manus: good morning from dubai. this is "bloomberg daybreak: europe." i am manus cranny. nejra: i am nejra cehic. a trained truce lifts asia stocks ahead of the g20. president trump promises if talksin tariffs with xi jinping fails. slashing the forecast of the u.s. government -- upping the ante. iran is set to breach the 2015 deal.

oil retreats from a five-week high. manus: a very warm welcome to "bloomberg daybreak: europe." it is in our headlines, goldman sachs capitulated and joined the fray. we putent bond yields, that handle on last week, we never held, goldman sachs down from 2.8%. we have had a gorging on duration. goldman sachs 10 year slashing., 1.9%, let's roll it over and have a look at the dollar.

what do you get out of a true set of the g20? what will that do to the dollar? ?ill trump pile on the rhetoric you are looking at dollar-yen at the bottom of your screen. there is a little reprieve in that market. i have no idea what this is. nejra: bitcoin, you know it. manus: i have never seen it written like that. i learned something new. 13,000, a shock from the producer. i have to talk a little bit about the markets i am looking at. you have u.s. futures pointing few days of a declines. we have risk on edging into the trade truce. we are seeing wti come off of the five-week high.

tensionsse trade weighing on crude not necessarily at the moment weighing on markets. markets in in on the asia. juliette saly in singapore has more. certainly the optimism about a potential trade truce is lifting markets, we are higher for the first time in three sessions. the nikkei leading gains. up by 0.9%. the yen extending losses. watching a lot of players in hong kong and china, a lot of movement in the likes of environmental material players. kospi up by 0.8%. may was lower than expected, but showing year on year retail sales steady at 1.2%. in terms of stocks we are

watching, there has been focus on micron technologies. chipmakers are rising better than expected. third-quarter results. this company is a computer ,ardware company in shanghai saying the u.s. blacklist on components is going to have an impact. i mentioned that move going into environmental and water treatment compsanies. willators saying they start a three-year inspection in china, putting focus on that. much. thank you very i have finally woken up and learned what bitcoin ticker is. race ipo reassures the ipo range. they hope -- that will give a

market cap to 3.3 billion pounds. the result of this, swiss re would receive in the region of 480 million pounds of capital boost. this is an ipo. good news if you are hungry for new paper. 280-330. thes talk about investigation we have, it all comes back to huawei. we have uncovered the several huawei employees collaborated with the chinese military. there are closer ties between the tech giant and armed forces that was previously acknowledged. huawei's chief legal officer denied this. president trump says substantial additional u.s. tariffs could be

based on good from china if there is no progress on a trade deal after his meeting with xi. touched down 45 minutes ago. david angle is on the ground. what do we expect from the next couple of days? like that isms what the markets are expecting, an uneasy truce. we got a few truces along the , this the last year difficult process between china and the united states. the last g20 meeting in buenos aires in december, we had a 90 day truce. we know how it fell apart. are they going to get a deal on saturday when they meet at 11:30 in the morning? very unlikely. will they chart out a path forward? it is possible but you have to read what they say.

xi jinping has not said much, but donald trump is tweeting, the chinese economy is going down the tubes. it is possible we will make a deal at i am happy where we are now. he talked about plan b should be plan a. ofn b means adding tariffs additional $300 billion to chinese goods. he wants to give the possibility shat another round of tariff are in the cards unless there are fundamental structural changes in the chinese economy, which the chinese have backtracked on promising. nejra: how might currencies play into this? donald trump is saying the dollar is too strong. he is worried some of the main economies, particularly china

can competitively devalue. i am sure absolutely competitive isaluation by the chinese not one of the strategies. he will hold that against the chinese as well, weaponizing the exporters.p their i am absolutely positive the currency issues will be brought up. it always is in these discussions. that is why we really want those negotiations tomorrow. excuse me -- on saturday. who would you rather be the fly on the wall in? there are two key dinners tonight. xi jinping will be meeting with shinzo abe tonight. donald trump will be meeting with australian prime minister scott morris. ishink the xi jinping dinner interesting. the first he has put a foot on japanese soil since becoming president. he has not been here since 2009.

those countries have had a lot of difficulties. they are trying to repair it against the backdrop of this u.s.-china trade war. nejra: thank you for joining us stephen engle. he will be leading the coverage on the g20 through the weekend. we will have index coverage live from osaka this week. stay with bloomberg for that. joining us for the hour is christian keller, dir. economics research, barclays bank. welcome and great to have you on the show. how high of a risk is it that the trade war ends the global business? christian: we think there is a limited risk. it is difficult for investors to decide. our decision is we believe extend towards chinese goods, there is a long-term conflict that is more likely to end up with all goods put on tariffs. we still see economies across

the region are very strong consumption service driven economies, where labor markets are relatively healthy. large economies like the u.s. look relatively shielded. risks have risen. think it is a time for long risk, recession risk is relatively contained. manus: welcome to the show. a quick correction. ien i was breaking swiss re, said they would get a capital increase of 400 million pounds. they are preparing their u.k. unit for their ipo. let's move along. understandingan from you. donald trump made a statement that the chinese economy is tanking. i take you to the data.

small companies, pmi's, how much pressure is the chinese economy really under? thewe under assuming downside pressure on the economy, which puts pressure on xi to do a deal? it quite: we take serious. we did our calculations. we assume there will be a 25% tariff on chinese imports. we have to shape up a hundred basis points on chinese growth. countermeasures, we have not seen below 6% growth in china since 1990. it is a larger in economy than it used to be. we think the chinese are experiencing pressure. the current process is gone, they made move into deficit. it is a most natural they would look to let the currency depreciate.

to the nextleads question. manipulation or the threat of manipulation aside, does that you when -- does the tarif it is a question of a political decision. opposite to what trump is suggesting, they are holding up the yuan and supporting it rather than purposely weakening it. we think these negotiations do not go in their favor. we have a forecast from a year it could that we think happen over the summer. about how i talk prepare myself for a bumpy ride. i look at your research. you say in preparedness for an

dollar, we along the so liberal of her recently. if we talk about the dollar taiwan dollar philippines, do you see a preparedness for escalation? dollar,n: i think the if you look at these currencies in asia, manufacturing economies in taiwan, if you look at the profile, the dollar versus a over the currencies next few months, we think will be dollar weakness. if you see an inverted curve start to steepen, that is the time when the dollar weakens, but not against those currencies. in terms of preparing for a trade war and an escalation, on allect tariffs

chinese goods, you still have a tilt towards risk. how do you protect a portfolio? christian: if you look at tenure treasuries, we see them at 1.95 for the next 12 months. if you look at the risk profile, it could move to 1.50. we think that is an estimate. the risk of them moving down is higher than moving up. still one way to protect oneself. this is what markets are doing. even positive news on trade, the chance actually for the u.s. bond market to selloff, we think that is a limited risk. manus: we will dig into those yields in a moment. where the put in the call can be. christian keller, dir. economics research, barclays bank. let's get to your first word

news with debra mao in hong kong. goldman sachs has joined jpmorgan in slashing its forecast for u.s. yield. byy see the 10 year at 1.75% year end, down from 2.8% as recently as sunday. the new figure prices in expectations of a long trade war and a dovish shift by key central banks. there's a million to one chance of a no brexit, according to boris johnson. a took a softer brexit chance day after saying he would take the u.k. out of the eu on october 31 do or die and come what may. iran is set to breach the 2015 nuclear deal for the first time today. it will exceed a cap on stockpiles of low-grade uranium. this puts pressure on the european powers trying to salvage the agreement. tensions have spiked as the u.s. has upped sanctions on iran.

saudi arabia has removed an ownership cap a publicly traded companies performance a tedious investors. this paves the way for international backers to take a controlling stake in listed companies and ends the previous maximum of 49% ownership. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. kong, debra mao in hong thank you. coming up, we speak to san francisco fed president mary daly from the aspen ideas testable. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in dubai. equity markets building up to what is expected to be a truce, cease-fire. papers at one of the the g20 this weekend? there is a great note on the bloomberg talking about raking through the barriers on the way to 100 against the dollar. that is something to consider. do you want to be fully engaged before the g20? just watch twitter. nejra: at the start of this week i remember you talking about the big things where the fed. in marketsf fiat today. oil is lower. we saw a drop in the u.s.

stockpile yesterday after the five-week high. the 10 year yield edging higher by six basis points. a little bit of a reprieve in the bond rally. users on the front foot in the days ofer four declines. we are asking the question, which asset will produce the best returns in the second half of 2019? team ont to us and mliv your bloomberg. let's get the bloomberg business flash from debra mao in hong kong. 0 is planning to jettison its controversial holdings into a new fund. the asset manager says it will separate the non-rated corporate bonds. management say they were surprised by the outflows. the chief investment officer says if they expected it, they would have handled it differently. they wererberg says too slow to respond to a video

of nancy pelosi. it was edited to make it look slurring heras words. it took the social network more than a day to label it as fake. >> that was an execution mistake. ist we want to be doing improving execution, but i do not think we want to go so far toward saying private company prevent you from saying that it thinks is actually incorrect to another person. a: elliott management is in advanced talks to buy qqe resources -- qpe resources. they could reach a deal within a week. that is your bloomberg business flash. manus: as the fed was primed to begin and easing cycle, morgan

stanley is keeping a cautious stocks, andina prefers brazil and indonesia over south korea, taiwan, and mexico. the u.s. and china decide to resume negotiations after president trump and president xi leave the g20 summit, it could deal a sense of relief in emerging markets. at least in the short term. christian keller, dir. economics research, barclays bank. another lifeline from central banks, we could can concur we have been given an oxygen mask by the central banks. you say you must hold your nerve with em, and even though you have headwinds of trade, there are strong anchors for em, credit, and opportunities to hold our nerves. why should we hold our nerves when you look at this chart we have run so far so fast? christian: i would challenge

you, any asset class above long-term averages, you look at equity and almost anything. we have a money tied keeping things up. three cuts by the fed by the end of the year. markets are pricing in cuts by the ecb. we have 12.5 trillion of bonds below 0%, meaning negative yields. that is a powerful factor. with regard to em, look at the growth, and as i said earlier, we believe the china-u.s. conflict will stay and it puts a lot of pressure on the em complex if china continues to slow growth. stay away from the most growth sensitive assets, but if you get into the credit spectrum and look at debt profiles and what yields you get, we think we continue to push money into emerging markets. idiosyncrasies, there

toa tendency for investors prefer india, brazil. they should be doing better than trade exposed economies in east asia. nejra: you make a point that that cuts are the silver lining, all.ot a panacea for some are saying when it comes to emerging-market bonds, longer is better, buying the long-duration debt is proving to be a winning strategy in a low rate world. is that something you are on board with? christian: i think one has to be selective. there are issues. even in europe, the tendency to issue a longer-term bond in developed markets. , but what wetry have seen in the last six months , the large differentiation in

performance, money is tight in the background but you see political events in turkey, they africa, brazil, depend on reformed decisions. we should not ignore them. the tendency will be to extend whereon in an environment central banks are bringing down rates. nejra: we have certainly seen that with austria. it tells us everything about the hunt for yield. christian keller, dir. economics research, barclays bank will stay with us. coming up, as u.s. strategists gather, goldman bonds team flashes its forecast for the 10 year yield. that is a punchy change of call. manus: it is indeed. you have to choose your word, isn't capitulation? joining the low bond on

that? we will get into this fed discussion, deep and dirty. it is all about what happens at the g20. nejra: we will be right back. this is bloomberg. ♪ the latest innovation from xfinity

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dave -- this is bloomberg "daybreak europe." >> you said it is all about fear and the fed. to the g20.rns we are not seeing a huge amount of fear in markets today. >> you call that delusional. that is a personal opinion rather than based on a bloomberg fact. twitter stream. equity markets have only one

thing on their mind. save the day.g to what would get a trump put in trade? >> we keep hearing conflicting things from the president. reports there could be truth out there. president trump saying he could move to plan b. >> more tariffs. will fx be one of the big issues ? it is certainly in his mind. he job owned the fed. to have a good old slap at the euro and every other currency. it is a feast of news. twitter will be king. let's get into the rest of the markets. our partner in mumbai.

ann marie on the ground. let's take it to india first of all. >> you are talking about trump. tweeted one in india, saying he is looking to meet prime minister modi but tariffs raised unfairly need to come off. speaking of the indian markets, you were talking about how the nervous.re not the last two days, we have talked about the small optics. fairly decent gains at the broader end of the spectrum. , considering we are approaching a big event. good start. let's see if this lasts. >> anne-marie, you are looking at the global picture.

a huge about-face. not all about treasuries. >> i will get to that chart in a moment. up 0.9 percent. hong kong as well. china csi as well. ahead of the meeting between president trump and president she. the japanese yen, down to 3%. we are seeing a higher u.s. dollar. sovereign bonds, already. australia's 10 year, up at basis points. down 0.5%., under -- $59 a barrel.

i would say the more important meeting is coming up this weekend when president putin will meet. it is about this call everyone is talking about. the year and yield call. 1.75%. it is a huge about-face. sunday, they said 2.8%. a laundry list. -- week data.ht the gulf as well as trade wars and you cannot forget brexit. issaying the bond rally going to be difficult. great work. annmarie hordern in london. let's get your first word news.

>> a bloomberg scoop. woody's ties to the chinese military look to be closer than previously knowledge. collaborated with armed forces personality. it includes an effort to classify emotions and online video comments. billions more in tariffs if talks with china fall through. that is what donald trump promised. he announced -- the whiteout announced they are set to meet 11:30 a.m. osaka time. one million to one chance of a no deal brexit. the shift comes a day after saying he would take the u.k. out of the eu. do or diane come what may. a milestone for saudi arabia.

the kingdom has removed and over -- a cap. this paves the way for international backers to take controlling stakes. it ends the previous limits. today, and, 24 hour more than 120 countries. this is bloomberg. >> thank you very much. jane --sachs, they have joined jp morgan. a substantial rewriting. incorporating expectations. along with a dovish shift. >> the san francisco fed president says the goal of any rate cut is to boost growth. she says it is hard to predict

whether rates will be lower a year from now. christine keller from barclays is still with us. i have to bring up the fact they have been one of the punch just, u.s. economists predicting a 50 basis point cut in july. does that hold given the developments we have had this week and what we heard? data is moving in our direction. you will hear from the most dovish member 50 is overdone. a get a 50 cut. about 75l strongly basis points for the remainder of the year. you will see cuts, what you

would call insurance. rates were high. still a very good call, looking at the risks we have. if your case is let's get to 75 points, the consensus trade seems to not just before lower yields. but for sweeteners. are you part of that? we see a steepening, five-year. once the fed makes the first step, there is a chance markets and rates start pricing more. there will be people saying, this could be worse than expected. a steepening of the curve. a weakening of the dollar and the initial phase.

>> of the rally and equities. yields falling lower, a disconnect. in?are equities rally does getting your head around that and where both markets go next come down to whether you see the fed cutting? because of the cycle? >> that is where one has to make a decision. pricing for recession or acknowledgment the long run neutral rate economists called it has been coming down? rate, see the long run the median, a year ago, it was three. it has been coming systematically down.

of view,ke that type you have a recalibration of interest rates. >> the argument is it is the market which is chastising the three people into doing these cuts preemptively. the mandate is about inflation and employment. is it enough in your opinion in 2020 to invoke the spirit of the five-year swaps? rekindle with substantial momentum the inflation expectations? >> we will have to see. the growth is holding up quite well. this is probably the view, anyone who thinks we will not get many cuts, saying this is a

robust picture. i remind you of the draghi speech. announcing potential for stimulus. concerned about some of the survey data. those may be take longer to turn around. fear expectations are no longer consistent with the 2% target. >> they have revised download yield forecasts. i want to bring up something manus and i were discussing. and the u.s. curve. flattening elsewhere because of concerns the fed cutting is a reflection of a global growth

slow down. would you disagree? >> it does reflect and await our narrative. europe is in a difficult position. the ecb also -- almost has to follow up with cuts. we are talking about people seeing 250 basis points. i think not to expect too much steepening in europe, given that there is room for qe. you will continue to depress the lower and. >> thank you so much.

coming up on the show, we speak to the san francisco president come out later on in programming. it is an exclusive conversation. this is bloomberg.

this is bloomberg daybreak: europe. the latest, japan's first ever g20 summit kicks off.

tomorrow morning, president trump expected to meet aid andly with japan's angela merkel. opening the day, ceremony, trump is expected to meet with vladimir putin. >> the most eagerly anticipated meeting is scheduled when trump xi. down with down with the official closing ceremony takes place. watch for more trade news again as the u.s. president holds a press conference. 6:30 a.m. london time. grounded 737 max have revealed a new safety risk. they discovered flight issues could cause the plane to dive in similar fashion. earlier, the chief

technology officer explained how they are mitigating risks. >> the faa has found a new safety risks. that has to do with the data processing software. how do you mitigate such risks >? >> it is fundamental to take a step by step approach and demonstrate as you progress along whatever roadmap, it is itortant to take step-by-step without compromising on safety. safety first. there seems to be a shift from jet fuel to hybrid engines. it is decades away.

now you are saying it is closer than you think. >> it is a societal need and business imperative. zero emto strive for ission technology. it will be a set of technologies to be developed coke currently to allow us to fulfill this ambition indefinitely. hybrid propulsion. range aircraft, going to sustainable fuels is an imperative. >> how soon are we looking at? a plane would that be? depends what type of technology. purely electrical propulsion, that would be feasible for the urban mobility type platform.

we can think of regional transports. for 2030. be like whereas if we look at bigger type of aircraft, that is where hybrid propulsion is interesting. enabling you to fly purely electrically, allowing to reduce significantly the perceived noise. range type of would continue being on the radar for the next years to come. tothat airbus ceo speaking haslinda amin. let's get the business flash says facebookberg was too slow to responded to a

doctored video of nancy pelosi. it took them more than a day to label it as fake. he discussed the incident at ideas festival. >> we want to improve execution. i don't think we want to go so far toward saying a private you from saying something it thinks is factually incorrect. >> elliott management is in an oil andlks to buy gas explorer. deal inld reach a weeks. paul singer's fund owns 5%. that is your business flash. to breach the 2015 nuclear deal for the first time. they said they will exceed the

cap in stockpiles of low-grade uranium. tensions have spiked. after the downing of the u.s. navy drone. joining us now is a reporter. iss is about provocation, it a symbolic thing to break the deal. everything the europeans do not want to hear. >> that with put them in a position. are behindying we this deal. we are going to stick to it. with iran basically coming out insane, we are going to break this deal, they may be forced to impose sanctions on iran. >> there are many threads to tie together, nothing least, the oil tanker attacks. this.e splitting over

tell us about how these could evolve. >> this is one of those curious statements we are trying to make sense of. the uae went to the u.n. and said, we blame a state actor for the first wave of attacks in the tankers without naming state. yesterday, the foreign minister said we cannot blame one country for this because we do not have the evidence. uae trying tothe keep some distance for maneuvering. they are doing their best because they don't want to see confrontation with iran come to ahead. >> we interviewed the minister. you kept pushing him and said, the world is worried about an accident. i would think this use of

language is that offramp. >> probably. the reality, the americans came out and said it is definitely the iranians. took usican navy reporters to show the ships attacked. government may be is possibilityep that for talks back and forth with its neighbor iran. the uae told us they don't want to be baited into crisis with iran. >> thank you very much. our resident reporter here in dubai. the oil a lot for markets to deal with. seen a ramp-up in the back of the geopolitics.

versus the demand side. that side is about global trade. what is more prevalent for you at barclays. we are looking at supplies and are somewhat disappointed. we thought there would be less impact from the sanctions on iran. somewhat low production from the u.s.. we came to a point where we think, given growth is slowing but not falling off a cliff, we have rent going over 70 and the second half of the year. >> >> i know you don't necessarily look at these on a daily basis. suggesting u.s. oil can keep

rallying. pointing in favor of what you are saying. do you see a slow grind? they can be concerning for the global economy. given the geopolitical issues when it comes to supply issues, that can always cause spikes. that is something that of course can create spikes you talk about. >> the head of economics research. i thought manus wanted to jump in. bloomberg, as geopolitical tensions continue speak tooil prices, we the executive director.

do not miss that conversation. bloomberg users can interact with the charts. tv.ured on bloomberg we will continue to analyze the market reaction in anticipation of the g20. this is bloomberg. ♪

>> good morning. i am nejra chair rich -- >> i am manus cranny. these are the top stories. plan b. tensions in trade lift asia stocks. billionsump promises if talks fail. morgan sachs joins jp slashing its forecast for u.s. yields in the global dovish tilt. we hear from the san francisco

fed president. set to breach the nuclear deal for the first time, days before being slapped. oil retreats from a five-week high. >> good morning and welcome to daybreak europe. hour from equity trading. after four days of climbing. u.s. futures pointing higher. with those reports out there of a tentative trade truce between trump and she. is the market getting ahead of itself? green in terms of equity markets. so risk picture is not

clear. the oil prices are lower, that is interesting. yesterday.pike suggesting concerns around demand and trade. some live pictures from osaka. the vietnamese prime minister arriving. momentum is building. what kind of plane did you arrive in? towho has the capacity hammer out a deal? the vietnamese prime minister arriving. the global bond market leader, the treasury market. these are treasury futures. 280 last week. gone.

one point 75%. this is a demolition or a reality check. yields are going further and lower. morgan's board at it. slashed to .3%. bunds, -.55. and crushing trade. that is what happens when you gorge. >> how interesting is this? saw inry bond sale we austria. let's look at numbers for h&m. second quarter pretax profit, 5.9 swedish krona. we are coming in a touch light.

they are saying sales got off to a good start. have you been shopping? h&m continues to improve. the number of new stores, cutting the number of new stores in favor of digital investment. shiftpdate on that online. big question, what is the size of the inventory? second quarter pretax coming in light. singapore, juliette saly. great to have you with us. frontes seem to be on the foot. but the yen weaker. are seeing money moving out of the yen. biggest drop since april. japanese stocks close out the session. nissan as well.

we did have an alert saying they are going to recall more than 491,000 vehicles. other makes and japan as well. it relates to circuitry and there could be a risk of fire. session,, a good coming through in asian equity markets. optimism bullying sentiment. india looking good as well. csi 300 update -- 0.8%. ofaysia's big bank did warn recessionary concerns due to chinans over the u.s. trade dispute. the aussie and the yen. extending that drop. dollar a beneficiary

ahead of trade talks. we are hearing saying exporters are hedging reluctantly. the philippine peso, the best-performing asian currency today. up 0.2 per percent. optimism about trade talks. money flow foreign into philippine stocks. >> thank you very much. buyer -- theon german chemical company. the stake 5%tt, higher. 1.1 billion in holdings. huge valueere is a

proposition. excess of $30 billion. this is a big line coming through. we have an interview. canou have a bloomberg, you talk to me and asked me what time the interview is that. i know you talk to me constantly, that they want a step change dealing with illegal issues. that is why we tell you to join us and have that conversation. you both onlking to air and on the iv. about alk about severalg investigation collaborated with a chinese company. awei'sway -- hu

investigator denied connections. substantial goods -- tariffs would be placed if there is no progress. they plan to meet on saturday. our chief north asia correspondent joins us now. let's talk about the fact equity markets do seem to be rallying on reports of a tentative truce. how likely is that and what might it look like? >> it is probably the best news we have had for a while on this front. even the treasury secretary says he predicts we are about 90% of the way toward some sort of deal as a possibility. it is always that 10%, the last 10 yards.

getting into the end zone. those are structural issues china has been reluctant to commit to law. do you want an easy deal or a hard one? that is where the skeptics come in and say, they are not going to get a deal done. no one is expecting a deal to be announced. the best case scenario would be a framework going forward. a path work toward reconciliation. meeting across the table face-to-face. that is what we are expecting. 11:30 in the morning. it could all go pear-shaped again. we have seen this kind of optimism fade out. they had a 90 day truce to work

out some sort of deal. comes in fits and starts and might fizzle out. >> you are going to cover the trade aspect. we have this line from theresa may. she is calling for de-escalation. trade, trade. you can be certain there is going to be one or two lines in iran. thank you very much. in-depth coverage. they are in osaka throughout the rest of the week. the senior economist for the u.k.. great to have you with us. the conversation we have just who is under the

most pressure. make a call. trump at his equity trade? xi. >> good morning. we think it is going to be trump under the most pressure. this has been about the asymmetry. more.s. imports so much from china. the analysis is going to be more blowback. a year into this, we are seeing the tables turn. if we get escalation, if trump follows through, this is a shock to the global economy. it could act as a tipping point into u.s. recession. is very difficult for presidents to be elected or

reelected on the back of a recession. trump has to have that in the back of his mind. he can't push this too far. does create some shifting of the political power. >> you talk about a tipping point for u.s. recession. even though they do expect tariffs to be increased to all chinese goods, they are little in terms ofguine the global business cycle. if you talk about the concerns of the u.s., most companies are seeing a contraction in business. to theuld take it tipping point of recession. >> it forces the authorities into stimulus. even then, it can be difficult for the chinese to offset the

force of this. we accept -- expect deceleration. you see that come through, you see a growth impact. it will push chinese growth. >> he said we could see growth at a level we have not seen since the 1990's. if there is a major escalation. do either of them really want that politically? trump could be under pressure. this is dollar you on. is dashed of the chinese just let the currency rip?

>> there is plenty more flexibility than we have seen in the past. the people's bank have put out saying, there are no magic numbers. when we think about the depreciation we have seen and theoretically, we should expect them announced in another currency. there are natural market forces in effect. there is no reason to fight that. i think we will see some softening. stability is a key mantra for the chinese. we think there is some flexibility. >> staying with us for the rest of the show. we speak to the san francisco

fed president. don't miss that exclusive conversation. this is bloomberg.

>> got me dancing around in my boston pops fireworks orchestra. equity close to the cash let's go to debra mao. >> a bloomberg scoop. elliott management and advanced talks -- we learned they could reach a deal in weeks. already ownsfund about 5%. planning to jettison

holdings into a new fund. they will separate these non-rated corporate bonds. management says they were not surprised by the outflows. the chief investment officer said they probably would have acted differently if they had expected it. that is your bloomberg business flash. much for thevery roundup. we are joined from rome by the european finance editor. what is the latest in this story? divesting of more holdings? what is the latest? >> this is an ongoing exercise in damage control. they are re-fencing the most controversial assets that have

triggered this. we don't know if there are other ofets people will work something that is a very liquid company where people can pull their money at any time. they need to reassure everybody they don't have a lot of assets they can't liquidate. >> thank you so much. goldman sachs has joined jp morgan putting down a forecast for treasury yields. expectations along with a dove age shift. -- dove it shift. you have seen two rate cuts in 2019. other than left stock and bond markets. would it protect the real

economy? >> you are trying to offset that 80% that has been built up. markets have become fragile. china and mexico. concerns about what might happen with the eu. aboutre talking bolstering business confidence. consider white house policy something that is weighing. inflation is a little softer. that is not something that can carry through, but we do see it. >> the conversations we have had is anying to guess what insurance cycle cut?

what does that do to the dollar? phases, wenitial should see some softening. that is enough to reestablish global risk sentiment, that is fine. we see some softening come through. the difficulty is if you see the fed having to act more aggressively. then you start to get some of the support that would provide offsetting things. you see the dollar wayne initially. start to recover. this to comect through from the dollar. more,turns into something you could see a sharp saul alpha. -- selloff. off -- does the

10 year yield, more likely to move to 1.5 or 2.5? what's we would see it moving toward 1.5. we will see something more benign. provides some risk support to markets. we don't see them much different than where they are. rather thanly lower higher. take the fed as the roads is traditionally traveled, who is going to be more radical? a more radical move? ecb looking to expand. boj ahead of the curve.

negative rates. seeing that pickup in qe. constraints.itical negative rates, more aggressive. considering whether or not it has to adopt a boj approach. likely to think about other issues as well. corporate bonds may be expanding. for being with us. it goldman going down to -.3. david page, senior economist for the u.k.. talked about 1% yields last thursday. we never quite made it again. a plane and buy

you breakfast in the morning. to have breakfast, manus. open ispean market next. this is bloomberg. xt. this is bloomberg.

>> good morning. we are life from our european headquarters. i am anna edwards. >> the markets say kick the can. stocks advancing. leanne extending losses did the cash trade is less than 30 minutes away. quiet's plan b. th