designed asked cynically for the chinese market. they want to double profit in five years. that's the key for the project.

guy: thank you very much indeed. the latest on the fiat story. steve pointing at citigroup is still with us. of citigroup is still with us. is the president of the united states focus. the on china? he seems to a call a little bit of a truce with europe. i bring this up because the conversation we just had. they seem to be breathing a little bit of a sigh of relief. will he come back? impact on thege shares this year. i would love for you to ask larry kudlow about that in the whole aim here. the press conference with jean-claude juncker with the european commission went very well.

they are going to be working towards agreements on particular trait issues. hold off oney would escalations of others during the process of these negotiations. but does a negotiations and things change. emmanuel macron had pointed out that these are not the circumstances medically the way this is going. backstory on that politically inside europe is very important right now. i think from what we are hearing, the focus is turning more towards china, it's narrowing. you will still have this investigation about the national security impact of auto imports in the u.s.. these reports will be out in the next month or two. the secondary impact of the honors trade is very important to the economy. it's not as simple as commodities where it moves from one place to the other. the supply chains are more fragile. guy: you can find all the

president tweets on your bloomberg. he was talking about pennsylvania, he was talking about steel. is what has happened so far delivering in those key areas for the president? is talked a lot about aluminium tariffs. what is the real effect on a day were we are talking about jobs and will be talking to larry kudlow. what is the real effect of these sanctions are these tariffs in key areas like philadelphia when it comes down to the nitty-gritty of people getting better jobs? so far this is really minimal impact. there have been some issues for companies that are in industries like oil drilling. the ability to get particular steel products. these things that are going on in the canada u.s. relationship. it's minimal impact so far.

it will have less effect on employment. look at,ke a literally, from the data we have from the university of michigan, confidence in u.s. economic policy is running high. it has fallen very little so far. there are negative effects on the political front and they are minimal at this point. if we end up lowering tariffs around the world, we can say that all of this came to a very good cause. you have to remember that the american economy is fully them void already. our ability to shift every thing around and make anything bigger at once may be asking too much. in longer-term, how painful the transition the? we could be two years away from a recession. if you think about protecting the steel industry in the u.s., american industries

that consume heavy amounts of steel have 20 times the output of the domestic steel industry. if you potentially raise costs for them, the impact can be to shrink rather than increase the u.s. economy. the shifts to aluminum another products will have a negative impact on the steel industry. technology will affect the number of employees. this is the type of man handling of the economy that we have concerns with. guy: what does it mean for your portfolio strategy? steve: -- strategy? steve: because markets are subject to different actors, relationships, and how they will respond to each other and no one knows the absolute in game, we have to take somewhat less risk in portfolios. good, strong, cyclical backdrop. you will have a 20% range for the year in the u.s. and we are

fully allocated to u.s. equities. the full amount of risk we would have is been reduced some because visibility of political decisions like this is lower than supplicant predict for a well. is lower than things we can predict right well. lateyou don't want to be brother and getting out early. steve: can we really count on you for days? i think people make mistakes by not investing across all regions, across multiple asset classes. if you take a look and you are so brilliant that you completely sold out of all your investment assets in 2007 before anything negative happened in the worst downturn since the great recession, each and every single asset class we track has had a better performance since the peak. not measuring it from when it was depressed.

that you do stay invested but you have to manage the risks around that. momentwaiting for that when markets get wildly overvalued and we want to be in every little part of that, i would rather take some risk mitigating steps around that. he will participate in all the good stuff and we have an overall positive outlook for equities in the world economy. we think the growth is somewhat underappreciated right now and undervalued. coming up, the white house chief economic advisor very kudlow reacts to today's jobs report. that's at 9:30 a.m. in new york. if you look at the bloomberg dollar spot index, this is bloomberg.

♪ i'm taylor riggs and let's get the bloomberg business flash. heineken hopes it is found a way to grow into the hot chinese market. the company is taken in three per $1 billion stake in china's largest gold -- we're maker. chinese beer drinkers are looking to switch to premium and foreign burgers. to you preparing for challenges in the u.s. market that could be had i a trade fight. they are sharpening their focus on keeping costs in line and fueling demand in china. ko'd reported quarterly profits that beat estimates. prediction for north american sales by 50,000 vehicles. beat second-quarter estimates thanks to a giant bond fund estimate. it manus to improve profits despite outflows early in the quarter.

we spoke with the cfo. we had outflows of about eight alien. this was driven by large mandate. if you adjust for this large mandate, outflows were more or less at the normal level. months,ook at the six it was about 11 billion euros so in general we had a very strong inflow. taylor: that's your bloomberg business flash. it's a job stay in the u.s. investors expect another solid report. here is bloomberg's economics chief economist. great to have you on air today. what does all this mean for what the fed does next? with a read a lot into this figure? i think it will be

watching a pretty closely and the reason for that is there a big questions about that strong assessment that the fed gave to economic growth in the second quarter. are questions whether that is sustainable or not in that's a politically charged debate. we need to see basically stronger income creation in the jobs report to be able to come even close to repeating that 4% type of gdp number in the back half of the year. i don't think that's the case. i am bullish on the economy, the underlying momentum is accelerating but for a repeat of q2 to happen, it was a perfect storm and i would look for that going forward. watch to see what types of income creation will be fueling consumer spending. point number two is something jay powell brought up. potential, aded to

crisis of animal spirits to two trade war anxieties. watching for evidence of cracks in the facade from trade war fallout. that was not the case in june. there are signs there may be some downdraft falling but i don't think you'll see that. that's the canary in the coal mine. it's quite strong with late cycle. what do normal late cycle payroll numbers look like? carl: i like that question because even though we have crossed the nine-year anniversary, you would not characterize this as being late cycle. if you look at economic fundamentals like low labor cost policy,amental labor these are all characteristic of earlier midcycle develop's. another way of thinking about is

to look at the composition of growth. we look at what is driving the economy, it's largely been consumer spending and only recently received some engagement from business investment spending. that's what happens at the midpoint of a cycle. i would not use a late cycle characterization of what we are seeing and typically at the midpoint of the cycle you see the labor market get a bit of a second win. think we arei seeing at the moment. economy picking up, labor costs muted, so faster growth translates into faster hiring. we are hearing from many industrial clients, especially in the construction sector and i'm not one who relies on anecdotes but that finding people and keeping compensation at something that maintains a positive outlook is becoming increasingly difficult. the course is getting stronger and stronger.

now that we've had this very profound gain in employment, you seen these strains into being able to take this for more than a couple of years? the inflation rate is low and it's a also starting point. how would you characterize it? i would look at labor force produced patient we are prime age labor force but a patient is only starting to turn the corner. we are doing it in an environment where even earlier this week the q2 employment cost index showed very muted wage pressure. we know things are really getting tired when wage costs take up. it hasn't happened to this point. it is coming but we are simply not. . -- simply not there yet. francine: the trade tensions stories changing significantly. isl: what we have to do

there's not a great precedent for looking at trade issues and trade war escalation. if we exclude the 1930's, for example. instead of thinking it as a trade war we should give it as a tax increase. economists have a much better ability to model tax increases. we take what has happened and what is being proposed, yes is a a 20ncrease but in trillion dollar nominal gdp economy growing a close to 3%, it still is very small. it has a relatively minor impact at the macro level. you will certainly see certain producers that are being clobbered or some who are getting tremendous benefit from measures at the macro level -- measures. at the macro level, it's not that big of an issue. measures at the macro we are talking $30 billion to

$50 billion. a small tax policy. how would you characterize financial conditions in the u.s. right now? carl: i think they are very accommodative, interest rates are low relative to the pace of the economy. being said, there are some signs of tighter financial conditions coming. one is the fed that is continuing along the path of gradualism. more importantly, we have to watch for the financial signals from a flat yield curve, from the balance sheet unwind that is putting pressure on financial conditions, and something that u.s. economists often in your they should because trade is becoming more and more important and that's the level of the dollar. we've seen a significant depreciation of the dollar of the last several months and it's starting to weigh ever so slightly on that manufacturing an economic condition. if that trend continues, we should be mindful of more

moderation to calm. guy: that is exactly where i hoped you'd go because increasingly on hearing at least on this side of the atlantic, the dollar store is beginning to run out of room. the political risk looks like it's going to be skewing the back half of the year. more for the u.s. than elsewhere. there's a bunch of other factors. if the dollar rolls over, does that mean the that has more room to run in terms of raising rates before gets to neutral? before gets restrictive? carl: absolutely but i don't think the dollars rolling over. i think the fed is the only game in town. i think will see in both the u.k. as well as continental europe is that as you exit some unconventional policy measures, it takes a lot longer than you would like. he put one profile forward is your land and ultimately and this was the case for the fed as well, it takes longer to execute on that plan and it will favor a

stronger dollar. if we are issuing more debt due to tax changes, that will create interest rate pressure which will attract foreign capital. in the u.s. economy is performing more strongly than other economies as well. mind you, the other story is china is effectively allowing the currency to weaken to offset the impact of tariffs. francine: thank you so much. let's talk turkey now. you can see turkish inflation was less than anticipated last month. pressure still building. joining us is john hardy. john, we're speaking to an analyst before saying why in your right mind would you be in 20 right now? -- into lira right now? john: excuse me? francine: why would you be picking up the turkish lira? john: the only reason is

extremely cheap but it's cheaper a good reason. the policy signals have been the wrong ones you read you have the structural situation that could lead to a default. you have some turkish companies looking to restructure the foreign denominated that. is amended tosure that historically caused a number of countries to head to sovereign default. the structure is there for a default scenario and the question is whether the leadership and its heavy of the leadership now. , whether they make the right policy decision. so far they've been making the wrong sort of signals. it's still an open question. i think there could be german this upside potentially but the right policy decisions have to be made. walk me through what those policy decisions are.

i need to understand the scale of the reaction that we need to see to stabilize the situation. we are 15% inflation in the target is five. john: policy rate is 18 so we're at almost 18. you're supposed to getting a positive real rate. just another emergency rate hike at a signal that the leadership is not going to interfere with what should be the correct supposedly independent central bank decisions. maybe lowering the temperature and massive fiscal expansion the country cannot afford. thank you so much. too short of time today. let's close off with steve. do you like emerging markets in general? turkey is a very symptomatic story but it's also dollar-denominated debt. steve: in our case, we are underweight turkey in equities and fixed income. that would be idiosyncratic.

the story you have seen in argentina this past year, the story in turkey, this is more or less fragile. the circumstances are very different. i think markets, while they have been worried in the u.s. is creating external pressure, the environment for other emcs not nearly the situation to his right now. francine: thank you so much. private bank now coming up. the white house chief economic adviser larry kudlow will be reacting to today's job reports. that's 9:30 a.m. in new york area this is bloomberg. ♪ two, down and back up.

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200,000 new jobs in july, but the real question is, what happens with wages? of commerce wilbur ross says he will keep increasing trade sanctions on china until it is less painful for them to reform then to stick to business as usual. englandit -- bank of announces a rare rate hike, but the pound drops -- uncomfortably high risk. daybreak, bloomberg i'm david westin with julie hyman. julie: it is great to be here. jobs day. i love excitement. isyou take a look at what happening in markets, not unusual in u.s. assets to not see a lot of movement. a slight bump on the week, the 10 year yield