francine: refer to raise rates -- and fed is ready to raise rates. pursues a state as markets doubt they will ever go public. alibaba reports earnings. the tech giant has suffered from tariffs and trade work concerns. -- war concerns. good morning, and welcome to bloomberg surveillance.

good afternoon to those of you watching in asia. these are your markets in asia -- in the stoxx 600. we're seeing some boosts despite the trade concerns. we are also seeing data out of the euro area. they are in line with forecasts. to give you an idea of the strength, we are also looking at the euro-dollar. the markets will get their cue from what happens, a lot of them expecting more clues on what effect will do next -- the fed will do next. we are speaking to esther george, we will get to her later. the dollar is rallying for the first time in six days. also looking at the rand in south africa. this is after a president trump tweet makes people nervous after

sanctions he may or may not impose. the budget airline has reached a agreement with pilots for strikes. here, we bring you our interview with the kansas city fed president esther george at 12:30 p.m. u.k. time. let's get to bloomberg first word news. >> donald trump has denied using campaign funds as hush money for women who alleged affairs. day after federal prosecutors claim some officials were aware of the payments. his payment contradicts a guilty played by michael:. --: -- cohen. >> later on, i knew. understand, what he did, they were taken out of campaign-finance.

they didn't come out of the campaign. they came from me, i tweeted about it. >> strong evidence, but let's agree that it is strong that knew thatmp the -- michael cohen would advance money on his behalf. and that it has a political purpose to its. the resumption of u.s.-china trade talks has boosted hopes that a trade war can be averted. today, the secretary for international affairs and chinese commerce ministers continue the first face to face a trade discussions and since june. that is as the next round of tariffs took effect at one minute past midnight washington time. donald trump plans to punish

carmakers who produce vehicles --side of the night dates united states, hindering his administration's efforts. bloomberg has learned that amongst the sticking points, is a proposal to increase tariffs on cars imported from mexico. australia's prime minister is digging in for a fight, saying he will only step aside if his rival says he has enough support. he has turnbull says called a special meeting of the only if therty populist challenger can gather enough signatures. if lawmakers back a leadership vote, turnbull said he would not stand. >> when the party meeting is called, i will invite a motion and to be moved.

if the motion is carried, i will take that as a vote of no-confidence. i will not stand as a candidate in the ballot. global news, 24 hours a day on air. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: thank you so much. states, thed minutes of the fed meeting show that discussions of how line -- high. that is as policymakers prepare to raise borrowing costs. bring you our interview with the kansas city fed president at 12:30 p.m. u.k. time. so what is next? joining us for the hour is the head of multi-assets at royal alumni -- london asset management. you. take off with get?uch play will be fed

trevor: we think they will be watching closely for signs that inflation is picking up. they will also be watching the housing market. minutes,ntioned in the a deep dive into housing data before the minutes were out. which describe the housing market as a little bit soggy. you find that housing is the canary in the coal mine. housing will weaken 18 months before unemployment starts to wise -- rise. francine: are you expecting them to hike more or less? a way: we will hike in that will support the dollar, but it depends on the housing data. if it weakens more significantly, then they could easily back on tightening

rhetoric. francine: what is your hunch? >> more hikes this year, and next year. the u.s. economy seems to be in good shape. the housing market, the data is mixed, but the disposable income growth, there is still some catch-up potential. so we think it will be ok. is just a good chart which is why i want to show what markets are pricing in. how does that impact the trade war? trade is awfully table. -- off the table. what we are seeing is within the bounds of what data is doing. it is a range of trading. if you were to see a more dramatic drop, it would be a sign that policy is tight to

cause a slowdown. we are talking about tentative signs of temporary weakness. i would agree that the economy is strong despite what is going on. you have to view trade as another rate hike. on its own, you will not get a recession because of tariffs. francine: of course, but we are late cycle. should we worry that the tax cuts will come to an end? we might even see an inverted yield curve. hodger: i am not sure about the cycle yet. we are seeing excessive credit binge, excessive spending. excessive spending and business investment. we do not yet see the excesses that are typical. view, this cycle has gone on for a long time. but has not reached the overheating stage.

overheating,to the but we have not had much yet. i think the cycle has a couple of more years to run. trevor: i would agree. this is already the second longest of business expansion. if it lasts for another year, it will become the longest ever. it is long because it has not been strong. there has been a gradual recovery. so far, not much in the way of wage inflation. we have to find out whether the phillips curve is still alive. but technology and other factors continue to keep wages down, this could go on. francine: we have two great charts to show. one is the phillips curve, the other is the s&p 500. both stay with us. stay with us, plenty coming up.

the saudi state oil producer is set to delay its ipo to focus on buying a stake in a chemical giant. what is the change in strategy mean? and alibaba reports. how do they get on? this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." let's get straight to the bloomberg business flash in singapore. ryan air and it's protesting the pilots have reached an agreement after a marathon negotiating session. points to thent end of a dispute that has disputed -- disruptive summer

travel. the deal will be voted on by the pilots themselves. shares have jumped on the news. is on behind for self driving technology and recently tried to buy are more innovation, and economists driving startup. according to bloomberg, vw had talks to buy our, only to be rebuffed because they wanted to maintain independence. rora declined to comment. we bring you our interview at 10 a.m. u.k. time. to bean is said dismissing about 100 staff at its asset management division. they have cut ranges across several businesses. spokeswoman said the reductions will be quoted relatively small and will not affect investment, declining to

provide more details. todman sachs is shutting hedge funds run by people based in asia. aboutnds, which manages $1.4 billion, were run by goldman sachs partners. retiring whilere one is expected to start his own font. declined to comment, while the two named did not respond to messages seeking comments. francine: thank you, julius. saudi aramco is putting its ipo on hold. that is according to bloomberg sources who say aramco wrote its advisors and ask them to suspend work for now. mean that thet listing has been canceled. said they minister government is committed to taking aramco public at a time of its own choosing when

conditions are optimal. so what can we read into this change of strategy? bloomberg'ss executive editor for energy and commodities. we are still joined by our guests. stewart, thank you for joining us. what is the news? >> not much, it is all in the language. it is telling that saudi arabia put out a statement at 3:00 a.m. to make sure the world knew what its position was. that is unusual and tells you something about the depth of feeling about the reports. where are we today? a couplehe board met of weeks ago and did not taken formal decision. they just said they will require a big stake, that is an enormous thing to absorb. it is basic common sense. francine: we have heard that in the past that they just want to

do it right. what does it mean the time to be right? oil price, investors? >> i think it is all of them, but fundamentally, the valuation. they have an idea of what it should be worth. analysts and investors may have a different idea, but the combination of a high enough oil combined with one or two anchor investors prepared to buy it, maybe not because they believe it is worth it, but because they see value in the relationship. francine: what would prevent them from listing it? to remind everyone, it is just a small part. >> best case scenario, 5%. based on the local stock exchange, the currency. what will push it is will they need the money, and is it a valuation that the market is

prepared to put on it? again, we will see what happens to the account. that will determine its. francine: are they targeting an oil price? >> it is a combination of both. they needed $70 plus to balance the budget. at the same time, you get too high and you start getting tweaked. -- tweets. that is what we have seen, a complete change in policy. francine: trevor, where do you expect the price to be? trevor: on the one hand, you have strong global growth. on the other hand, you have had a brief. riod of dollar strength, which tends to keep oil back. if there was a weaker data, the dollar will also be weaker.

it is a funny thing. the oil price, the better the valuation, but the less they need money. it is a difficult entrance. francine: what are the markets like? it in general, i do not know if you want to talk about a middle eastern company. is it a good time to ipo? trevor: there is a general a combination of the weakness we have seen in the face metals and the dollar strength. things, with a cooling chinese economy, it is a toxic domination -- combination. it does not feel like a brilliant time. francine: that goes back to the strength or weakness of the world economy. that everything is fine but there is a lot of risk. the world economy is not

doing as well as it did, but it is still doing well enough. for markets int the developed world, the time is not bad. in the emerging market, you have to distinguish clearly which countries are exposed. others should be fun. francine: going back to saudi aramco you were saying it was unusual to put out a press statement at 3:00 a.m.. what are we expecting? trevor: the next big thing will be how they raise the financing. we presume a bond for several. fundamentally, that will get most of the money they were intending to get. assets,t is shuffling but allows them to buy a big

stake and they will end up with the cash. francine: we will keep a close eye on it. wallace.for stewart he is bloomberg's executive editor for energy and commodities. our guests stay with us. up next, alibaba earnings. revenue is rising at the fastest rate in four years. is investment paying off? this is bloomberg. ♪

francine: this is "bloomberg surveillance" alibaba reports earnings later. the margins are sliding as it invests billions in chinese retail and delivery grid networks. that is expected to drive revenue to its fastest rate. the numbers are expected to shake the stop options of increased volatility following the announcement. joining us from hong kong is lulu chen. what else is expected? the sentiment is fairly upbeat. analysts are expecting at least 61% in growth for revenue. that is the fastest since 2014. all of this is done by acquisition. alibaba is investing heavily through channels like new retail, entertainment, and food delivery business that is a

highlight of the past few months. alibaba declared they will invest $443 million into the sector in the third quarter, competing against companies for china's food that willarket all eat into the margins and analysts are expecting a profit drop. francine: how is trade affecting alibaba? >> international expansion has always been very important for alibaba. the global goal is to get 50% of revenue from outside of china. are not veryey heavily exposed to the u.s. market as of now. in fact, their core business is very china centric. all of the revenues coming from china. one thing i have to point out is

that a loss the u.s. merchants they are trying to list are going to encounter some difficulties. , these merchants that have been trying to sell through alibaba are getting hit by the tariffs. ma has is a jack promised donald trump trump last year that he wants to create one tolion jobs in the run-up 2021, and that is not conducive in this environment. francine: thanks so much. lulu chen, bloomberg reporter in hong kong. tariffs coming into effect as trade talks resume in washington. we talk trade, tensions, this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." i am francine lacqua in london. and check in on what is trending.

brexit is tricky, but we have put together a pick your own brexit game. pick to see if you can get a good deal, pretty fun, actually. it is a hard game. saudi aramco is said to have put their ipo on hold. sources told bloomberg the oil giant is focusing on buying a strategic stake in a chemical company. in third place, the fed signals they are ready to hike if the economy stays on track. in second place, president trump --ies claims as scrutiny as on his campaign intensifies. on top, jp morgan dismisses hundreds of workers in their asset management division. let's get straight to first word news. donald trump has denied using campaign funds as hush money.

the comments came a day after federal prosecutors claim some officials were aware. as statement contradicts guilty plea by his longtime personal attorney who says the president directed him to make the payments. >> later on, i knew. but you have to understand, what he did, they were not taken out of campaign-finance. they did not come out of the campaign. they came for me. i tweeted about it. >> i think the evidence is conclusive, but let's agree that it is strong. michael:ump new that was going to be advancing money on his behalf to hush up the relationships with these two women and that it had a political purpose. donald trump plans to punish carmakers who produce vehicles outside the united date.

hindering his administration's efforts to close the deal on a new nafta. bloomberg has learned that, amongst the sticking points, is a proposal to increase tariffs on cars imported from mexico that do not meet new rules. australia's prime minister is digging in for a fight, saying he will only step aside if his chief rival can prove he has enough support. of resignations, malcolm turnbull says he will call a special meeting of the party tomorrow, only if the populace challenger ken gather enough signatures. it would be the second this week, and turnbull said he would not stand. >> when the party meeting is will invite a motion to be moved. if it is carried, i will choose that as a vote of no-confidence and not stand as a candidate.

the cable signal that once life to continue as normal. they say that institutions need to agree to sensible solutions. as the government publishes the first of 80 technical notices, explaining how businesses should prepare. and we bring you our interview with the uk's international trade secretary liam fox tomorrow. global news, 24 hours a day on air. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: thanks so much. the united states has a vote of tariffs on $16 billion on chinese imports. this comes as officials meet for the first face to face negotiations. to talks are not suspected

produce a breakthrough, but may pave the way for higher-level discussions. for more, let's get straight to our chief asia economics correspondent. is it counterintuitive that there are extra tariffs being put on just as trade talks start? it just goes to show you how deep the challenges are. there are two of these on the talks. the positive view is that both sides are getting together after a stalemate. they are starting to talk about talks, and that may result in a framework or a way forward. all these talks are going to do is reinforced just how wide and deepening of the united date -- states. in all likelihood, we are hurtling towards the next phase. overall, the expectations are

not very high. if the president wants to talk to someone in china, does he have a line to the president? is there anybody he can call to put an end to this? >> that is the interesting thing. they are at such a low level, it would indicate a there is not much trust on either side. wants to be embarrassed by sending their highest level officials only for talks to fail. riviera said back in may when the top economic envoy went in washington, backed by treasury secretary mnuchin, and then it fell through. all of the indications are that if we will move towards any kind when the president's meet in november, there will be a lot of groundwork that has to be done. that is why we are starting at the bottom of. thanks so much as always.

francine: let's keep the conversation on trade and tariffs. our guests are still with us. when you look at the trade specter, i do not know how you model it. do you stay away from the companies or industries that could be impacted by an escalation or do you ignore it? trevor: it is another nail in the coffin to this business expansion. you have got interest rates starting to go up. policy is still quite loose. you have still got tariffs coming in gradually. they will impact global trade. in particular, emerging economies that are badly impacted. but they are not knocking themselves. and then you have to ask the second order question, what will the policy response be in response to these tariffs. themre already seeing

cutting the reserve ratios for the bank, freeing up bank lending, increasing physical stimulus. what they are trying to do is boost the domestic economy, to offset damage. as usual, the policymakers do not know exactly what the impact will be. they do not know how much stimulus to administer. but that they have started suggests they will keep easing until the economy is relatively positive. that means china could accelerate. francine: how much easing would that entail? does that have secondary effects? hodger: i do not think it will entail a lot of easing. the direct economic damage of these tariffs is not huge. we are seeing an impact on and to some extent,

on business investment, which is driven by confidence. the thing for me is not whether , the eases monetary policy thing for me is whether the fears we currently have about the future of world trade are corroborated or whether we get an easing. get to the state whether united states and the eu already are. they disagreed, but have already agreed to talk. agreements similar between the united states and china, then the damage will be limited and would not require additional easing. trevor: the politics are interesting. you have to ask if donald trump wants to go into the midterms having solved the trade problem. or does he want to go into the midterms fighting? , because a fighting lot of voters in his base do not understand a solution. my feelings are this will run long. about donaldking

trump, south africa's rand slumping against the dollar. after a tweet by the country's presence on the land debate prompted speculation. ,his is my dollar-random chart what do you do with that? do you immediately get out? it is policy by tweet. trevor: it is, distraction tactics. he has found a new target to tweet about. but don't take it too seriously. francine: do you? hodger: know, i would not. -- no, i would not. for south africa, this could be a serious thing. for the world economy, the impact is very small. francine: thank you both. both stay with us. we talk brexit next.

signal todayt will that he wants life to carry on as normal in the event of a no deal exit. he is confident an agreement will be reached, but we will discuss that in our weekly brexit show. that is next. this is bloomberg. ♪

francine: welcome to our weekly brexit show. let's get straight to the brexit bulletin. high, juliette. -- hi, juliette. >> regulations may force banks to shift jobs. that is according to the banks regional ceo. it has been waiting nearly nine

months for eu officials to approve a banking license that will turn its frankfurt branch into a subsidiary. while it expected approval by spring, it has been at the mercy of regulators. emmanuel macron and angela merkel will meet in paris next month. they are expected to discuss european matters, including brexit. and accord seems out of reach. it will come after the informal summit. jeremy hunt says britain has faced bigger challenges then brexit and will survive the process. 's comments came after a leaked letter from nhs providers, which represent hospital and ambulance services, warning that hospitals face running out of medicine. the european union's chief

brexit negotiator says talks with the u.k. will be continuous. michel barnier's comments came as time is running out. at a virtualions impasse for weeks, the two sides are rushing to reach a deal by october. global news, 24 hours a day on air. powered by more than 2,700 journalists and analysts in more than 120 countries. francineloomberg. francine: thanks, juliette. we are getting breaking news out of one of the biggest oil companies in the world. if you look at the net income, they're coming up with figures. net income below estimate. we were expecting 27 billion yuan, coming in at 25 billion. what i will point to is the fact that china, just a couple of days ago, was earning the state own energy giant to boost domestic output.

not think that reflects the first half, but something to keep an eye on. if you look at the price of oil, it has been in that range for quite some time. we will keep an eye on anything to do with them. let's get back to brexit. the brexit secretariat will ,ublish the first of 80 papers outlining how businesses should prepare. they have signaled they want life to continue as normal and says he is confident a good deal is achievable. but that is a view not shared by the general public. thinkey said most britons they will leave without and accord, with many planning to cut costs on everything. is the government right to be optimistic? tom from thew is

institute of public policy research and trevor. program.o the why are really talking about the worst-case scenario now? our companies prepare for the u.k. crashing out? tom: we are doing it for two reasons. it is summer, so not much else to talk about. at a fundamental level, it is a clever strategy. they had managed to lower expectations, so we have now anyhed the point where deal, no matter how poor, is better than no deal. therefore, it gives the government more room in negotiating. the real thing we have learned wem these papers is that miss -- that's brexit had some sort of leverage was a lie. saying we just want to carry on , it shows that we have

no leverage in these negotiations. that is the one thing we have learned. francine: maybe it is politically astute, but our companies prepared? tom: they are doing the best they can. but the scenario is extremely unlikely. in all likelihood, we will have perpetual uncertainty, which is difficult for business. we continuees, doing what you were doing before, you try to prepare contingencies. but businesses have no real basis on which they can plan. francine: how much do you worry about inflation? is, at thek the risk moment, 9/10 of our approach is coming from consumption. you just heard that survey that

households are planning to cut back. i do not think we will have demand pull inflation. but continuing weakening seems to be likely. to aer that is responsive change in interest rates, that seems unlikely. francine: first of all, you want to react to that. trevor: i was struck by something you said about expectations being lowered. people like jeremy hunt saying britain will survive, a low bar forces us -- for success. [laughter] earlier, theresa may will say that no deal is better than a bad deal. now she is switching it around. tom: any deal is better. francine: but because of parliament. right, so the interesting question is if she fails, what happens next? they were saying the option of a

second referendum is on the table. but she may call one herself. francine: and we still do not have a clear answer on -- from jeremy corbyn. tom: i'm not sure that is true. in this situation, it seems to me it is unlikely they will not get a deal. we have seen that dominic greaves has no backbone, and without him -- francine: but if jeremy corbyn was in charge, how would he take brexit? tom: i am not sure. the labour party has said they will put economic interest to the forefront. you would imagine that would lead to a softer brexit. saying they would expect the referendum results and they want to put economic interests first, that was due to a much closer arrangement. trevor: and they say they want to make their own trade deals. heard a story about

somebody getting married next year after march 2019 and their florist asked for 20% more money to make sure she could deliver the flowers. are we going to see cases like this crop up? hodger: that might be an extreme case. but we will see the uncertainty about brexit affecting quite a few discussions. i do not think we'll see a spike in inflation or a significant weakening of economic growth. what we will likely see is that economic growth remains below what it should be given at this stage of the business cycle. and that it remains more of vulnerable relative to what it should be, given the underlying fundamentals strong point which are still there. francine: thank you all. all say with us. up next, sterling slides. the pound is slides by the most in two weeks.

we talk more brexit. this is bloomberg. ♪

francine: welcome back. let's get back to brexit.

us.guests are still with we are getting into the politics of things, but first of all, where do you see the pound? will mark carney have to reverse the hike? it depends on the outcome of the negotiations. in response to that, sterling has an upside. that is, of course, very brexit dependent. trevor: what is interesting is that if you look at sterling-euro rather than cable, it has been in the two cents range. and traders do not know which way to jump. on the one hand, they think there is a possibility of a no deal, but also the possibility of a close relationship or second referendum. it is like a courtesy pay. -- peg? francine: tom, who is the next

prime minister? tom: not boris johnson, that is for sure. in all likelihood, if they fail to get the deal through, you will have a contest. i suspect what you will see is michael gove. rather than boris johnson. jeremy hunt could have a look in there, but that is probably most likely. but i think she will get the deal through. dominic grieve's does not have any back. -- green does not have any backbone. trevor: it is interesting. all sorts of things could happen. and next year, you may have a meaningful vote. francine: when do you think we will know whether she gets the deal were not. 11th hour, or december? tom: we will know before then, because parliament will have need -- needs to have voted.

we have already lowered our that when we say and a group -- deal, we does mean any agreements. and a soft declaration that you cannot put out a contract that could be completely changed. we have change the meaning of what a deal means into not actually being a deal. trevor: with in march, the brexit show carries on. francine: forever! [laughter] ,odger: except for one thing they will insist on an irish backstop. francine: we will also have an irish show. we will invite you all on, that was fun. that was the brexit show, tom keene with me next. ♪

♪ francine: taking a hike. the fed it ready to raise rates if the economy stays on track. fresh tariffs on china.

ipo on hold. markets, the government says they are committed. alibaba reports earnings, the tech giant has suffered from trade war concerns. we break down the figures. good morning, this is "bloomberg surveillance," good afternoon for those watching in asia. i am in london and tom keene is in new york. it is all about policy. it is mainly about jackson hole. tom: to an extent but this nation is riveted by the paul cohen dayichael two. is the president tweeting about africa? there was a headline on the africa willat said

call the u.s. ambassador in for discussions. francine: this is a serious deal. this had a huge impact on the south african currency. we do not know if the tweet was interpreted at the u.s. looking at sanctions on south africa. let's get to the bloomberg first world news. kailey: the u.s. and china have imposed new tariffs, just as the sides resumed trade talks. taxes being levied on $16 billion of products. the u.s. is targeting chinese made motorcycles. china retaliated by a slapping duties on coal and cars from america. president trump making it tough or his administration to close the deal on a new north american free-trade agreement. boost tariffs to on cars imported from mexico that do not meet stricter rules.

south african currency fell after the president tweeted. the president asked mike pompeo to study the currency. there is an ongoing debate about whether south africa should siez e land without paying for it to address inequalities. in the u.k. -- theresa may's government wants business as usual if there is a no deal brexit. raab publishing the first batch of god t -- first batch of guides on how to prepare businesses if there is a no deal solution. 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'm kailey leinz, this is bloomberg. equities, bonds,

currencies, commodities. a lot to look at, record high for the market the last few days. i will show a curve flattening chart different than the 10 year and a two-year in a moment. next screen, please. real nuance. the vix drives lower. 30 year bond, 3%, shows the curve flattening farther up. attention,y full hockey stick on sanctions. we will go to moscow in this hour. brazilian stable. francine: this is what i am looking at. similar data check. dollar climbing, stocks steady. dollar rallying for the first day in six and investors want to know what global central bankers do at jackson hole after the fed it signals no change the monetary policy tightening. you mentioned it. i am looking at what south

africa is doing. slumping after a tweet from president donald trump, suggesting possible sanctions against the country. remarkable, involving tucker carlson over at fox and the secretary of state, essentially a direct order to his secretary of state over twitter. the vanilla spread is a difference in yield between the 10 year and the two-year. let's go to the curve where consumer finances done, maybe where mr. powell is concerned and has his attention. the curve flattening of the two- five spread and it is nearing inversion. basic. mark here is the zero where the two-year yield and the five year yield are the same yield and with a vengeance we are coming down, not unusual. we are nearing that point where the two-year yield could be higher than the five year yield

and you could see that is a rare event having to do before economic slowdown. francine: this is what i am looking at. on the back of what we heard from the fed, basically, if you look at this chart, it gives you the idea -- thank you, hillary -- the benchmark federal funds rate, is fluctuating between 1.75% and 2%. there could be quarter-point increases, two more before the year is out. i will post this out on social media. today marks the kickoff for the 2018 economic symposium in jackson hole, wyoming. it is where policymakers and economists gather and discuss global economy. what should markets watch for? let's bring in richard turnill. so many questions. good morning. let's take it off with the fed. is there saw venus in the

housing -- sogginess in the housing market? richard: when we look at the broad u.s. data, it looks robust. signals point to growth closed to 3% or above in the next 12 months. the bulk of u.s. fiscal package to hit the economy going forward. what we don't know is what impact rising uncertainty around trade, policy, may have on consumer expectations. strong growth outlook but rife with uncertainty. francine: what does that mean for fed policy? richard: in the short term you have a clear message about what it needs. the minutes yesterday -- they will continue on this path of steadily raising interest rates, once a quarter through the end of the year at least and potentially into 2019. as your chart showed, that is fully priced in. there has been a significant

adjustment in expectations since the beginning of this year when markets were skeptical. we will be focusing on the jackson hole commentary around -- what happens when we are deeper into 2019 and how does the fed respond to rising uncertainty? when you look to the minutes -- there was commentary around the trade risks, and about the upside risks associated with fiscal policy. investors will be focusing on not so much the next quarter, the path is clear, but what is the longer-term half or interest rates in the united states? tom: maybe we have never seen going into jackson hole, so much certitude about a gradual path for the fed. what will upset the apple cart? away from the happy talk of jackson hole, what will be the shock you will pay attention to? richard: it is interesting. while you are seeing the fed, you are seeing a well articulated path, managing

market expectations. that higher level of short-term interest rates, in terms of the yield curve chart, that higher yield curve, is attracting investor interest, a positive return in safe haven assets for the first time in many years is triggering, or exacerbating volatility -- in the current financial market. tom: your observation is so important, richard. dated back good news about the two-year going farther out the yield curve, -- will we have a legitimate yield curve inflation -- two-year, five-year and dare i say, tenure? richard: -- tom: 10 year yield? richard: growth remains very strong in the u.s. albeiton is rising, gradually.

importantly, the fed is steadily withdrawing excess liquidity, starting to shrink the balance sheet, removing factors which were weighed down at the end of the curve and led to this lacquer. we see some of those -- led to this flat curve. we see some of those reversing. i do not think the fed will focus on the yield curve. that has become a less accurate predictor of economic growth forward. they will pay attention but it is not going to be the primary concern. what they will be focusing on is the breath of economic data coming out and the inflation data. one of the things we have heard from the fed is the degree of humility about how much we know about where we are in the cycle and about, to what extent, inflationary pressures build. it will be data driven. we arechard turnill and

thrilled about this conversation in august. the president tweets near 1 a.m. this morning. itchollusion, rigged which hunt. let me tell you about this and the conversation about jackson hole. i am thrilled about our coverage. worldwide, this is bloomberg. ♪

♪ >> this is "bloomberg surveillance," i'm a kailey leinz and let's get the bloomberg business flash. volkswagen says global demand is strong. the german automaker is concerned about the impact of a possible trade war. bloomberg spoke to the head of passenger car sales in berlin.

>> we have a very stable market, extremely high level of market demand. obviously the talks on the global level between the u.s. and china, the tension building their has influence on customers , they love to buy immediately. we have stable markets and we are looking forward with confidence into the chinese market. it will take some time to are the market picks up to where it should be to our latest expectations. globally, we have stable growth. 7% in all august, regions. year to data, it is strong. in selective countries, we have impacts -- turkey for example -- near european country, the economy has a huge impact on the economy and currently we have a slowdown of car demand, not only in the car sector, but any sort of trade sector in turkey.

argentina, in the past weeks. pool, more connected a problem in the moment. kailey: that is the bloomberg business flash. tom: thank you. it is time for recalibration of tension between the united states and china. our chief correspondent in hong kong -- i need an update on where we are in the tit-for-tat battle -- where are we? reporter: we have taken another step forward today. on latest batch of tariffs $60 billion worth of goods implemented by the u.s. china responded in kind as promised. with tariffs on 50 billion worth

on each side. the next age might get more complicated and more material in terms of impact on the economies. we have talks in washington this week, they are not expected to result in any breakthrough. then will we be talking about -- will he get tariffs on another $200 billion worth of chinese goods? how severe will the tariffs the? be? 10% or 25%? how will the chinese respond? we're moving forward step-by-step, incremental. we continue to head down into a trade war and not anywhere near a solution. francine: when you think we will see a breakthrough? we were talking about who the president could call in china. at the very moment, low-level talks. i wonder if it is the psychology of president trump, being in a

fighting mode with china off the midterms or whether he wants a solution? reporter: that is exactly right. it is complicated by the domestic political calendar in the u.s. trump will make his own calculations about how they should go in the trade war i had of elections. head of nor, -- a elections. president trump and president xi will have the opportunity to meet around then. the bigger picture -- well there may be breakthroughs on the goods inside, more structural challenges remain for some time. francine: thanks so much. our chief asia correspondent. tit-for-tat -- how does it end and you think the markets will continue ignoring it until it becomes really big?

>> the markets are not ignoring the trade tensions. you're seeing risk premium into markets. very strong earnings growth on one hand. globally, markets have been softer than we saw in 2017. it is having impact on markets. francine: there is no real fear it hurts global growth? richard: there is a fear. that is priced into greater uncertainty but it has not led to widespread concerns about global recession. as we look forward, it looks increasingly likely that tensions are likely to escalate before they eventually hopefully get resolved. why? the political pressure or escalation is strong. what would be the the pressure that would cause a great deal to get done? significant stock market falls. we are not seeing that. the s&p closed all-time highs. or evidence that the stance

the president is taking is impacting his popularity. we are seeing that is the opposite so far. it is unlikely we will get a quick resolution. trade tensions continue to rise. that will be a factor which will hold back markets, despite strong fundamentals. tom: we want to move on to south africa but quickly, i will use a phrase from the engineer from france -- diffusion. a tariff is a tax. it diffuses through the economy, completely different i would suggest been china. a true tariff against china -- i would suggest -- has limited impact versus a tariff in the united states. richard: the global economy is becoming increasingly integrated over the last two years. one of the areas of greatest

uncertainty is what is the full impact of increasing tariffs on both sides, not just the u.s. and china but on all trading partners. what is encouraging is as yet you are not seeing the impact of higher tariffs coming through in terms of weakening economic data. the data we are looking at whether in china or the u.s. continues to hold. perhaps surprisingly well. some companies talking about greater uncertainty, some tariffs orighting tensions but if you look at the broad picture in the macro data and what we're hearing, as yet, you're not seeing them have a significant impact on growth. risks are still ahead. francine: thank you, richard turnill staying with us. head of deutsche bank global fx strategy. we will talk about dollar and euro and the south african rand. that is at 6 a.m. in new york,

11 a.m. in london. this is bloomberg. ♪ this is bloomberg. ♪

♪ tom: "bloomberg surveillance," extraordinary backstory. i cannot convey enough, america, whatever the political feel, jaw dropping and continuing awe about a president doing a foreign policy over twitter. we see that in south africa. richard turnill, all of this is a domestic story for south africa but it has been internationalized by the president of the united states.

movingbout inequalities, from a colonial architecture to a modern democracy. here we have the president, on the land dispersion in south africa. "i have asked the secretary of state to closely study the appropriations and large scale killing of farmers. " pick up on this and translated for me. me.ranslate it for francine: basically, after the tweet, which sent the rand in is president trump looking at sanctions against south africa? we can go to the backstory of what it has done in terms of land. first of all, what you do with the rand? there is a legal case in the u.s. -- saying -- i will look into this -- what does that mean for institutional investors?

richard: they are focusing on, as you start to see u.s. interest rates rise, financial conditions tighten in the dollar increase, volatility in em south for some time, africa, the latest in a series of idiosyncratic events, specific events, where the volatility in those has been magnified both by u.s. foreign policy but also by no longer having that blanket of liquidity available previously. as an investor, they will be wary about stepping into some of these markets which have weak fundamentals, large external deficits, focusing instead on markets where you have strong growth, strong balance sheets, that is more asia. francine: emerging markets currencies sliding, the lira, the bottom one and you can also see rand.

we will push that on social media. if the president on the united states -- if he were to impose sanctions -- we will go back -- the south african president telling he wants to increase land access to the board -- what will that mean for investment? richard: the market is differentiating between economies that have strong balance sheets, strong fundamentals -- this is drawing attention to south africa's weak fundamentals. francine: moore emerging-market talk. we will look at lira and the mexican peso. this is bloomberg. ♪ xfinity mobile is a new wireless network

designed to save you money. whether you use your phone to get fit. to find meaningful, thoughtful, slightly-weird gifts. or just to know which way you're facing right now. however you use it, your wireless bill is about to cost a whole lot less. ask how you get xfinity mobile included with your xfinity internet. so you just pay for data -- by the gig or unlimited.

saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. ♪ francine: this is "bloomberg surveillance," i'm francine lacqua in london and tom keene is a new york. let's check on what is trending on tictoc -- brexit is tricky

but if you think you could do better, bloomberg has put together a brexit game? it is difficult but play to see if you could get a good deal from the u.k.. ipo on hold. oil giant is focusing on buying a strategic stake. in third place, the fed signals it is ready to hike again if the economy stays on track. scrutiny on president trump's campaign intensifies. you can find out more by logging onto the bloomberg. let's get straight to the first world news in new york city. kailey: the head of germany's central bank warns that the major powers better remember history before engaging in a trade war. it tackling the economic

crisis of 2008 and 2009, the g 30 countries refrain from ensuring theyies, do not repeat the mistakes of the 1930's. back then, protectionist measures played a role in exacerbating the great depression. today, a major trade war could be detrimental to the global economy. two of the latest round of trade talks between the u.s. and china. goods: $16 billion of imposed tariffs, chinese made motorcycles. china retaliated with american medical instruments, cars and coal. the latest negotiations are not expected to result in much. president trump's former lawyer now involved in another legal matter. he has been subpoenaed to testify by the state of new york

in an investigation into the president's charitable foundation. earlier this week, he pleaded guilty to finance charges. a republican congressman from california has been stripped of his committee assignments after being indicted on charges of misusing campaign funds. prosecutors say duncan hunter and his wife used more than 250 thousand dollars of campaign money for personal expenses. republican leaders removed them from the armed services and other committees he served on. in australia, the prime minister is trying to fight the attempt to replace him. he says he will step aside only if the chief rival, peter duncan, can prove he has enough support. the governing liberal party may hold the second leadership party this week. 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'm kailey leinz, this is bloomberg.

francine: thank you so much. saudi aramco putting ip on hold. -- ipo on hold. advisers were asked to suspend work for now. it does not mean everything is canceled. the government is committed to taking aramco public at a time of its own choosing when conditions are optimal. the executive editor for energy commodities, stewart, it is great to have you. this is not really a twist. they have always said, it depends on the price of oil. now they want this big stake. they are being shrewd in some respects in that they have clearly worked on this ipo for a couple years. there was a disconnect and what they thought it was worth and

what the market thought it was worth. that is dependent on oil prices but nonetheless, they wanted the money for the sovereign fund. start to diversify the economy away from oil. by doing the deal -- $70 billion, from one state owned company to another state owned company but it raises money for bonds, in effect, they still end up with cash. francine: they don't need it but they could cancel it? they could but i do not know why they would. two peopleally only who will make this decision, the king and the crown prince. tom: this is inflation adjusted oil, call it the cartel chart, rising above many decades. oil is trading somewhere in the this entity of non-cartel lows.

here is the cartel's power, the collapse of the cartel in 1986, a couple wars, we are still at a collapsed state. is the reason this deal fail because saudi arabia thinks it still has cartel power? stuart: i don't think they are connected, or not that closely. ultimately what is going on, they have a figure in their head of what the company is worth, and a lot of people disagree with them. tom: come on. elon musk an idea in his head of what tesla is worth. i get it. is this a major misjudgment by the royal family over what this cartel is worth given the power they used to have? stuart: no. the issue of the valuation does not have much to do with opec in the sense that what it comes down to is the reserves. it is the license that aramco has over reserves and the extent

to which it exploited it. opec policy and saudi policy can override that so it is not normal in that sense but what it came down to is -- how much do they have on the ground? and how much will that be worth? francine: i have a great chart to dazzle stuart wallace. in charge of commodities and energy. brent, it is so beautiful. richard turnill of blackrock, still here. is it traded bound? this alliance between russia and saudi sticking -- what will move oil price? richard: it is being driven by two forces. rising global demand and secondly, the market has been adjusting back to tighter supply for some time. supply reductions including in libya, nigeria and iraq. all prices moving higher.

lately, prices giving back gains. primarily because it has been caught up with the rising concerns around global trade and global growth and greater economic uncertainty. we have seen falls in the oil price and many industrial metal prices as well. looking forward, our analysis continues to point to tightening oil market particularly in 2019. net supply falling. global demand still strong. we'v think that points to a firm oil price going ahead. francine: thank you so much. richard turnill with stuart wallace. we will be back and look at dollar dynamics. we will look at the politics of everything and look at emerging market turmoil. coming up next, nina schick. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance," i am in london and tom keene is in new york. the brexit secretary acosta's the first of 80 papers today outlining a different sector should prepare for a collapse in talks with eu. isb will signal that he wanting life to continue as normal. he is confident a good deal is achievable. that is a view not shared by the general public. most brits saying that u.k. will leave the eu without accord, planning to cut costs.

nina, let me kick this off with you. are we at a point where in u.k. politics the bar is so low that even if it is a bad deal it will seem better than no deal? nina: what you're seeing in terms of the shift in public opinion is voters and conservative voters are starting to think that no matter where we end up in talks, it will not be a good outcome. you are not seeing a huge shift in public opinion in terms of people calling for second referendum but people think -- uh oh, the optimism after the referendum is declining and especially amongst conservative voters. when you look at domestic -- the blame game is starting. who are we to blame for talks not going as we had expected or wanted them to go? francine: give me a sense of what kind of deal you think they will be able to achieve? there is a million possibilities. over the summer -- is the u.k.

crashing out a more likely scenario? we have talked it to death. it is not my base case an area of. ultimately -- base case scenario. what needs to happen is the u.k. needs to move. when theresa may laid out the styleshe is doing a hard of the plan and the u.k. -- as far as the eu is concerned, the u.k. will have to give more. it will not get a special car rve outservices -- ca for services. this is all about framing it in the domestic arena. the biggest issue is the issue of the irish border. if there is no deal, the issue with the irish border is not solved. everybody in negotiations including eu and ireland, the u.k., the 27, want to make sure

there is not a hard border. it is safe to say that whatever the deal is, it will not be better for the u.k. it is damage control. tom: i want to throw a chart to you and richard turnill. remember the doom and gloom of brexit. the current account deficit of the united kingdom as a percent of gdp. the red circle was the gloom, the world is coming to an end . it has not happened. from a rasmussen international relations standpoint -- why did this occur? why did this good news occur? nina: i think primarily when we talk about the economic downturn and the doom and gloom predicted by the remain side of the campaign before the referendum and george osborne was much maligned, if the u.k. voted to

leave there would be a punishment and none of that happened. that is of course because the u.k. has not left yet. everything now is functioning as normal. even if the deal is done, we are going to have two years of transition. what does that mean? it is exactly the same arrangement the u.k. has now -- the only difference is it has no more say on how rules are made. what you might see is if the deal is done by march, 2019 and you have the transition, the u.k. will still be negotiating to get to the end destination with that eu. you may see another crisis moment in 2021. it will probably extend and pretend. ultimately, it is an everyone's interest to ensure continuity. tom: this chart refutes the gloom. it will all go to an end.

here is the blackrock vector. doesn't this peak about the fact that people want to do business in london? shows youhat chart clearly that there has been tailwinds for the u.k. economy. one, the global economy has been strong, led by the u.s., it has exhilarated. second, the pattern has been weak. despite both of these things, the u.k. economy has lagged the global economy, struggled to deliver growth about 1.5% and indicators suggest it will remain stuck. we have not seen the catastrophic recession many forecasters predicted in the immediate aftermath of the brexit vote. we have seen the u.k. economy international competitors and that has played out and financial markets with

the u.k. stock market being one of the weakest performing major stock markets. tom: is it a value trap or can you go long united kingdom? richard: there are more attractive opportunities elsewhere. investors are being rewarded for focusing on areas sustained and visible earnings growth forward. when we look at the u.s. -- over 20% earnings growth now with all 11 major sectors upgrading revenue expectations. emerging markets -- strong earnings growth, particularly in asia. when you look at europe and the u.k. specifically, you are seeing weak earnings growth despite the talents. the.spite francine: do you think they will have to reverse the hike? richard: we think the u.k. will be on hold. they are balancing inflation,

still stubbornly high but growth remains weak in any historical context. that creates an environment where the central bank is on hold and where it is likely to remain weak going forward particularly when further rate hikes are coming in the u.s. francine: richard turnill and nina schick, staying with us. tomorrow, talking brexit with the brexit international trade secretary. i am looking forward to that interview. this is bloomberg. ♪

♪ kailey: this is "bloomberg surveillance," and let's get the bloomberg business flash. a warning on deutsche bank. a note calling the german lender unattractive, and that the bank will deliver a single return on global equities. slicing the target. the cost of fossil fuel emissions in europe rose to the highest price in more than a decade.

$23 a ton. buy permitssses which were designed to limit greenhouse gas emissions. concern that rising fuel prices will hurt earnings. the fuel bill will probably rise 21% this year. the airline reported record annual profits. that is the bloomberg business flash. tom: thank you so much. quiet story in the extraordinary news flow. paul manafort, michael cohen and let's look at the unraveling of the ruble. dollar-ruble now with incredible stasis. oil success perhaps of russia coming out of the crisis, good. here is the unraveling. now this new leg up in ruble weakness. richard turnill with blackrock in london and nina schick

joining from berlin as well. international relations at some point but the weaker ruble does not seem to be part of the russian calculus. is that correct? russia, thek for economic hit based on sanctions starting in 2014, orchestrated by the eu and the u.s. is always something it could weather. what has shifted since the invasion of crimea is that russia has come back with a bang to the international negotiating table. it was frozen out by western allies after the invasion of crimea. since then, ukraine has fallen off the international agenda, russia involvement in syria, russian interference in the united states but all across the european countries -- russia is certainly a player all countries have to contend with. angelanteresting, with

merkel meeting with vladimir putin in berlin and she is increasingly seen as europe's relationship with donald trump goes sour, she is seen as having to be a part of the conversation. vladimir putin is looking statesmanlike next to donald trump. tom: is russia a frontier economy? e.m. economy? or g8? richard: russia has been caught up in the volatility affecting e.m. markets. tighteningwith financial conditions and a tightening dollar, exposing any markets with weaker fundamental, weaker growth, larger external deficits. a series of emerging-market specific events, turkey, brazil, argentina, have had a knock on effect to russia. you are starting to see global trade concerns -- talking about

the oil price being impacted -- that has added on the impact to russia. all these factors are intervening to foreign exchange volatility in russia markets and that is creating opportunities in broader areas of em. risk premium rising significantly. what does that mean? cheaper valuations and investors being paid more for taking risk. francine: when does that change? is there a catalyst where you feel comfortable to take a position on weaker emerging markets? richard: right now, we would not be stepping into the weaker areas with soft fundamentals. we do not see immediate catalyst for change. long-term -- very attractive opportunities in emerging markets being indirectly hit by capital outflows. areas like china and india and asia. money is flowing out of emerging markets, not differentiating

between weaker fundamentals and economies with strong fundamentals. francine: i want to ask you about dollar. the pending on what happens, outcomes can be different. richard: it is playing a critical role in volatility within emerging markets. we see the dollar continuing to rise going forward. we see that rise at a more gradual pace. why? first of all, the rising interest rates in the u.s., which has played an important role of driving dollar higher, to a larger extent has been priced into the market now. positioning toward the dollar, which was cautious at the beginning of the year, becoming now very long. a strong dollar view, widely held consensus in the market. many investors are positioned for continued dollar strength. while fundamentals continue to point to the dollar higher, our view is that is likely to be less aggressive and less destructive for emerging markets but for investors in emerging markets, still looking at

currency. tom: thank you so much. nina schick, thank you so much, rasmussen from berlin. a tweet from the president at 1 a.m. based on the twitter clock. no collusion. hunt"d witch that will be in washington with kevin cirilli. let me tell you about what we will do in foreign-exchange and the emerging markets, alan ruskin of deutsche bank joining us for the hour. please stay with us, london, new york, this is bloomberg. ♪ xfinity mobile is a new wireless network

designed to save you money. even when you've got serious binging to do. wherever your phone takes you, your wireless bill is about to cost a whole lot less. use less data with a network that has the most wifi hotspots where you need them and the best 4g lte everywhere else. saving you hundreds of dollars a year. and ask how you get xfinity mobile

included with your internet. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. him tom: this morning, a juror

speaks to fox. washington cap let it go. ,hat is next for the president the special counsel? dollar strength is crucial. good morning everyone. this is "bloomberg surveillance." the discussion on the irish is the specific point of the brexit debate. catch 22.it is a the border can also change. it is difficult to see how they result that. to emergingt

markets and the south african rand. weaker, but here is first word news. china have and imposed new tariffs. taxes are being levied on $16 billion of products. coal,slapped duties on medical instruments, and cars. president trump is making it tough to close a deal on a new nafta agreement. the u.s. wants to boost tariffs on cars imported from mexico. fell after president

trump tweeted about the growing debate over land. there is an ongoing debate about whether south africa should seize the land without paying for to address inequality. theresa may's government once guidess as usual, telling businesses how they should prepare for a collapse in talks. he said both sides need to come up with the solutions to keep things running smoothly. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. tom: equities, currencies, bonds, commodities. the curve flattening.

under 22 basis points. euro and oil stable. next to screen. grinding in again. , a russian ruble weaker hockey stick at that. .ollar-real francine, south african rand? francine: the dollar rallying. jackson hole getting traction. know what the fed signaling no change means. pretty much flat. losers,est currency south africa, the rand slumping

due to speculations of possible sanctions against the country. tweeting onsident collusion and the witchhunt. fox and friends this morning, here is the president of the united states. , but what he knew did, and they were not taken out of campaign-finance. bigger thing. they did not came out of the campaign. they came for me and i tweeted about it. tom: right now is sleep decried kevin cirilli. mr. cohen.iew with what was your take away? >> that this is not going away soon. michael cohen has evidence it

seems to back up his accusations that he was instructed by then-canada president trump to make these host payments. tom: is he listening to his attorneys? say he isterview will considering pardoning paul manafort. that is going to increase criticism from democrats, who have raised the issue of an abusive pardoning power. wait to see if that comes out. a democrat from alabama raising the issue, as are other democrats. is a direct correlation in oen andf how the ch

manafort news are giving some people pause to wait until this all comes out, because there is an assumption the supreme court might have a case in front of them regarding the news flow. francine: how do you think republicans will react? if the president is thinking about pardoning, will people resign? >> it will be interesting to see. my colleagues at bloomberg who reports on congress asked mitch mcconnell yesterday whether or not he had comments regarding paul manafort and michael cohen. he did not take the opportunity to weigh in. it is only a matter of time until republican leadership is going to have to comment. tom: with us this morning,

martin schenker. do you just assume there will be more action by the special counsel against new names? ,anafort, cohen, cohen manafort. we will have a whole new set of names. fronts, the two molar investigation, and the southern district of new york investigation. potentially produce more names as they go through the documents. tom: the president speaking on fox and friends. the president says almost anyone running for office has campaign violations. let me ask you the same question. is the president listening to

his lawyers? >> he is listening to rudy giuliani. the strategy to a taking is to trivialize essentially violations of law, like he is doing right now, that everybody does campaign violations. thread hisommon legal team has taken to shrug off these obligations and can thethe public -- confuse public and plow on through them. at what point do we talk about impeachment? is this science fiction or something the market should be looking at? y is throwing that around. impeachment is a process bringing charges against the president. the key thing is conviction, and

that happens in the senate. i think there is a difficult and high threshold for a conviction in the senate. of what i have seen has indicated that tone. at the age of 72, the presidents celso george and -- self absorption may come back to haunt him. to remind his team that he still omerts from his capos. we are also still in the early stages of the molar investigation. guess i simply say, where are the republicans?

are there any cracks in their silence? >> no. with whatree with marty just said. even if the democrats were to take the senate, it would be difficult to have any conviction of impeachment. you're starting to see the political news flow out of washington slow down the trajectory of other policy initiatives. if you are trying to price in what that means for policies, judge kavanaugh. pat is something the administration had hoped to get a quick confirmation on. now you are seeing it punted to october, a tricky timetable. tom: headlines coming out. throw that up on the bloomberg screen. this is the president on fox and friends about his attorney

general. the attorney general never took control of the justice department. this has been an ongoing theme. ,rancine: one of the questions marty, does political turmoil mean the president will be more belligerent when it comes to trade, to deflect. what does that mean for foreign policy? interest an unbridled in getting a trade deal beneficial to the u.s.. there is talk of being close on a nafta deal with mexico. he would love to say we have done a terrific trade deal with canadaand now move on to to change the narrative and give the impression that it is business as usual at the white house. market participant to only faith thought the

president would like to go into the midterm elections in a fighting mood because it is an easier win to speak to his face. there is every indication that when donald trump wants to create controversy, he can do it in 144 care or's at any moment. i don't know that you can over interpret them the strategy he has. isald trump in the midterms not going to be critical in these local races. they are often based on the simple quality of the candidate. want to go to the comments the president made about his attorney general. of edwardnges history, edward meese, and a president questioning as well.

didn't the german from alabama say, enough -- gentleman from alabama say, enough? >> i saw the optics of that. jeff sessions was sitting in the room at the time. he urged 10 to deal with the issue of opioid addiction and big pharmaceutical companies. he did not take it public, until now. , if you's point, look look at the enthusiasm gap , theng democrats urging administration feels strongly they want to get the president on the campaign trail. now untiltween

election day. tom: thank you so much. greatly appreciate the work. and martin schenker. are there headlines on the president from his interview speaking out with fox and friends. the president reiterates mr. manafort was not with his campaign long enough and the attorney general should have told him about that. that is not new. francine: the man of the hour when it comes to brexit negotiations, now delivering a .peech on the government's plan what he is saying is britain won't risk starting a battle with the eu by imposing border checks or travel restrictions.

let's just have a listen. >> support businesses with the new data arrangements in place. beyond domestic preparations, making sure we are in the best position to continue key international agreements with the eu. we signed a, nuclear safeguarding agreement with the international atomic energy agency and struck a bilateral agreement with the u.s. fifth, this requires money, which there is a further 3 billion pounds in the budget for planning and preparation. so, our laws will be on the place, book, staff in and institutions will be ready for brexit, deal or no deal. theoday takes this for to

next stage. first batch in the series and we will be publishing more over the coming weeks. the ones today explain how the u.k. would mitigate the consequences of a no deal in a range of ways. for comes supporting businesses at the border. it sets out how we would ensure a day one there will be functioning customs and excise system, giving advice to businesses on customs declarations, register for u.k. operation and identification number, or make safety decorations on goods they moved from the eu to the u.k. next the technical notice on workplace rights indicates the steps taking place. the workers will be entitled to

flexible working or parental leave. in many areas, we go much further than the eu. other technical notices will stress health care, ensuring love products are safe and making sure we can import parts -- supplies from the eve you the eu, even though we are self-sufficient in this regard. we are acting to protect u.k. institutions and businesses, so we set out how we will underwrite all horizon 2020 bids and make sure the u.k. retains its status as a global leader in scientific research. understand livelihoods are at stake here. sure withe, making the treasury guaranteeing

applications up and tell 2020. british higher education institutions should continue to bid for funding. the government will underwrite successful bids until the end of 2020, helping young people the opportunity to enjoy the educational opportunities and cultural life across europe. fighting global poverty, we care and t their funding -- we care in t their funding. is the secretary of state for exiting the european union. saying that britain will not start a tit-for-tat battle with the eu.

amongst some of the things from researchers at the banks is the concern they have is by talking about the fact there is no deal is lowering the bar on what kind of deal they can achieve. if you want to continue listening, you can do so on the bloomberg terminal just type live . coming up, we will speak to liam fox. it will be interesting to have his thoughts on pound and a post-brexit u.k. world. tom: very good. the president still speaking. the key headline has just come out. the president asked by fox if he manafort, and t 04 the answer. -- he avoids the answer.

michael allen out this morning, , within the convoluted story on russia, it makes clear that cohen's representatives are saying he he did not know about the russian meeting. there is more to it. is what alleading of this means for the market and the deepest market of all, politics in washington, the u.s. dollar. we bring in allen rest can of deutsche bank. what is the deutsche bank all. we are looking at it right now. strongershed call is euro, weaker dollar. we are staking arrange. the topside is 125 on euro

-dollar. the downside is 110. when you battle over all of it is about an interest rate analysis or capital flow analysis? which is dominant now into next year? interlinked.e interest rates drive capital flows. terms, thee see in u.s. side of things in terms of , there arestrength short-term inflows supporting current account financing. there are interesting angles on the capital flow side. european hunger for foreign bonds is on the wane.

savingssis of european going abroad seems to be tailing off, a good thing for the euro going forward. francine: when you look at some of the things happening in emerging markets, a headline from bank of russia saying they won't either fx on the domestic market to the end of september. what do you do for these ?urrencies hit by sanctions how do you position if the president can do foreign policy with one tweet? , what have this real risk we call a headline risk, highly unpredictable. it makes it more difficult to hold on to some of the traditional carry currencies. the ruble is more a petro

currency. these currencies have some innate volatility that makes it harder to hold it. when you look at the recent u.s.,cs yesterday in the what does that mean for currencies? the russian ruble is one suffering partly because of what is happening in the u.s. the bank of russia halting these purchases of fx as part of the budget rule from august 23. is that aimed at reducing volatility? >> i have not seen the details on this. it seems they are letting the currency carol. , it will engender more volatility rather than less volatility. you have been a student of

politics for years. how does our audience synthesize this historic moment what we saw equities,go into bonds, currencies, and commodities? watching markets closely. perio clinton impeachment d, we had a lot of volatility, but there after the markets went off on a tear and functioned off the underlying economy. hasstarting point is anything happened in the last two days that changes your view on u.s. growth, inflation, current accounts, even the ,iscal policy side of things monetary policy. if the answer is no to any of that, markets are shrugging a shoulder. tom: are you a u.s. optimist?

can you see a sustained 3% gdp? >> no. 2%,he economy grows at steady growth, and we have these long cycles, i would have taken in 2009 to be where we are from an economic standpoint in 2018 any day. tom: a huge news flow around the president. let me recap. the president almost running, anyone running for office has campaigned violations. sessions never took control of the justice department. he says the attorney general should have told him about the plan. also asked by fox if you will pardon mr. manafort, he avoids the answer. maybe we will get headlines through the day and tweets as

well. extraordinary goings-on in washington this morning. coming up, the peterson institute for international economics. china and theer dynamics of our trade economy. please stay with us. from new york and from london -- weak sterlingn, a london, please stay with us. the turkish lira, stability as we look at their bonds as well. where did the tower go? ♪ xfinity mobile is a new wireless network

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his speech on the governments plans for brexit in the event of a no deal. he is saying no order check or travel restrictions. also, they have to consider an ,lternative if there is no deal and they must be ready for it, saying they have for progress on separation issues and have settled issues, including an agreement on citizens rights. the last two months to three ouths, more anxiousness there that firms are not prepared in case of of crashing out of the eu, and reports that would be no medicine or food if suddenly there were tariffs and duties to pay. this is an exercise by the government to address that concern.

has president donald trump waded into the debate on land reform, triggering a selloff in the rand. mike pompeoould ask mo to study the land seizures. the competition commissioner responded saying the government encouraged land invasions. run us through what happened when the president tweeted what he tweeted? >> we immediately saw a reaction in the markets, the rand depreciating as much as 1.8 percent against the u.s. dollar, adversit to emerging markets. the president addressing lawmakers in parliament, saying

the redress related to land reform would be done within the confines of the constitution. we did see some concerned once that tweet was sent out. received a statement from the foreign affairs minister of south africa saying president trump's comments are unfortunate and regrettable in the sense they are misinformed. we have yet to see what happens when department officials meet with the acting u.s. ambassador later today. within this is the idea of land reform and the gross inequality in south africa. the margino suggest is better, but come on come on, it has a long way to go. could this be an actual catalyst for land reform in your nation? be aere is hope it will catalyst. the congress made a resolution

landit will expropriate without redistribution in some aspects. reportent will have a that will be released as to how amendments to the constitution could be made to allow for appropriate of land without compensation. overshadowing the debate is the anxiety in people, a policy that certainly has to be handled with care. tom: thank you very much. we are advantage this morning to kin and hisus knowledge of south africa. i would like to move away from deutsche bank and talk about the of the race and the

challenges. i remember as a kid and where we are now, can the nation provide a quality in land, a tangible agricultural foundation? >> one would hope. in theory, the answer is probably yes, but how we get from here to there is the problem. isyou have seen, history replete with land reforms where the product to the in terms of agricultural collapses and it is ,egative for everyone concerned so this is not a subject you and i will solve here and now. it is an issue that needs to be dealt with. tom: bring up the tweet. we had it up earlier. in any extraordinary

time and in the moment. it goes back to the fundamental tensions of south africa. the president is talking about seizing land from white farmers. it sounds like a bad movie from 40 years ago. describe the hangover we have from apartheid. >> in the buddy who has visited the country recently and has gone back 20 years ago, 40 years , therethe apartheid era are still extraordinary inequalities. you see if the minute you land at the airport. issues athese big hand. even without major redistribution, the rate has been low, so it is not like the cake is growing rapidly.

it is an easier environment to redistribute. that is part of the problem. francine: let me bring you back to fx and the rand. >> please. francine: what could sanctions look like, and as an investor do you need to watch what goes next or preempt in case there is a selloff? >> you have to watch what the u.s. does next. get into a turkey-type situation where the u.s. starts negotiating and playing hardball on an issue that might look like a domestic issue. and that case, it could have profound effects on the rand here it i don't think we are going there. this is one tweet so far. let's see what mr. pompeo actually comes up with.

i would think this is probably going to be a one-off. tom: thank you for the comments on south africa. let's get away from this. institute, we can shift chad to the idea of tariffs and how they ramp up and ramp up. where are we within the ramp up of the tariff war? both the united states and china imposing another $16 billion worth of the $34 following billion in july. in washington, we have five days or six days of hearings for another $200 billion worth of tariffs. the president said he might 25%, andse tariffs to china said were prepared to go to $60 billion more, so it is

just continued to escalate. escalate untilit the midterm elections or until you reach boiling point? >> that is what we don't know. the trump administration has created a lot of tariffs, a bit ,f a crisis on the trade front a moment, but it is not clear what they want from china. the chinese are frustrated because the administration has not appointed a point person. the administration has not been clear on whether they want china to buy more stuff or address the challenges like industrial subsidies and intellectual property theft. that has gotten lost over the last couple of months and we are far away from dealing with those

issues. francine: what does escalation look like? if the u.s. touches carmakers, especially german carmakers, is that a full on trade war? >> that is the other thing we are worried about. we do have detente at the moment. it seems like now the united states and europe are beginning to have trade talks. said or theymp has both agreed there would not be additional tariffs. the big looming trade case on the trump administration side is this $350 billion worth of automobiles you'd -- automobiles. tom: floating currencies, i guess renminbi is floating come a sort of, kind of, like now. do you have a number in your head where currency comes in to

your world? >> i would not say with a vengeance, offsetting in terms of the tariff side. chinese currencies have depreciated by 10%. mind when chinese currency goes down come it impacts all of the chinese economy, tradable's, non-tradable's. so this is not just trade with the united states benefiting from the exchange rate. is not thes it differently pushing the currency down. it is allowing the currency to go down. there are more forces than just trade. it is chinese monetary policy as well. tom: thank you very much.

we look forward to a longer conversation in the future with the peterson institute. the president continues to speak on fox and friends. the wall ist said going up. he would like to build it faster. trump says the market would crash if he got impeached. i guess that would be from the strategists at 1600 pennsylvania avenue. we will drive for the discussion on immigration, america. this is bloomberg. ♪

tom: very good. headlines this morning.

the marketnt says would crash if he got impeached. he is saying that this morning. , but that isnow what the president thanks. we need a briefing with first word news. >> islamic state has claimed responsibility for a deadly knife attack. the attacker killed two people and wounded another before being killed by police. it took place in a town west of paris. they two of trade talks between the u.s. and china hours after each country imposed tariffs on $16 billion of goods. china retaliated with tariffs on american medical instruments, cars, and coal. the latest negotiations are not expected to result in more than a joint statement. michael cohen has been

subpoenaed to testify in an investigation into the president's charitable foundation. cohen pleaded guilty to finance charges this week. president trump denied the claim he used the campaign fund as hush money. the head of germany's central bank says we are still learning lessons after the decade following the financial crisis. september will market the 10th anniversary of the lehman brothers collapse, a decisive moment in the financial crisis for many. it merged witha the sovereign debt crisis. we are still processing fallout and extracting the right lessons. area is to the euro make financial systems more resilient. it is crucial we strengthen the competitiveness and growth fundamentals of the various economies.

of public debt needs to be broken down. these are the challenges each individually.e the framework of the monetary union has to be rendered crisis proof, requiring a better balance between individual responsibility and liability. only then will incentives he reduced. that is not saying i'm ruling out greater risk sharing between states. those calling for more risk sharing must be prepared to relinquish more sovereign rights to the european level. >> global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. tom: thank you so much. alan ruskin with those from deutsche bank. the world of markets and jackson hole. speeches, be papers,

hikes in the woods him up but a singular memory of what happened 15 years ago. charts an extraordinary of the nightmare of any and all in central banking when the japanese simply got it wrong and went to raise interest rates in 2000 and had to reverse that because they got the inflation call wrong. this is the nightmare that infects everything in central banking. we don't want to do with the japanese did? >> you don't want to be reversing course rapidly. tom: you want to avoid it like the plague. >> indeed. tip my cap told the boj to have shifted out of this yield curve targeting to something more flexible without

setting the markets off on some tangent and creating a huge amount of volatility in a so so far so good on navigating policy. the yen dohat will from here? toughestn is the currency to forecast because it is caught between a risk on, risk off theme, so you have the yen doing well on a cross rate basis. the broader theme is the retreat from monetary policy easing. emt is driving a lot of the negative risk in the story as well. higher u.s.lving bond yields in particular. that is consistent with the yen weakening. you have the two big forces. i would say hands off this currency right now. francine: there is quite a lot

over the tweet, but then it fizzled out. what do you make of that? >> the change recently in terms of policy? francine: the targeting of the 10 year come yes. >> we had that bounce up, and the global environment took the bear market in the for jgb's. it has gone off incredibly well. cap toe boj allows that fall away, it is usually disruptive for markets. global bond markets would selloff. it has gone off well because of the international environment. the 10 year jgb's should be 20 basis points. they have given themselves

enough latitude to have the market have a say in what is going on. tom: you just said you want to avoid dn because of the ambiguity. in thean i make money back third of 2018 and the next year? what is the trade attractive in this news? >> we have come off a big em selloff. we had a decent dollar run. the dollar has a lot of positive forces driving it over the last three months. the u.s. economy, the china story, the european story have converged to create this stronger dollar town. -- tone. i don't think all those pieces will fit together, but two out of three and you have a strike stronger slightly

dollar. i would look at dollar weakness to buy dollars. the em complex is deceased by this reduction in -- the seized by this reduction in global liquidity. it still works, but not an aggressive trade. tom: thank you so much for your comments on south africa. greatly appreciated this morning. we will come back in london. terrific headline flow this morning. morning briefing, bloomberg daybreak, bloomberg radio coast to coast. they with us. this is bloomberg. ♪ us. this is bloomberg. ♪

francine: alibaba out with sliding as itins invest in a retail delivery towork, but that is expected drive revenue growth to its fastest pace in four years. it is exciting. >> absolutely. amazon,ways they follow

but that acceleration into brick-and-mortar is ahead of what amazon is doing. you see this idea of going into a shop where your purchases are done automatically. of where weication see e-commerce retail going. francine: some breaking news, a monster. first quarter adjusted earnings , a little below expectations. what other metrics are you looking for? >> haula their online live streaming platform is performing. we saw a lot of chinese advertising across the billboards there.

it is a massive audience in china. the ability to tie those online assets, it will be interesting to see the comments. francine: revenues and line. earnings per share a little below. tom: thank you very much. incredible news flow today. substantial headlines this morning as well at fox and friends. the wall, and he speaks on mr. manafort. and on the markets as well. he actually mentions impeachment. mentions impeachment. this is bloomberg. ♪ bloomberg. ♪ retail.

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officials meet today and washington as both countries impose tariffs on an additional $16 billion on one another. are we there yet? bankersspeaking as gather and jackson hole. alibaba comes up shirt. eps less than expected. revenue growing on pace. welcome to "bloomberg daybreak." . am david westin alix steel is off. alibaba short on earnings. 61% as thenue company's investments, which took down its bottom line, started to pay off. 804 yuan. the shares