this is "bloomberg daybreak: europe. xi jinping condemns protectionist measures ahead of a -- with the u.s. president. has big trade deals with japan and india. no stress. the titans of u.s. banking promised to pump more cash to shareholders after all 18 lenders past the stress test. san francisco fred president mary daly tells bloomberg it is too early to know if they cut is needed, or by how much. too early from my

perspective to know whether we should use the tool at all, and what magnitude of the tool we should apply. and in another exclusive, paul singer sees a market correction of 30% to 40% whenever the downturn comes. >> i have been expecting it is but they's epiphany, possibility of a significant market downturn. ♪ nejra: good morning from london. let's get a check on the markets. big day ahead of the g20. we look ahead to the meeting between trump and xi. we don't know what to expect at

the moment. we saw gains in u.s. equities. s&p dead flat, but we are heading for the first weekly drop in global equities in four weeks, so that is something to note. in june, we have seen global equities rise 6%. the bloomberg dollar index is treading water, but it is headed for its biggest monthly decline in more than a year. switched up the board and take a look at the pulse of risk in some of the other asset classes. dollar-yen, we are seeing the yen bid is a safe haven in, along with gold. while a little weaker. we are looking at wti a little soft, but oil looking at its best month since january. it is the g20 and also opec next week. let's check on the markets. juliette saly has more. juliette: cautious in asia, as you would expect ahead of the

trump-xi meeting. you are seeing japanese stocks down by about half of 1%. investors are weighing whether or not there will be an increase amidst threats on u.s. tariffs on japanese countries. we have seen some pretty good data coming throughout of japan today, despite the increasing trade tensions. we saw industrial profits rise the most in more than a year in may, up by 2.3%, well above estimates. elsewhere, you are seeing risk off across the board. asian stocks lower by about a third of 1% on the msci index. but let's put it into perspective, because it has been a good month for asian equities. have seenf stocks, we comenix in seoul under. s&p cutting the outlook amidst

concern of semi conductor sucks. it has cut the outlook to stable on the week chip environment. elsewhere in the tech space, nec looking quite good. and we are watching this stock in hong kong, because it has successfully applied for a link on the ipo, the new tech board in shanghai, rising the most since april in its hong kong-listed shares today. nejra: juliette saly, thank you. let's get to our top story. the g20 summit is underway in osaka. u.s. president trump has already met with prime minister's modi, abe, and chancellor merkel. he is bracing for a meeting with xi jinping tomorrow, and huawei is said to be a dominant theme of the meeting. let's get a stephen engle for all the latest. stephen, great to have you with us. what have we heard on the issue of huawei from both nations?

stephen: huawei is the big elephant in the room that is clouding the potential discussions they will have tomorrow between donald trump and xi jinping. will the chinese side demand the u.s. block the action -- or drop the action they have taken on this export blacklist on flyway? will they demand the u.s. drop that action for any kind of trade deal or discussions to go forward? will it be a precondition even for a truce? perhaps it is a longer-term goal for the chinese to get the u.s. to back down on huawei for some sort of trade deal to come to fruition. nobody is expect in a trade deal to happen here or any details of a trade deal tomorrow after their meeting, but we are likely to see -- were many participants are hoping to see whether there is a path forward on discussions. shinzo abe really -- he said it in simple terms, but he said

tensions are rising on trade and geopolitics. that is what we are seeing. already you are seeing the optics being played out the day before xi and trump will meet. xi jinping has already met with the leaders of russia, japan, india, and some african nations and made some very interesting comments. it did not name the united states or trump in name, but let me quote you, xi jinping saying, "we are calling on fair and equitable market environment and for upholding the completeness and vitality of global supply chains." that is a very definite inference to the flyway case. also: yes, and we have heard from president xi jinping on bullying. talk us through a little more on the mood music and the comments we have heard from president trump and xi ahead of thereby

bilat.ahead of their a lot going on all weekend. stephen: absolutely, on different sides of the g20, taking dominant themes away from the overarching g20 and what is going to be their final communique with all these leaders competing. there is climate change pushed plastics pushed by the japanese, but the overarching themes will be the trade war between china and the united states and combing the trump white house and iran. the other thing we got from xi jinping earlier this morning, positioning ahead of the big meeting tomorrow with donald trump, he said any attempt to put one's own interest first and undermine others will not win any popularity. what is happening now, as donald trump is also meeting with the

so-called quad, he is trying to reshape the dialogue in the asia-pacific to the indo pacific, which includes australia -- his first meeting with the prime minister of australia for dinner last night -- and he has met with shinzo abe and modi today. he is lining up his ducks in a row, xi jinping is lining up his ducks, and it is all going to culminate tomorrow. nejra: thank you for joining us. today we are asking the question on mliv, what will monday trading look like after the g20 leaders summit? you can reach out on your bloomberg. hour, a chief the investment strategist at norman trust. great to have you here. let's kick off with the mliv question. what are assets going to do on

monday, post the g20? >> i'm sorry, but what exactly is the mliv? >> what will monday's trading look cap like after the g20 summit? >> yes, but what is mliv? nejra: markets live blog. it's just a question we put out. >> oh, i'm sorry. to a large extent, it is about trump. xi ingoing to talk to a positive manner, or will he put anything on the table? we are focused on trump, trump, and trump. how does he talk and interact with these global leaders? that will be the leading indicator of the market involvement on monday. nejra: who is under the most pressure to get positive outcome? >> it looks as if it out to be xi, but in preparation for these meetings, we have had some

pretty tough talk from china and also a very clear indication that they have the tools, the policies, the ability, the firepower to support the economy come may. it is hope for the best, prepare for the worst. from donald trump's side, the risk is that if the trade war escalates, if tariffs are imposed on all china's exports to the u.s., then that starts to have a pretty dramatic affect on the u.s. consumer. so both sides have plenty to gain from a positive outcome, we think. nejra: ok. you thought towards the beginning of the year that markets were priced too pessimistically on global growth. has that shifted as we head toward the g20? >> we have become more cautious. we believe tensions have escalated to a degree we did not anticipate at the start of the year, and we feel the long-term trend on having a hegemon power

in the shape of the u.s. and a rising power in the shape of china coming to blows, that was always going to happen, but it is happening much faster than anticipated. that certainly put trade tensions much higher on our agenda with the negative implications that has for growth. yes, we have become more cautious on global growth. the dollar reversals indicated more optimism ahead of the g20, but they sort of dropped back again now, and i suppose it highlights the fragility in market sentiment ahead of this key meeting. do you think the yuan needs to weaken post-g20 based on china's fundamentals, rather than on the politics of the trade wars? >> we do not think that is the case. that is always an option for china, of course, but any move in that direction would be taken by the u.s. as an aggressive move.

it is unlikely that china would weakeron making the yuan than less the relations had really broken down. i reiterate that china has done quite a lot already to stimulate growth to offset the impact of the trade dispute, and there are risks, of course, with aligning the currency to weaken in terms of risking capital outflows. so we do not think we will see further weakness. nejra: great to have you both here for the hour. now let's get the bloomberg first word news with debra mao in hong kong. debra: titans of u.s. banking say they will pump out more cash to shareholders. cash has risen to $175 billion, after all lenders past the federal reserve annual stress test.

results were a particular win for deutsche bank, after it repeatedly failed past exams. the global economy could be headed toward a slump, according to billionaire paul singer. the cofounder of elliott management estimates there will toa market correction of 30% 40%, but he could not predict the timing. the highk we are at end of the risk spectrum. , or have been expecting -- it's not today's epiphany -- but the possibility of a significant market downturn. debra: the second democratic debate saw former vice president joe biden come under fire from center, the harris. -- from senator kamala harris. she accused him of being and sensitive to african-americans. harris did say she did not believe biden was racist.

easy come, easy go in the world of cryptocurrencies. bitcoin has a most wiped out its make again this week, sinking just as swiftly as it rose. this brings back memories of the crypto bubble that burst at the end of 2017. news 24 hours a day, on air and at tictoc on twitter, powered by more than 27 hundred journalists and analysts in more than 120 countries. this is bloomberg. debra, thank you. coming up, we speak to ken moreles. ♪

this is "bloomberg daybreak: europe." markets and a bit of a holding

pattern ahead of the g20. we are seeing a little bit of red on the msci asia-pacific index. maybe a tiltuch, towards risk off, but nothing extreme. s&p futures are flat. global equities actually heading for a weaker loss, the first in four weeks. , but it isback foot heading for a multi-gain, and, of course, trading lower ahead of the g20. also, opec plus next week, gold still above $14 a barrel -- .1400 let's take a look at the bloomberg business flash. , boeing following the most in six weeks, on a scoop that it could take three months to fix latest software glitch on the 737 max 8.

duringue was discovered faa simulator tests when the pilot experienced a lag in emergency response time. apple's design chief is leaving after decades. johnny ives is moving to form an independent company with apple as one of its primary clients. he is responsible for the look of the company's mostly climate -- most iconic products. how much was he worth chapel? is $9 billion, how much the company lost when the news broke. june is not over, and so far large companies doing business in europe have announced 28,000 job cuts in the region. the latest is ford motors, joining peers and industry in making massive layoffs to cope with a downturn in their businesses. that is your bloomberg business flash. nejra: the fed is widely expected to cut interest rates in july, with some even seeing a 50 basis point move.

but san francisco fed president mary daly said it is too early to know if a reduction is needed. she spoke exclusively to bloomberg at the aspen ideas festival. treasury'sar is the responsibility, so when we are making our judgment, we are thinking of the inflation mandate and full and we met mandate -- full employment mandate. the dollar is one of the variables we track, but we do not think of it as the output of our policy, largely the input. >> it would likely go down, would it not? >> it depends on a number of factors. the dollar fluctuates on more than just the strength of the u.s. economy. it fluctuates on geopolitical issues, debt ceilings, et cetera. if you do a rate cut on july 31, how do you feel about the debate whether it should be 50 basis points for 25 basis points, the new theory that it

is better to take strong action earlier? >> that is a theory that is not as new as it seems. that came out of the research after the great recession and the recovery, that using your tools early and -- that would call for different actions. in where a day to come we are slowing. it is too early to know whether we should use the tool at all and what magnitude of the tool we should buy. that was our exclusive interview with mary daly, san francisco fed president. sarah, is the fed going to be able to offset the risks from the trade war with whatever action it takes this year and next? >> we think they will certainly

make exception to do so. there has been a shift we have seen in the fed's treasury, signaling they are willing to ease trade policy to offset the trade dispute. we get resolution over the weekend, the longer term remain for businesses. investment are perhaps not going to be as strong as they otherwise would have been. and this is an environment where inflation is low. we are not seeing it move up in a way that the fed may be thought. it gives that the fed scope to take cuts. we think they will cut in july. we think the fed funds rate could be down by 50 basis points by the end of this year. but the data is going to be very significant. nejra: you say there might be two this year.

the question is, what would be the point of doing just one 25 basis point cut this year? it is to lift confidence as well. you think we could see three rate cuts this year. >> we do. we have been calling on the fed to reverse its mistakes from the end of 2018. we are well into the year and we now think they need to cut three times to get ahead of the situation again. we would love it if they did 50 dips in july. we think they should, but let's face it, it is unlikely. like we saw in the interview, the fed is cautious, moving in a piecemeal manner, and it is not action. take decisive they should, but they won't, even though the inflationary backdrop calls on them to do so. nejra: it's interesting that you want them to cut 50 bits in

july. some say that will really spook the market. is this what you need them to do to be preemptive and get ahead of a slowdown or any further concern in markets? wouter? exactly -- exactly. the fed has become market dependent. they do not do anything with their interest rates unless they get ahead of the curve again. the market dependency, they can really fight into that pie, so to speak, by doing a 50 bit cut. they would show they are back in control. that's what they are looking to do. sarah, one to two cuts this year, what would be the impact of that? does it actually affect inflation, the real economy? >> get does it affect the real economy through -- it does affect the real economy through

confidence, by reducing borrowing costs. i think the danger we have to see sentimenttill indicators, very high levels. we have seen some suffering recently, but a lot of it depends on how the trade dispute turns out. yes, the fed has been clear that that is what changed, really, the uncertainty over trade. we may be in a better situation even by this time next week, in which case markets will be, perhaps, rethinking what they are expecting. we still think there should be two rate cuts this year, but beyond that, the fed, we think, can afford to sit back and see how the data turns out. nejra: that's interesting if we actually do see markets turn around after the g20. we have had changes in the 10 year yield. year-end to 175.

what does that mean for your portfolio in any shifts you are making? wouter: we have the same yields target and have had it for a while. we have been optimistic about the 10 year for a while and conscious on interest rates, so we think yields are going to go down. we think we are at the advent of a global easing cycle, so we think rates in germany will stay low and may even go a bit lower. u.k., the same story. japan we think will see positive territory again this year. we are optimistic about government bonds and relatively negative about the interest rate environment, because we think it is all about inflation. we think the inflation and the drop in inflation expectations are what's driving the bond market here, and we think those will continue to come under pressure, putting that global easing cycle in place. wouter, stayand with us. major joinsteven

me. we will get his take on the g20, the fed, and much more. the hunt -- this is bloomberg. ♪ the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome.

nejra: volkswagen's truck unit begins trading. it could be one of europe's biggest ipos this year. a big day for european inflation data. it will be watched closely after mario draghi's comments last week. we get a reading of inflation

for the french economy. is expected to remain unchanged. more inflation data comes from italy at 10:00 a.m. u.k. time. summit first ever g20 continues after a series of bilateral meetings between leaders. there will be a so-called family photo and opening ceremony. trump sits down with xi tomorrow morning for traded talks. the g20, according to a chinese haspaper, president xi pledged to further open markets and expand imports. he is holding a bilateral meeting with vladimir putin. for more, our chief north asia correspondent joins us. great to have a with us. it has been a fast-moving meeting. what is the latest? >> there are so many different headlights coming out from the different bilaterals. all our preludes to the big

bilat, which has been classified as a lunch between donald trump and xi jinping. we are already getting a little bit of the flavor become to with. the markets and world want to know, are they working towards a truce, toward getting talks back on track? or is it the status quo? is it an impasse that will continue? i'll be going to leave osaka with nothing new to report, nothing repaired between china and the united states? so far, the comments we have gotten from xi jinping, a little bit of they'll criticism -- vailed criticism of the united states. he said we are calling for a fair and equitable market environment and upholding the completeness and vitality of global supply chains. that is about as clear a reference to huawei, without mentioning huawei and the united

states, as someone could get. we are getting some interesting color between donald trump and vladimir putin. when reporters asked about allegations of election meddling and potential meddling going forward in the next election, donald trump said don't metal in the election -- don't meddle in the election, please, pointing directly to vladimir putin and shaking his finger, then they both kind of smiled. we are all waiting for tomorrow, whether some sort of truce can come out of china and the united bates and maybe issue one would be the iraq conflict. nejra: at least there are still some -- iran conflict. nejra: at least there are still some smiles. trump-xiy anticipated

meeting could determine the next chapter in the trade war between the u.s. and china. it will likely result in the reorganization of supply chains around the globe. our reporter has the details. what are you looking at? >> good morning. trade is top of the agenda as world leaders meet at the g20 in osaka. i have been looking into how global trade is working, how interconnected it is. you can see this looks like a web of trade. ' biggestited states trading partner is canada, china pink -- ino and pink. when you look at trade as a percentage of gdp, and the statistics come from the world bank, you can see that as a percentage of international trade for gdp, china and the

u.s. do not stand to lose much. -- the san francisco central bank expected to cut rates in july. some are looking for a 50 basis point move. we spoke exclusively to mary daly in colorado. if the data comes in that shows significant weakening, that would call for different han data that says we are facing headwinds and slowing. it is too early to know if we should use the tool at all and what magnitude of the tool we should apply. >> titans of u.s. banking say they will pump out more cash to shareholders. that is after all 18 lenders past the federal reserve's annual stress test. the results were a particular win for deutsche bank, after it repeatedly failed past exams. boeing has fallen the most in six weeks.

it could take three months to fix the latest software glitch on the 737 max. the issue was discovered during faa simulator tests when the pilots experienced a lag in emergency response time. apple's design chief is leaving after decades at the iphone maker. he is moving to form an independent company with apple as one of its clients. he is responsible for the look of the company's most iconic products. how much was he worth to apple? the markets verdict was $9 billion. that is how much apple loss in value when the news broke. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: debra mao in hong kong. thank you. the global economy is likely headed towards a significant market downturn, according to elliott management founder paul singer.

he sat down with erik schatzker at the aspen ideas festival. pua if whati yo do is paper ever-growing respectul: monetary ease -- isl: if what you do paper over growing monetary ease -- what you are doing is possibly augmenting the possibility of an ultimate downturn. -- whathave today is you have historically, and none of them have been predicted by the experts and gurus. what you have is every four years, roughly speaking, since basically world war ii, you have stark market downturns of the stock market downturns of 20%, 30%, and a couple of cases, 50%. that has been suppressed for the last 10-11 years.

what you have today is i think the longest bull market in american history. when i look at, just as a risk manager, because i am a practitioner, not an economist, the parameters of what a downturn might be from surprises. it has to come from surprises, because we know that the presidents and prime ministers are desperate to avoid a crash, desperate to avoid a financial crisis. janet yellen, the former chair of the fed, is quoted as saying there will be -- never be another financial crisis in our lifetimes. larry kudlow, a senior advisor, said a couple of months ago that he felt that there would never be a rise in interest rates again in our lifetimes. he really said something like that. -- me, somewhere between

30%-40%, something like that. >> let's not depressed people too much. i feel like we are depressing people. maybe they want to be depressed. it is not so bad. every sevenssions years on average in the united states and we have gone 10 years without a recession, so we are due for one, by normal standards. recessions are not normally the great recession. the lesson of the last recession, if you are an investor, was by and large, if you were not over levered, you ut, buy back your equity at a discount, making a lot of money. there was a lot of good things that happened for some investors out of the great recession. i don't want to make it sound like the world will fall apart and the u.s. will not survive if we go into a recession. i don't want people to leave here thinking your net worth will go down 50% in the next year or two or three. it will not happen.

the markets will bounce back because we have such a vibrant economy and so many great resources in this country. i would be more worried if i was an emerging market country or frontier country. they will have a harder time bouncing back from a modest or great recession. nejra: that was paul singer and david rubenstein speaking with erik schatzker. sarah hewin from standard chartered bank and wouter sturkenboom from northern trust asset management are still with us. you were sent one of your biggest contrary and calls is for lower interest -- contrary ian calls was for lowest interest rates. what that means is risk assets remain attractive. talk me through some of the tactical changes you have made to risk assets in your portfolio? wouter: we did interest rates will be suppressed -- we think interest rates will be suppressed. in place inweights

infrastructure. we think that the trade tensions are serious and we need to take them into consideration. we are looking for categories that have a little bit of downside risk protection. is a great example of that but even infrastructure has a better downside risk profile than equities. within equities, we have decided to be underweight emerging market equities. like wouter sounds is still sort of progress, but conscious -- pro risk, but conscious of the risks of trade. sarah: i think economists are permanently on recession watch, as our central bankers. we are not predicting were forecasting a recession for the u.s. economy. we are technology that the global economy, the u.s. economy

, the chinese economy is likely to be weaker next year. we are already seeing some signs of slightly softer data. that, we mustl recognize that there has been a pretty substantial fiscal stimulus going into china. there has been a financial -- substantial fiscal stimulus in the u.s. that is still working through the u.s. economy. china has more to do. they have plenty of firepower if it is required. now, in terms of the trade talks havetrade slowed. there has been a shift in trade. countries have benefited, countries like the him, -- vietnam, taiwan, asia. tooink we should not be gloomy here. nejra: you make a great point about china having more room. this chart shows china

central-bank policy divergence. the chart clearly shows china has more room. who is going to be the most aggressive in easing over the next year? out of china, ecb, and fed? sarah: good question. let's look at where the scope is. for the ecb, we have a negative deposit rate. that lookse program as if it is running into supply-side constraints. there are limits to how much more the ecb can do. they will, if they need to, take rates lower, restart the qe program, they will find was to extend the scope -- ways to extend the scope. we have already seen easing on the fiscal side for china. the fiscal easing is taking the string here -- strain here. it is broadly a question of maintaining liquidity.

the fed we have already discussed. perhaps a preemptive couple of rate cuts this year. more as possible, if need be. when you are starting with a relatively low interest rate, it makes more sense to act in -- to act sooner rather than later. nejra: i want to pick up on what you are saying about high-yield. ght, butstill overwei have reduced it so slightly. where can you actually get stable assets that pay a yield? for you and your portfolio, how do you answer that question that is dominating the mind of a lot of people in the market? wouter: are high-yield called is one of those answers -- our high-yield call is one of those answers. other equity markets are less generous with their dividends

and it is much harder to come by. we are also quite clear that we are completely neutral, sorry, underweight cash. all of the risk control assets that we have are in investment -- credit. we are taking up all the yield we can in that space. look at the bunds. even this year year to date, you saw very good results in those categories, even though the yields were already at zero but they move into negative territory. tore are still good returns be had if we are right about the global easing cycle taking place. nejra: you've admit that positive trade talks would temporarily expose your equity portfolio. would you be ready to make a shift? wouter: we would take it there he seriously -- very seriously. that athoping for

the start of the year. we would take that very seriously. the backstory is long-term, the u.s. and china will be at loggerheads with each other because one has to make room for the other and that is going to be difficult. nejra: i think sarah agrees with that long-term loggerheads between the u.s. and china. thank you for joining us, sarah ,ewin, and wouter sturkenboom great to have you with us on the show. impact investing is taking the world by storm. as more focused -- companies focus on social responsibility, which once make the cut? on herk to marisa drew strategy for making a positive impact and generating a financial return. cannot wait for that conversation. this is bloomberg. ♪

♪ nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. not too sustainable investing and a particular aspect of it, impact investing. the sector hopes to overcome environmental and social challenges and is one of wall street's fastest-growing asset classes. coinedhe term was in 2007, $500 billion -- suisse manages more than $2 billion in impact investments. our next guest is building out a team that now numbers around 30 to focus on credit suisse's

impact investing activity. marisa drew joins us for an exclusive interview. delighted to have you with us this morning. thank you for joining. what are the factors driving interest in impact investing right now? there are so many forces at work that are positive -- the positive outcome driving the market. we have millennial driven consumers, who are absolutely focused on trying to generate positive environmental and social outcomes. they are expressing that in the way they behave as consumers. as they begin to grow wealth and inherit wealth, they are telling us they will invest it differently and will invest it for good. you have consumers driving the wave. you have those who give asset managers money asking how that money will be used. you have under enormous amount of regulatory intervention --

under enormous amount of regulatory -- an enormous amount of regulatory invention -- intervention coming into play. all that is making it happen for us. nejra: you report directly to .he ceo of credit suisse how important is impact investing to the growth planning of credit suisse in the next two to three years? marisa: i think it is a statement that as we develop this business, it is a director group's ceo. if we think about some of the trends that will affect our business over the intermediate and long-term, probably the most profound when is the fact that we will face the largest intergenerational wealth transfer in history. to thiswealth moves next generation, this is critical for us.

if we do not have a response to investorsroup of that want to invest their money for good, then we will face issues. this is very much an investment in the future of the bank. investors whos of might be in little bit skeptical or not quite ready to jump in to this type of investing at the moment, what are you telling them? marisa: what i say is, if you step back and think about what is smart investing, if you think about the companies you can invest in, those companies more attuned to the underlying trends happening in their customer base. if you think about companies that are more nimble and ready to respond to regulatory intervention, and then as importantly is the employee base. companies that have a positive purpose and really can articulate that, they are the ones that i think will attract the best talent.

if you think about that just as a company matter, who would you want to invest in? those companies, the companies that have that positive environmental or social aspect to what they do deeply within their strategy. i think they will be there winners -- they will be the winners and i view that as smart investing. nejra: broadly speaking, i understand that esg is focused more on the operations of the company, whereas impact investing takes it back to the products and services the company is producing. give us an example of the sort of companies you would invest in as an impact investor. marisa: sure. i would differentiate in little bit between esg and impact. esg takes environmental, governmental, and social factors into consideration. impact investments are deliberate. they set out to achieve a

specific outcome. those impact investments say they will hold themselves accountable for that outcome. we think about the types of companies that are really impactful, making real change. i would point you to this millennial driven consumer as one data point. a company i think is incredibly impactful would be like beyond meat. that is a response to a fundamental issue that today the way we eat, consume, and sadly waste food, is not sustainable. this company has a real response and a plant-based alternative, which is much more environmentally friendly than the meeat we have been eating up to now. look at the valuation of the company. we brought it at $20 per share and it was north of $100 in less than a month. that gives you a sense of the energy and valuation drivers

that will be. behind these types of impactful companies. . that is just one example. if we think about the enormous energy focused on the plastics the equation, every day i am seeing so much incredible innovation about trying to find plastic alternatives that are credible and non-toxic to the environment. on it goes. these are the types of companies we are keeping a close eye on. nejra: you are heading up a new unit. you have hired 30 people. are you looking to increase that team, double it? what sort of tea might we see in a years time, briefly? marisa: we are absolutely continuing to invest in the business. stay tuned for some announcements that will be coming in the very near future. we see, as this sector continues to grow, and you referenced the number of about half a trillion is the current view on the market size of impact investing, that is about 800% growth in the last couple of years.

if we are going to be anywhere near to servicing the energy with our business, we are going to continue to invest. nejra: marisa drew, credit suisse ceo part impact finance -- ceo for impact finance, thank you so much. next, we are joined by steven major.

♪ morning from bloomberg's european headquarters in the city of london. this is "bloomberg daybreak: europe." these are today's top stories. showtime and osaka. xi jinping condensed protectionist measures are ahead of a make or break meeting with the u.s. president. we are live from the g20. no stress. the titans of u.s. banking promised to pump more cash to shareholders after all eight and lenders past -- all 18 lenders have to the stress test -- passed the stress test. mary daly tells bloomberg it is too early to know if they cut is needed or by how much. >> it is too early, from my

perspective, to know whether we should use the tool at all and what magnitude of the tool we should apply. nejra: elliott management's paul singer sees a market correction of 30% to 40% whenever the downturn comes. >> i have been expecting. buts not today's epiphany, the possibility of a significant market downturn. ♪ nejra: good morning, everyone. we are just under an hour from the start of cash equity trading in europe. i had of the g20, looks like we are heading for a weekly loss so far for global equities. that would be the first weekly drop in four weeks. yesterday we saw some green on the screen on the s&p 500. futures treading water in the u.s. right now.

it looks i can exactly the same picture in europe. no one wanting to take big positions ahead of the g20, too much uncertainty. we are seeing the yen a little bit stronger in today's session. gold on a bit of a tear. the 10 year treasury yield was dipping lower earlier. you can see fairly steady on the futures. a similar picture if you are looking at btp's and bonds. global equities sitting on gains of almost 6% for jim. bonds -- june. bonds on course for the best month of the 2019. the dollar is headed for a monthly drop. it is actually headed for its biggest monthly decline in more than a year. let's check in on the markets in asia. juliette saly has more. context: that monthly worth putting into perspective when you look at asian markets. we see read on the screen, as you would expect, i had of this

highly anticipated meeting between president trump and president xi. over the course of june, it has been a great one for asian equities. the msci asia-pacific index on track for a gain of about 5%. china also coming under pressure. india is weaker. let's have a look at how the yen is tracking. the yend actually see go turbo if it is a benign outcome from the g20. at the moment, just a little bit higher. the korean yuan is on track for a second weekly gain. we have seen ship inventories in south korea fall. as been boosted by optimism coming through in the overall south korean economy. we are looking ahead to the indian budget. the indian rupee up against the greenback.

this is looking like an increasingly favorable carry trade. juliette saly in singapore, thank you so much. we want to quickly get to some breaking news. ib are toe, and cpp purchase merlin. that is a stock to watch at the open in terms of merlin entertainment. g20. according to china's people's daily newspaper, president xi has pledged to further open markets and expand imports. u.s. president donald trump has already met with prime minister modi, prime minister abe. stephen engle joins us now. great to have you with us. u.s.-china really what the markets are watching at the moment? start with what we have heard on huawei from both nations.

>> huawei is the big elephant in the room. we heard yesterday from other media reports that perhaps the chinese would be demanding the united states removed that blacklist, the huawei blacklist on the telecommunications supply chain for any possible deal to go through between china and united states on the trade front. we may be got more clarification that perhaps that was for an ultimate end deal, not necessarily for a truce. all focus at the g20 right now ahead of the working lunch isorrow between xi and trump whether there will be any progress made between china and the united states on the trade front. secondary, perhaps, would be easing the tensions with iran. most of the focus is on china and united states. we got some comments this morning. to theing was quoted foreign ministry official as

saying any attempt to put one's own interest first and undermine others will not win any popularity. that is a quote from president xi jinping. got morer meeting, he passive aggressive towards the united states and donald trump without mentioning either. he said we are calling for fair and equitable market environment and for upholding the completeness and vitality of global supply chains. that is about as direct as anybody could be without mentioning huawei or donald trump directly on the huawei case. nejra: what have we heard from chinese president xi jinping on bullying? >> yeah. that is another big issue. so much of the market chatter yesterday have been about how we were working towards a truce. we got a comment from the foreign ministry spokesperson yesterday at a beijing saying that any kind of progress or any kind of deal with the united

states has to be balanced and with mutual respect. that is one of the biggest complaints that beijing has had towards donald trumps white house. that is that they are not necessarily treating china with that mutual respect. they have been employing bully ing tactics. those are comments we have heard at of pyongyang over the last year, that mike pompeo has used bullying tactics to get kim jong-un to the negotiating table. looks like china has picked up on this. that does not bode well for any kind of goodwill leading into this very important dialogue that trump and xi will have tomorrow at 11:30 in the morning osaka time. nejra: thank you so much for joining us, stephen engle. lister inve gotten a the building, steven major. he joins me for the rest of the show.

great to have you with us. does any sort of agreement, even on agreement on further talks, put the treasury rally at risk? steven: it might mean if you basis points -- a few basis points here and there. it is one factor the bond markets are looking at. if there was good news on the trade dispute, front and yields would go up a bit -- front end yields would go up a bit. it is not the main driver. things have moved on. it was not just trade. atare looking through this the data and bigger picture. i relies it is a theme for this weekend -- realize it is a theme for this weekend. currencies have been adjusting for this and the bond market has priced in a lot of this. if there was good news from the yields could move a little bit

but it's not the big theme for me. nejra: talk to me about what the precipitous drop in yields have been about. what hasn't been about -- what has it been about? what explains it? steven: the first half of the yield dropped has come from removing the hubris and over optimism that surrounded the previous views. every man and his dog was forecasting 3, 3.25. more recently, the last two or three months, pricing in the reality that the economy is not doing so well and the fact that there will be rate cuts. there are two pieces to this. people come to me and say, are you surprised by the scale of the move in the bond market? i am not really that surprised. we had to remove the over optimism. the fed was telling us that they

were going to over tighten and then ease. that really was nonsense. i said it at the time and looking back at it, it looks crazy. we had to remove that big hump peake dot plot, that big in expectations. the second half is a reality. the global economy is not doing that will. nejra: there is so much discussion about what the fed will do next. will we get three rate cuts this year or two? mary daly had something to say about this. listen. if the data comes in that shows significant weakening, that would call for different actions than if the data comes in and says we are getting headwinds and slowing. it is too early to know whether we should use the tool at all and what magnitude of the tool we should apply. steven: the markets already

implying 75-100 of rate cuts, then they need to cut to keep up with expectation. this is a useful word of warning. the fed is still tightening as we speak. the impact of the previous rate hikes is working through to the real economy. don't forget, it would be a bit odd to be cutting rates while shrieking the balance sheet at the same time -- shrinking the balance sheet at the same time. to me, they are going to cut. if they do not cut in july, it does not really matter. they could just do twice as much in september. nejra: i have been asking all week, what would be the point of one or two rate cuts and 2019, especially if they continue managing the balance sheet the way you described. are you expecting more than cuts? maybe a resumption of qe or something else?

steven: qe4 as possible. each iteration -- is possible. each iteration of qe has had a different rationale. qe3 was about the deflation risk, trying to avoid it. qe4 might have to do with the liquidity and reserves in the banking system. the fed cannot say this, but it appears that taking $600 billion or so out of the system so quickly might have been an error. they will never say that. if qe4 means reversing some of that mistake, then so be it. when we try and build out the scenarios for the policy easing, it is a bit more complicated than previous cycles. what people are doing is saying it's like 1993 or 1994, or 1998. of course, no cycle is the same. the idea of one or two cuts and done i don't think relief it's. we are -- really fits.

we are playing with scenarios, some of them quite dark, that could see rates taken down to the effect of lower bound. if that were to happen, how fast is the balance? ounce? you need to have a whole range of scenarios and look at the path of rates. we are still trying to build out the. scenarios. . to me, there is not much reason to change the forecast at this point. nejra: you are holding that 10 year yield forecast at 2.4%. others have surpassed. goldman calling for the 10 year byld at 175 bite year and -- year end. what are you doing around the curve? what traits are you recommending -- trades are you recommending? steven: we are not ending the yield call.

the forecast is not right or wrong until we get to the end of the year. why anybody would suddenly dropped area forecast by so much i cannot possibly know -- suddenly dropped their yield forecast by so much, i cannot possibly know. the curve is very flat between 2's and 5's. weakness or2's, 5's 2's. ofyou got some sort transitory inflation shock later this year, then you are in the right kind of product. when you work through the scenarios, there is one that i am thinking through for september, october, who knows, maybe we get a shock. maybe the fed cuts rates and we have murphy's law. inflation pops to the upside for some reason.

we have to kind of role play and stress test all these scenarios. i think the right balance is to be front end, liquid two-year yields, which are likely to fall further if they cut rates, and then keep the duration but altra long terms -- by ultra long terms. nejra: steven major stays with us. let's get the bloomberg first word news. >> titans of u.s. banking say they will pump out more cash to shareholders. total payouts are seen rising to nearly $175 billion. that is after all 18 lenders passed the federal reserve's annual stress test. the results were a particular win for deutsche bank, after it repeatedly failed past exams. the second democratic debate saw joe biden come under fire from senator, let harris --, let a harris. kamal

she accused him of being insensitive to the plight of african-americans. she said it was hurtful, but did not believe biden was racist. easy come, easy go in the world of cryptocurrency. bitcoin has almost wiped out its gains this week. the brings back memories of crypto bubble that burst at the end of 2017. bitcoin is sitting at around $11,000 but was as low as $3600 just six months ago. stocks will be barred from trading -- it is meant to replace it as of treaties between the sides. the accord has run into a wall of opposition from both the left and right in switzerland. been over and large companies doing business in europe has announced -- is not even over and large companies

doing business in europe have announced. job cuts. they joined peers in industries from autos to power in making massive lay-ups to cope with the downturn in their businesses -- layoffs to cope with the downturn in their businesses. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: debra mao in hong kong, thank you. we speak to the trait in ceo, as volkswagens truck business on the stock exchange this morning. at't miss that interview 9:30 a.m. london time. this is bloomberg. ♪

♪ h i think we are at the igh end of the risk spectrum, so i have been expecting, it is not today's epiphany, but the

possibility of a significant market downturn. nejra: that was billionaire paul singer, elliott management cofounder and co-ceo, speaking exclusively to erik schatzker. isven major from hsbc still with us. is this a time to be adding too much risk in portfolios? steven: it seems reasonable to expect some adjustment. i don't know about the size of the potential downturn, but it seems we have had a very good run. now is the time to be diversifying. if you look at the performance across asset classes, everything has gone up. anyone could have made money by just sticking a needle on a map. that cannot be right. at some stage, we have to become a bit more discerning. now is the time to start looking for quality, the safe havens, and liquidity.

if that warning comes to fruition, you don't want to be in illiquid assets. nejra: on the safe havens you brought up, money managers are struggling to find stable assets that pay a yield. what would fit that category for you at hsbc? hasen: the hunt for yield let investors into stuff that is not. it could be infrastructure, that kinds of stuff, which is fine, because you don't have to cash in at any point. you have to have a good weighting of short data treasuries, because they are the number one satan. they compete -- number one safe haven. they compete with gold and the yen. the yen and gold and treasuries. i would have to pick treasuries as the favorite of those three. now we can start looking around the world and see what we can

find. there are plenty of opportunities in europe. investors are going up the curve to get the duration. in fact, maybe the best duration choice. if you are a duration hunter, you should be agnostic of yield, frankly. going long on the european curve. you saw 100 year austrian bonds yesterday issued at a price of 150. someone is prepared to pay 50 over the redemption for that. that is the world we are in. they are not wrong, they just have to buy the duration. nejra: how do you feel about euro investment grade credit? european investment grade bonds yield more after converting into dollars. you can see that on the chart. this is one of the areas where you are not bearish. steven: look at our team in london. they have looked at this and we

do like the investment grade in europe relative to the u.s. it is largely down to hedging because of the money market differential. if the ecb were to start up some kind of qe, it is more likely to pspp.p than that brings indiscriminate buying. everything will go up. that eurozone investment grade credit continues to perform quite well and relatively well compared to other markets. we prefer europe to the u.s.. nejra: you mentioned the cspp. that covers your view in terms of resumption of stimulus from the ecb. what about on the rate cut front? steven: if you look at bond -- five-year bonds, five-year forward, that is in positive territory. imagine i have been told the ecb will not increase rates above zero, then it's five years. that seems quite plausible.

those buns are still cheap -- bonds are still cheap. people are having trouble with this because they are looking at the spot yield. it seems the ecb is going to actually cut. if that is the case, and we are forecasting two more rate cuts, that should lower the whole structure. french 10 year yields just hit below the zero. there is a model -- nominal money illusion that sees money go up the curve to get some extra yield. when the nine-year dips below zero, people go for the tens, and the 15th. people will go up the credit duration curve. there is still plenty to do in europe. i think it is wrong to say that just because there is zero yield, there is no value. in fixed income, it is also about duration. nejra: can i finally ask you about the dollar, because you

still have the strong dollar call with hsbc. steven: it all links up. the fx team, led by david bloom, talks about the pillars. he would be much better at doing it than me and much funnier. the cyclical part of it, that is being undermined by the expectation of u.s. ricketts. -- u.s. rate cuts. the u.s. has a better chance to cut than the rest of the world. that was the floor up from the dollar a bit -- that pulls the floor out from the dollar a bit. we are holding out for a higher dollar. nejra: steven major, great to have you on the show this morning. coming up, as world leaders gather at the g20 meeting in osaka, we speak to the prime minister of the netherlands. don't miss that interview. that is it for "bloomberg daybreak: europe." "bloomberg markets: european open is up next.

futures flat in the u.s. and europe. tune in to bloomberg radio live on your mobile device and on dab digital radio in the london area. this is bloomberg. enjoy your weekend. ♪

♪ >> good morning. welcome to "bloomberg markets: european open." we are live from our european headquarters in the city of london. manus: good -- matt: good morning. stocks in asia slipping ahead of the meeting between president trump and president xi. yueh. futures pointing lower -- european futures pointing lower. the open up cash trading less than 30 minutes away -- of cash trading less than 30 minutes away. ♪ showtime in osaka. donald trump