ou 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. anna: good morning from bloomberg's european headquarters. . manus: this is bloomberg daybreak: europe. these are today's top stories. anna: china hits back at trump's claims the trade war. the pboc stepped into cushion the yuan. profit beat estimates by trade concerns. the bank says fundamentals remain concerned -- remain strong. >> the numbers for the first time -- the first half of the year are very much in line with expectations. saudi-canada standoff.

canada's foreign minister criticized the arrest of a woman's rights activist. good morning, everybody. 6:00 here in london. 9:00 in dubai. let's have a look at the risk radar. equities in the big picture for asia is hiding some of the detail we need to be aware of. into the afternoon session in china, we can is coming through in the equities session once again. the china shanghai composite down. i know you've got further thoughts on where the currency has been going. a bit of a line in the sand for the pboc. it stepped in and we see more strength in the chinese currency.

in state media china pushing back against president trump and his suggestion the united states is winning. state media pointing out china is in it for the long haul, they can endure a prolonged trade war. treasuries, two .95%. we heard from jamie dimon at jpmorgan, he talked about how we need to be ready for something that could be 5%. he says rates should be 4% already and they could go to 5% or higher. we will pick up on that later. a standoff between saudi arabia and canada is having an impact on markets. looney.the slip in the it recovered, now slipped once again. saudi suspending diplomatic ties with canada. a germanic escalation in a dispute over the detention of various women's rights activists . part of the big short

position on treasuries. how to scare the horses, talking about 5% in yields. how do you scare your average estimate? you say it's going to cost 20% if you want to traded forward. so you break this trend. this is the longest losing streak in the yuan in history. really what the pboc has done, they have reminded the market, we are in charge. if you are going to take a dangerous position against the yuan, be warned. . ocbcthey did on friday, said people have been testing the boundary. pboc has broken its silence. have a? really? i am not sure. it is the first explicit step and the question is, do you want to stand in front of that? said, we just don't want

anything to do with the yuan at the moment. it is a break of trend. will it sustain? as the chinese hunker down, we know the chinese have a long history and they are in it for the long game. who is in charge in the white house? is it kudlow? lighthizer? one note saying, is everybody happy with xi jinping's communication with trump? is everybody happy in china handling of the trade position? equity markets have been a relief this morning. anna: the relief we saw on friday, partly because of larry kudlow's comments, how is that going to translate into today's trading session? larry kudlow talking about how high-level conversations about trade had resumed. looking at rhetoric over the weekend, this is what the futures are factoring in right now.

things seem a little bit quieter as you go to the u.s. -- as we .o through august, i should say we still have a season is less to talk about. you spoke earlier on. the hsbc cfo. we are going to be bringing that interview to our viewers as well a little bit later on. the numbers broke around 40 minutes ago. you spoke to this area. in the middle east. >> we did indeed. you do when i am away on holiday. you asked, are you running free? i asked the same kind of question this morning. what does he mean by we are in good shape? the top line numbers have delivered in terms of pretax profits. that was a little bit better than the market had anticipated. profitond-quarter pretax , the market had penciled in

6.05. when it comes to litigation they have taken another position. a civil money penalty. side of thencome business, the equity side, is something the market is going to focus on. it is about the negative. -5.6%. this is what they got battered on at the end of the last report. we covered a lot of issues. we will bring that to you in a full and frank discussion later on. frank -- andin frank with her discussion of the first word news. juliette: chinese media has responded to donald trump's comments. in the global times said the nation's prepared for a quote protracted war and does not fear short-term economic interests.

it follows the release late friday in beijing of a new tariff list designed to retaliate against the united states. iran is racing to complete a string of deals before the u.s. ,mposes tough new sanctions with iran air taking delivery of five new passenger planes after washington gave its approval. public resentment has been building as tensions with the u.s. push the riel to historic lows. toronto has said it will ask later today to help the currency todaye -- tehran has said it will -- to help the currency decline. times, heo the sunday said there is a chance of a no deal outcome. he blamed the european commission for lack of talk.ility in months of the prime minister's office

issued a statement saying the government remains confident in securing a deal with the eu. in venezuela, security forces have made several arrests after a military parade was attacked with explosive carrying drones. the blast left president maduro unharmed. six people have been taken into custody, including one man involved in an attack last year. 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. anna: thank you very much. debra mao with the first word news. sophie kamaruddin has details. a lot going on. >> not top level, but a lot going on. we have eco-data as well as earnings. stocks higher by indonesia after the gdp data beats for that

economy. leading higher, set for a fresh all-time high. chinese stocks have been hastuating while the yuan pared its earlier rise. some movers in tokyo given this earnings flood, we have data soaring after its first quarter as the telco looks set to shop for overseas deals. japanese carmaker subaru is falling after -- reporting to ms. in first-quarter operating income. profit.id impact onomputer virus attack -- it works recover from this incident. manus: thank you very much.

softbank numbers through the rest of the asian session. the yuan moves higher. the pboc announced a tweak. the move comes amid rising trade tensions between the world's two largest economies. chinese authorities pledged to retaliate any escalation in u.s. tariffs. joining us from beijing is bloomberg's china editor. good to see you this morning. it sounds like the chinese are hunkering down for the long, long haul. what is the mood in china? >> it does seem that way. there have been some indications over the past couple weeks things might be easing up a bit. there was talk of the chinese and even the u.s. reaching out on talks and scuttlebutt about the hits xi jinping was taking within the party from this protracted trade war.

this move on friday, hitting out with a threat on $60 billion worth of u.s. goods, a proportional response to trumps own threat on $200 billion of chinese goods, shows they are in this for the long haul. they are not going to lose face by not responding. they want to appear strong. you mentioned state media, which has come out fighting, once again pushing points about the u.s. blackmailing china. the global times, one of the more ribald tabloids, quite interestingly saying china is happy or willing to take a bit of an economic hit to persevere with this trade war, which is an interesting perspective. anna: saying the chinese have put up with a lot of in the past, suggesting they can again. what comes next? we heard from larry kudlow before the weekend.

he was pointing us towards an offering. there were high-level negotiations and stopped taking place. what do you think? understand,r as we -- >> as far as we understand, there have been talks with representatives of trumps administration and some representatives of china. we are not talking the kudlow level, but those talks have been happening. where they had been. in terms of what happens going forward, we had trump doubling down, which might explain the state media reaction here, saying hitting out on trade was his thing. i guess you could see more terrorists from the u.s. side -- tariffs from the u.s. side. that is not an option from china because the tariff thing is kind of over for them.

we may see them do less obvious things. inspections on u.s. companies, only imports at the border, boycotts. the list is endless on that front. bloomberg's china editor, emma o'brien. economist, the senior at -- great to have. us.with >> mr. trump is very unpredictable. trade war's are the biggest downside for the next one to two years. that is absolutely clear. when it comes to trump-china, i wonder if trump is playing the old point if you escalate tensions, and he likes his crescendo at the end where there

is a deal. i have my eye on the midterms. if mr. trump can head into the midterms with some deal on the way with china, a strong u.s. gdp, he thinks that is the best chance he has got. that is the time horizon i am looking at. if we get past the midterms and he is still spouting trade war, i may panic more. hass: one institution that decided, the pboc. i started the show with this chart. the longest losing streak on the yuan since the inception of the data we collect. do you think the pboc has had enough of a decline? is the pboc aching silence? -- breaking silence? the yuan was15, the lightning rod for panic

about the health of the chinese economy. i do not think from an institutional point of view the pboc would like the yuan default too far. if it falls a little, that might help upset the tariffs. the key thing from a trump-china point of view is how does the consensus look for trump? you have a strong u.s. economy boosted by fiscal stimulus of supply-side reform. you have a china economy which is experiencing what is a normal slowdown in its underlying natural trend growth rate as it becomes more advanced. it is also from a potential bank policy point of view having to manage this credit excess. tweets,ee mr. trump's trade tariffs are working, if you look at the headline numbers, you might think that was true. he may actually just hit on this ail, the trade war nail,.

little bit harder. anna: thank you. more on the u.s. economy in just a few moments time. down. jamie dimon doubles the jpmorgan ceo makes a new warning about u.s. views. are exclusive interview with the hsbc cfo right here. ♪

anna: good morning, everybody. bright and early this monday morning. a beautiful sunrise over westminster. we see weakness in the pound.

the trade minister over the weekend talking about his estimate of the likeliness of brexit. it is more likely than not. here is debra mao in hong kong. hsbc has beaten analyst expectations for second quarter profit, posting subdued revenue expansion. pretax profit on an adjusted basis rose. it suggests the ceo's $17 billion bet on asian growth markets has yet to pay off. warren buffett's berkshire hathaway said operating earnings rose 16.7%. that is as insurance operations recovered. it may have been noteworthy for what it did not contain. more on when or even if it will buy back shares. taiwan semiconductor manufacturing is recovering from a debilitating computer virus. it has warned of delayed shipments and reduced revenue.

the taiwanese company which makes chips for the iphone said 80% of the fabrication tools affected on friday evening have been restored, and it expects full recovery today. it did not specify which customers would be affected. merger would become the world's largest industrial gas producer. it is facing an unexpected hurdle from the u.s. antitrust -- a company to sell more assets. they noted a likelihood a merger -- higher than outlined in be merger deal. the global cohead of its trading arm. andmberg has learned american-based in london would run the securities unit. while the cohead of the division 2014, twohere since

resigned in june and were not replaced. a representative from goldman sachs did not immediately respond. for china are even more ambitious than previously understood. the internet giant is in talks with tencent and other chinese companies to offer cloud services in the world's second-largest economy. discussions began in 2018 in google narrowed partnership candidates to three firms. a google cloud spokesman declined to comment. that's your bloomberg business flash. anna: thank you. a little bit of breaking news. we covered this story a lot last week. a money manager saying there was no departure from the strategy. this comment coming in a letter

to clients posted on the company's website. gambling's slumped the most in nine years after the announcement. it warned of risks to investment flows. that. a big move on one big mover and shaker in the markets, jpmorgan chase ceo doubling down on his warning about u.s. treasuries. jamie dimon is the name. he previously warned investors to brace themselves for 4% on the 10 year yield. he went further over the weekend to 5%. he also said he felt in the current market could last another two to three years. a senior economist at berenberg bank is with us.

when you see jamie dimon calling for 5%, that is one of those big numbers. i am more focused on the fact that $78 billion of paper have come into the market. >> the key thing is from mr. dime's point of view, where he thinks current growth and inflation trends ought to head. want yields on 10 year -- bond yields on 10 year would not be -- i prefer bond yields a little bit higher than they are. my guess is we will break 3% around the turn of the end of this year and get near 4% toward the end of 2019. , notew is that bond yields just in the u.s., are not pricing in enough growth

expectations. if that lasts too long you will get to a situation where bond yields, which are used to price other credit insurance audits, will simply be too low -- insurance products, will simply be too low. anna: he says rates should be 4% already and 5% is what we should brace for. that is what the arrow points to. do you think -- you have some sympathy with him, then? you think the market is not assuming enough inflation? >> i have some sympathy with that view. if you take u.s. nominal gdp growth at 5% now, roughly speaking, there is a correlation between nominal gdp growth and the 10 year bond yield.

relative to that 5% nominal gdp growth, bond yields are too low. before the financial crisis, the fed was talking about the conundrum. it was raising the short end, but the long and was staying too low. that seems to be happening again. i do not think we will get to 5%, although i do think it would be good if we start to head to their. anna: thank you. when you are traveling to work, remember you can tune in to bloomberg radio. you will find it on your mobile device. not that anybody ever turns off the tv. standoff.t is a saudi the kingdom suspends ties with canada over criticism of an arrest of a women's rights activist. the very latest with our executive editor. we saw some moves against germany earlier.

arabia, theof saudi standoff with canada begins. politics first on bloomberg, right here from dubai and london. ♪

manus: 6:30 a.m. in london. 2:30 in tokyo. mr. noda, the internal affairs officer speaking into care best in tokyo -- speaking in tokyo. talking about their forward guidance. the markets are top-heavy according to ibc at 11150 for the trade totals. we've got a bit of relief from the markets this morning. willing indoor? -- will it and do -- will it endure? an editorial said the nation

is prepared for a " protracted war and does not see certifying short-term economic just sacrifice short-term economic interest. iran is racing to complete a string of deals before the u.s. imposes tough new sanctions with iran air, taking delivery of five new passenger planes after washington gave its approval. public resentment has been building as tensions with the u.s. push the rialto to historic -- real to historic lows. u.k. trade secretary says brexit negotiations are now more likely to end in failure.

there is a 60% chance of a no deal outcome. he blamed the european .ommission venezuela, drones wounded several security forces. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. >> thank you very much. let's get into these markets. the yuan is on the move. chinese stocks have stable is --

stabilized. how is your gmm. unchanged.msci in the weakness coming through into the chinese equities. australian and doing too badly. weakness primarily in china. another step up. in trade tensions. announcement of some retaliation after comments over the weekend. had late friday, the pboc basically implementing measures to make it more expensive to short the yuan. we sit offshore and onshore strengthened somewhat. you can see how we were starting to get close to that seven level, an area that the one --

an area that the yuan has not been near since december of 2016. taking another check elsewhere in the market, on the 10 year treasury yields, we saw drop a few basis points on friday following the jobs data, with weakness in the dollar as well. edging higher today, trading at about 2.95, 2.96%. four times this year, we have gone above 3% and pull back. jamie dimon saying we will hit 5%, not for the next two or three years, but we have supply coming through on the three, 10, and 30-year note. 2.5906 thank you very much. italy's interior minister says the next budget low will include measures aimed at easing fiscal pressure.

italian bonds dropped last week with 10-year yields touching the highest level in more than a month. joining us from rome, kevin costolo. let's put these moves into context. what is behind the market nervousness -- nervousness we saw on friday? kevin: the question is who will pay for the populace program. but there is a possible conflict between italy and its european union partners. this is something both sides want to avoid, but it seems to be coming to that. course, italy's ebony premier has had some tough words over the weekend. what exactly did he say? kevin: he said international speculators better stay away from italy. he says the country is building defenses against them. exactly what, he did not say.

he also said solid foreign investment is welcome in italy and he is counting on that to help build up the economy. ana: so he likes investors, not speculators. what is the timing? there was a meeting on friday, more meetings this week. then this will have to go to the eu. kevin: yes, in fact, the next big meeting will be on wednesday, when the two coalition partners will look at what they have. what is interesting this morning is that all the papers are leading on their front pages on tensions within the coalition major, major construction projects. this is a bit off the budget, but it doesn't show these tensions will be something to be watched in the coming weeks and months. manus: thank you very much.

western europe economy editor? britain goodngs crash out of the european union without a deal. international trajectory -- trade secretary said the chance for a no deal is 60%. says he still thinks a deal is possible. find aave to compromise. of compromises very much embedded in the european union until now. i think that is positive. shown remarkable unity in negotiations with united kingdom. i think they should come to the final moments of negotiations, focus the mind between negotiators, and work for a

reasonable cover my's. i still believe it -- compromise. i still believe it is possible. let's go back to the italian story first of all. i want to go back to italy. 1.6%.cit of a debt ratio of 130.8%. will the market really task the italians? the speculators really won't be held at bay, with a? >> no -- will they? >> no. and i don't know how you can cap to avoid a slight if italy is headed for trouble -- avoid a slide if italy is headed for trouble. here is an economy with already weak underlying growth potential. a bad fiscal backdrop, planning to reduce its underlying growth

potential by some more, and raise borrowing. --hink we can get away from with some nonsense for a while as long as the global backdrop is good. with italyad-to-head in the bond markets will not happen during the next recession, but the next recovery. remember, it was during the recovery after the financial crisis when markets started to spot european economies that were behaving poorly before. given five years, i think italy will find it is in a pretty big hole. showsi have a chart that the extent of the tick up. we didn't get above 3%. that we got not all that far away from the height of the nervousness earlier this year. the tensions within the government also something to watch. whether this government survives

is something we have taken our eyes off a little bit. fromities ranging fixed-income to a flat tax. there is that prospect that this government doesn't last, i suppose. >> this is a very unusual union. you have both far left and far right in partnership. whether new elections will benefit anyone is hard to tell. the far right is a connect with the five stars so they will probably try to hedge. we will learn more in october. again, i make the point that 3% yield is still fairly low. they are high on a european level, but given the risk that italy's generating for itself, 3% is still a fairly low bond yield. manus: i'm just preparing a chart. rhetoric is no deal, hard

brexit. the analysts are getting a bit sketchy. this is the forward view for the forecast. the median forecast for the end of the year is 1.34 compared to 140 -- 1.43 in april. the hens are getting nervous in the coop. we don't have a view on a hard brexit. my view is that we avoid a hard brexit, see 20% chance of a hard brexit, 80% chance that some kind of deal is struck. still i guess 1.3920 end of the year. -- 1.39 to that is the end of the year. but part of that is a u.s. story. mr. fox is in a way a spearhead in of the hardline brexiteers.

he has the biggest objection tune agreement and goods that constrain the u.k.'s negotiating hands in non-eu negotiations. same.k. and eu share the objective, a trade a keeps the irish border open. in one -- iss is one in which they can set their own internal tariffs. the eu says, no, we cannot go for that. i can understand why the trade minister would have an objection . you. thank saudi arabia has frozen trade investments and diplomatic ties with canada and the latest escalation of their dispute over the kingdom's arrest of a women's rights activist. what is behind this?

remind everybody what has led us to this point. iswhat led us to this point the canadian government calling for the release of a women's advocate inside saudi arabia. what people is weren't expecting to be, this aggressive, recalling the saudi ambassador, expelling the canadian ambassador, and suspending all mutual investment ties. this is a pattern we have been seeing the last couple of years, with more aggressive saudi foreign policy. we are seeing it with qatar, with iran, and now with canada. manus: that was a scoop you wrote up in march. how should we pride -- how should we interview this? any criticism of the leadership, this kind of reaction -- do you think this reaction is very big relative to one tweet, one

comment? what is the signal the saudi's want to send to the world today? >> there are two ways of interpreting it. tieslimited business inside saudi arabia with canada, that could mean nothing. in march, we had the scoop about german businesses barred from some saudi contracts, qatar, i recommend the rest. -- iran, and the rest. when investor told me one time why would they invest in the ahram ipo if they can change their mind any day? another key story in the

sent tothe u.s. reimpose sanctions on iran tomorrow. what are we expecting to see? >> it is very difficult to expect -- the reaction from iran. we see the currency under severe strain. we see people rushing to buy gold. the government is about to launch weight called -- what it called a new package, which includes more strict measures on who gets foreign-exchange. tomorrow'sy, because sanctions will begin with the dollar bank bills, we start to see more of that strain and turbulence. it is difficult to see the political reaction. we have yet to see the president address the nation tonight. perhaps, he will make some announcements than. manus: that is are managing

better -- managing editor for the middle east. we bring you more of our exclusive interview. he says the bank is in good shape, posting positive second-quarter results this morning. this is bloomberg. ♪

anna: welcome back. let's get the bloomberg business flash. bar -- warrenn buffett berkshire hathaway says earnings growth 67% from this time last year. but the statement may have been what it didthy for not contain, when, how, or even if it will buy back shares. recovering from a computer

virus. 80% of the fabrication tools affected on friday evening have been restored. they expect full recovery today. it did not specify which customers would be affected. disclosed james as willo -- james esposito run the securities unit. two resigneddone -- in june and were not replaced. representatives did not immediately respond to a request for comment. that is your bloomberg business flash. had the numbers this morning, second-quarter profits ahead of estimates.

translating that into significant revenue growth is the challenge. asked about the health of hsbc. >> hsbc is in good shape this morning. the numbers for the first half of the year and the second quarter are very much in line with our expectations. we saw a good revenue growth through the first two quarters of the year. that is translating into a good report and profit progress over last year. continue to invest in the growth of the business and we sit on a strong balance sheet. i am reasonably confident about where we stand. >> what about momentum in revenue, ultimately hong kong as a key market for you. break it down and give us context with the fx. >> the over already progression

this year has been good. the global businesses. have boosted revenue 7% compared to the sam querrey last year. over at -- to the same quarter last year. informed bysinesses progression in hong kong and across the rest of the asian network. we see progression in u.s. and mexican businesses as well. from a revenue standpoint, drawing the business with customers across the stretch of our six to seven-country network is looking pretty good. adverse of fx, we saw impact in terms of strengthened dollar against sterling. accuratelyt reflected in our tier one ratio.

a little bit weaker at the end of the first quarter, when it was 14.5. was influenced by movements in foreign-exchange between the u.s. dollar and sterling, but also announcing the buyback. it is 85% complete. so overall, revenue progression good. where we see fx impacts coming through, that is largely commoned within our equity tier one ratio. a number of banks having good, if not splendid investment bank performances in the second quarter. how did it go for you? the last order was tough trading. how did it come out in equities? how did it come out on fixed income, commodities, currencies? >> a stable quarter compared to

second last year, which was very strong. ,n terms of fixed income commodities, 13% compared to the same quarter last year. we had a good quarter in equities, -- not equities, in foreign exchange, where we were up about 10%. that was all set by some weaknesses, rates in credit-rating. overall in that business, we progressed pretty well. we continue to see progress within that business. a new equities front, we saw weakness coming through, driven largely by european business. very much the same. innomenon that we saw [indiscernible] our overall markets business continues to progress well. tensions are in focus this morning. what kind of impact do you focused him -- forecast it might

have on your business? >> our job is to deal with what is in front of us in terms of supporting our customers. that is what we have done through the quarters and through the years. clearly have the potential to represents and challenges line forward, but this is not the first time we have been through difficult trading conditions. our focus is very much on serving our customer needs across the network and across the product ranges. we will deal with what we see in front of us. manus: that is available on your bloomberg. that is the cfo speaking to me a little bit earlier. anna: reminds us of the cost story. he said he is not concerned. he is absolutely line with the cost story. we will see hbc when it trades in london.

a little bit higher in hong kong. some final thoughts from you. transatlantic divergent growth stories. case, fiscal base stimulus, tax reform, some catch-up still in europe. we still have two to three years of the labor market run. 2018 slightly different. trade was hit europe. , lowers confidence, reduces economic growth. if trade wars fierce toward the end of the year, we get back to potential growth in europe, 2%, and close to 3% in the u.s. anna: so watch out for if the trade tensions continue. up next, china response to trumps trade threats by saying that it is ready for a protracted war.

we have the response from's 8 -- from state media overnight. this is bloomberg. ♪

manus: good morning from dubai. these are today's top stories. at trumpina hits back claims that the u.s. is winning the trade war. hsbc second-quarter profits a beat estimates despite trade concerns. the bank says asian fundamentals remain strong. but also has an eye on brexit. >> we clearly all hope that negotiations between europe and the u.k. turn out with a slightly better outcome than the worst-case scenario.

we are planning for the worst and hope there is a better outcome. manus: saudi-canada standoff. all newdom freezes trade and investment after canada's foreign minister criticized the arrest of a women's rights activist. ♪ welcome to the show. breaking news from softbank, full-year dividend will be ¥44. building that $100 billion war chest to do deals along with apple and saudi arabia. billion yen.

this is on softbank. estimates were for 447.5 billion with two estimates on that. 714e a considerable beat at . on the lossthe gain of a control over a number of europe, number of entities. ofking a gain on the sale arms china. that is one of the bolstering factors on these numbers for softbank. the bigger issue is that sprint and t-mobile getting together. those numbers from sprint last year, subscriber growth. ubs has started coverage on the ¥2500.ith a target of that explains the numbers.

the dividend guidance is a little bit lower for the year. it is bolstered by the sale of arm china. ofa: let's do a bit shopping. in early july, they told us about a partnership between two businesses, entering into a long-term alliance. they have signed it. that is the news this morning. they entered into this long-term strategic alliance as previously described, the joint purchasing of products and goods not for resale. it will be a three have in your operational framework. it will be operational from october of this year. let's get to a breaking news on the economic front. this is german manufacturing orders coming through. a couple of data points for this morning. manufacturing orders, down by 4% month on month.

the estimate was for a drop of half a percent. factory orders number, that is down on a year on year basis, down by 0.8%. that is again below the estimate, which was for an increase of 3.4%. those numbers look to be light when it comes to the guidance. very volatile data sets. something that euro trade is not very well aware of. we see a little ground on this, but not an enormous amount. just touching lows, not falling out of bed entirely. to what extent the market in germany or investment in germany will be hit by sentiment around the trade war, even though we saw the news from uecker when he cker whenounger -- jun he visited trump. manus: private equity is always trying to do a deal. this is a company in focus.

they have the office buildings. they are terminating their talks with terra firma and tdr. this stock has had a cracking run. this is one week. talksmay, when these first came around, they rallied by nearly 30%. they are also giving us numbers for the year. the key line is this, terminating talks with starwood, terraform a -- terra firma, and tdr. with market estimates. let's see how they open. those talks are off, share buyback program. let me come back to that.

more details on that to come. other markets now in noon to the fact that u.s. could go to $200 billion and china could go to $60 billion. it is all well within the china paradigm. is everyone happy with the xi jinping negotiation tactics? you are seeing this overall view from the markets. you got 94 months. , 94producer of daybreak months of job growth in the united states of america, an unbroken trend. that is the backdrop to markets. there's specs of light coming through the clouds of gray when he came to the view of the world. u.s. stocks rallying for five straight weeks on the jobs numbers. europe set up very nicely.

anna: let's look at the risk radar. there are some interesting things happening in the session. trade rhetoric from president trump and the chinese administration, suggesting they have what it takes to endear a protracted or prolonged trade war. yield, we0-year should be at 4% right now and we need to brace ourselves in case we go to 5%. the dollar against the canadian dollar, we saw the canadian dollar losing ground this morning on these -- this diplomatic standoff. it seems to be escalating quickly. it has to do with the rest of a women's rights activist. she is a canadian citizen. let's look at the growth rate.

deborah: china's state media has responded to donald trump's claims that he has the upper hand in the trade war between the two countries. editorial, the nation is prepared for a "protracted war" anddoesn't fear suck face short-term economic interest. saudi arabia has halted new trade and investment dealings with canada and suspended diplomatic ties in a dramatic dispute. the kingdom recalled its ambassador to ottawa and ordered to riyadh toenvoy leave in 24 hours. came after the canadian foreign minister criticizing the

arrest of a women's rights activists. says brace foro yield of 4% or higher. he also said the current bull market could go for two or three more years. because the economy is still doing quite well and markets usually turn right before the economy. liam fox says the brexit negotiations are now more likely to end in failure than success. he said there is a 60% chance of a new deal outcome. he blamed the european commission for a lack of flexibility in 16 months of talks. the prime minister's office issued a statement, saying the government remains confident of securing a deal with the eu. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

manus: thank you very much. let's get into the markets. a slight taste of how europe is setting up. sophie: it has been a mixed monday for asian stocks. chinese shares on one and of the spectrum, down 1%, while the yuan has paired. the syntax ia record high. choppyo, it has been a session as lower jgb yields have weighed on banks and weak earnings push down electronic makers. we had softbank closing higher, 2.2% ahead of delivery. we did see first quarter operating income topping estimates. that's tomorrow under pressure ru but to borrow -- but suba

under pressure. c.t.s. international and other related stocks hitting for the largest intraday drop since june 19. anna: thank you very much. let's get to the politics and the trade conversation globally. the yuan is peering its gains after the pboc announced a role tweak -- a rule tweak. hedge touthorities u.s. tradegainst any escalation. we heard strong words once again from president trump in ohio over the weekend. and now we hear from state media in china. >> that's right.

they are coming out punching was again. but somewhat surprising. over the past couple of weeks, there have been indications and rumors around beijing that they were worried about the hits to xi jinping, that this was inflicting not really to his power base, but to his image, the control that he has over things, particularly within this trade war. china has come out swinging with a proportional response with threats to impose tariffs on $60 billion of u.s. goods. it is pretty much the biggest they could have hit back on in many ways. so they show they are willing to fight punch for punch on this. the comments over the weekend from donald trump, when he was basking in the glow of what he sees as the success of the trade war, probably emboldening some of them are ribald state media

editorials we are seeing today. manus: what comes next? relative size of what the chinese are prepared to do is proportionally much bigger than what the u.s. us try to do. versus $250 billion out of $500 billion of exports out of china. you are right, china doesn't have any wiggle room at all when it comes to tariffs. that risks pushing us into a more murky realm. the u.s. does have more scope to place tariffs on china. donald trump indicating over the weekend that was a favorite method of his. that china, not having that we will run, not having night capacity, could moving to other ways of retaliation that are not as clear to investors, not as clear to people watching this. that includes inspections of

u.s. companies here, holding up imports, parts, various things, borders, even softly encouraging boycotts of u.s. brands here in china. so the list is pretty endless. we are in a different realm here with the trade war going forward. manus: great reporting. our editor ins beijing. joining us in studio is jennifer mcewan. good to have you with anna and i this morning. when i look at the fact of the day, 94 months of unbroken growth in jobs in the united states of america, should i be more focused on that or more focused on $60 lln of potential tariffs on potentially u.s. goods into china? jennifer: it depends on your

time horizon a little bit. yes, u.s. performing very well. the u.s. economy is clearly in a good state. that these tariffs are wearing and they take effect quite soon. it's likely that export growth like soybeans will move slow in the second half of the year on the back of tariffs we have seen already. the u.s. is not helped by the appreciation of the dollar. anna: what is your thinking around the timing of all of this? the timing of the midterms this crucial here. will we see in the run-up to that is all about the midterms. maybe things change. is that the base case? the trade war runs in one trajectory up to the midterms and then things could change after that, not just this endless pushing into trade war's into the future? -- i hopei've said so

so. it is hard to tell with president trump. but it's likely talks in the run-up to the midterms where farming is under pressure. perhaps after that, we will see an easing. it is extremely difficult to tell. ares: the one thing that we seeing, we spoke with the hbc -- the hsbc cfo this morning. what is the biggest risk to growth? ceo les week said he is more worried about global central banks moving out of qe and raising rates than he is about anything else in the world. is that the risk to growth? risk, i'm nots sure it is the major one. these guys that central banks seem to be taking a very cautious stance, the ecb in

particular. it is still buying assets at the moment. that will stop at the end of the year. it will maintain a massive balance sheet. the bank has been very clear that it will take a very gradual approach to normalization. the u.s. fed is moving more quickly, but the economy is in a first-round or state. looking forward -- in a far stronger state. looking forward, you would hope the central banks will respond to that by easing off the pace of normalization. morgane spoke with j.p. over the weekend. jamie dimon says we are at 4% now and we should brace for rates at 5%. do you expect to see that kind of level of rates in the u.s.? what expectations does that half of the u.s., for the global

economy rather? jennifer: it would depend very much on why that is happening. the economy is growing very strongly. hiringionist measures, borrowing costs are warranted. the u.s. economy is likely to slow fairly sharply next year. as they are goes on, markets will start to see a time when the fed will cut interest rates and then we will see the 10-year yield stocks come down. manus: jennifer mcewan is our guest this morning. let's change gears a little bit. softbank reported a 49% first saider, japanese telecoms it books a gain. the sale of arms china unit. let's go to tokyo for a deep

time in the numbers. exceptionalhat numbers for softbank, how does it look? about softbank is exceptional. the surprise in this quarter was not only the profit from the in arm, butr stake the valuation game on the vision five, which was ¥245 billion. if you look at last year, for the entire year, the similar again was about ¥200 billion. quarterbillion in one is a substantial number. anna: investors of softbank really hang on the words. analyzing the

earnings briefings in the language that he uses. what are the trends we are seeing? survey.e did a we used software over the last 12 years, quarterly briefings, 303,513 words. you can see an unfolding of his vision, his whole business strategy opening up before you. for example, the beginning was all about the internet and then the mobile internet, then it's e-commerce moving into digital payments, and ride-hailing. blitzthe way, you see when it comes to certain deals along the way. 2012, there was a lot of mention of sprint. six years later, now it's all about selling sprint to t-mobile. what you see in this is, on the one hand, the long-term strategy and on the other hand, the big

deal, the milestones along the way toward achieving that strategy. manus: thank you so much. our managing editor for japanese news. let's get the week set up with context. we have some earnings at today. softbank, hsbc, but we move on to the u.s. and they will be in the first phase of the restoration of economic sanctions. we will go hard on this tomorrow in dubai. tuesday, where central-bank policy decisions from australia. the boj releases a summary of their opinions from last month's meeting. boj more recently was all around allowing a little bit of movement, those yields on jgb. the market last week really testing where the new boundaries are for the beat -- the boj. samsung unveils this new galaxy smart phone.

from japan, the u.k., and also russia, as well as inflation data out of the united states. they could be good in light of what we heard from jamie dimon, the 5% yield, with the inflation story. we haven't seen people increasing their bets on tips products, for example. let's pause that thought for a moment and see what is going on in europe, specifically around brexit. ratcheting up warnings that brexit talks ending a failure. lee pimm fox is. likelihood of a breakdown as the clock ticks down to departure. jennifer, your expectations -- what are your expectations at capital economics for the chances of a

new -- no deal brexit? jennifer: our assumption is there will be some kind of a deal. it is in everybody's interest to make that happen. obviously, it is difficult to reach, but there are very sentiments where -- the crucial issue is the irish border, the irish backstop. regarding the future trading relationship, hopefully, some form of wording can be found that just about suits everybody and allows time to continue to allow both negotiations. manus: one of the things that who carney focused on, spoke with francine lacqua and other agencies friday, fdi should be on fire in the u.k.. would you agree that it is not and that it is stymied because of the prevarication over brexit? jennifer: yes.

i think that is almost certainly true. -- there is more uncertainty than anything else. it is hard to know what would have happened without brexit. but it's probably fair to say that it is having an impact. investment intentions are relatively buoyant. we are not too concerned about the outlook for the economy. anna: would a new deal -- would no deal resulted in a recession in the u.k.? jennifer: following the vote, there was an assumption the u.k. and thatp sure it away did not happened at all, in fact, continued to grow christ rally for a while. considerably for

a while. systemly, the financial would be relatively well shielded, have enough capital to deal with the situation. but there may be other elements, for example, business investment, that will suffer a lot. i love what the telegraph road about mark carney. he is neither high priest of project fear nor a reliable boyfriend. let's take a look at this chart. he says he will not give away the possibility of raising rates. will we get another hike between now and the exit day next year? -- brexit day next year?

jennifer: probably. it will comes sooner than markets expect, around may. it depends very much on how these negotiations run. in the event that there is not some deal in place come october, the chances of a november rate hike will go down. is sounding a note of caution in brexit negotiations, relating monetary policy directly on how those flow.ations i am assuming there will be a rate hike before the end of the year, but that is dependent on a relatively smooth brexit transition. anna: thank you very much. thank you for your thoughts this morning. jennifer will continue the conversation with us here on bloomberg and on bloomberg radio. manus: it looks like the yuan will be in focus. we are together on radio. if you have not had enough of us on television, join us at 8:00

a.m. on radio. a feast of interviews for you. this week on bloomberg. ♪ two, down and back up.

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matt: welcome to bloomberg markets, the european open. we are live from london. i'm matt miller. guy johnson is off this week. hong kong is a bright spot in asia while stocks in mainland china and japan are down. is it the hsbc bounce? for cash trade is less than 30 minutes away -- the cash trade is less than 30 minutes away. ♪ matt: hsbc beats the banking giant pretax