manus: good morning from dubai. this is daybreak europe. from european headquarters in the city of --don, this is stocks further into the red and treasury yields lower. beijing asks estate buyers to suspend u.s. agricultural imports. from johnson's 10 years as hsbc ceo comes to an end amid a low rate environment. a dangerous situation. carrie lam warns against unrest

as protesters moved to shut down hong kong. we are live on the ground. a public spending boost from boris johnson raises expectations he is playing for an early general election. parliamentary majority hangs by a thread. manus: a warm welcome to the show. and raise your game the bet higher. that is the message from the chinese. the dam has been breached. the dogs have been unleashed by the pboc. they are letting the hounds run, even though they verbally intervened.

nejra: i love your use of language. what a dramatic day of the markets. the question is where the next resistance level is for the yuan and whether the pboc is going to defend a certain level or whether it is just protecting against wild swings in volatility. whether we now see the start of a currency war and weather will be more challenging for banks which have less room to ease, which means japan. manus: there are five emerging-market central banks, five more to go this week. i think when it comes to pboc, you are seeing the south koreans defend verbally their currency. aboveoc let the yuan run seven in response to the potential escalation of tariffs in the united states. china has reset the boundaries. they said they were looking at a reasonable and balanced level. does not mean it will not come back, in that they will fight against short-term speculation

and stabilize the market expectation. therein lies the point, which is that you have let the currency run above seven and then they verbally intervene. >> in the meantime, we have calls adjusted all over. goldman upping at the end forecast on the trade war. -- upping its yen forecast on the trade war. manus: i thought we would have a quick look at the 10-year note. oil is lower. bank of america merrill lynch in potential escalation trade wars could knock 250 to 500,000 barrels of oil off the demand side. the risk is that china goes to buy from iran. that could knock $20 to $30 off the price. 10 year notes, the lowest since 2016. 0110 year notes. it just makes that whole story, life is the market still prices

five rate cuts, including last week, by the first quarter of 2021. the market will not be stopped. did you miss me? nejra: i did. it is so great to have you back as we stand here questioning where that circuit breaker is. last week was the worst week since december for u.s. equities. five days of declines. we reached a technical level to the downside. u.s. futures to the downside. nasdaq and dow futures, so we are seeing this impact feeding through to the u.s. session. i put the two year yield up to demonstrate. this after we saw the german curve below zero on friday. the yen's bid, gaining against g10 peers. dollar-yen did breakthrough. we now trade at 10602. juliette saly has the latest from asia. they are calling it manic monday.

the worst day for asian stocks so far this year. the msci asia pacific index has fallen more than 2%. and a look at the function see these red boxes around the indices, meaning they are significant moves. they are focusing very much on what is happening in hong kong. carrie lam saying she will not be stepping down. the protests really weighing on hong kong sentiment. the hang seng is off nearly 3%. ie msci asia hong kong index, should say, on its longest losing streak since the handover in 1997. --perties trucks and casinos stocks and casinos hit very hard. the kospi hit as well. by 2.4%. is down that stronger yen weighing into the nikkei. let's look further into that move in the korean won. this is on the back of that move

in the yuan today. korea's one south leading losses. it is down by 2% against the dollar over the last two sessions. it moves past 200 to the dollar since the -- for the first time since 2017. holding at its weakest level since march 2016 and prompting intervention from authorities. they have said the move is excessive and abnormal. this is the south korea ethics authority. -- south korea affects authority. fx authority. manus: juliette saly rounding up the rest of the markets discussing the yuan. the pboc says it will deliver stability across a basket of foreign currencies. jp morgan forecast comes through.

705. the previous call was 690. nejra: the chinese government has asked state owned enterprises to suspend the import of u.s. agriculture products. what assets will suffer the most pain? you can join the debate, reach out to us and the mliv team, ib+tv under bloomberg. joining us now is the chief economic advisor at -- great to have you with us. what happens next? as august the same 2015. it is also the same as this year. a few months ago in may. stocks declined. bonds rally. rallies,ese currency the swiss franc. the safe haven issues stay solid. emerging markets should be worst

hit. most people have significant exposure because they have gone out there to grab yield. you can see in the treasury bond markets, we had the fed cut rates last week. the u.s. treasury market rallied 30 basis points. it is a classic risk off movement and that should continue for the rest of the week. you mentioned 2015, 2016. haderms of the debt china then versus now and whether that will perhaps put a lid on the capital outflows from china, is that one of the key issues? >> it is. it is going to be hard to manage it. the break of seven is because of trade friction. it is also because of the issues

in hong kong. an issue for the chinese and the central bank is going to have to be careful how they handle it. this is a g20 commitment. all g20 leaders have promised not to weaponize currency. actively beingis talked in the marketplace and the chinese authorities themselves have to make sure they take that off the table, not to weaponize currency. >> should we worry about the global currency? >> yes, if we do not get back below seven. to or 7.3, that is going escalate the situation rather than take it off the table. simply, what does it take to get us back below seven with substance? >> we are going to have to see the chinese authorities like august 2015 actually come out

and give the market some stabilizing factors. chinese leadership is actually away on holiday. they have taken a two-week sabbatical to the beach outside beijing. we are very unlikely to hear key the key issues, the players, but the central bank is involved. they may have to put controls in place. the currency will have to be stopped in the short term. the reason for china to do that is stability. chinese stability will be impacted if they allow the currency to depreciate significantly. >> what will it mean for other asset classes generally if china does not step in to defend a specific level, but just try to control volatility? >> we have this spike already. they're going to have to move in. other currency losses in the you

thise e.m. space, already year we saw the fed cut rates last week. we have 31 central bank the have cut rates. almost all of them are emerging markets. as you mentioned, central banks are going to cut this week. .e will probably see a lot more i expect fiscal easing will be talked about more actively, especially in europe. europe is going to take a significant hit because they are the largest exposure on trade. that to beect discussed actively. from an equity point of view we are seeing a shift. the topics is down. warren buffett was a net seller in the last quarter. he sold a billion dollars worth more than he bought last quarter. do you think when you see the

beginning of this kind of repricing, and i say beginning, because that is what this monday morning looks like. the beginning of a shift. do you think this is going to be a race out of equities? >> i would think the emerging-market space are relatively unstable, going to see the largest hits. that is where the inflows have taken place. in august 2015, we had a very significant 20% decline. already, we have seen u.s. stocks around 5%. we have seen the hong kong stock market off around eight. some markets have been unchanged because they have relatively

consistent and new economic policies and macro policies in place. we will dig deeper into the differential and policy in a moment. stay with us. speaking of the rally in the haven's, equity markets coming off their highs. what is going on in the straight skirmish? is there more repricing to come? dani burger takes a look. >> these headlines could not come out a worse time. stocks.ly got back into the fed was trying to assuage investor concerns about trade war damage. i want to jump into a chart because it looks like we are at max complacency. you put it best when you said we are just starting to see repricing. this trade war monitor really does look like investors have not been anticipating the drop,

or were overlooking. the red is the more complete markets looking at the pricing risk ofts most at getting hit for trade. this means investors are not pricing this in. we have the drama today, but still, it looks like investors are not too concerned, which is why we see the assets reacting the way they are. we can also see this when we look at u.s. stocks if we dive into those. this can help us set up for the u.s. open today. when we look at friday's trading session, which again, we started to get headlines, and basket of stocks performed better than the s&p 500 in the blue here. this close performance means not everything is priced in yet. if you are looking to save the complacency, considering how complacent markets are, now might be the time. much. thank you so

let's get the first word news. >> two mass shootings in the u.s. this weekend. at least 30 dead and many more wounded. a crowded mall in el paso was the target of one shooter. just hours later in dayton, ohio, a gunman opened fire. he was shot dead after killing nine and wounding more than a dozen others. the u.k.'s new prime minister has dramatically boosted public spending since he took office. is speculated to be preparing for a election. today he will lay out the details to the nhs. it follows recent pledges to hire more police officers and boost infrastructure spending. flynnhief executive john is stepping down after less than

18 months in the job. the lender has not given a reason for the departure. the lender also announced a quarterly we text profit at $6.2 billion and says it will buy back up to $1 billion worth of shares. warren buffett's distaste for overpaying is winning out over his -- sitting on a pile of cash. berkshire hathaway's told -- hathaway sold more than -- $1 billion more in stocks than it bought. recordnow surged to a $122 billion. 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. thank you very much. unrest in hong kong, and it is escalating.

demonstrators disrupting flights . check with your carrier. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's have a look at the markets. you want is on the move above seven. you need something substantial to get it back. dollar-yen is up. haven's our bid. the yield on the jgb, what will the pboc -- what will the boj tolerate? we will talk about the yield curve next. a little bit of inversion in japan. nejra: take a look at the 10 year yield, hitting a 2016 low. futures on the back foot after

the worst week for u.s. equities since december last week. dropping two a three year low. hong kong faces a general strike with flights canceled and public transport disrupted. carrie lam is accusing protesters of trying to ruin the city. motives areerior going to destroy hong kong. , twosk one country systems. nejra:nejra: sophie kamaruddin is in hong kong. give us an update on what is happening. >> after nine weeks of civil unrest, we are bracing for the general strike that is to happen this afternoon. together -- toet gather throughout the island.

we heard from the railway operator that all train services have resumed after being disrupted as part of efforts by protesters ahead of that general strike. we just heard from carrie lam. we heard her talk about the dangerous situation hong kong has found itself in. she painted a very grim picture and did not address protesters' demands, including calls for her resignation, which she said would not provide a better solution. she also maintained support for the rule of law and also highlighted that she would not seek to withdraw the extradition bill at the heart of these concerns and driving weeks of protests. of ruin.e warns i would imagine the protesters she is talking to do not really care if there is a subliminal move. from an economic point of view,

is there an impact? impact to? economic are you seeing less people and tourism there during these big summer breaks? >> there are concerns tourist arrivals will begin to flag. retail sales have taken a hit for the protests really began picking up seem. -- picking up steam. data falling to the lowest level since 2009 for the hong kong economy. that does not bode well. we have seen obstructions to local businesses. shops along streets that would be infected i -- that would be affected by demonstrations shuttered their windows. that has weighed on market sentiment. jeffries is downgrading its outlook for hong kong with equities given the concern no real end is in sight. there may be more downward

pressure on retail, on tourism, as well as -- hong kong stocks today really taking a hit. the biggest drop since october. let's see how luxury stocks open later on in western markets. sophie kamaruddin tracking the hong kong protests. you can get live updates on the blog. it is tough at that airport. we have seen bond yields shifting globally. jgb's slid to the lowest level since july 2016. bonds at ament two-year low and counting. our guest this morning as the chief economic visor at alpha.

library so thehe director will be able to bring it up. the risk of inversion in japan. is this relevant? mi using the right comparative? manus: not especially, though it is quite a nice little chart. the boj decided not to ease policy, and the key to their policy is the currency. hundreds,yen breaks and we have seen the sharp fall already to 105, we will see easing by kuroda during the third quarter. most of the market thinks there is not much firepower left. their balanced sheet. they can buy more equities. they could get quite aggressive

if the currency breaks 100. that will be the key issue rather than the bond yield. it is pegged at zero. aey will definitely shift to much easier stance if we break 100 on dollar yen. >> how low could we go on 10 year treasury yields? >> the 10 year, i would point to again, the august 15 chinese renminbi shock actually brought the 10 year yield from 2.5 to 1.5. over the past week, the 10 year treasuries lead bond market globally valued 30 basis points from 2.05 to 175. we can easily see it at 1.5. 1.5 is the key issue. nejra: we are watching that. martin malone from alpha book stays with us. discussed hsbc and the latest

set of earnings next. manus: if you are traveling to work, the bloomberg radio team is on your mobile devices. ♪

manus: it is "bloomberg daybreak: europe." hsbc shares are falling today in hong kong after the ceo's tenure came to an end. the veteran is stepping down after 18 months on the job and will be replaced on an interim basis by the head of global commercial banking. for more, let's bring in bloomberg intelligence senior banks analyst jonathan tise. is this going to make things better for hsbc? there was a huge restructuring story, then it became a buyback returns story.

now it has been how do we manage investment? suddenly, topline changed dramatically. we are probably back to costs and efficiency. maybe he's going to crack the whip and refocus a little more. the u.s., they are not going to make -- in 2020. it's not good enough. the fact is the world has changed very quickly. manus: good morning. the patient's level for those renminbis banks might be .hittling down you talk about the business and global effects. he talked about global ash

-- you talk about fx.bal it was currently hibor state, high for longer than expected. relative to european banks, you have very good topline momentum. i bank with lots of capital. we want to see various pockets improve. how did they do that? >> costs, balance sheets, management. have been investment program. they are not going to want to slow down. they need to invest.

growth got no revenue and they need to invest. manus: did the buyback impress you? >> previously they switched back to we will only use buybacks for dividends. we have plenty of capital, but one thing that means is your return is lower. i point to the share prices. pretty resilient. these are a good set of numbers. if they are also saying u.s. business returns are going to be lower than we thought, having lots of capital does not help your return on capital. nejra: will we see more job cuts? >> unfortunately. not as wholesale as elsewhere. you look fx, you look at markets, that is pretty weak. there you go.

short answer sink. know what wets to get jonathan tyce as a prize for coming in early -- let's check on the markets from around the world. shah and annmarie hordern. the nifty 50 gone into correction. i'm in shock. good morning. >> good morning. a lot of markets are in shock acause everyone believes -- lot of conversation about how india is not the center of the trade war. manus: my apologies. go ahead. just saying the fact that a

lot of people are still thinking this is an oversold territory and may be bought into, the world is now turning against. that should cause additional pressure. a percent and a half lower for the benchmark indices. put currency weakening. please be cautious. you are looking at the drama unfolding after we saw the yuan breakthrough seven. >> we are seeing dramatic moves across asia as the trade war ramps up. news we are seeing is in australia, down 1.5 percent. south korea's cost be getting hit hard as well as hong kong. there is no room to the upside. what is driving equities lowers the move we have seen from the chinese yuan.

it is at the top of the .oreign-exchange that line in the sand, beijing allowing that to happen. should traders be bracing for a full-fledged currency war? we are seeing green as we see a rally around yields coming down. it is all about iron ore this morning, down 6%. that is my chart of the morning. the singapore contract is weakened below $100 a ton. you can see just weeks ago this was highflying iron ore, above $120 a ton. it is starting to crash. saw of these markets, we supply coming onto the market, but really, the trade war has pushed it over the edge. minors likeon those rio tinto. they are certainly going to get the pressure today. manus: battered and bruised from every direction.

thank you very much. breaking news your bloomberg terminal. -- aman company urging value shock read headline. they are demanding a full separation of the auto business. they are demanding a comprehensive strategy review, demanding more ambitious buyback program from scott 24. they have a 7% holding. havegoes back to what we seen several times, the rising level of activism within u.k. stocks. let's get your first word news headlines from hong kong. china is asking its state owned businesses to suspend imports of u.s. agricultural products. funds will wait to see how trade

talks progress after president trump escalated tensions with beijing last week. --osing tariffs on other another 300 billion dollars of chinese goods. two mass shootings in the u.s.. at least 30 dead and many more wounded. a crowded walmart in el paso was the target of one shooter. 20 were killed before the suspect was arrested. hours later in ohio, a gunman opened fire. he was shot dead after killing nine and wounding more than a dozen others. iran's state media has confirmed the nation -- the persian gulf. it is the third ship taken by the revolutionary guard in recent weeks. i ran's press tv said it was an iraqi vessel. the u.k.'s new prime minister has boosted public spending

since he took office. it fueled speculation boris johnson is appearing for a general election. it follows recent pledges to hire more police officers and boost infrastructure spending. 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. thank you so much. let's get back to the fed. according to donald trump's top trade advisor, the central bank is the single biggest obstacle to strong growth in america despite u.s. jobs data that underscored mounting risks to the economy due to global weakness in trade tensions. now pricing in four more rate cuts by 2021. we will hear from the fed is a number of presidents are speaking this week. they include james bullard and

charles evans. martin, the market pricing in four rate cuts by first quarter 2021. is the fed going to have to match that market pricing with the latest escalation despite the strong jobs data we are getting? >> it is a double-edged sword. if we go back last year, the fed hike 100 basis points toward the end of last year. that hike was probably a mistake in december. the fed could have cut in june. they did not. they cut last week by 25 basis points, the start of a new policy easing cycle. the mistake the communication from the fed last week was this is not the start of an easing cycle. they are turning themselves in knots to communicate effectively with the marketplace. they are way behind the curve. rate,d at 2.25 fed fund

treasuries targeting 150, this is a very difficult dilemma for the fed to handle. they are communicating -- one could say they made a policy error last week. what makes you so convicted that we need three, possibly five, the market is assuming we will get by 2021? what makes you so sure we need that? >> on the economic side, the economy on consumption and jobs is very solid. ont is not the case investment, it is not the case on trade. the fed has to take some type of influence on what they see on trade. what we have seen since the month of may, china has walked , ak the agreement they set

one hundred 50 page document. the hardliners decided, we don't like it. g20, president xi and trump sat down and tried to get that back on board again. that is unwinding as well. fed'ss playing into the hands, unfortunately. the fed is going to have to react to them. the issue becomes when this becomes an uncertainty issue. the uncertainty and volatility of markets are going to add to financial instability, which brings the fed in on their third leg. it is full employment. it is stable pricing. the uncertainty of stability would bring more cuts. u.s. equity markets have been troubled by jerome powell's press conference, but also earnings. corporate guidance is suggesting a profit rebound might be elusive.

the reaction of investors has been not that forgiving. i know you are long-term bullish on stocks. would you be tempted to take profit right now? >> the quick answer is yes. the reason is, say the united kingdom, u.k. consumption and jobs are rocksolid. we look at u.k. investment, which is around a relatively large share of gdp, it was negative last year and it is negative this year. two years of negative investment is almost unheard of. that is something the u.s. could a further trade situation. to halt ourt want conversation for a moment. breaking news on axel springer se. -- axel springer. we expected that announcement.

axel springer are responding. they have accepted the offer r.om kk there is the response mechanism on the bid from kkr as you can see. the minimum threshold has been accepted. the conversation about rates. the breakeven rates in the united states of america, that miscommunication last week i think unseated the inflation expectation. this is the 10 year breakeven. they absolutely walloped it.

this is what they are supposed to be fixing, not breaking, isn't it? >> collect -- correct. most central banks are flexible inflation targeting. we have seen, this is a major issue for the markets, we have seen relatively ok growth. .he weakness is coming through the trade and investment side, not jobs in consumption. on inflation, we have seen the deceleration across every economy in the world. emerging-market central banks, almost 30 of them have used this year. we can see this in europe. the growth deceleration, but the disinflation is more troublesome. that is why all policymakers --

we measure them relative to global gdp. we are up to 55% of the world's central banks that have cut rates so far. we expect that to go to over 80%. >> we have to draw a line. we have more work to do. we are going to set up the week's agenda. there is a lot to take stock of. germany kicks off out of the gate. compass it pmi's hit the slate. the same day, we have a right decision from the rba, expected to hold firm. several aipac central banks that include the reserve bank of india, thailand, and the philippines. big earnings throughout the week. commerzbank reports wednesday. thursday.ws the u.k.'s new prime minister boost spending. we will discuss. ♪

manus: it is "bloomberg daybreak: europe." atra: we are taking a look live pictures from hong kong. fromwe are seeing is live outside the police station, the pro-democracy protesters have been holding rallies in parts of the city with the aim of paralyzing the city and the economy. lines have been suspended. carrie lam warning of a dangerous situation. let's get the bloomberg business flash from annabelle jewelers in hong kong.

>> hsbc chief executive john flint is stepping down after less than 18 months in the job. they are appointing head of global commercial banking quinn as interim chief. the lender announced a quarterly pretax profit of $6.2 billion and says it will buy back up to $1 billion worth of shares. buffett's distaste for overpaying is winning over his frustration with sitting on a pile of cash. last quarter, berkshire hathaway sold $1 billion more in stock than it bought, its biggest net selling since the end of 2017. the company's cash toward has -- hoard cash horde has surged. a mass shooting at an el paso

walmart. the company says it goes above and beyond federal law in background checks. they say they are responsible seller of firearms. renault reducing a stake to revive its deal with fiat according to the wall street journal. the carmakers for to cut stake in its japanese partner. that is your bloomberg business flash. manus: thank you very much. to the u.k. now, there is a new prime minister. speculation boris johnson is preparing for general election. the pound could tumble to a 54 year low in u.k. leaves the european union without a deal. more likely than perhaps six

months ago, according to the bloomberg survey of analysts. is our guest host. i read your piece, martin. good to see you. where are we with this? are you a believer hard brexit would be catharsis and sterling would rally? inare you a believer 34-year-old 110? you reckon? >> if there is a so-called hard brexit, we have been very negative on the currency and very negative u.k. property for almost the entire year. we will continue to maintain those positions. we could see the currency dropped one against the dollar. just on a knee-jerk response to a hard brexit, it depends on the

definition of a hard brexit. it gets very difficult. the definition of no deal is almost unexplainable. there will be some type of deal. we still have multiple scenarios . macronend of august, will host the g7 leaders. this would be a crucial first meeting of forest and the european leaders to figure out how to work out the brexit issue. a numberu talk about of scenarios. one is the possibility of a snap election. when do you expect that might happen? would you price sterling on the back of that? would've the positive or negative? i would almost be relatively surprised if there was -- before the 31st.

there is a 0% risk of for general election before that. the key issue for boris, we have seen a bounce in the popularity of the tory party in the past few weeks. a generalasily see election in november. the popularity of the tory party will depend on delivering the key issue. your analogy about who boris johnson is from a policy response mechanism i find fascinating. with -- is analogy that realistic? >> the key issue is once we get away from brexit, which is what the entire electorate wants, the economic underperformance of this country is very poor.

the growth, the long-term averages 1%. it needs to be 3%. the fiscal deficit is 1%. we need to have a 3% physical boost. this is very similar to when shinzo abe came into power in 2012. the similarity is to use all levers to maximize future economic performance. solid economic plan. that's what this government must do. they are discussing brexit, but the core issue is re-accelerating the economic issue. that's knowledge for 12 months. that's the next decade or two. boris johnsonts has boosted that -- martin malone from alpha book, great to have you with us. show, weming up on the

are going to continue to update you on the protests in hong kong. carrie lam warns about rumination if protests continue. no sign of her resigning. ♪

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nejra: good morning from bloomberg's european headquarters. manus: live from dubai, this is ."oomberg daybreak: europe stocks dragged further into the red and treasury yields lower as beijing asks state buyers to suspend u.s. agricultural imports. a very dangerous situation. furtheram warns against unrest in hong kong as protesters moved to shut down the financial hub.

we are live on the ground. the price exit. hsbc struggles to steady amid a low rate environment. bracing for a vote. a public spending boost from boris johnson raises the expectation he is planning an early general election. hangsrliamentary majority by a thread. nejra: welcome to "daybreak europe. we have to get to some earnings. softbank coming through on the bloomberg. the red headline is the first quarter operating income comes

to 268 ¥.86 billion. the estimate was 269.2. pretty much in line. it still sees full-year operating income at ¥890 billion. your guidance, it still sees full-year net income at ¥480 billion. it still sees the dividend that ¥85. the estimate was 85.5 five. those are earnings coming through. we are still deep in earnings season, but let's get back to markets. a huge reaction across bonds. bond markets the lowest level since 2016. there's going to be a raft of fed speakers. will they read grasp of the capacity to message clearly, cogently, and what is the strategy after a serious misstep in the middle of last week?

a policy errors some would say from the fed. lower. yields cascading the lowest since 2016. a new dovish extreme. the markets priced in five more rate cuts. available onntly u.s. treasuries. leads riseob mckay ?n u.s. treasuries is that a possibility? ratcheting higher from the chinese in response to donald trump's trade talks. the hounds are running. nejra: we are seeing a classic risk-off in markets as a result. for gold bid, yen bid, oil selling off. 100, dax, and cac 40

futures in the red. the same for u.s. futures after the s&p dropped last week, its worst week since the december selloff. we saw a weekly loss for european equities. a similar picture in asia. juliette saly can tell us more. juliette: a terrible start to the trading week. big moves coming through in equities and bonds in asia. the csi 300 down by 1.4%. hong kong's hang seng off by 2.8%. the msci hong kong on track for its lowest -- longest losing streak since the 1997 andover. protests denting sentiment. the pmi right out of hong kong showing a slowdown in the economy. the nikkei off by 1.7% on the close. it's worst today drop since

december. south korea's kospi and the won tumbling. australia's market had its worst session since december. all these trade concerns, and what we are seeing in the yuan weighing into sentiment. set the you one weaker than 6.9 for the first time this year. can is onshore where you see they had that big move-up 1500 pips from the u.s. dollar. big reactions coming through in the offshore. both currencies moving past seven. the onshore at its lowest rate in more than a decade since march 2008. everyone in the market starting to say, what does this mean? is this a signal china is allowing the currency to weaken and start to use this as they ramp-up their rhetoric with that the trade dispute daca -- with the u.s. over the trade dispute?

manus: takeaway.com has agreed and allshare combination with just think. --eaway.com is going to owe sorry, just eat holders will hold 51%. ont eat closed at 736.4 friday. just eat is about 5 billion pounds, a five billion pound market cap. offered 731.being takeaway.com supplies the value of 731 on the deal. a whole new world. a little bit of a spike in the latter part of the month. that is certainly one to watch as we get started on the day.

how is that you one looking? yuan looking? nejra: it continues to be stable. jp morgan forecasting the yuan against a previous call of 690. manus: the trade news does not stop there. the chinese government has asked state owned enterprises to suspend the imports of u.s. agricultural products. are we hitting peak trade angst? what assets will suffer the most sustained pain from the yuan's breach of seven? reach out on the mliv blog. our guest host this morning as the head of ishares for blackrock. our last guest was in shock. i was surprised that this

retaliatory move. they have unleashed the yuan. they really have. back at you.e slot we are not buying more agricultural products. if i was to ask you the scale of the response from the chinese on one to 10, 10 being the most aggressive, how would you rate the response fiasco >> a seven. -- how would you rate the response? >> a7. , if you thinkavel about the additional tariffs on chinese exports, that would anyway assert depreciation pressure on the currency. if you think about two sides of the negotiation, maybe the chinese right now are seeing less need for them to support

the currency as part of the negotiation process, given the news last week and the result that perhaps leading to weaker currencies. the direction of travel is not surprising. the magnitude is. nejra: earlier we were talking about the fact the pboc might not be targeting a specific level, but more concerned about controlling volatility. not tove advised firms speculate on the yuan, saying they are ready to crackdown on short-term speculations to keep the currency stable. how long do you expect this continue?to for the rest of this week? could we find stability by wednesday? >> it is inconvenient we are in the middle of summer. liquidity generally -- volatility can be -- can even persist, which is why we

continue to reiterate our forecast on building portfolio resiliency. we are looking at gold, we are looking at u.s. government bonds , european government bonds, as well as inflation linked bonds. manus: in the last hour we had a conversation with martin malone. this is the em fx. there is this huge reach for yield, isn't there? think the em equity space is going to bear more pressure relative to the developed market equity space in the beginnings of repricing? answer is yes, which is why in our second half of the outlook piece, we have moderated our review from overlook -- overweight to neutral.

european fromed underway. -- underweight. we are moving incrementally away from emerging markets as we reflect our caution again, emerging markets coming under pressure. commodity markets have been punished. we are seeing oil down today. iron ore getting hit as well. gold is bid. in terms of the more hard commodity markets, if you look at oil, the focus seems to be on-demand. is that a dynamic you expect to continue and that we will see reflected in the low? >> part of that is the dollar. exerting pressure on the commodity space. you are spot on. some of it is in response to

demand expectation. this negative headwind we have seen investors favoring precious metals and gold and silver, actually more than industrial metals. manus: can i pivot back to the bond market? everything almost prices off that. 10 year government bond paper cascading lower. since november 2016. you said we are too pessimistic on our perception of the breakevens. they are structurally repricing, below 1.7%, as you can see on the 10 years. why do you say we are to pessimistic on the breakevens?

you look at breakeven repricing in the u.s. and europe, looking at the expectation for the central banks to not reach their targets for prolonged time, for a really , and somed of time point it could seep through to expectation. this is unduly pessimistic. you talked about the fact u.s. ten-year is below 1.8. markets are pricing in 3, 4 rate hikes for the next 12 months. we think the fed will cut weight again to support the economy, to combat trade tension, but the cement of pricing is a bit too excessive. >> you teams disagree? is

thinking what the fed is going to do is not going to work. we will pick up on that. >> two mass shootings in the u.s. this weekend. 30 dead and many more wounded. a crowded walmart was the target of one shooter. 20 were killed before the suspect was arrested. in dayton,ened fire ohio. he was shot dead after killing nine and wounding more than a dozen others. i ran's state media has confirmed the nation seized another oil tanker in the persian gulf, the third taken by the revolutionary guard in recent weeks. state-run press tv said it was an iraqi vessel. these latest moves add to concerns about the safety of shipping in the strait of

hormuz. the u.k.'s new prime minister has boosted public spending. that fuels speculation boris johnson is preparing for a general election. he will lay out the details of his boost to the nhs. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. now, staying in hong kong, it has been hit with citywide strikes today. carrie lam is accusing protesters up trying to ruin the city as protests erupted. motives areerior going to destroy hong kong.

nejra: sophie kamaruddin is at the hong kong airport. tell us how things are looking right now. >> i am back at the airport. on top of the cancellations we reschedulinging, 14 flights. we are seeing continued disruption to flights, subway .ervices have resumed operation this afternoon we are seeing protesters gathered for the general strike. seeing hundreds of protesters and striking workers brave the sweltering heat for a peaceful sit in. we are seeing a different scene unfold at the northern border with china, where there are -- there is footage of clashes between protesters and police.

from carrie lam, who considers -- this morning she maintained her support for the rule of law. said the withdrawal of the extradition bill would not be considered and she did not address protesters demands, including for jerez are -- her resignation. the question is what is next for hong kong. confidence has taken a hit when it comes to businesses as well as residents. have you changed anything you do socially? have your friends, your colleagues, stopped going out? have you stopped your usual business? how was the economy affected? what's going on economically? >> it has to be said these protests, they are fairly well

telegraphed. maneuver around the city without being directly affected. that does not mean shops in the pathway of these demonstrations are not seeing an impact. over the weekend, we saw shops being shuttered because they wanted to avoid the fallout from demonstrations because of concerns things would turn violent given the increasing tension between protesters and police. when it comes to concerns around tourism, that is increasing. retail is concerned. sales in the luxury sector are turning more sluggish. today, when it came to the stock reaction, the likes of -- one of the local cosmetic stores, we saw that stock fall 8%. overall, there is some anxiety around the outlook for the economy. we have a pretty dim indicator this morning. the market pmi data for hong

kong's full economy fell to the lowest since 2009. not a great start for the second half. highlight, paul chen raised the prospect of a recession for the economy if they continue in this manner. manus: that is the global risk we are all watching. great reporting. sophie kamaruddin on the ground in hong kong. is dedicated to the events in hong kong. the gmm, a quick snapshot. it is all about the renminbi. the pboc vows to keep the currency stable after letting the dogs off the leash. busting seven for the first time since 2008. you are just looking at some significant moves on these markets.

this is bloomberg. ♪

nejra: 7:23 a.m. in london. this is "bloomberg daybreak: europe." our markets are up and running here in the middle east. in dubai, we have our market up and running. people are concerned little bit about the margins. that is dragging our index lower. 1.3 4%.es down by the abu dhabi market unchanged. digesting the global repercussions of the yuan breaking through. 10 year yield well below 180 and dollar-yen on a 10 five handle.

it is risk and safe haven bid. let's talk about the u.s. further. warren is turning his back on stocks, reinforcing his distaste for overpaying with markets at all-time highs, berkshire hathaway sold a billion dollars more of stock than it bought last quarter. wei li from blackrock is still with us. had in stocks we last week and all the pressures, but you also think the u.s. treasury rally has gone too far. wei: we have recently brought our neutral view on the u.s. government to actually underweight to reflect back -- or like the fact if you think about currency below 1.8%, less than a year ago, we were talking about above 3.2%, so really significant repricing. we think the fed will continue cutting rates to combat trade

tensions, to combat growth. degree of dovish repricing has gone too far. manus: would you like any german government bonds? they are all negative at the moment. let's try and get a little bit of guidance. are absolutely right. curve, the the yield market is really quite extreme. if you look at movement last week, going from negative to more negative, there is a case to be made one does not have to be too fearful of bonds, because at times of crisis, they can go even more negative. of underweight in the space. should there be a bit of

repricing, we think there is a place for u.s. government bonds for diversification purposes. nejra: what equity markets are you putting work into with a preference for? inunderweight to neutral anticipation of the stimulus package for september. we think that could be more pricing in markets, but we have adjusted lower our emerging-market equities from overweight to neutral. of chimes witht what we have heard in terms of people reaching for extra yields. thank you for being our guest host this morning. head of investment strategy over at blackrock. this location in the markets, bond markets are roughing it, we

just had a very interesting opinion from blackrock in terms of, they do not think it is going to crash through 1.5%. is up the european open next. futures lower in europe. ♪ ♪

>> good morning and welcome to bloomberg markets: european open. we are live in london. i am anna edwards alongside matt miller in berlin. matt: are things really going well? , as investorsld flee risk assets. european futures down more than 1%. the cash trade is less than 30 minutes away. ♪ anna: the big