>> good morning. from the city of london, i'm nejra cehic. manus cranny is live from vienna. these are to get -- these are today's top stories. washington outlines $4 billion worth of eu goods that could be hit with fresh tariffs as the airbus-boeing dispute takes another ship -- another head. donald trump says trade talks with china have begun as china's premier says beijing will scrap financial ownership limits sooner. in hong kong, the hunks and jumps after being shot -- the hang seng jumps after a day of unrest. goldman sachs says a deal opens

the door for shale producers to grab more market share. we are live in vienna. good morning. welcome to daybreak europe. it has just gone six clock a.m. in london. manus cranny is in vienna. a long night for you. you're looking fantastic. update us on what is going. what is the mood music? manus: two messages they wanted to convey. certainty and continuity. meeting --rathon's marathon 10 our meeting from opec. there's a word that the saudi

oil minister wants you to focus on. >> the commitment to a nine-month extension of unequivocal, very solid, very strong. not only are we committing rollover, the individual commitments to conformity from all countries word, it is that unequivocal. he is the central banker of oil. that is his commitment, to continuity and certain. the fragility of geopolitics, the frailty of global demand, it is counterbalancing that that is the message they really wanted to convey. they also moved the five-year target. nejra: you could argue the fact that they really wanted to put that certainty in the market shows some concern about the market. is this enough to rebalance the market?

we are already seeing oil come up a little bit. manus: it is of course a concern about demand. when we caught up late in the evening, he talked about the concern of the weakness heading into 2020. the property explosion, aside from the oil market, it is here. i'm standing literally in the epicenter of the redevelopment of vienna and the redevelopment of this institution called opec, making sure we have relationships with our partners in russia. this started out as a six-month courtship between opec and opec plus. it has turned into a three, four year relationship. now the parents want a marriage, saudi arabia and russia. that is what the charter is old there's an existential threat and i will leave you with the

shock headline. nejra: manus cranny in vienna. we will catch up with you again in about 40 minutes. let's take a look at the broader global markets. another day, another record. global equities also hitting their highs for the year. also a little bit higher. the 10 year yield down a basis point. the back up didn't last long. the aussie dollar up by one quarter of a percentage point despite the fact that the rba cut rates for the second time in a row. let's take a look at the euro. -- we some we yesterday saw some weakness yesterday. it is holding onto those losses. we got some signals from policymakers in helsinki that there could be further to come. also taking a hit on the pmi data. pmi data globally not looking strong. below $1400, still

per barrel. oil coming up a little bit as well today because of the attention turning away from the extension toward the concerns around global growth and slowing demand. juliette saly has more on the rba rate decision and a lot more. great to have you with us. juliette: they were saying that yesterday's global rally could be a one hit wonder but a lot of asian stocks still well supported today. .17%.ikkei up 0 you want to take a look at hong kong. the hong kong hang seng playing catch-up, being led by tech players, by 1.3%. the hong kong dollar has been searching, reaching its midpoint level for the first time since september.

a little bit of flat moves on the main chinese index. yesterday, it was up 2.9%. selling coming through in the likes of korean and taiwan chipmakers. they rallied today. only a small pullback. the rba decision, interesting to hear what governor philip lowe has been saying. they have been on these record expansions, cutting interest rate today to 1%. this is the first back-to-back cut we have seen in seven years. the economic growth trend is expected in his cut was really to spur this economic growth, saying the potential samaria -- potential scenario remains reasonable. we have seen the s&p 500 hit its highs on the close on the back of that decision. all focus on governor lowe speaking in darwin later today. reiterating, the rba cutting

rates to a record low of 1%. nejra: thank you. now, the u.s. has added more products from the eu to a list of goods that could be hit from tariffs as part of a long-running subsidy dispute between boeing and airbus. u.s. stock futures fell after the announcement but they have since pared losses. joining us is senior currency strategist at cba europe. we saw the rally and risk assets, and today we are seeing a different picture as markets digest that this trade truce doesn't mean there is no uncertainty ahead. in this environment, what is your take on where global growth goes from here? and number of manufacturing gauges yesterday showing week across -- showing weakness across the globe.

>> the risk to global growth is still skewed to the downside. there are still structural impediments to a long-lasting breakthrough in the u.s.-china trade negotiation. this means any trade deal in the foreseeable future is probably still low in likelihood. last year, we also have a trade truce and 90 days later, a further escalation in trade tensions. the market is cautious. the risk is still skewed to the downside. pmi's have now shifted further deeper into contraction territory. this will continue to keep the currency market quite volatile. this, we still expect the u.s. to trade on the defensive largely because of the

significant pricing of rate cuts by the fed. nejra: what we saw yesterday was even though we had that trade truce, the pricing didn't really change in the bond market. does that mean that you see a little bit of a near-term bump in the dollar? how much downside beyond that based on a fed cutting cycle? take the euro as the anti-dollar trade, we expected to close 12.20 in the next few months. we believe the fed will cut rates by more than what the market is expecting the ecb to do. you look at the euro from a valuation perspective, the euro is cheaper, 10% to 15%. it suggests underlying demand for the euro is positive. these are some of the reasons we expect the u.s. dollar beyond the short-term period of ken.ngth we can -- to wea

nejra: currency traders have building short dollar positions. do you expect dollars strength against emerging-market currencies as well? elias: one thing it is important to remember, the risk of global growth is skewed to the downside but we are still constructive on the global growth outlook. monetary policy is still quite loose. that is supportive for growth. most central banks are now in the process of adding more stimulus. the ecb being more cautious, the fed about to cut interest rates. most central banks have cut from a dovish bias. monetary policy is the most stimulative since 2009. all this, despite the threat of nastier trade tensions between

the u.s. and china, accommodative fiscal and monetary policy will continue to be supportive over the global growth backdrop. we expect the u.s. dollar to trade on the offensive starting the third quarter of this year. nejra: i wonder how bullish you are on oil. the bump was short-lived. weaker today as there are concerns around the demand-side mounting-- demand-side with trade tensions elias: the rolling over of the production cuts will be supportive of crude oil prices. you still have the downside risks that will contain a significant cyclical upswing in crude oil prices. expect those to remain around current range. this is why we are quite positive on the canadian dollar,

especially relative to these other commodities like the australian dollar, not just because of relative commodity price trends, but also because of trance between canada and even australia or new zealand. nejra: let's get the bloomberg first word news. annabelle drew less as that in hong kong. >> australia has cut its key rate for the second straight month. the first back-to-back reduction in seven years. this is their attempt to provide support to a slowing economy. philip lowe has lowered the key rate. china will scrap ownership limits for financial companies when year order -- when year earlier than planned. full foreign ownership of securities firms, life insurance companies will be allowed by

2020. the next round of trade talks between the u.s. and china is underway according to donald trump. it ends the stalemate between the countries. trump saysnt tariffs against mexico are off the table after the country stepped up efforts to stem the flow of migrants to the u.s.. trump said mexico is doing a great job and is having a big impact on migration. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. bloomberg. nejra: thank you. hong kong's chief executive carrie lam has condemned violent demonstrations after protesters broke into the legislative council yesterday. this comes after hundreds of riot police fired tear gas to

disperse the crowd. joining us for more is bloomberg's david tweed. some extraordinary pictures there that were played alongside you. update us on the latest today after what we saw yesterday. been a day of clean up after last night. last night around 9:00, the whole thing got out of hand. a strange thing happened because the hong kong police sort of withdrew and allowed the lons offrs to rip the py the side of the street and turn them into weapons, and use them as ramrod's to breakthrough these windows so they could get access to the legislative council where they went inside and trashed the place. the question, why weren't there police behind these windows? they just watched the protesters

slamming these things into the windows. why didn't they come out and take action? we have seen police before do that in this case they stood right back. carrie lam came out. they were dispersed by teargas 12:00bber bullets around after they had been inside the legislative council. around about 12:00, the police came back and that is where the teargas and rubber bullets came out. four hours later, carrie lam holds a press conference where she condemns the violence and tries to really bring back public opinion to the government's side, where she talks a lot about the violence of the protesters, who didn't attack the police, by the way.

they were really attacking the building, although there were some police injured as there were some protesters throwing some sort of corrosive substance at them. nejra: ellis about the comments of eddie -- tell us about the comments of eddie chu as well. he is a pro-democracy lawmaker who came out and spoke to us earlier. he painted a pretty gloomy picture because according to him, we are looking at what could be a turning point in the protests and for hong kong. eddie: in the long run, hong kong has become a police city. the government is not trying to solve problems in political ways, but to arrest and imprison young people david: -- young people. david: there you have eddie chu speaking, painting a bleak

picture of more repression in hong kong. at the feet depressing thought when you think about it. -- that is a pretty depressing thought. he is worried the government will use this as leverage to crack down on the protest and turn public opinion away from the protests which, as i recall, brought 2 million people into the streets just three weeks ago. it is not just the problem of the exhibition bill -- the extradition bill. there are larger concerns, concerns over the democracy that these protesters believe they were promised by china when the british handed back hong kong is a colony to china 22 years ago yesterday. that is actually the reason why there were these demonstrations in the first place. nejra: a historic, historic night. play more to come. when you are traveling to work,

tune into bloomberg radio. this is bloomberg. ♪

this is bloomberg daybreak europe. let's get the latest business flash. deutsche bank is reportedly discussing with regulators about lowering -- about lowering its capital buffer. this is a way to finance impending restructuring. authorities are reportedly positive about deutsche bank's restructuring plans. woodford's frozen flagship fund are still looking to get their money. the fund is still locked.

morningstar says it could take woodford more than a year to liquidate half the portfolio. >> the suspension was first to protect the interest of investors but secondly to give woodford the time to execute the strategies we've outlined, and other words the shift in the portfolio into more liquid in a way that ensures we don't damage the interest of our investors. your bloomberg business flash. nejra: let's turn to central banks. the rba delivered a second consecutive interest rate cut to a fresh record low of 1%. questions remain around the fed policy. hundred basis points insurance cut by the fed. >> i'm baffled by this notion that an insurance cut is 100 basis points. an insurance cut is not 100

basis points. you don't want to use up all your ammunition now. secondly, if you need to cut 100 basis points, there is something deeply wrong with your economy. from cbaias haddad europe is still with us. we get that cut that was widely expected, including by yourself. but the governor leaving the door open for further easing. elias: it is mostly priced in. there is more expectations of more aggressive cuts by the fed. that is one of the factors that continues to undermine the u.s. dollar. more fundamentally, in australia, you have a balance of payments backdrop that is supportive of the aussie dollar, a current account deficit that is historically small and financed by investments. underlying demand for the aussie dollar is quite firm.

secondly, from a valuation standpoint, the aussie dollar is roughly 10% undervalued. these are important supportive factors here for the australian dollar. nejra: what would you be targeting than? how high would it go based on those factors you talked about? thes: we are expecting australian dollar to trade close -- by yearyears and end. i believe we have the rba cutting interest rates one more time this year, to 0.75. i think the statement post-mee ting signaled there are more rate cuts in the pipeline with the rba suggesting there been little inroads in the diminishing labor market slack. , the naturalates

rate of unemployment be closer to 4.5%. there is still a lot of labor market slack out there that will continue to leave the door open for more rate cuts. nejra: ultimately, you do expect the fed to be one of the biggest doves in terms of easing. i think you are expecting 100 basis points of cuts over the next year. ?hat does it mean for the euro we did hear from policymakers that further stimulus could be on the way because of inflation. elias: market-based measures of inflation expectations are plunging. that is where the risk in our view is the ecb loosening policy further. nejra: that means you expect what?

elias: at this stage, or base case is for the ecb to keep interest rates on hold. . in our view, it will not curtail the upside in the euro. one of the reasons they expect potentially more rate cuts out of the ecb is the leading indicators suggest that they underwhelm the expectations, they still have trade from the trump administration -- trade threats from the trump administration. despite that, the reason we are still bullish on the euro is we expect the fed to cut rates more aggressively. thank you for joining us today. elias haddad, senior currency strategist at cba europe.

areng up, european leaders unable to agree on who will take the bloc top job after an 18 hour marathon. this is bloomberg. ♪ we're the slowskys.

we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not.

it is bloomberg daybreak: europe. i'm nejra cehic in london. eu leaders fail again to agree on who will take the top job. france and germany have been wrangling for weeks ovary jobs package centered on the nomination of next european commission president. chancellor angela merkel and french president emmanuel macron aired their frustrations. >> once we have all had time to get some sleep, i think we will all be ready and willing to continue to work for a compromise. we will be happy to present a euult for the -- before the

president has been elected. >> this gives a bad image of both the council and europe. nobody can be satisfied on what has happened after so many hours of talks. i think this raises extremely deep questions that we will have to address in the long term. our reporter is in russell's. -- in brussels. are we likely to have any more clarity today? president said clearly that the summit was a failure. the reality is that there is no clarity and we are exactly where we were a day ago. impact on this has an the rest of jobs including the european central bank. the heat is very much on angela merkel to see if she can reach a compromise and rescue her own

deal. at this point, what is clear is there has been real pushback from her own political group. they do not understand why angela merkel is about to give up the job in brussels. we have no clarity and we could be in for a long day in brussels. nejra: turning to the ecb presidency, we did see the euro weaken on a number of factors yesterday but one of them was may be the prospect of jens not leading the ecb. can france security ecb present -- secure the ecb presidency? maria: officials do believe they have a way in. the french think they have high-profile women and they do see there is a path to the european central bank. ae issue is, if this comes to

mann does notweid get the job. reporter,t was our tadeo in brussels. jensishing prospects that weidmann will lead the ecb. the common currency may need to look for outside support to stem its decline. here to explain is dani burger. if timmermanss, gets the job, that we will not see jens weidmann as the ecb president. because of this issue, we saw the euro fall to just about a two-week low. with someone who

seemed to support cuts but we might get the altar easy policy outliving draghi. a slightly weaker dollar. we are seeing analysts come out and say this. expectations versus the u.s. and euro area, which is in white. he says it is starting to rebound. that is support for the euro. we are seeing options markets back this up to some degree. they have finally entered a bullish stage thinking that the risk is to the upside. this is the most bullish options traders have been on this in about 18 months. we also have the differential thinning as well. regardless of what happens with the ecb presidency, there is still hope for some options

traders. nejra: we all live in hope, don't wait? china will scrap ownership limits for financial companies a year earlier than planned. it is the latest step by policymakers to open up china's $44 trillion industry to overseas competition. this comes days after an agreement to reduced trade talks and shows the policy of financial opening remains on course despite broader tensions. luke from goldman sachs asset management. in emergingeaction markets following the trade truce between the u.s. and china. june was a really good month for em equities. despite all the lingering uncertain, do you expect that to give a further boost? luke: the market this year has been trading very much on

whether we will get a resolution between the u.s. and china. what people should be focusing on is the underlying picture and, for the most part, it is robust. we have seen a bit of a slowdown in places like china and asia but, overall, the fundamentals are solid. what is great, you can really talk about some of the detail below the surface. let's focus on china for a second. in terms of policy support and of course we were just talking about measures of opening up the economy, what kind of stocks in particular do you expect to benefit from chinese policy support? it is a similar picture if we think about what suffered last year. very much the domestic economy in china was oversold last year.

the consumer really suffered as sentiment worsened. that was not too badly positioned especially with the stimulus you have seen push through into the market this year. when we look at medium and longer-term, companies exposed to this millennial phenomenon where you have people under the age of 40 moving into peak income years, they could be positioned to deliver strong income growth and may be insulated from some of the trade dynamics. nejra: do you expect financials to benefit much? there are parts of the financial space. the deleveraging, quite a big burden on the balance sheet for some of the big banks. from our perspective, you have to be very cognizant of government influence in some of those spaces. you want to be a respected minority. you go through that deleveraging

cycle and in some instances, the banks are used to help manage that cycle. nejra: smaller companies or larger companies, do you have a preference for that in china? luke: small and mid-cap names by nature are tending to be more interesting for us as a bottom-up manager. we find they are often the ones focusing on the domestic growth drivers as opposed to some of the legacy stories that did very well. nejra: if we look at the redistribution of the global supply chain, what sort of countries would you be looking at as potential beneficiaries? clearly think there is a dynamic between the short and long-term. in the short-term, we have seen places like brazil benefit from some of the tariffs. we have seen places like mexico benefit from potential

reinvestment. longer-term, we still think india is probably the primary beneficiary. we are seeing this big campaign from the modi government and a push to drive light manufacturing export growth. the bigit with some of tech companies committing to build basis in india. that is probably a country we can see really benefiting if you are seeing some offshore from china. nejra: the reelection of modi for you supports your belief in india as well? luke: yes. we think the market under reacted to the significance of that result. we saw bjp coming with it -- with an even bigger majority. we said it would likely win 220-230 seats. what they won was 303.

you have a clear mandate. on something like labor reform, if they can continue what they have done in the past, that can be eight huge driver for long-term growth. if you look at labor policy coming india, if you apply more than 100 people, you have to go to your state government to get approval to lay off any of those workers. automation, technical goods, as opposed to driven by labor dynamics. mentioned tech in india. i want to ask you about semiconductors. one thing was the delay to the restrictions on huawei. your andmiconductors asia some where would be interested in at this point perhaps based on evaluations? luke: we took positions last year and some of these names. we thought the markets would be overly focused on some of the

near-term trade dynamics. what i would say in the semiconductor space is really understanding what the business does. some of those fourth industrial revolution phenomenon. genericferent to your pc or home computer type capabilities. nejra: i want to ask you about mexico as well on this trade theme. ort is your bet on mexico mexican companies at the moment? luke: we are not really in the game of trying to take a short-term debt. -- short-termbut. bet. the issues with the u.s.. for the most part, mexico still looks fairly robust. the underlying growth picture looks ok. to the extent that you get the new version of rad -- new version of nafta ratified. nejra: great to have you with

us, luke barrs will stay with us. here's a look at what you should be watching today. it is the second day of opec meeting. today includes a broader group of nations including russia. the eu summit will take lace around 11:00 a.m. -- will take place around 11:00 a.m. live with updates from brussels. -- one of thethe more hawkish members of the fomc speaks in london. industry deliveries may drop from a year ago. and tonight is england versus the u.s. in the world cup semifinals. this is bloomberg. ♪

nejra: this is bloomberg. i'm nejra cehic in london. let's get the first word news. >> the trump administration is turning up the heat on the eu. $4 billion worth of you goods eu goods a list -- of 3 to a list that could face tariffs. and is about the boeing airbus dispute. leader iss embattled condemning legislations that saw the city's legislature stormed by protesters. police fired pepper spray and teargas as people stormed into the building. >> the extreme use of violence and vandalism by protesters who

stormed into the legislative council building over a period of time. this is something that we should seriously condemn because nothing is more important than the rule of law in hong kong. >> australia has cut its key rate for the second straight month. intend toolicymakers provide support to a slowing economy. the governor, philip lowe, has lowered the key rate by a quarter-point. deutsche bank is reportedly discussing with regulators about lowering its capital buffer. this is a way to help finance a pending restructuring. the german lender has talked to the fcb about the decision. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. is bloomberg.

nejra: thank you. opec will extend production cuts into 2020 in an attempt to buoy oil prices as global demand falters. ministers confirmed their agreement furry nine month extension. that support came from all the members. >> commitment to a nine month extension is unequivocal, very strong. not only are we committing to rollover, i have heard the individual commitments to conformity from all countries. nejra: my coanchor manus cranny has been covering all the latest from vienna. manus: a very good day to you. al-falehsaw khalid

using a very important word, unequivocal. i read that as meaning more cuts to come. >> things for having me. i don't think it means that. i think he means this is a commitment to reduce inventory and whatever it takes for them to do it, it means they will over comply. he did say that the second half will be similar to the first half. if required, after nine months, they will continue with a deal. manus: they are already doing the heavy lifting. to the iraqis now need to comply? that is one of the stumbling blocks of yesterday. amrita: yes, that is a big debate. under compliance has been huge from other members. that came up. yesterday, the king of saudi arabia called the prime minister

of iraq to discuss such matters as well. they have been ensured that iraqi compliance will go up in the second half. manus: a note out this morning, unless there are deeper cuts from opec plus, you won't get to the rebalancing that opec plus is trying to achieve. what is your take on that? forta: the deal is only nine months. the point of moving the inventory goal post, this was a specific target. manus: this is a five-year average. amrita: which gives us about 250 million barrels of excess inventory to run down. 100 million of that is crude. it could be more than nine months. venezuela, whod not producing much right now, they are already doing more than the 1.2 million barrels per day.

manus: can he economically commit to continuing to do that heavy lifting? look at the gdp numbers from saudi arabia and the oil industry. amrita: i think, right now, the only thing he is focused on in saudi arabia is revenue. if they continue to believe that cutting more will get them the price upside, if they believe that, they will continue doing that. revenue matters a lot given gdp. manus: let's go back to the area that i know the team has been writing about. what is the most important thing to him? price and revenue? amrita: yes. market share, he believes shale growth is going down. producedrs ago, they 8.5 million barrels for the saudi's, now they are 10-ish. they haven't really lost market share, have they?

manus: we are in the sidewalk, let's get into the gutter. we are talking about the oil price. what does this mean if the g20 plays out more positively. nine month extension, give me a price? amrita: 79 to 80. manus: risk of demand as we go into trade conflict. another level of conflict with europe, with japan. that is my risk. amrita: the problem is, you don't know which country is next. that is why companies are really struggling to make investments. we are seeing some very weak numbers. it doesn't react that quickly. it is just that everyone is frozen and they don't know what to do. manus: trade anchors with japan, what would that do with japan. what adjective would you choose that that would throw risk at

the market in terms of demand? amrita: european is already very weak given what is going on in china. i think the risk is the week shis and demand -- the weaknes in demand is amplified. manus: there was a marathon discussion. iran had the last word on the extension of the relationship between opec and opec plus. are people peeved? line, this was the easiest he has had. this was not easy. amrita: i think the reality is that it is not just iran. several members have highlighted the fact that this is an opec decision. why is it in announced at the g20 by heads of state? they wanted it to be there decision.

no pressure is coming in and they believe they are calling the shots. who gets the credit, i think that is what the fight is about. i don't think it changes anything in the market. it is the optics of who gets the credit. manus: we know who the central banker of oil is. amrita: saudi arabia. sen, the founder of energy aspects. sachs,aspects, goldman it has a nice ring to it. nejra: you've got energy aspects with you and i've got goldman sachs right here. we will catch up again in just a few minutes. we are asking the question on mliv, how far up can asset curves drive oil prices? let's get back to luke barrs.

i know you don't make calls on the oil price. however, you do invest in companies that are exposed oil in emerging markets. in the second quarter, the energy sector was one of the best-performing. how would that influence how you invest for the rest of the year based on how you see oil going? luke: it is just -- it doesn't affect how we trade for the rest of the year based on us being very long-term in focus. concern would be the sector, where, as a minority shareholder, you are not the beneficiary of the share price. we have seen reforms in places like russia where you see dividends being increased. that should be for longer-term investors. they will still use those companies to manage through the economic cycles. we are slightly more cautious on em.

indirect beneficiaries in places like russia, looking at the stories that focus -- that benefit from growth, oil prices. nejra: that is very interesting. let's talk about your biggest conviction call for the medium to long term. we don't have much time left. bullish are still very on companies exposed to the millennial phenomenon it 86% -- phenomenon. 86% of them live in em. anything focused on digitalization is attuned to that. greater value on is like likeiences -- on things experiences. nejra: coming up, the final flourish. deutsche bank ceo adds the finishing touches to a turnaround plan as the troubled german lender discusses lowering its capital buffer with

regulators. remember, bloomberg users can interact with all the charts shown using gtv. more markets next. this is bloomberg. ♪

manus: i am manus cranny in vienna for opec plus phase two. welcome to daybreak. nejra: i am nejra cehic in the city of london. .hese are today's top stories short-lived optimism. washington outlined or billion dollars worth of eu goods that could hit with breast tariffs. the boeing dispute takes another twist. gold rebounds ntm currencies we can. donald trump says trade talks with china has begun as the premier says they will scrap financial ownership sooner. the hang seng jumped after being shut on a day of unrest.

the rally in crude oil is without and investors switch to set -- soft economic data. she'll producers to grab even more market share. we are live in vienna. ♪ nejra: good morning and welcome. london.one 7:00 a.m. in manus cranny has been covering the latest from the opec meeting in vienna. great to catch up again. we were talking yesterday, you brought up the word certainty. what is the language from this -- sog so far customer far? manus: continuity. more importantly than that, it is about the language of the global central banker for oil. there is a new word for the

lexicon. take a listen. >> the commitment to a nine-month extension is unequivocal, solid, very strong. , thenly are we committing individual commitment to conformity from all countries. manus: for anyone who missed this reiteration, commitment and unequivocal. you need to find unequivocal. does it mean from my vantage point, is it a move to a five-year average, does that give them the capacity to do differ cuts or is it about the tone and internation which is the counterbalance of fragility, the frailty of demand which he acknowledged the end of dinner was looking tough going into the beginning of 2020. you have a new global headline about trade. it took 10 hours in that institution to come together. yesterday evening. this was not a meeting went as

uae minister presumed. nejra: also the 10 hours of deliberations, if -- is the decision enough to rebalance the market? you have been looking through analyst reaction. manus: yes. ' view is tos rebalance the market, to get to that, it will take deeper cuts. you have not been complying, do your job, start to comply. doing the heavy lifting. we have a new target and this is critically important to the market. the definition of where they want to get to. 2010ive-year average from 220 15, that gives them the latitude to employ deeper cuts of they need to if there is an escalation in trade wars and a

dissipation of demand. about that.talk the one spoiler is this, it was a six-month dating game, russia joining the opec cohorts to rebalance the market. it went down in 2016. they never really cheap -- achieved the objective but we footing and relationship. governments will decide whether this relationship enters. there is the spoiler, it is shale. gasquet shell. good morning. nejra: where does iran stand in all this? board they got on straight off the bat. supportive. their, there is something i want to say. the last time i was here, there was an iranian delegation that looked agitated, very ill at ease. person,s a phlegmatic

he had the last word or the iranians have the last word. they said the press and this institution which is opec must be growth, it must be our decision, it must we are unified decision in terms of what we do with cuts. not the long arm of putin making announcements before we get here. iranin lies the angst that vocalized which i would say to many others in this cohort of opec humbly are rankled -- probably are rankled that justice vocal. coanchor manus cranny in vienna. we look forward to the rest of the coverage. we are asking the question on mliv, how far can the output curve push prices? let's go to the border markets and we saw dated equities

yesterday. another day, another record for the s&p 500. we saw some green and the dax entering the bull market. taking a look at what we are seeing in futures. we could see another day of gains. how long will these last on the back of the trade truce given the fact we have seen concerns around global manufacturing with pmi coming out of europe, asia, and the u.s. the bond market may be telling a different story. we saw yields drop significantly. the 10 year and yield taking a fresh record low and yield low 2% for the first time since 2018. part of that was down to we wouldon him that see of dovish fed -- a more talking about the

need for more stimulus because of low inflation. we could see a touch of a turnaround in the btp market given the drop we saw yesterday. you can see what is happening there with the 10 year treasury yield rate we saw a backup in rates but where back down again today on a 202 handle on that 10 year treasury yield. let's get a check on asian markets. juliette saly has more. rba decision in focus as well. good to see you. juliette: that is right. the rba cutting records -- rates to a record low 1%. in terms of equity moves, it has been more subdued than yesterday. that strong global rally we had on the back of the g20 optimism. you have seen weakness coming through in mainland chinese market in afternoon trade, the csi 300 down .3 of 1%. it was up i 2.9%. india over the weekend and australia closing flat on the sx 200. you saw the banks fall after the rba cut those rates. the nikkei is a little bit

higher up like .1 of 1%. hard to see but hong kong is where we are focusing because was closed during the public holiday in protest. it is playing catch-up so the , a rally in i 1.2% the tech space. let's have a look at currency moves. there is focus on the aussie dollar in yields in australia. after the rba's decision. where looking for evidence philip lowe to be speaking in darwin. there was a policy decision in that city. the aussie dollar is tracking higher up by .2 of what percent. above the cashow rate of the rba 1%. the hong kong dollar has been surging on the back of the hong kong monetary authority trying to propel that dollar, support oft dollar in the wake protests.

we have seen moves come through in terms of futures curves. the2 of 1% moving past midpoint range against the u.s. dollar for the first time since september. nejra: thank you. the u.s. has added more products from the eu to a list of goods that could be hit with tariffs as part of a long-running subsidy dispute between boeing and airbus. around $4 billion worth of goods could be hit. u.s. stock futures fell off at the announcement. with us for the rest of the show, our guest. great to have you with us. so as we move on from the fact we have a trade truce and we saw this rally in global equities yesterday, the concern turns back to what we have she's in the manufacturing gauges. what does that mean to help you would construct your portfolio right now around equities? paul: one has been the direction of markets over the last several years which has been much more leveled toward the growth areas of the market.

there is a perception going into the meeting that the opportunity cyclical into the more areas of the market was pervasive. -- there is a valuation argument for it. pmi's are starting to roll over. it does look as if the global economy is getting softer. from that perspective, investors would be tempted to take the opportunity of valuation. run would a concern not to that too far so you may see some volatility going on. nejra: you talked about value versus growth and as we can see and we have discussed this, the msci world growth index has been outperforming value. you are saying we could see a short-term turnaround here where the gap on the chart could be closed or just a little bit of a closing of the gap? >> i don't ticket will get fully closed. the headwinds in terms of

disinflation, in terms of commerce, [inaudible] from that perspective, the previous market behavior which you would have seen a decade ago has made up for -- is not likely to be repeated. value rallies would be likely to be shorter, sharper, and more temporary than in the past. isra: talk to me about what holding you, running up to the g20, you have some holdings in the industrial space, you have trimmed consumer staples. >> that is right. we felt that any alleviation of trade tensions from g20 would see the market get more positive toward some of those value cyclicals. we have not shifted the portfolio around completely. we have increased those areas and flatten the portfolio on the

basis of the market. it could be more easily matched. the more structural long-term aces it seems if the growth stocks sold off we would see support come back at some stage. is your position on tech? it was one of the best performers on the stoxx 600. it was interesting, you saw for time ericsson and nokia gaining which suggested less of an expectation that this relief would last for a long time. you have competing forces. how do you view the tech sector based on the wall way story as part of the trade? morning, it felt -- they had been seen as negatively impacted by huawei, it did come back into the picture. that does indicate the market had been getting excited coming

in last week about outcomes. values make,those could be more volatile. perspective, we have seen a battle between growth and values. maybe the next few months, that could be different or with no potentially clear winner. take: are you looking to opportunities in the second half of the year? marketse emerging should in theory should be beneficial to this kind of market move. china would be a direct beneficiary. factegarding that is the the chinese financial system is under some sort of stress. something that will lead some investors to believe we

a moment for the chinese financial system. that is not necessarily, it could hold back longer progress as we go through the end of the year. nejra: interesting. palm markham stays with us. let's get the first word news with annabel in hong kong. embattled hong kong's eater is condemning illustrations which saw the city's legislative council stormed by protesters. never fired tear gas and spray at hundreds of people flooding into the building. protesters had used excessive violence. and vandalism by protesters who stormed into the legislative council building over time. this is something that we should

seriously condemn. nothing is more important than the rule of law in hong kong. annabelle: china will scrap financial limits of companies when you're earlier than planned. -- one year earlier than planned. owners o australia has cut its key rate for the second straight month. is as policymakers provide support to a slower economy. lowering the key rate to 1%. italy's populist government has lowered the budget deficit in a bid to comply with eu rules. for failingctions to rein in debt. it is expected to the 2% of output much lower than the 2.4% seen in april.

global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you. coming up, deutsche bank's biggest overhaul in years. loring -- discusses lowering regulations. we will bring you the latest. this is bloomberg. ♪

nejra: 38 men from the start of cash equity trading in europe. this is "bloomberg daybreak: europe." fronts slightly on the for a day and we saw gains in the european session yesterday. the dax entering a bull market and green on the screen in terms of futures. the euro holding to losses.

we saw weakness because of the pmi and the fact there was speculation we could get a more dovish head of the ecb with all the horsetrading around the eu top jobs. the 10-year bund yield dropped on that. we get -- got to 1036. btp dropping and it stays there. the aussie higher spite the fact we have a rate cut. crude higher now, it was a ming the highs from yesterday. opec plus agreeing to extend those output cuts. let's get a bloomberg business flash. investors are still waiting to access their money. the fund will remain locked. the administrator saying that given the timeline for reopening. morningstar said it could take a year to liquidate portfolios. >> the suspension was designed to protect investors and secondly to give the time to

execute the strategy as we have outlined. the shift in the portfolio into more liquid. we do nothat ensures damage the interest of our investors. is moving china closer to merging its chipmakers. they would dwarf international rivals. china's shipbuilding and state shipbuilding are planning a restructuring. it would create everything from aircraft carriers to oil tankers. that is your bloomberg business flash. thank you. deutsche bank has talked to regulators about lowering its capital cushion, that would be a way for the bank to finance an impending restructuring. stephen erin. is great to have you with us. this is a desperate move? something.

to avoid a capital increase. they do not want to raise capital from investors because the share price are's -- it would be a hard fight so they have to come up with alternatives to raising that capital and lowering the buffer is a way to do that. it's a bank in comparison to high capital cushion. it does seem like a possible way to do this. how do we expect regulators to respond? stephen: when you talked about regulators, there never happy to loweringt the idea of capital cushions especially when facing an economic environment that is possibly heading toward slowdown. deutsche bank has a capital cushion that is relatively high. they have shown in the past they

de-risked the balance sheet and they're working on a plan to de-risk it even more. i think regulators will be open to the idea and give a fair hearing to deutsche bank on this. nejra: great to have you with us. markham is still with us. your first take on banks. your voice -- take it worry want. paul: there were stress tests two weeks ago, several days ago, they were positive. the indications were u.s. banking system is less likely to the risks and that means power ratios have been taken up. would enjoy better returns and it shows discipline on the part of those banks. that was seen as being a positive exercise. there are a couple of structural headwinds that are proving

problematic for them. one of them is the fact it is hard to generate inflation. that is something that will be a tail wind should that come around. it is a lack of demand and that is something the ecb has tried to stimulate that without significant or lasting success. to market is looking forward the change of president thinking there could be a change but it could be more challenging to make that change in the market. nejra: in europe, low rates are a challenge for a lot of the banks. a lot of people have said don't do equities because that is where you find deal. where's the best yield? >> they do remain attractive. paper is pretty wide. spreads are good. there are several sectors which offer that. pharmaceuticals, there are staples but it could be they have a little bit to go

through this summer. nejra: great to have you with us, paul markham. that is it for daybreak market -- daybreak europe. we could see another day of gains. this is bloomberg. ♪

anna: good morning and welcome. i am and edwards london. today, the markets say what happens to the risk rally? futures point to a modest open after yesterday's positivity starts to fizzle out. the cache trade is less than 30 minutes away. ♪ hit $4ashington could billion of goods with tariffs. opec steps up.