from bloomberg's european headquarters in the city of london. s: live from dubai, this is "bloomberg: daybreak europe." announcesident trump a new agreement with mexico. trump hopes for a u.s.-china trade deal. several of china's biggest banks reported second-quarter earnings today. and a japanese automaker is investing half $1 billion in uber.

shares gain as much as 2%. ♪ anna: good morning. 6:00 here in london. 9:00 in the morning in dubai. this is a picture on the asia equity sector. getting a little bit excited about trade. talkednt trump can bilaterally about trade. -- talk bilaterally about trade. there is the potential for a breakthrough on nafta. deal does the u.s.-mexico leave canada and china, and other trade deals? trump is weighing in on

expectations. let's have a quick look at some of the currencies. the canadian dollar is fairly in limbo. the foreign minister of canada is on her way to washington, talking about a modernize nafta. -- modernized nafta. we have the mexican peso as well. it is retreating this morning after initially rallying on this u.s.-mexico deal. here?does this had from -- head from here? manus: the mexican peso rallied 4.4% this year. one thing is for sure -- the markets have decided to short risk protection, the vix, u.s. treasuries, and dollar.

we are ratcheting lower in terms of the speculative. there is a larger short position on these trifectas of risk indicators in the market. is this the beginning of dominoes set to cascade after the midterms? you can't read that much across from mexico into china, but could it be after the midterms, trump ratchets up his ability to do deals? at the moment, the market believes risk on. -- we are seeing strategists raise the s&p 500 forecast. $27.50 is ony says the agenda.

we are seeing a global left this morning. anna: in terms of the futures, we don't have much direction. new all-time highs on u.s. equity markets. we were talking this time yesterday about what china was doing. the mexico-u.s. news pushed u.s. market the heart -- u.s. equity markets higher. we are going to be joined by the legendary investor, warren buffett, on thursday. 4:30 p.m. u.k. time. what does he make of recent ties and stock markets? let's get a first word news update. deborah: -- trump has said america is pursuing a new trade accord with mexico to replace nafta and called on canada to join the deal or risk being left

out. he announced an agreement with mexico in a hastily arranged oval office event with the mexican president joining by conference call. mexican president said he is quite hopeful canada will join the revised agreement. trump also commented on the trade war with china. pres. trump: it is not the right time to talk, to be honest with china. it has been too one-sided for too many years. it is not the right time to talk. france is preparing contingency plans in the event of a no deal brexit. it will present a draft deal in the coming weeks. it will ensure fluid frontier controls after the u.k. exits the european union. it underlines concern britain it underlines concern britain may have no deal ready in time. odell beckham jr.

has agreed to a five-year contract extension with the new york giants, worth as much as $95 million and 65 million dollars in guaranteed money. this contract would make him the nfl's highest-paid wide receiver. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg @tocgo. manus: thank you. alternative structures are expected to be offered to investors from a swiss fund manager. make its expects to first payment in early september. 74-80% toeturn luxembourg. 60%-66% of to return

payments. they have been in the headlines over the past couple of weeks. of relief on the mexico-u.s. steel. -- deal. what does this mean for markets? david, good morning. david: it is another reason to be embracing risk trade. gains across the asia-pacific are nowhere near the levels of yesterday. seven out of the last eight sessions we have seen gains. we are coming off our highs of the day. we are very close to session lows. two-year yields coming within two basis points of the tender high. -- ten-year high. to dollarading strength and reversing

currencies across the asia-pacific. seven out of the 10 industry groups in this group are on their way up. 70%-80% ofate to blue chips heading higher. market, theandup world's best-performing major market, when you look at the census index. let's have a quick look at the movers. big four of the chinese banks reporting earnings over the next few hours. a big point, caribbean and -- korean carmakers. the trade deal would exempt them from any form of tariffs between mexico and the united states. anna: really interesting how it seems such a positive for those carmakers.

let's talk more about trade. the u.s. and mexico are pursuing a new trade accord to replace nafta. president has called on canada to get on board or risk being left behind. he made the announcement in a hastily arranged oval office event, with his mexican counterpart joining by conference call. our bloomberg senior editor has the details. could this be the end of nafta? i are reminded about the classic literally line of what is in a name? inliterary line, of what is a name? it can be difficult to separate the name from the context. contents. >> if there was a deal with the u.s. and mexico, it would be the undoing of nafta, a bilateral trade agreement rather than a free negotiation.

a lot depends on whether canada comes to the table and negotiates with mexico. they have other issues in addition -- they decided to do it this way, the u.s. and preciousnd maybe canada to come to the table. there canada does not, are questions about whether this can go forward. also, it is unclear whether the steel can make it through congress. they might have to wait until after the midterms and then you have a different kind of congress. so much now dependsthey might hl after the midterms on whether canada will come to the table. they have issues, including its dairys on industry, and whether those will have to be dismantled. anus: the detail of the deal comes down to autos.

was there a risk of capitulation, for an easing of the sunset clause? rephrase, a movement by the american side? >> i think there was an easing, how long you would have before you would have to look at the it is now six years rather than five. that was an easing on the american side. the big change from the current nafta accord is on our toes. it would be 75% regional auto -- made inutos would be each region, up from 62.5%. be hearinge will more in the coming days. the real question is whether they can get this over the finish line with canada, and if

not, will it go forward? some interest groups are very concerned about a bilateral agreement and whether it will disrupt supply chains. schneider, joining us from hong kong to talk about the potential deal between the u.s. and mexico. joining us now, is the global head of fx strategy at rbc europ e. good to see you. peso, the vanguard of 2018 in fx. is it peso abounding to the upside? we have heard the headlines, but we are talking a lot of detail. whether this know is a substantial deal, or they have agreed to agree without finalizing all the details.

we don't hear that there is still work to be done around august culture. trump -- agriculture. trump still has the border wall issue. on thers will be focused incoming administration in december, rather than how this will play out. anna: a lot of detail we don't know. i have a chart that shows the --ction to the canadian and canadian dollar and mexican peso. gains.f we do need to know whether butda is going to sign, what will dictate review around this trade deal? mexico and canada have similar red lines. there are some similarities.

canada has supply management issues and mexico is more concerned about single projects. we have not heard what has been agreed upon between the united states and mexico. mexico has managed to extract concessions from the united we have notstates, it is differ. s: i am delighted you used the word capitulation. i would get into trouble if i did. this is a shorting of volatility in bonds in fx. there seems to be a shift in risk sentiment. if i am to get through the november moment of elections in the united states, how do you set yourself up for risk on in is were half -- if that base case scenario in fx? case scenario in fx?

>> china will be the much larger --tacle to navigate sums come september. we are still pending the outcome of an investigation, a hearing due to finish on september 5. we could see two or three weeks before president trump announces the first round of those tariffs. i would be more cautious than piling into a huge risk on position when that kind of uncertainty is a standing. anna: and president trump is trying to downplay the expectations of the markets moving too much from one trade deal to another. thank you very much. next, toyota has upped its bet on self driving technology. the carmaker has invested $4.5 billion in the -- in uber.

this is bloomberg. ♪ anna: good morning.

this is "bloomberg: daybreak europe." we have the pound dropping a little bit against the u.s. dollar. theresa may is signaling a brexit no deal would not be the end of the world. an upbeat tone, as the clock ticks down on britain's departure from the block. let's get a bloomberg business flash.

ebra: a chinese delivery giant has started viewing demands for an ipo. it could raise more than 4 billion u.s. dollars. it could seek a valuation of as much as $55 billion. says supplier problems are affecting six planes and the production of two more is being caused. these concerns affect american airlines, among others. for china is sitting in storage for unknown reasons. trauma may- private have overshadowed signs of progress on the crucial model 3.

production may have exceeded the target of 5000 a week for much of this month. estimates can vary from week to week, but tesla may have topped for6000 cars a week goal late august. toyota is investing half $1 billion in two uer. -- into uber. this underscore its efforts by the automaker to catch up on self driving technology. what do you know about this valuation? kevin: this is an additional ubertment by toyota in it.should be much bigger than the initial small stake it took a couple of years ago.

this is a partnership that revolves around toyota making uber'ss that incorporate self driving technology and having that mobility platform via a company that has yet to be named. they will recruit a third-party they are both happy with. anna: the minivans are small scale. is what the ceo has talked about, a once in a century paradigm shift for the industry, very important for strategy. kevin: that is right. he talks about it endlessly. a time asjust driving, but also sharing and connected vehicles -- autonomous driving, but also sharing and connected vehicles, changing the way the way people move -- changing the way people move.

the ceo does not only want to ,ave the company be a carmaker but an outlet software moves into. toyota making a foray into uber ups its stake. there.on dollars put in it is trying to partner with companies across the globe, in china and southeast asia and uber, which mainly operates in the united states. anna: kevin, thank you. the global head of strategy at isfx strategy at rbc europe still with us. you have done a lot of work on the flattening yield curve in the united states. you have gone back over 70 years.

my chart goes back to the early 1970's. what does this inversion tell us about a recession, and you look at the time lapse between and inversion and -- an inversion and recession. we look at the three months 18 month forward rate. that can give you a more accurate signal in terms of a recession. there can be quite a long lag between the current being at the nowl we are -- where we are and the curve inverting,, and the level the curve is out during an actual recession. explain that to us.

have seen a string of downside economic surprises in the united states. we have seen several dips. some people might couple that with the flattening of the yield curve, saying this signal something more for rain. i would be more cautious. we have just seen the readjustment of expectations, rather than a significant debt. you would need to see a much longer downside and the forward curve pricing in much greater risk. removedd we're one step from the recession risk with the yield curve. your work suggests this is the front end rising, meaning a stronger dollar? elsa: when you look at the yield curve and the signal it sends the currencies, look -- we have

looked at whether this is the front end or the back end that matters more and what happens when the curve twist. the front-end selling off, the back end is rallying, and the front end rallies more. and the flattening of the yield curve is going up -- going on it globally. maybe not to the levels we have seen in the united states. this is a global phenomenon and you think this is a global recession, that does not necessarily mean it's a recession for the u.s. dollar. manus: thank you. superpowera chinese look like? could be world's second-largest economy actually afford it? the dawniscuss this on of a new agreement between the united states and mexico. what does that mean for the ramifications for china-u.s. relations?

toput all those questions rbc on bloomberg. ♪

anna: good morning. this is "bloomberg: daybreak europe." london. a lot of volatility with the u.s. dollar. let's talk about what is going on, what you need to watch out for. speaksopean commissioner at a conference in brussels, the of twitter and other media, about the italian government and budget contributions. could have an

interesting impact in terms of the spread. the ecb is among the panelists at a conference in germany. what does he have to say in terms of policy? of the first trade updates since the start of the trade war with china. what's get first word news update. let's get a first word news update. debra: donald trump has said the united states is pursuing a new trade accord with mexico and is calling on canada to join or the left out. he announced the deal with mexico in a hastily arranged oval office event, with the mexican president joining by conference call and saying he is quite hopeful canada will soon be incorporated in a revised agreement. president trump also come --

also commented on china. >> it is not the right time to talk. foras been too one-sided too many years, but eventually i am sure we will be able to work out a deal. itsthe white house returned flag to half mast, following a barrage of criticism for donald trump for ending the tribute to the late john mccain just one day after he died. president trump said he respects john mccain's service to our country. he ordered flags in the united states flown at half mast untold mccain's boreal on sunday -- burial on sunday. announcing plans to boost britain investment in africa after brexit. theresa may says she is unashamed about assuring money aids in africa to combat

benefits britain. global news on air, 24 hours a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. anna: thank you. china is sidelined from u.s. trade negotiations. world's second-biggest economy continues to expand its influence geographically. inld any income trap stand the way of it becoming a real trappower -- an income stand in the way of it becoming a real superpower? ng view,ing stuff, a lo taking a different perspective from the daily news. isn't china already a superpower? >> it looks that way. the economy is actually already larger than the united states.

it is starting to look a little bit like a superpower. it opened its first military base last year. the belt and road initiative is unprecedented in terms of this scope and ambition, that kind of economic investment. the best definition of all these other things is the ability to project power anywhere in the globe. there is the possibility of becoming dominant. china is not quite there. manus: mark, when you talk about the ability to project itself as a dominant force, many people would take that up with defense. spending, $100 billion on defense. chemchina match that kind of china match that kind of money and expenditure?

marc: it would be a very large increase. around $230 billion on defense. go.as a long way to if you look at the way china has been able to expand its military spending, it has been very affordable until now. they were spending around $20 billion in 1990. it is now more than 10 times that. they have reduced their share of the government budget that defense takes up in that timeframe. we saw another trickling to go. china is starting to face easilyds in terms of how it can afford to do these kinds of things. what stands in the way of

china becoming a superpower, by this broader definition? country -- it is not yet rich. yet it is already aging. that is very unusual for any tontry that continues require expansion. when you look at britain or the united states, when those countries were becoming superpowers, they had huge population booms. china's resource has been its abouttion, but that is moving people from the countryside into the city and making people productive. and shift has kind of ended the population is going to shrink somewhere around 2023. this could be quite sharp.

marc, thank you so much. oneally insightful piece what is a superpower? head of have the global fx strategy from rbc europe. a superpower is the ambition and currency needs to internationalize more. yuan, there the seems to be of a stop in terms of the trajectory. pboc hasb oc -- introduced a fixing higher than what the markets have anticipated for four days in a row. how would you describe the thusventions on the yuan far? the pointave reached where chinese authorities were feeling uncomfortable with the pace of you wanted depreciation. they have done what they can do

to manage the situation. we had 6654 our targets this 720 and a 30 and 740 next year. the path of travel over the long run in our view is slower. a lot depends on what we see from trump and the chinese on trade. i have a soundbite which underlines expectations for doing a deal on trade. pres. trump: china wants to talk. time.not the right it is too one-sided for too man y years. i am sure we time. it is t will be able to work out a deal with china eventually. president trump, weighing in on expectations in the

market. what are your expectations for the horizon? president trump says it is not the right time. what do we know about when the right time will be? : we have these section 30 one investigation ongoing, and the hearings that wrapped up yesterday. there are now britain rebuttals, and the timeline ends on september 5. the president will also influence the $200 billion of tariffs. if anything, this will get worse. another piece in the chessboard of growth in china. a big ship, which will take a bit of time to shift course. are you concerned? you talk about the bearish perspective on the yuan.

how bearish are you? on growth on china? elsa: we are seeing a slowdown, driven by attempts to deleverage the economy. we are beginning to flatten out a little bit, and this is going to reach a bit more of a sustainable level. you also have a decent amount of dollar strength. that is really what has been driving dollar-china high and we will continue to do so in the next year. chart that sets chinese growth against eurozone growth. the eurozone is not one country, clearly. there isasure them up,

the question of whether china becomes bigger than one country from the eurozone in 2018 -- one country in 2018. do you have any thoughts on euro cny? elsa: this will come down to whether the euro area the seeistic prospect -- can inflation and the realistic prospect for tightening. core inflation is still subdued. a slow tightening for the ecb is probably the most reasonable. furtherld change, the down you go into 2019 and 2020. for now, we are quite cautious about getting carried away with euro strength. us.s: stay with bloomberg users can interact with all the charts we bring up.

go>.library is gtv < build your own a library. -- your own library. anna: theresa may travels to three african nations to drum up post-brexit trade deals. we are live in johannesburg with the latest. this is bloomberg. ♪ ♪ anna: good morning.

this is "bloomberg: daybreak europe." london back in business after the bank holiday. a no dealy says brexit would not be the end of the world. let's get a bloomberg business flash.

debra: toyota has confirmed it is expanding its alliance with through half $1 billion of new investment. the deal values uber at $72 billion and would you see toyota making minivans equipped with uber -- through half $1 billionf new investment. would see toyota making minivans equipped with uber's self driving technology. elon musk's personal trauma may have overshadowed signs of progress with the crucial tesla model 3. estimates may have topped 5000 for much of this month, although estimates vary from week to week. restaurant review and delivery giant has started engaging investor demand for a

plant hong kong ipo. the tencentr from backed company could raise more than 4 billion u.s. dollars. the company plans to seek a valuation as much as $55 billion. boeing is said to be in a delivery bottleneck with the dreamliner. supplier problems are affecting six planes and production of two moore is being caused. airline concerns affect united and shanghai airlines. a dreamliner for air china is sitting in storage for unknown reasons. that is your bloomberg business flash. let's check out what is trending across the bloomberg universe. ta disinvesting another is0 million in uber, -- investing another $500 million autonomou catch up on

s driving technology. manus: the french government is preparing contingency plans in case the european union and the u.k. fail to reach a brexit agreement. the risingies concern britain may crash out of the bloc. theresa may says it may not be such h -- a tragic event. to expand itsms influence, but a certain demographic critics -- stand in the way. fed officials question whether this time is different with the yield curve. and trump says a mexico trade deal is to replace nafta and calls on canada to join or risk being left out.

find out more about all of those stories on the bloomberg. the foreign secretary of canada is heading to washington. we will continue to watch that. a new form of nafta? let's have a chat about the u.k. it can still make a success of brexit even if it crashes out of the european union without a deal. that is the message from theresa may. she headed to south africa for five days to visit the continent. toela merkel will embark west africa later in the week. we have our reporter from johannesburg. what does theresa may want from her visit to africa? it would be a deal. prime minister theresa may has willed in south africa and

be holding several meetings today, as well as one with the south african president. high inl feature quite the agenda will be the attempt to boost britain's post-brexit exports prospects. africa paschi growth potential does present a market worth tapping into. africa's sixthth largest global trading partner. in 2017.lion just she will talk about moving exports into this region post-brexit. we have land grabs, and the mass killings of white farmers at the top of the agenda. there could be some other

things on the agenda as well. chancellor merkel, also on her way to africa this week. we have different motivations in terms of investment. what are the ambitions there? >> german chancellor angela merkel will be going to senegal, ghana, and nigeria. merkel has a campaign to tackle the causes resulting in a stream of refugees into europe. combating terrorism in that region is expected to feature quite highly. security when at thinking of markets they will invest in. angela merkel is expected to

look at security when she meets with the leaders of the country. visit comes at the same time when theresa may will be heading also seeking to discuss trade relations and security in that region. both of the european leaders and africa this week. our bloomberg reporter joining us there from johannesburg. thank you very much for the briefing. the global head of fx strategy from rbc europe is still with us. president trump weighed in on the south african currency last week. theve a chart that shows currency sliding further than the average. but we have a little bit of a

bounce in emerging markets. specific thoughts on the recovery potential for emerging-market aspects? sa: we had the recovery on the back of turkey coming under so much pressure. the currency still has a decent yield story. that is not enough when you ,onsider how retail investors particularly in japan, have been scared by the exposure to turkey and south africa. manus: one chart is popping into my screen now, the aussie dollar. i wanted to close off the hour by talking about trade and risk. you said, don't throw your hat into the risk ring. there is still this lingering doubt about trade deals between

china and the united states, and is this the vicarious trade to look at in that context? lsa: people have used the aussie dollar as a prospect for those concerns. we have the story of the political uncertainty, but longer-term the thing to remember is that trump is not consistent on to many things -- on many things. the one thing he is consistent on his china and trade. it is a theme for this administration. it would be premature to think we have reached an end to this due to the short-term agreement with mexico. anna: i want to show you a chart on the pound. we saw these headlines coming from theresa may's visit to africa.

pound, 2/10 in the of a percent. it has recovered a bit of that ground, based around this headline that theresa may says a no deal brexit would not be the end of the world. what would it mean to the pound? elsa: it depends how this deal comes about. a no deal brexit does not mean no great deal. it is the idea of the u.k. crashing out and having to revert to wto rules. it is not clear whether the u.k. would be automatically es, orting to these rul other countries would be arguing against the quota affecting the u.k. directly. some wayhas gone toward pricing that in the last month or so, but there is more to go. euro: do you think that

sterling trajectory is higher? does it have more bang for your buck? cable,f you think about a lot of that is u.s. dollar direction. is the fed going to continue the current pace of hikes? -- struggling is a much cleaner way of expressing those sterling-specific risks. anna: great to get your thoughts. next, the united states will pursue a trade deal with mexico. what does it mean for nafta? could canada be left behind? the foreign minister of canada is heading to washington? will canada signed? they are talking about a

modernized nafta. probably hasmp agreed upon something bilaterally with mexico. we will talk trade, next. this is bloomberg. ♪ to rent a movie?

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manus: good morning from dubai. i am anna edwards. these are today's top stories. trade.trumps big day for the s&p hits a fresh record high as the u.s. president announces a new agreement with mexico. where does that leave canada? bad timing. u.s.-chinaort for deal saying it is not the right time to talk. one of china's biggest banks reports second-quarter earnings. the japanese automaker is investing half $1 billion in

uber to catch up on the autonomous driving market. 2%.es up manus: very warm welcome to daybreak. it is 7:00 a.m. in london, 10 a.m. in dubai. we are back in business in the u.k., the ftse is your -- open. the mexican standoff seems to be coming to an end area the u.s. and mexico could have a new structure, a new form of a deal. you have seen a little bit of a lisk -- a lift on a good he markets. should you take the mexican-u.s. readtial for a deal as a through for china? not at all. it feels a -- as if it will be a bumpy ride but you have seen

this nice rise in the equity market this morning. you have that lower tone -- tone from sterling giving the extra and we are tying risk catch up in our london market. back to business and the bank holiday that was yesterday. this is a picture of asian equity markets. positive by .3 of 1%. the tray conversation, the nafta talks and the news about nafta, the progress or the breakthrough them a call it what you want on a trade to between the u.s. and mexico even if it is not a full blown nafta deal. that seems to be adding some positivity around trade conversations. president trump can do some kind itbilateral deals on trade rained on anyone's parade of it -- the thing -- they think there will be a deal. he said it is not the right time

and we do not know if canada will come to the table. the canadian allegation will be in washington so we watch that with interest. keeping track on what happens with the peso, we did see the peso rally but the dollar is up .3 of 1%. many are asking lots of questions, what is the detail and will canada signed some of these big questions. and talking about the importance of getting a international deal. as the bondng market is concerned, you can pick up more with elsa who was with us in the last hour talking about it is the one tends in terms of the yield spread. limited supply came to the market, that was taken while but supply is building up very at

the slight bounce in terms of price this morning from the fed. and the flattening curve is a there is aomenon, huge amount of evidence. you have to go to tv and pick that up. we have the deputy prime minister speaking to an italian newspaper saying they may breaches 3% limit in 2019. its investments and boosting the economy growth require doing it. is that the warning shot? there is also a line coming from the finance minister this morning which is fascinating. it talks about the yield curve will narrow and this is a message from the finance minister. the italian-german bond yield spread will their own. somewhat of a diversions. a diversion view from the market.

debra mao has your first word headlines. debra: donald trump has said the u.s. is pursuing a and called ont canada to join soon. he announced the agreement and a hastily arranged oval office event with the mexican president joining by conference call. trump commented on the trade war with china. the white house returned it's like to half mast after ending the tribute to the late john mccain one day after he died. the president said in a statement. he added he had ordered flags in the u.s. flown at half mast until mccain's burial which will

be on sunday at the naval academy in annapolis, maryland. the u.k. can still make a success of brexit if it tumbles out of the eu without a deal. primes the message from minister theresa may as she heads to south africa on a five-day visit to the continent. the wto chiefd who said that trade was not going to stop if britain and the eu fail to strike a deal. and the u.s., odell beckham, jr. has agreed to a five-year contract expansion -- extension to the nerve giants. including $65 million in guaranteed money. the contract would make him the nfl's highest-paid wide receiver. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the

lumber get top . -- bloomberg at top . ofa: let's get a check assets. decent is after having a tuesday set for a third day of gains but there might be a little condition -- conviction with the bounce we saw on monday. now looking little changed after the events we saw a earlier in the session. the dollar in recovery mode and the rally in emerging currencies despite the pboc's determination to stabilize the yuan created has been a choppy session for chinese mainland markets. several analysts say they do not template for a china talks and see how that filters into today. that has helped nudge carmakers higher in japan and toyota on

the move gaining ground along with several of its carmaker peers in japan. and getting into the self driving game. this. to highlight softbank's vision funds is investing. last word on country garden, the worst performer on the hang seng. malaysia spends [inaudible] for the city project in the city state in malaysia. anna: thank you. pursuingand mexico are a new trade accord to replace nafta. president trump has called on canada to get on board or risk being left kind. he made the announcement in a

hastily arranged white house -- oval office meeting. >> i will terminate the existing agreement, when that happens, it depends on what the timetable is with congress but i will be terminating the existing deal and going into this deal. we will start negotiating with canada relatively soon. they want to negotiate very badly. but one where the other, we have a deal with canada. it will be tariff free cars or a negotiated deal. manus: johnny us now is jodi schneider -- joining us now is jodi schneider. is this the end of nafta as we know it? it appears to be that way. the deal, they started negotiating with canada but this agreement which is per is with mexico.

so it is different than nafta. a lot depends on whether canada comes to the table. canada has some big sticking points with the u.s. still toluding on it does not want give up protections for its dairy industry. we would have to see how that plays out. it is aks like different deal. with that, there are complications. it would have to go back through u.s. congress, it is a midterm election year, we do not know how that would work out. by everything we are seeing here this is different than the nafta deal and right now it is bilateral. manus: that is the key difference. anna: what do we know about the deal terms, autos have been a big sticking point for some time. have, and it raises the amount of regional content to 75% from 62.5 under nafta

which is something both countries wanted. and this helps mexico. the u.s. agreed to ease its requirement for having -- how long it would need to look at the deal afterwards. the u.s. had wanted to take a look at the deal every five years. they eased and gave up some ground. it is not clear what this does for u.s. manufacturing. president trump had campaigned on ending nafta saying it was a bad deal for the u.s., the u.s. beenost jobs and it has tough on that point but it is unclear how many manufacturing jobs the u.s. will get back under the terms of this accord. anna: thank you. there's a lot of detail we need to wait for. us on set, great to have you with us. we are waiting to hear details

of what the deals contained and we wait to see if canada signs. this function on the bloomberg. it shows you the u.s. relationship with china, this is the biggest trading relationship the u.s. has. in second place canada and in third place, mexico. does this tell us anything about what will happen with china? president trump clear that the time is not right to talk to china about trade. us an idea.ves withssues are to do liberalization. so many hard and soft restrictions in place right now and it is about liberalizing that. the u.s. will find it easier to operate. there is the differentiations in

the way that companies are treated and where they u.s. companies are treated area that will be difficult for the chinese to give any ground on in the short-term. withimportantly is to do the way that tariffs operate. goes into theat u.s. it is twice as much. it means reductions of tariffs of goods coming into china. can the chinese give ground? caps on a little bit but nothing meaningful right now. the tactics are conciliatory because they have a lot more to lose in terms of escalation of this conflict. manus: the ramifications of doing a deal, politics will interfere with doing a deal with china and that could have consequences for growth. how much of a slowdown, this is the debate we have had, how resilient do you see china on

the global growth story? the chinese growth was slowing and they would taking measures to ensure the slowdown is contained. the inflation moves are beginning to take place. it will take three months to six months to work to stabilize the economy and slightly boosting it back to 6.5. in terms of more medium-term impact in terms of the increasing trade dispute the estimates are coming out on the zero point 4%und reduction in the global gdp for the next 12 months and another similar amount in the second year. this is the guidance and we need to figure out where the second and third round impacts of this will be. this is in the face of a situation where this year rose has been buoyant but there was

an expected slowdown and 20 and night teen -- 2019. what we're looking at is the increased slowdown next year and that means that perhaps the monetary policy, they need to adjust for that. toa: has this done anything increase your appetite for risk or reassess your appetite for risk right now? ashok: not really. markets are being held up because of the goodness and -- especially since earnings are are beating for 80% market estimates. is holding in bullish .xpectations in 2019 and 2020 investor disappointment is going to set in. we have coming to us in 2019

when the ecb will stop the qe program so we have tightening on the monetary policy and terms of rising interest rates in the u.s. and continued reduction of the fed balance sheet. and reduction of them monetary -- the monetary [indiscernible] thisis works through and delays impact. theink in terms of markets, risk rises next year. are waitinghinese until after the midterm elections because they know that trump cannot be seen to be giving them a good deal before the elections and trump will have a freer hand after that. do you agree with that, is it the politics that they are playing on?

some truth ins that. thing thatndamental the u.s. is to mending of china and whether american companies can operate in china, that will be difficult for chinese to give ground in the shorter term. as they liberalize their economy they will be able to meet some of the demands. anything the chinese do in the short term is to contain this and not let it flareup any further. everything they do -- at the minimum level they have to to be seen not to be giving in. this is a long drawn out process and you should expect further escalation as the u.s. is pushing -- putting more treasure on china to relent on some of the topics that are on the table. anna: thank you very much. a little bit of breaking news coming through in the insurance , aspenin the u.s.

insurance will be bought. apollo global management is going to be buying them. $42.75 in shares in cash. atllo insurance closed $40.10. it is -- operates a holding company providing poverty and casualty insurers -- property and casualty insurers. canou are a customer you watch using the tv function. it has lots of extra so you get not just the regular tv stream but you get the charge that we are using, the functions we are using and you can do what that yes just did, message the team. to manus and ige or to our guest. manus: we will talk about the

u.s. equity market. where are the investment opportunities? and later in the week, we will be joined by legendary investor warren buffett. thursday at week on 4:30 p.m. u.k. time. this is bloomberg. ♪

anna: this is bloomberg daybreak: europe. let's get a bloomberg business flash. toyota has confirmed it is expanding its alliance with uber. at 72 billions it and both see toyota making minivans equipped with uber's self driving technology.

musk's two week ago private have shed a progress on the model three. it may have exceeded the target of 5000 week for much of his month. estimates from the tool can vary but tesla may have topped at 6000 cars a week for late august area that is your bloomberg business flash. the asian stock market extending gains after the u.s. equity market climbed to fresh record highs. the dollar has recovered and the yen has slipped. where are the opportunities in the market? take you straight to the s&p, flirting dangerously with 2900, new records and the nasdaq.

the data is rolling over, i put surprises formic the u.s. versus global economic surprises. do you want to join in the record rally? ashok: the torrent of good news is good. and we have another quarter or two of fairly good earnings growth to come. i think the market is not given a chance to correct and will reduce its interest rate rises for next year. there is already discussion taking place about the flattening of the yield curve will force the hand -- the fed to guide the market down and

terms of interest rate rises next year which are back to perhaps one. those are the things that are supporting markets but the things to look at in the market, leadership has narrowed, if you look, stocks are down so you ene need to be careful where you are positioned. stable company and more companies with certain earnings growth expectations that have been left behind in high risk mode. answer am getting the will be no. if this the time to get back into emerging markets? plateould pay -- it would positively for emerging markets. the main reason markets have been left adrift is to do

with raising interest rights and the -- rates. i do not see what changes. we'll have two more rises to come and we continue the production of the fed balance sheet. been exerted has in the emerging market is going to intensify in the next two quarters. there are values to be had but i seek we will continue to another selloff in the emerging market assets. we will head for a number of years a third full-year and the loss of bond markets. it happened big beneficiaries -- they have been big beneficiaries. anna: great to get your thoughts on that. and uptick in emerging market assets. thank you very much.

investment director at london and capital. european markets are up next. when you're traveling to work you can tune in to bloomberg radio. manus and i will be there. this is bloomberg. ♪ ♪

bloomberge watching markets, this is the european open. we are live from london alongside matt miller in berlin. matt: a rally in asian stocks stalled in u.s. futures are paring gains. european futures pointing to a mixed open. the cash trade is less than 30 minutes away. ♪ guy: trading on a new you -- a new deal. america and mexico make