francine: remember the royal. long.rags the stoxx escalation. hong kong protesters disrupt ports while carrie lam warns the city is on the edge of a dangerous situation. surprise exit. john flint comes to an abrupt end as the global industries. welcome to bloomberg

surveillance. i am francine lacqua. these are your markets. the one to watch out for is remember the -- is remember the. we are seeing stoxx 600 down to 6%. euro-dollar 11133. we are getting euro area services for the month of july. that is pretty much what we are expecting. you can see that this move is also having an impact on s&p futures, down from 1.1%. a sick resources are the ones losing the most. -- basic resources are the ones losing the most. , we will have plenty more from your markets. let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: china is asking its

businesses to suspend imports of u.s. agricultural products. firm will wait to see how trade talks grass. this coming after trump escalated tensions last week. he proposed tariffs on another $300 billion of chinese goods. 30 are dead and many more wounded in the attacks that happened in ohio after two mass shootings in the u.s. this weekend hours apart. the shooter in up also had -- in el paso had anti-emigrant views. >> hate has no place in our country. we are going to take care of it. i spoke to the attorney general. . spoke to christopher wray spoke to the governors, both governors, and we are doing a lot of work. , johna: hsbc executive flint, stepping down. he has not given a reason.

quinn asointing interim chief. the letter announcing a profit of $6.2 billion. it will buy back a few $1 billion of shares. over to the u.k. where the new prime minister dramatically boosted public spending since he took office. boris johnson is preparing for general election. today he lays out details of his $1.8 billion move to the nhs. it follows pledges to hire more police officers enforce infrastructure spending. the single greatest obstacle to u.s. growth. according to trump's top trade advisor, it is the federal reserve. that jerome powell is responsible for losing gdp growth. he spent a year criticizing the central bank's chief. warren buffett is winning out

over his frustrations sitting on a pile of cash. billion its sold $1 biggest net selling since the end of 2017. the cash has surged to a record $122 billion. renault looking into producing its nissan to resolve its deal with fiat. the sides are planning to cut its stake with its japanese partner. any reduction we need approval from france. -- would need approval from france. heathrow officials and leaders have agreed to talk with mediators over a pay dispute, secured guards, firefighters running to walk from midnight sunday night. flights have already been canceled. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries.

i am viviana hurtado. francine: thank you so much. canceled.ith flights says executive carrie lam protesters are trying to ruin the city. motives areerior going to destroy hong kong. .e-risk one country to systems francine: joining us now is stephen engle who joins us on the phone. what is the latest on the ground? stephen: right now i cannot give a good estimate of people but surely in the thousands have gathered. there's hardly any moving space right now. it is all around the central government officers.

there are umbrellas out everywhere reminiscent of the 2014 umbrella movement, because it is about 38 degrees celsius out today and blistering sun but that has not deterred people. a peaceful protest right now as we head into the late afternoon but into this evening, they are at 4:30.or a flash mob police are nearby but they are staying away from this large crowd as we stand. it is pretty tense as we head into nine straight weeks of unrest here in hong kong. stephen, how is this affecting the hong kong economy? stephen: yes, it is. the biggest problem is summed up , the problem now is there is no end in sight. there is no end game for the protest and that was exacerbated

according to the protesters i by theef executive's, -- chief executive's comments. there has been nine weeks of violence and she says it is going to be a dangerous situation. she highlighted the risks to the economy. the pmi plunging to the lowest since march 2009. that is in the throes of a financial crisis. hong kong has four main pillars and two of them are in retail sales. they are getting hit. retail sales plunging 6.7% in june. the stock market here, the index down today, nine straight sessions. down 10%. the longest streak since 1997. i have to emphasize, there was no new solutions from the government in the press conference on how to this

protest. no end in sight that is why there is a lot of apprehension. francine: i was going to ask you, how does this end. either carrie lam steps down. >> she says she will not step down. she has a responsibility to keep this going as the chief executive. couldys the protesters destroy hong kong. those you talk to hear on the banks of the hong kong harbor, they say the protesters are not destroying hong kong is the social ills that have led to the protest. they are at a standoff. it doesn't seem like these protesters are backing down despite the increased use of force by the police. francine: thank you so much, stephen engle. coming up, john flint's 18 month

stint. earnings. latest we will check back on the markets entree tensions. -- on trade tensions. this is bloomberg. ♪

francine: economics, findings, politics. this is "bloomberg surveillance." hong kong briefing the people gathered. carrie lam warned of a very dangerous situation if protesters moved to shut down the hub. we will continue listening to the press briefing. let's get straight to the bloomberg business flash. walmart.we start with the retailer has no plans to

stop selling guns are ammon nation -- or ammunition. that is according to a company spokesman after a mass shooting and in el paso texas store. the company says it goes above and beyond. it says walmart is a responsible seller. tesla bringing back the free and unlimited charging park. -- perk. elon musk scrapping the offer as a part of a cost-saving measure that eddie shareholder meeting -- measure but at a shareholder keying he described it as a measure to fail. union leaders agreed to talk to mediators over a pay dispute. secured guards and engineers threatening to walk sunday night . 170 flights have been canceled.

and that is your bloomberg business flash. francine: changes at the top. hsbc shares have fallen after -- john flint's tenure came to an end. tice,get to jonathan let's -- this felt like a surprise. that reflects the fact things have changed quickly. the hsbc investment thesis has moved on the capital return to growth. growth has been questioned. we know need to focus on efficiency. francine: what is the other person going to bring that is different? and guard touppose the bank, the guy has been there

for nearly 30 years. maybe this is a different environment. eyes.d a fresh set of if you think about standard chartered or barclays, they both had investment banking. go andhey are going to ask an investment banker from a u.s. bank. pushed.e the investment bank is still disappointing. francine: what do you make of the earnings question mark jonathan: -- make of the earnings? john:n they are decent -- a balance sheet shifting in terms of shifting stuff around. the dividend, they are going to keep cutting. get a bunch of

buybacks. the growth is going away. francine: jonathan tice, thank you. beijing [indiscernible] stocks tumble around the world. we will bring you the latest. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua we are looking at pictures from hong kong.

reporter there on the ground. we are following a briefing from the hong kong police, the chief of police briefing. reporters on the ground. been sayingsically they have deployed over 100 year grass -- tear grass -- teargas rounds. protesters are shut down -- shutting down. nine straight weeks unrest in opposition. -- and opposition. our report on the ground, you can see thousands of people protesting. we are following trade. you are seeing stocks in the red on fears that the u.s.-china trade war is escalating. china's yuan fell past the key seven per dollar level.

pboc says the drop is due to the threat of tariffs on chinese goods. speak to enda curran. what exactly is china trying to signal today? >> it does seem they are sending a message that they are going to open and when it comes to trade war rhetoric. last week trade war talks had resumed. both sides said they were constructive. that truth was shattered by president trump with his threat of new tariffs beginning in early september. clear what they can do on the currency side of things. we have had news they are not willing to buy u.s. agricultural goods.

francine: what is the likely load of -- likelihood of further yuan weakness. who is a tricky balancing act for china because -- >> it is a tricky balancing act for china because where the economy is going, a softer yuan. on the flipside, they cannot go to 4s because you go into the world of risking as companies try to get their money out of the country. if you get into that cycle, the government has to start spending their reserves. there is a bit of a double-edged sword. for china it is a question of allowing it to soften so far the economy little bit of a boost. going too far will backfire. francine: what kind of leverage does the pboc -- we touched on

that a lot of the banks need capital raising. what are you trying to stabilize? sure thatnt to make the broader economy stays on track. so far indications are that the pain from the trade war is impacting. it is manageable. we have seen the authorities saved the option to roll out getting credit to the real economy. we have seen what they can do on the exchange rate side of things. the economy is keeping stable. the question is where does it go from here. the president with these additional tariffs and september -- and september. further compressing. it is a real issue of trying to keep things on track and the worse it gets more pressure for shareholders to respond. francine: thank you so much.

enda curran joining us. spin on trade and markets. joining us now is natasha pope. every time you join us there is a selloff. how are clients reacting to the trade? it is very binary. natasha: absolutely. it is one of the main factors that is contributing to client nervousness. we see a market in which clients are under invested. trade headlights -- headlines, we saw a reaction. there is nervousness at the moment. that, while things is -- ourn our view view, it we anticipated this to

a degree. management,rtfolio is it something we will get used to? and iteration of the trade skirmishes. >> it is important to think about the potential impact of this escalation in the various regions. when we have a look at the u.s. where the majority of our portfolio exposure sits at the moment, we are expecting a modest impact. mind, it ist in important to have the overall context and recognize it is going to contribute to that nervousness and contribute to the current client trend. francine: if you are client, do you get more questions about monetary policy? or trade? or geopolitics? natasha: it is pretty evenly spread. there is a lot of questions what

we see with the fed. the trade tariffs is underlining everything at the moment. it does -- you look at the economic situation. it is important they keep the fundamentals in mind. the tariffs are taking people's attention but the fundamentals in the u.s., the u.s. is still in healthy shape. francine: this is our question of the day. our mliv blog.on what assets will suffer the most from the yuan's breach of seven? natasha: good question. the broader question of the impact, i think the euro -- i think europe is positioned where the impact will be most felt. europe struggling to break 1% if we assume that the tariffs are going to shave global growth.

2.1% in china at 2%. 2%. europe -- and china at with europe being a big exporting area, that will impact europe. francine: natasha, thank you so much. she stays with us. should u.k. embraces -- should u.k. investors embrace? we will talk about what we heard from boris johnson. 2%.stoxx 600 down ♪

francine: renminbi the china's currency has fallen -- the move

drags the stoxx lower. .ong kong protesters carrie lam warns the city is on the edge of a dangerous situation. surprise exit. john flint's tenure as the hsbc chief executive comes to an end. good morning, everyone. this is "bloomberg surveillance." i am francine lacqua here in london. whatound has to do with boris johnson will and won't do. this is what people are trying to wait the odds out. we have the data that will -- that we will deliver to you which is the july pmi. , 49.8.recast you can see pound not really moving on the back of it. 121.26.

let's check in on what is moving the markets. >> a lot of movers. i wanted to start with basic resources, the miners down. iron ore has been tumbling, plunging throughout this session and overnight. now trading below $100 a ton. just weeks ago we were at $120. swatch is having its worst day in nine months. lvmh,of luxury names, this has to do with the trade war. these luxury companies are sensitive to any news and rhetoric that has to do with escalation in the trade war. hong kong is the key market to the luxury space and a lot of them are feeling the pressure. metro ag down 4.5%. this comes after a billionaire says talks they are going to increase the price and offer a bit for metro are just wrong.

that is why we are seeing the stock down today. francine: let's get to the bloomberg first word news with viviana hurtado. viviana: protesters may "ruin hong kong." this according to carrie lam as demonstrators moved to shut down with a general strike. it disrupted subway lines and airlines canceling flights. it marks the ninth straight week of unrest. >> sets extensive disruptions in -- name of certain demands such extensive disruptions in the name of certain demands has undermined hong kong's law & order. love and many of us have to build to the verge of a very dangerous situation.

viviana: around state media says the nation sees another -- iran's state media says the nation sees another oil tanker. press tv says it was an iraqi vessel but baghdad denies this. dead and manye more are wounded in the attacks in texas and ohio, after two mass shootings in the u.s. this weekend hours apart. the shooter in el paso allegedly had anti-immigrant views. justice department is considering it an act of domestic terrorism. according to trump's top trade isisor, jerome powell responsible for losing a point of gdp growth. his comments echoes those of president trump.

he spent a year criticizing the central bank's chief. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. heading --s the u.k. at the u.k. heads for general elections, boris johnson has made a series of pledges. they are he will lay out details. test later today he will lay out details. -- later today he will lay out details. natasha pope. i have one million questions for you. i also have the same questions every day. what are the chances of a no getting readye is to campaign for general election. >> remember the brexit campaign in 2016, the nhs was a key part

of that. anyway this is boris johnson making good on that pledge -- in a way this is boris johnson making good on that pledge. the conservatives stopped denying they were heading for the election. one of the key figures said they would not have an election suggesting it would be more likely to come from a vote of no-confidence. we think the labour party is thinking about putting forward in early september. one of the things is when that election might be. over the weekend, speculation that a reporter from fleur pellerin saying it is too late to stop a no deal brexit. francine: when we saw the cabinet announcement, i heard borisrmer chief saying

johnson is the single most important person. is he the one that get ready for the general election? emma: what he was saying over the weekend is it was too late to stop the no deal. there is this idea kicking around that the prime minister would not have to call an election before september 21. gamble and the through borisll johnson was saying if we just hold through. theyng the eu whether would be prepared to follow through and at the u.k. crash out. changed atou have the margins goldman sachs. a no deal brexit. increased theve chances of a no deal.

groups thatresearch boris johnson is going to bring more volatility. is an orderly brexit. youcine: if investors ask do you think there is no deal or something, you say there's a 20% chance? are you buying into sterling? for --bal natasha: sterling? natasha: for global portfolios, it is not as big as people think it is. of -- globally, i think it is important to have the right context. within the u.k., we are trying to encourage clients. for a long time patient capital

portfolio, the intricacies of those dynamics is not a good idea. you mentioned the pound. in terms of long-term value, we are constructive on the pound. we think there is good long-term value. long-term, we still see the pound moving up 128, 133. is he going to block a no deal brexit? emma: there are two main scenarios. move through a no deal brexit either through a vote of no-confidence. there is a question over with a more determined prime minister our parliamentary move for an extension, that might work. the other route is the legal route. governor toing the

court. says minister john major he would take it to court if there is a no deal brexit. mp's saying that if worse johnson was shut down the government for no deal, i think whatever happens we are probably going to have some kind of constitutional crisis in september. francine: emma, thank you so much. the tosha stays with us and stay with surveillance -- natasha stays with us. stay with surveillance. much is the trade war priced into the equity markets? this is bloomberg. ♪

francine: this is "bloomberg surveillance." demonstrators really trying to hamper the morning commute with actions that left subway lines and operable. we did hear from -- subway lines and operable. we did hear from the city. airlines scrapped some 30 flights. global stocks continue to fall but just how much of the u.s. -china trade skirmish is priced into the markets? >> the tariff headlines have come at an unfortunate time for investors. just stepping back into stocks. what some of these

assets are doing, things could get worse. looking at the trade monitor, this is something that our mliv strategist has put together. it shows us markets are near max capacity even with the selloff. these are a basket of trade related assets. looking at their relative performance. the more negative, the less trade concerns are priced in. this is their max complacency. that is part of the reason why markets have been reacting so much today. a lot of reversion going on. u.s. stocks opening should be interesting. if you look at a basket of stocks that are most vulnerable performing in line with the s&p 500. more damage to come, francine. francine: any burger with a lot more charts -- dani burger with a lot more charts to come. we are seeing a lot of concern when it comes to u.s. futures.

i am looking at treasuries. they are surging. the yuan at seven. we are looking at these pictures and hong kong. carrie lam saying the disruption is undermining law & order. marketsus to talk about and trade is natasha pope. natasha, think you for sticking around. we were talking about the -- thank you for sticking around. we were talking about the fed. i don't know if there's a communication problem about -- because they are costly getting tweeted at. they don't know how to handle that. it is difficult to commit to more rate cuts. pointa: it was a focal for markets last week. 25 basis point cut was not priced in.

the commentary did surprise people. it was a more hawkish cut. then of course the day after that we had the trade headlines. our view was that 25 basis points was expected. it wasn't warranted by the fundamentalist. -- fundamentalists. has beenin the u.s. surprising to the upside. we have gdp up one. i think in terms of what that does and how that feeds into the cut, thehere after the following day with the trade headlines because this is an unknown variable that we increase the probability to 80% for a further 25 in september. changee: does the fed

right away? natasha: you are right. either way it is going to be quite binary. if the situation improves, that will help change the course of the fed. either way, aggressive insurance cuts which is what we are seeing. those cuts in the past have not reduced the frequency of recessions. nor have they decreased the downside growth risks especially when you have the financial easing that we have had. -- weis is a relatively see this as a relatively limited easing cycle. francine: what is your take on europe? the big loser in this trait concern. -- trade concern. the bank wondering whether mario out what monitor

policy can are can't do. look at if you have a the valuation discount, that is quite meaningful. this is and housing growth is attractive. -- the business and housing growth is attractive. a good flow of funds into europe. ecbou say, and accomodative -- and accomodative ecb. move --e a lot room to a lot more room to move. pope fromnatasha goldman sachs. -- strikes bring more disruption to hong kong. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's get the latest from hong kong. within the last few minutes please have been firing tear gas at protesters. a general strike is underway.

flights canceled and public transport disrupted. carrie lam says protesters were trying to ruin the city. joining us is our reporter, stephen engle. he is on the phone for us. a briefing from the police, what have they been saying? stephen: they are confirming what we could hear. we are in front of the central government officers -- offices where thousands have gathered and it had been peaceful. they are hard-core protesters -- there are hard-core protesters. they set up barricades and police have confirmed what i heard. that was the bam, bam, bam, the unmistakable sound of teargas being fired at protesters. we are getting people being dispersed.

others are staying even though the protest loudspeakers saying you must assess your own risk right now. we suggest if you don't want to take a risk, you must disperse. there are no signs of police. police did let us know they have arrested 82 people across hong kong today. theyhave been seven -- have been seven various protests all across -- all across hong kong. they have deployed over 1000 rounds of teargas since june and have arrested 420 people since june 9. francine: it is difficult to speculate. carrie lam does not seem to be wanting to step down. what are the protesters asking? stephen: they are asking for her to step down. they want an independent committee investigation into the police tactics, among many different -- five main demands.

so far the government has remained affiant. the government leadership has remained silent until this morning when carrie lam did address the people -- did address the media. went down a list of the different illegal activities of the protesters. did not offer any solution other than the people of hong kong you to rally together and stop these illegal acts. protesters here are upset that this was an opportunity for the chief executive to address their demands. she did not. according to sean darby, he summed it up really well. he says the problem now is there's no real end in sight. what the end game is for these protests. we will have plenty more from hong kong throughout the day. bloomberg subscribers can follow the latest on our special top

live page. president trump plans to speak about the mass shootings over the weekend in dayton, ohio. the gunman was killed by police. less than 24 hours after 20 people were killed at a walmart have listed a 20-year-old texas man. the justice department is considering it an act of terrorism -- domestic terrorism. biden andard from joe other democratic front runners. this changes the contours of the democratic contest. >> it has unified democrats very control favor of gun and they are being open about this on the trail. you are going to see a lot of comments from top emma kratz,

from joe biden -- top democrats, from joe biden to beto o'rourke who used to represent el paso in congress. interestinge is an case because he has lacked down in polls. down in polls. ciampa supposed to speak at 10:00 in the morning -- trump is supposed to speak at 10:00 in the morning. this president has said after previous mass shootings that something needs to get done but nothing has gotten done. since ieen 8.5 years gunman walked into a sandy hook elementary school and killed a bunch of five and six years old ---year-olds. nothing much has happened since then. francine: we will keep bringing

you up-to-date with anything that is happening. trump is due to give a speech a little bit later on. surveillance continues in the next hour. the conversation on the u.s. continues with bill gavin at 5:00 p.m. london time. this is what your markets are doing. a lot going on when it comes to renminbi. stocks tumbling. china escalated trade disputes with america. yuan weakening at a milestone level. investors dashing to save assets. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

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dollar. hong kong protesters disrupt public transit. the city may be on the edge of a very dangerous situation. executive speaks to the share price and low rate environment. good morning. this is "bloomberg surveillance ." , withancine lacqua caroline hyde, info tom keene -- in for tom keene. caroline: policymakers are blaming trade protectionism, but also saying we can still keep it stable should we wish. i am bracing myself when trump wakes up, when the first tweet comes, because he calls china a currency manipulator. francine: that is usually in the

6:00 hour. we will let plenty more on that. first, let's get to the bloomberg first word news. here's viviana hurtado. viviana: we are beginning with china. the country hitting back on china on trade -- on the president on trade. it is asking state owned companies to suspend imports of u.s. farm products after president donald trump threatened to add 10% tariffs on another $300 billion in chinese imports. in hong kong, protesters are trying to shut down the city was a general strike and commuting disruptions. hong kong's chief executive carrie lam called it "a very dangerous situation." lam: those ulterior motives are going to destroy hong kong,

to risk one country, two systems. today, president trump plans to speak about the two mass shootings over the weekend. 29 people were killed in texas and ohio. many more are wounded. the shooter in texas allegedly had anti-emigrant views. it is being considered an act of domestic terrorism. democrats calling on president trump to denounce white supremacy. in the u.k., there is speculation prime minister boris johnson is getting ready for more than just brexit. there is also talk he could be seeking an early election as well. since taking office less than two weeks ago, johnson has dramatically boosted public spending. is conservative party isn't ruling out an early vote. 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. i'm viviana hurtado. this is bloomberg.

caroline: thank you so much. a quick check on the markets. there are big moves today across the board. on friday, talking about the worst we can the market in the u.s. of all the year. now we see futures plum even lower at the moment. the s&p 500 bracing for the trump reaction. emerging markets selling off that well, at their lowest since january. we are down nine straight days, the lowest since december 2015. we are looking at yields being crushed in the u.s. across the board, and nasdaq futures as well. this is really a global selloff, money moving into havens such as yen. crude and commodities in general selling off, corns, soybeans and the like. francine: overall, havens definitely and demand. droppin -- andand

yields dropping. i'm looking at what we are -- seeingrenewing be and renminbis. caroline: we are going to be keeping a close eye across , they of the yuan movement volatility we've got to be keeping a close eye on. key assets are on the move. francine: this is what i'm looking at overall. if you look at emerging markets, they were definitely battered. the move pulled other currencies down. we will have plenty more on that throughout the day. let's get straight on trade. european stocks in the read this morning on fears that the trade war is escalating. asian stocks heading for their biggest selloff this year after

the yuan passed the lowest level in a decade. we are joined by our guests. thank you for joining. can things stabilize from here? , and the always can chinese have a control over the currency, but it is obviously just a number. it is something everyone has been watching. the chinese are very well aware that this is a declaration, and it comes in response to a tweet by trump threatening to increase tariffs on the remarrying -- on the remaining $300 billion of chinese imports, and the market has reacted accordingly. francine: so now the bets are off that this escalates? or is it peak trade war? >> i think it is an escalation,

that is the key thing. i think there has been a response to trump's tariff escalation at the end of last week and for investors who have been putting trade wars into the box that at some point we will get a resolution that will be ok for markets, i think this raises a pretty major question mark. caroline: i'm interested in your ripple effects, your perspective here. we've got on the blog on the bloomberg the key question of the day. which assets will suffer the most from the yuan's breach of seven? ben: i think it is particularly dependent on the sort of asian -western trade links. those are most likely to come under pressure. you seen that in the price action today, companies that are exposed to global trade and

economic sensitivity that have sold off the most. they have sharply underperformed, whereas we've seen defensive style assets perform relatively strongly. it's pretty similar in a lot of ways to what we saw in the fourth quarter of 2018. i think people have got their same playbooks out and they are running them again. caroline: christian, that's to find the silver lining. is there anywhere economically speaking that somewhat benefits from this? i know many have looked to vietnam for a supply chain perspective. do you see any economies that might perform better than others? ben: frankly, i think overall -- christian: frankly, i think overall, this is negative news. some may temporarily benefit from the supply chain shift. generally, people speak, as you mention, about vietnam and possibly some other asian economies on the manufacturing side. some wonder whether

agriculture may shift to brazil. wouldn't overall growth slows and there is less demand, -- when overall growth slows and there is less demand, usually there are no winners. francine: in the past, if the global economy was to get worse, the markets would think, well, the fed is here, the central banks are here. is this also testing the limit of central banks? christian: i think to some extent. mr. trump probably thinking the fed were to do more if he escalates with china. the fed to some extent was more guarded last week. i think now markets will think the fed has to do more. we expect the ecb to do more. the boj is in a difficult spot. they may have to do something. now the central banks have to ease more.

the question is how much they can do it in the current situation. francine: are we even expecting china and the u.s. to continue talks in september, or is that now off the cards? ben: i think it is likely that there will be further conversations come but whether those actually yield anything are able toand reduce detentions we are currently seeing is debatable. we had a situation where a week ago, we were told things were going very well. within a few hours we got an escalation of the tariffs. i think investors are being cautious until we see anything substantive appear, and will generally be pretty negative toward the situation. caroline: it is interesting we are seeing volumes pretty large in the commodities space. larger expecting volumes, or where you see this trade action going? christian: but as people have seen pretty substantial gains ver 2019, so there are

profits to be taken over most assets this year. we are seeing a reversal somewhat of the situation that we would see a resolution of the situation and given the height of equity markets, the aluations, that poses particularly unattractive picture right now unless we see a reversal of those factors. caroline: we have an inverted yield curve in the united states. are whispers of recession going to start to rear their ugly heads? christian: i think the situation now is the perspective escalation of a trade war with china will make them stronger again. we are relatively less concerned about a recession, but what we do think is that kenya

-- is that 10 year treasuries, for example, are worth being invested in. i think that is regardless of whether someone necessarily sees a recession coming or just believes that market are going to price more hikes -- sorry, more cuts. francine: thank you both for joining us, christian keller and ben ritchie, both staying with us. in the meantime, we are seeing quite a lot of protests in hong kong. it is clear to see that it is escalating. we heard from chief executive carrie lam, saying disruptions are seriously undermining law & order. the busytors hampering morning commute with actions that left transit at subway lanes in operable and airports disrupted. we will have plenty more on the disruptions in hong kong. this is bloomberg.

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viviana: this is "bloomberg surveillance." a surprise shakeup at hsbc. the british bank's ceo john flynn stepping down after only 18 months in office. the board believes change was needed to deal with "an increasingly complex environment." in the last year, the bank's shares have fallen about 15%. meanwhile, hsbc confirming plans to cut more than 4000 jobs. senior executives will be a focus of these cutbacks. british airways trying to avoid a strike by pilots at the height of the summer travel season. next week, the airline and the

pilots union will continue talks after three days of negotiations . a plane 48 hour strike at london's heathrow airport was suspended. besides we'll have further talks to resolve a pay dispute. walmart won't change its policy on selling guns or ammunition following the deadly shooting at a store in texas over the weekend. the world's largest retailer calls itself "a responsible seller of firearms." stoppedrs ago, walmart selling military style automatic assault rifles. that is your bloomberg business flash. caroline: thank you. this week, fed speakers will face a challenge in delivering a -- tomessage, cleaver your message clung -- clear message, clearer then fed chair powell achieved last week. we will hear from charles evans

wednesday. let's get back to our guests, been ritchie of evidence standard investment and christian keller of barclays -- of aberdeen standard investment and christian keller of barclays. you think we will get a better message than what we got last wednesday? christian: it always depends on the speaker, i think. i expected to be relatively dovish. said before he thought 25 basis points were appropriate, but people thought he would be asking for 50 basis points. overall, i wonder whether so many speakers actually have become a problem for this bed because there are so many opinions voiced, and markets start to price when clarida talks, and then powell has to somehow clarify. it makes it very difficult for him. he came across more guarded last week. he did correct it a little bit

afterwards. these speakers we are seeing will probably suggest that they can and probably will cut more than what they just did last wednesday. caroline: while that have a significant effect on the market? we have that markets move on trade, on federal reserve speak. we know that september is pricing in another cut. how dovish does the tone need to be to get a significant move on equities? ben: i think it probably needs to be pretty dovish given the current environment we are in. i think it is important to remove or that the fed does face a challenging situation because the domestic economy in the u.s. remains relatively robust, and consumption is extremely strong. against that backdrop, the global economic environment is slowing for a wide number of reasons. trying to get that balance is a difficult balance, given their to domestic mandate and the environment. one can understand why the messages coming out of the fed

are mixed. they need to ultimately decide whether they will make preemptive supporting actions were not. francine: is this because they don't know how to read the trade concerns? if the trade worries were to be put to rest for good, what would that mean for fed policy? christian: i think it would make them more confident about the economic situation domestically. is completely right. the labor market is producing less jobs than last year, but we have healthy domestic demand, so this is typically a situation, and many at the fed have pointed fed wouldthat the not cut rates at this time, and they have. the global slump in manufacturing, they now have to and on top ofrces that, you have a president that really once a weaker dollar. putting all of this together makes it extremely difficult for

them. francine: where do you see the dollar for here to the end of the year? ben: i think expectations so far is that we see a more hawkish approach from the fed. i'm no great expert on currency dynamics, but i would think relatively we might see at underperformed from here. caroline: ben ritchie raising himself for underperformance. we thank you and christian keller, both staying with us. from new york and from london, this is bloomberg. ♪

♪ caroline: unrest continuing throughout the weekend in hong kong. today at affects the commuters and businesspeople of hong kong. the hang seng being sold off by 2.8%. currently, services being forced ,o stop, in terms of airlines canceling 130 flights. the hong kong fire services department is urging protesters not to block the roads. anernment is holding interdepartmental press conference today to talk about the impact of the noncooperation campaign. so far, hong kong leaders, notably carrie lam, warning of a

, butdangerous situation she is not handing in her resignation. francine: we will speak to our stephen engle. john flint is stepping down as chief executive of hsbc, unrelated to hong kong. 's departure comes after just 18 months in the top job -- his departure comes after just 18 months in the top job. the stock trading a little bit lower in london trade this morning. drawing us now is our european -- joining us now is our european managing editor for finance. what does this mean for hsbc? reporter: one of the things that will be key will be who the successor is at hsbc. has reached within its own ranks in the past. flint started as a trainee at hsbc in a decades long career. the question is whether the bank

will now be reaching outside its internal ranks to find someone who can ex -- you can execute the vision the board has for the company. francine: will it be someone who has more of an angle on the u.s.? what are you hearing? could it be a big banker to focus on their operations there? big andbc has a navigatingfocus for a complex asian market, especially given rising tensions with the u.s. and china, that would be an important starting point given its presence in the region. they recently parted ways with the head of their u.s. operations, so someone who would be able to bridge these very important markets, i would imagine, would be crucial litmus test. caroline: the numbers weren't

bad, but has the outlook for tier -- has the outlook deteriorated? sree: the outlook for all banks globally has been deteriorating. , forave brexit headwinds many of the banks and exposure in this region, but in the case of hsbc, there were also some specific issues that flint had been focused on, keeping costs under control. caroline: we thank you. our european managing editor of financing. later, we will welcome the square cfo. this is bloomberg. ♪

♪ caroline: and caroline hyde in new york, with francine lacqua and london. tom keene is off today. hong kong faces a general strike today, with flights canceled and

public transport disrupted. chief executive carrie lam is accusing protesters of trying to ruin the city as protests erected across hong kong. ms. lam: those with ulterior motives are going to destroy hong kong, to risk one country, two systems. caroline: joining us with the latest is our chief north asia correspondent stephen engle. give us the latest on the ground. of the: we are in front central government offices which house the just laid of counsel and the chief executive's offices. heard last hour or so, we the signature sound of tear gas being fired by the hong kong police. they did fire several rounds of using "the least amount of force," they say, to disperse the crowd that had blocked the central part of hong kong.

mostly peaceful right here on the grass in front of the central government offices at victoria harborside. it is kind of a tense calm right now as police have tried to clear the roadways, but many protesters still stay here. the police are confirming they did fire teargas. they've arrested 82 people across hong kong. they've also announced they've arrested some 420 people since june 9 and fired more than 1000 rounds of teargas since these protests began in june, so nine weeks now of social unrest, civil disobedience, noncooperation. weeks, you say, of action. we haven't seen this sort of selloff since the handover back in the 1990's. how is this affecting the local hong kong economy? stephen: it absolutely is, and

perhaps some of the protesters want that to happen. chief executive carrie lam spent much of her speech today saying this is the reason why the people of hong kong need to rally up, join hands, and end this violence. some of the hard-core protesters say this is being waged to hit people in the pocketbook. hong kong, asia's financial center. 6.7il sales are down percent in june. the msci hong kong index down now nine straight sessions, down of the mostse come since 1997, the british handover. pmi also plunging to the lowest level since the depths of the global financial crisis in march 2009. francine: how much more difficult are these protests compared to the one in -- to the

ones in the past? do we think it will escalate from here, or will the protests be tempered? stephen: that is the big problem right now, there is no solution. didf executive carrie lam not offer any solution to end this. she is taking a hard-line approach, not willing to back down on any of the demands of the protesters. she remains defiant. she says she will not step down, she will not officially withdraw this very controversial extradition bill. she says it is a very dangerous situation, and that the protesters are trying to destroy hong kong. they would argue that hong kong s,ready has the social ill the great wealth gap that has led to these protests. there's lots of speculation, could the pla come in, the people's liberation army from

the border in china? analysts say it is unlikely, but the hard-core here want to keep this unrest going through much of today in this general strike. francine: thousands of black protesters rallying their ended locations across the city, chanting, "strike, strike," and blocking roads. that is stephen engle in hong kong. let's get straight to the bloomberg first word news. viviana: china signaling it is ready to play hardball on trade with the u.s. for the first time since 2008, beijing allowed the yuan to fall below seven per dollar. state owned companies are being asked to suspend imports of american agricultural goods. all of that coming after president trump's latest threat to impose tariffs on more chinese made products. hate has trump saying

no place in the u.s., and he will be "taking care of it." the president speaking after two mass shootings in the u.s. democrats highlighting the texas shooter's anti-emigrant views, calling on the president to do immigrant -- immigrant anti- views, calling on the president to denounce white nationalism. 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. i'm viviana hurtado. this is bloomberg. francine: thank you so much. boris johnson has dramatically boosted public spending since taking office, fueling speculation that the u.k. prime minister is preparing not only for brexit by october 31, but preparing for a general election as well.

ross thomass gina -- is, ross thomas -- is emma ross thomas, and still with us are christian keller and ben ritchie. emma: there's been speculation for a while that the only way out of this impasse would be a general election. part of that is because parliament is opposed to a new deal brexit, and boris johnson is saying he will deliver brexit on october 31. last week we had the extra $2 billion in spending, and more money for the nhs. it was a key part of the brexit referendum came -- referendum campaign in 2016, so he is sort of making good on that pledge, which would be useful going into a general election. johnson has a majority of one

come about when it comes to brexit, he doesn't have a majority at all. francine: i guess markets want to know whether boris johnson's blessing on a new deal brexit or bluffing on a new -- whether boris johnson is bluffing on a no deal brexit. -- emma: i think we would all like to know. we go back to the problem of the irish border. that is their priority. , i will leavetion it to others to put the numbers on it in terms of probability, but no deal and general election are the most likely outcomes, but the question is will it be

before october 31, or this new idea frightening people a bit, that it could be after october 31, in the immediate aftermath of a no deal brexit? caroline: if it was after, what then of leaving the eu? does that get put on pause? there are various legal wrangling surround this. emma: you're right. before, we used to be talking before general election october 31 would be good reason for an extension. certainly the eu would probably look quite favorably on a general election. this is very much in the realm of speculation, but perhaps if there were going to beat a general election, one of the options would be to have it after october 31 and allow the country to tumble out in the meantime. whatever happens, we are

certainly heading for some kind of constitutional crisis. normally when you call an election, you are not allowed to do anything to controversial, anything that the next government would disapprove of. the beginning of september is going to be pretty wild. caroline: still with us, ben ritchie of aberdeen standard investments. your take on where we feel the input asian's in the market. -- the implications in the market. is areas thatt seem to be relatively stable and shaking it up. we seen a selloff in sterling, a significant rise in u.k. guilds. it adds an additional element of uncertainty to an environment that doesn't need it at this point. christian: if you look at probabilities, they went from 31% to 42% probability of a no deal. that, our view

for a no deal, there will be another 6% to 7% of depreciation, so i think the pound is in the center here. i think something interesting is in the u.k. yield curve, while the yield curve had been coming down with global yield curves, there has been a steepening in the 10 year and 30 year because there are large promises on the fiscal side. on the shorter end, your expectations for cuts or hikes determines the curve. the further you go out, it is the fiscal picture and the uncertainty around it. francine: let's look at possibilities for what the boe does. let's say there's no brexit. would they automatically hike? would they be more hawkish than they are? if there is no deal, how do they deal with that? do they cut, and then have to hike because of inflation? christian: we think they would probably look through the inflationary impact because if you have one of depreciation,

that is typically the path that fades out after a year. we think they would cut. it would have to be very dramatic for that to go into emerging-market mode. ben: the thing i would be particularly worried about would be u.k. yields going up. you seen them respond in traditional fashion in risk off, yields go down. i think that would be a much more worrying environment for policymakers, and we haven't seen that yet. francine: i know we don't have a crystal ball, but when do you think, with all of here experience in dealing with brexit, that we could have a date for either general election or more clarity? emma: early september. if you want to have an election before october 31, then probably you are looking at having a vote of no-confidence in the first fortnight of september. mp's come back the first week of

september. that's when one might expect some clarity. francine: thank you so much, emm a ross thomas, ben ritchie, christian keller. caroline: let's get a quick check on the markets. we are bracing ourselves for further falls in the united states. it was the worst week last week that we have seen all year for u.s. markets. down on the s&p and nasdaq futures. money moving out of europe in significance. still, the haven of choice has got to be bond markets. u.s. treasury yields down to the lowest levels since 2015. coming up, yet more market analysis. "bloomberg daybreak: americas" is at 7:00 a.m.

this is bloomberg. ♪

caroline: this is -- francine: this is "bloomberg surveillance ." data out of germany starts tuesday with services and composite pmi's. on the same day, we get a rate decision from the rba. then there are some big earnings throughout the week. commerzbank wednesday, uber on thursday. caroline: and i'm interested about the earnings story because after a week that sent stocks fed conferencee and president will tweets, the market still seems to indicate that fundamentals in business is still matter. the second quarter has proved that earnings haven't lost their

ability to move the markets. check out this chart of companies clearly slashing their forecasts at the strongest rate in four years. more than half in that last bar chart are now cutting them to the downside. clearly there are concerns. whether this is a trade hit, the effect of federal reserve and central-bank policy, i'm interested in how this is all being digested within earnings season. let's get back to ben ritchie of aberdeen standard investment and christian keller of barclays. amid all these geopolitical risks, still, earnings matter. how much have you been seeing european earnings role in, and perhaps the third quarter, even into 2020? the guidance looking to rose tive whenysts' perspec you compare it to what others

say. ben: since the start of the reporting period, we've seen pan-european equities drop to 3% growth this year. we started the year at around 10%, so we seen a significant applying -- a significant decline in earnings expectations. we are seeing corporates operate in an environment that is getting more difficult rather than easier, so i think we see earnings continue moving south. we are very focused on those companies which can maintain and sustain earnings in a challenging environment. caroline: what sort of sectors? on: unsurprisingly focused companies whose businesses are not particularly cyclical, so they may not be very exciting, but companies in staples, pharmaceuticals, perhaps with more of an income angle, looking towards areas within telecoms and some utilities.

businesses which have some degree of control over their own destiny. earnings and revenues which are not dependent on cyclical end markets. francine: this goes back, christian, to your worlds, which is invectives being shy about investment because we don't know what the future holds. how worried argue about the world economy in general? for the chances -- what are the changes in the next 12 to 18 recession?a christian: the central banks have very little ammunition left. central banks outside the u.s. are very clear, particularly in europe, that it would have to be the fiscal side that does more. are the global economy, we already seeing something close to what you could call industrial recession if you look at global manufacturing. this is offset by still relatively strong services and to domestic demand and consumption, but there are already some cracks in the picture. it will be interesting to see to

what extent can the machine of domestic consumption and services hold as we see global manufacturing and related activities slide. francine: is it going to get worse from here or do you think it will get better? christian: at the moment, we are seeing it getting worse. in particular, but we already said today about trade. if you look closely at the u.s. was that come out, there less shift towards consumption rather than corporate earnings. that means probably less support for investment, and we think that is the weakness of the u.s. economy, business investment. we don't see this turning around. caroline: we thank both ben ritchie from aberdeen standard investment and christian keller from barclays. sticking with us, i'm pleased to say. let's get an update on what we are seeing in hong kong. still we are seeing tension around the city. an issue with commuting and with

flying in and out of the city. we are down 2.8% on the hang seng in the ninth straight day of losses. from new york and from london, this is bloomberg. ♪

caroline: i'm caroline hyde in new york, with francine lacqua in london. tom keene is having a well-deserved break today. , rine -- corn, soybeans crop futures taking a tumble on a report that china has asked state owned enterprises to halt imports of u.s. agricultural products. china's state tv has since denied the report, but there are mixed messages offshore. ours get a report from reporter joining us. we could see a halt of soft commodity purchases. how much worse does this make the situation for u.s. farmers?

reporter: chinese purchase of u.s. farm products has already been fairly slow this season. we will have to see how china decides to progress those going forward, but essentially this is just another sign of potentially slow demand for u.s. agricultural products after months where there have already been pretty slow shipments to china. caroline: soybeans have been a marked concern. we understood there was a huge order being placed by china. trump insisted that that was mainly what the last talks were treasury secretary minute and and trade representative -- secretary mnuchin and the trade rep is in it if robert lighthizer went to china. if we are already seeing slowing, how much more could we see it dialing back?

megan: essentially, throughout the year, china had made some of soybeansrchases of a few million metric tons at a time that they have been putting into the agricultural markets. some of those are still left to be shipped, so the u.s. marketing year ends in august, so we will have to see how that play out that how that plays out. out. see how that plays the growing season has been a difficult one. chinese buyers have been turning back to brazilian soybeans now, bidding for supplies for august, september, october. we are coming off of a pretty large harvest in south america, so there are plenty of supplies buyers will be able to turn to. do these supply shifts

go back if we have an agreement, or does it stay as it is? christian: i'm not an expert. sometimes these supplies are linked to the huawei connection, etc. but these things are temporary, and typically not something that a country like brazil would permanently benefit from. francine: thank you all. reporter, andal ben ritchie of aberdeen standard investment and christian keller of barclays. we will continue the conversation on bloomberg.com. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in?

ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. >> china post currency falls

past the dollar for the first time since 2008, as the move drags us down lower. lam is on edge -- warns that the city is on the edge of a dangerous situation. hsbcohn flint's tenure as ceo comes to an end. good morning, everyone good afternoon if you are watching from asia. this is bloomberg surveillance. i am francine lacqua in london. caroline hyde is in for tom keene in new york. what that means for central banks around the world and hsbc -- including soft commodities. caroline: these lines in the sand that many an investor and analyst go through. they have policymakers that would not let us drop past seven, but they blame it on the trade tensions. they blame it on local protectionism, this really being

-- will president trump respond to the so-called manipulator that he calls china? francine: we are on presidential twitter watch. first let's get to first world news with viviana hurtado. beijing left the yuan tumble to the weakest level in more than a decade plus, asking state owned companies to suspend imports of u.s. farm products are comes after president donald trump threaten to add 10% tariffs on another $300 billion in chinese imports. to hong kong, that is what protesters are trying to shut down -- that is where protesters are trying to shut down the city, leaving traffic stalled and airports disrupted. carrie lam calls it a dangerous situation. they are going to destroy hong kong. to risk one country, two

systems. viviana: it is the ninth straight weekend of unrest in hong kong. the protests began over a proposal to allow extradition to mainland china. to the u.k., that is where speculation by minister boris johnson is getting ready for more than just brexit. there is also talk he could be seeking an early election since taking office less than two weeks ago, he has dramatically boosted public spending. his conservative party is not ruling out an early vote. today president trump lands to speak about the two mass shootings over the weekend. 29 people were killed in texas and ohio, many more are winded today. the shooter in texas allegedly had anti-immigrants -- many more are wounded today. the shooter in texas allegedly had anti-immigrant views. president trump is being called on to denounce white supremacy. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over i am vivianas, hurtado. this is bloomberg.

caroline: thank you. let's refocus on the markets right now because we are seeing the selloff continue. it is the worst week for u.s. stocks this year. not seen sinceind of a selloff january 9, money moving into the dollar, out of the onshore or offshore yuan. most moving into bonds, now eight basis points. is's kick it on with what happening in the nasdaq. futures there also in the red. tech moving. the yen currently trading higher, and commodities, we might see a dialing of soft commodity purchases. crude oil is also off. francine: gold is rallying, 10 year treasury droppin to

the lowest level since october of 2016. china's currency weakening to a milestone level is kinda freaking out the market. the global bond rally, i am looking at pounds just because there is speculation about a general election. or a snap election being called 3.1.213 caroline: the police are now at protesters. there were protests throughout the weekend. today is a national day of strike action being called, affecting businesses and flights in and out of the city. one that we are clearly watching. francine: let's get back to trade. european stocks are in the red on fears that the u.s.-china trade war is escalating.

thes get straight to bloomberg news senior editor in singapore. i don't know how you would describe these trade tensions. is it up a notch? is it continuously escalating? will they sit down in september to talk? say that they are ratcheting and they are ratcheting upwards. today was a very clear indication of a ratchet up, both with the currency move and also chineseorts of possible state-owned firms asking to -- asked not to buy u.s. farm goods. that report has gotten a lot of people very jittery right now. this is definitely a ratchet up, and one of the things i would know is that there is the potential for a lot more ratcheting to go on in the not

too distant future. remember, there is a september 1 deadline for a 10% tariff on ,nother $300 billion of goods exports from the united states. president trump has said that is a floor, not a ceiling. he has said he is willing to have that tariff level go up, and up possibly past the 25% level we have seen on other lines. so there is room for additional escalation here, and if you are talking about off ramps where the talks are, those are not scheduled yet. there is any number of things that could happen here. there is a lot of time between now and then, but right now you are seeing upward ratcheting and you are not necessarily seeing a lot of those off ramps. you on past seven. how will president trump take it? do we expect the u.s. to retaliate from the retaliation of china? derek: i think this will be one

of the more interesting trump twitter morning watches in a while. i am interested to hear what he says in the 6:00, 7:00 morning hour when he usually starts tweeting. if he does not say something, he is scheduled to talk to the press at 10:00 on an unrelated issue, that being the mass shootings in el paso and in ohio. there are multiple opportunities for president trump to come to the microphone and address this today. caroline: more to these ethics chief the global forex managing strategist joins us. mark, i am looking at the spiking you on. utility spreads are absolutely soaring. we have not visited the one-year chart, but if i move it to be a five-year chart, we have not seen this volatility since august of 2015, when we had the

unexpected devaluation there at how big of a change in sentiment is this coming from china? >> i think the 7.0 level is important, but looking at the chart, looking at the valve ability the volatility, they are looking at less than 4%. the important thing is we go from a low volume currency to a median volume currency. what we are seeing with the u.n. lowere -- typically at a currency as well. i think we are seeing the markets respond to the penetration of 7.0, and the market is anticipating retaliation by the u.s.. the u.s. cannot take this laying down, so to speak. i think we will have to see some retaliation from the u.s. and continued escalation. caroline: and also contagion effects. you said type in crs, and you can see not only how far the

falling.renminbi is how much will this have a spillover effect? will this have a cost across the asian markets? c: the u.s.-china is just a tip of the iceberg. south korea and japan have a trade tension going on as well. south korea tech stocks? they get some finished goods from south korea, so now the over-the-counter technology stocks are off almost 8% today. there is a huge shot on world growth and disruption of trade. morning fromd london. when you look at our question of the day, which assets will suffer the most from the you want's breach of seven? marc: i would say local equity

markets come you see this also with the yen and the swiss franc strengthening, the mexican peso and the south african -- they are also getting beaten up on this unwinding. it is not so much what assets do well, because people flock to their fixed income. but how widespread the contagion is, depressing world growth outlooks, emerging markets, depressing -- even if you look at the australian dollar in the new zealand dollar, the contagion from china is weighing on those currencies. francine: from the markets live ivog, watches just type ml on your bloomberg terminal. -china tradee a u.s. resolution pretty quickly? if president trump text off -- --ks tough on china marc: with what happened last

week with the new threat of terrace after a tariff truce, no notice to the chinese despite what the presidential advisers reportedly were trying to suggest he do, i think china move signals they have given up on a deal with the u.s. right now. they are willing to take whatever shot the u.s. wants to fire to them, and i think after a certain point, whether you 20%, 20iffs 10%, 15%, 5%, at some point they have a marginal turn, -- 25%, at some point they have a marginal turn. if the u.s. retaliates, china has indicated no plans on coming back to the table. caroline: marc chandler, we thank you. with the ongoing political tensions, we see tensions in hong kong continuing today, the police starting to fire back on protesters. there are live pictures we have from icable news.

more than 130 flights have been canceled. from new york and london, this is bloomberg. ♪

francine: demonstrators hampering hong kong's morning commute with actions that left traffic snarled. we have been getting live pictures in. subway lines are inoperable and the airports have been disrupted. let's go to stephen engle, on the ground following everything very closely. how much more violent is it, or how much more disruptive are these protests compared to the previous ones?

stephen colbert this is peaceful right here on this side of the central government -- stephen: this is peaceful right on this side of the central government. on the other site is where they have had the police standoff on hard court road as well as queensway, where there was tear gas fired today. police are saying 82 people have been arrested today in the latest round of violence, if you will. there have been seven different protests around various parts of the former british colony, including citywide general strike called by the organizers. this is a banner that they have been handing out to everybody here. "strike aty says, work, strike at school, strike at commerce or the markets, and oppose the extradition bill to china." these are the main demands today. they have taken a flash mob

approach. every day they have taken a different approach to keep the police off guard. they will strike one area of the city and retreat, and trying to keep the police off court -- off guard. keep them on the offensive and the police on the defensive to seize control of what has been nine weeks of unrest. police as well as the chief executive, carrie lam, did address the people today, but a lot of the protesters here that we have spoken to and talks to, they have heard more of the same. basically the police as well as chief executive carrie lam running down the litany of different crimes that have allegedly been committed by the protesters but not offering solutions. that is where we stand right now. what is the end game to all of this? francine: how is beijing viewing this, stephen? stephen: i'm sorry, i could not quite hear you. how ise: how is beijing,

china viewing this? is there anything they can do to de-antagonize the situation? stephen: absolutely. the one thing they could do would be to send in the people's liberation army soldiers. that is kind of that overhanging threat to hong kong. however, there is no indication that is necessarily going to happen. i believe the police commissioner today did say that is not an option at this moment. we have heard as well, though, from state media in china, vision one news agency put out a sharply worded statement saying, "we must ward off the ugly statements that undermine the bottom line to the system's principal. the central government will not sit idly by and let the situation continue." they called the hardliners here extremists who desecrated the national flag. yesterday they said those words because some of the protesters

did pull down the chinese national flag, and they threw it into victoria harbour. they called that an affront to all the chinese people, not only in china but to the chinese people in hong kong as well. caroline: are we hearing corporate, seeing business intoe and entities calling question hong kong's place as the financial hub of asia? well, that is what the chief executive and also the finance secretary tried to address today. even though they did not give a specific solution on how to resolve the crisis, they mentioned that this is hurting everybody in hong kong. we have already started to see the numbers in hong kong. our second-quarter gdp was below the estimates at 0.9% quarter over quarter growth. we are also seeing retail sales plunging nearly 7% year-over-year in june. we also got the pmi as well for july. it was at 43.8, the lowest since

the beginning of the global financial crisis. we are also seeing the msci -- excuse me, the hong kong index down for nine straight sessions. that is down 10%. we have not seen this kind of fall since march -- excuse me, since 1997. that is of course when hong kong was handed back from britain to hong kong -- from britain to china. caroline: sadly it is taking effect. stephen, stay safe. we thank. coming up on the european close, you have hans reddick or of morgan stanley -- hans reddick or of morgan stanley joining us. this is bloomberg. ♪

caroline: i'm caroline in new york -- i'm caroline hyde in new york, with francine lacqua in london. tom keene is off. when we look at the u.s., this meeting will have some clear challenges. mix data, presidential pressure, the trade war -- all of that weighing on the federal reserve. from james bullard on tuesday, charles evans on wednesday. where does the u.s. dollar go? thee -- doesn't remain

currency of choice? >> something the dollar is rolling over after a 10-year bull market, and the driver is really the unwinding of what happened before. where it lifted the dollar with this divergence. -- u.s. monetary policy tightening. not just what happened last week, but the first rate cut -- with the first rate cut in the but it solidifies market expectations. there are three meetings left this year, a cut in every meeting. that is what the market is pricing in now. caroline: and exactly what trump would want to see. this has been a difficult line to draw with the federal reserve because thus far the data has not really indicated some of the weaker -- some of the simulating action they have taken. do you think the data will start showing the weakness that they can level blame on why they need to be ramping up? marc: the reason that the federal reserve said they were

cutting rates had to do with -- they ample side -- they emphasized global uncertainty, global risk. that was a nice way of saying trade tensions that the u.s. is provoking. i think that is the international variable. that is not so much that the economic data has to show the weakness. we have seen some softness in pmi last week. otherwise strong employment report, it suggests a strong -- a soft quarter. 1.5% orns in q3, maybe so. i think the federal reserve believes because inflation is low they have the latitude to support the aggressive trade policy. arc, i don't know whether you expect the trade equation to get worse, but if it gets better, did it -- does it change what the fed does? marc: this morning the first presidential tweet says, if it says we have made a mistake and

we should not have provoked china, and they can hurt us as well, we will back off, i think the markets will respond favorably, including taking back some of the fed easing. instead, i think things will have to get worse before they get better. francine: thank you so much, marc chandler. we will be back with him later. later,up a little bit the bernie sanders senior economic advisor will be here. electiontalk about the and the horrible mass shootings. this is bloomberg. ♪

francine: the mounting situation in hong kong. carrie lam warning of a very

dangerous situation, protesters moving to shut down the financial hub with a general strike. this is the ninth straight weekend of unrest in opposition to china tightening grip. 100 -- more than 140 flights have been canceled. we also have stephen engle on the ground. anything new in hong kong, we will bring it to you. we have seen teargas in certain parts of the city. now let's get to first word news in new york city. signaling ita is is ready to play hardball on trade with the u.s. beijing allowing the you want to fall below seven per dollar. state owned companies are being asked to suspend inputs to american agricole -- agricultural goods after donald trump's latest threat to impose tariffs on chinese made product. mitch mcconnell is recovering in

kentucky at his home after breaking his shoulder in a fall. he is 77. some democratic senators say mcconnell should call the senate back from recess to debate gun-control measures after this weekend's masks -- after this weekend's mass shootings. and i's revolutionary guard taking -- and iran's avolutionary guard has taken vessel. donald trump a vessel. donald trump says hate has no place in the u.s., and he will be taking care of it. the president speaking after two mass shootings in the last 24 hours with 29 people dead. today president trump plans to make a statement. democrats are calling on the president to denounce white supremacy. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over i am vivianas, hurtado. this is bloomberg. caroline: as she was just

saying, stay with bloomberg television as we will bring you that note from the president. he will be speaking about the mass shootings over the course of the weekend, the president do speak at 10:00 a.m. in new york, 3:00 p.m. in london. who better to get more information is marty schenker. do we prepare ourselves to be set at 10:00 a.m.? any real change here? marty: there will be a lot of discussion in the white house this morning on what kind of tone donald trump takes. i do think because of his history and his rhetoric, including charlottesville, where he had moral equivalency with the white supremacists and those who were opposed, it is very difficult to be authentic for him at 10:00, and that may generate even more noise. ultimately we have seen time after time on these incidents, nothing gets done. so i do not expect it this time

either. caroline: this becomes a presidential 2020 campaign issue. we have seen the democrats take this up, in many ways if you contenders trying to pin the blame on trump and the antagonist asian of racial hatred. do you think that is reasonable? crassly think to be political, there is a danger if democratic candidates try to take political advantage of this tragic event. i do sense, especially with bernie, some real authentic outrage over the president and his words, and an appeal to him to scale back. and the manifesto that the shooter in el paso uses phrases that almost seemed directly from a trump rally. so there is a real opportunity here for the president at least to speak the words that need to be spoken, but the question is, does he have the moral authority to make them stick. francine: as we look to 2020,

will gun control be part of the main issues discussed in the election? marty: i think there is no question about it, but beyond the specifics of gun control -- the house earlier this year passed extensive background check legislation that was partisanly, but it never went anywhere in the senate. i think the focus will be on mitch mcconnell, who is recovering from a shoulder fracture. but it is really up to him if he wants to move gun control forward in the congress. until he does, it will be an issue in the campaign. francine: after the deadly rampages, does it actually focus democrats? are democrats more on the same page than they were five days ago? marty: on this particular issue, there is no question they all seem to be on the same page in

terms of asking donald trump to restrain his rhetoric and provide real leadership on this issue. i think it will be very difficult for him to do that, given his history. it is going to be a very difficult line to walk now, trying to evoke market reaction with such a tragic set of circumstances, but this does become a campaign issue. of the presidential is this impacting? think -- i donot not think what is decided in these near-term elements determine what happens. the trade tariffs and they trade tensions have a greater chance to derail the economy, and that would be one of president main points in his favor, and i know a lot of

econometric models, like low unemployment and the relatively modest growth is supporting the incumbent, but the outcome might not be so good. caroline: one of our previous guests was saying perhaps it would be poor timing, but perhaps trump -- there will probably be questions fired at him regarding china and the u one weakening. do you think he will have something to stay on trade, or will he stay on point? marty: i think he will definitely stick to the mass shootings and the message he wants to give. i doubt he conflates the two issues, but with this president you never know, and i really doubt he will take any questions. it will be a straightforward statement. francine: how does the president deal with escalating trade? we have this abrupt escalation of the trade war. china retaliates. does the administration try and

temper the trade war, or do they just add fuel to the fire? marty: this is the danger of going down this road. a number of people all along have warned about positions becoming entrenched. that hised last week chief advisors asked donald trump not to impose these 10% tariffs, and he just missed -- and he just dismissed them. this is the danger. if he backs down from those tariffs or suspends them, it is going to look like from a position of weakness, and this is the danger of a tariff war, that positions get hardened. you get further apart, and coming back together is made much more difficult. schenker, chief pain reader, mindreader -- let me ask you this -- do we think president trump really has a problem with china and wants to get a better deal, or is it to

fight china and maybe strike a deal before the election because it will show that he can strike a deal? marty: like you said, it is really impossible to know for sure what donald trump's plans are, but i can see it being very possible that he wants to use the china trade negotiations as a political -- to his political advantage in any race with the democrats, portraying the democrats as weak on china and that he is tough. the backdrop, though, is the markets are down significantly this morning. if this continues, if the markets keep telling donald trump that this is bad for the u.s. economy, he may be forced to try and come to some deal way before the election. caroline: it is interesting because thus far, one of the most isolated economies all of this has been the u.s. because so much depends on the u.s.

consumer. but we know tariffs can increase prices of key consumer goods and that could hit them in their pocketbooks. who has the most to lose at the moment? does the u.s. have more to lose than china does? marty: i think the conventional wisdom is that if -- because china has their surplus, if we had stopped trading completely, the u.s. stands to benefit because they have the deficit. but i don't think things will work out quite that way. on rare earths, for example, there are a lot of different moving parts, but the consequence i think is that -- is a couple things -- one cup of the u.s. economy is not going to be in a position to take on europe. whether it is the pipeline between germany and russia or nato, or the trade imbalanced, europe might be given -- or the trade imbalance, europe might be

given a free ride on this. the other indication is that other countries will be caught up in it, sort of like innocent bystanders. caroline: on friday we had that beef deal being struck between the e.u. and the u.s., but jokes being made about 25% tariffs coming toward the auto sector, then real comments about the auto sector, that they can always face tariffs in the u.s. how much is europe not in the line of fire here? this: i do agree if chinese-u.s. trade war intensifies, it will take some of the pressure off europe. to run multiple trade wars at the same time, so -- and i think china is the big deal, and they will be trying to make those talks move ahead and probably deflecting any action against europe for a while. francine: marty, thank you so

much. marty schenker, bloomberg chief content officer. let's quickly check on your mark is because there is a little bit of frustration. european stocks are definitely down. the selloff was triggered by the u.s.-china trade war that we were talking about with america. later on today, the former sb at -- the former fbi assistant director joins us on "balance of ," at noon. this is bloomberg. ♪

viviana: this is bloomberg surveillance. let's get the bloomberg business flash. a plan strike by workers at heathrow airport has been delayed for at least a day. airlines scrambled to reinstate canceled flights. all but 50 departures have gone off as originally planned. british airways is trying to avert a strike i pilots at the height of the busiest summer travel season. the pilot union will continue talks after three days of negotiations. warren buffett would rather sit on a pile of cash than overpay for stocks there it equities at a record high, and last quarter sold akshire hathaway billion dollars more stocks than it bought. it has surged to a record of $122 billion. betting on consumer finance. the media company is spending

$265 million for a majority stake in credible labs. the market place for consumers seeking financial information. the field will help bolster foxbusiness news. tesla trying to juice up sales of its model s and model s electric vehicles. d3 company is bringing back three and unlimited supercharging perk. unlimitede and supercharging perk. the superchargers are being called absolute key to sales. that is your bloomberg business flash. francine: thank you so much. now it is time for our single best chart. negative yields across the world. the fed rate cut definitely ,elped slow the total of debt more than $14 trillion for the first time. i am looking at my chart, and the question we are trying to ask ourselves in this negative yielding debt, what assets are more attractive as they grow

more and more negative? let's go to our guest. when did you -- where did you buy into? ofthat is probably why a lot money is flowing to the u.s. and some of the emerging markets, high yield there's, are drawing attention as well. , are drawinglders attention as well. it is hard to conceptualize how deeply negative we are going, new record lows in many of the european bond markets. the negative interest rates were talked about, as the possible euthanasia of a class of people who lived on fixed income. there is so much capital in the he just wants a passive savings with negative risk. francine: how much of a problem

is this for long-term portfolios? marc: this is one of the big challenges. on one hand it sounds all right because as yields fall, securities or getting capital gains. but eventually you are going to be looking at stalling capital gains and still stuck with negative yields. for people on fixed income, planning for pensions, this also affects corporations because what they will have to do is they have a threshold for investments. the negative yield should be lowering that threshold. is not lowering their threshold for fixed investments. because they are looking for higher rates of return, the higher our ally -- the higher our ally -- you're talking about some of those companies before, they stay with lots of cash. because the investment threshold is too high, slow to make the adjustment of lower rates, the same way pensions funds are slow to recognize they have to lower

expectations going forward. interesting that we are seeing t. rowe price and goldman sachs talking about pushing down the yield curve to a certain extent. come to mind?ble is there going to be more financial risk as we get closer to yielding debt and rate cuts? >> lower interest rates take the pressure off the lower quality credits. so i think that could continue. with the central banks having so much liquidity, that keeps volatility down. and i think that is ultimately what happens. give us one trade within the fx market -- it was interesting you were talking about emerging markets, that people are looking to put the cash in. with the weakening dollar, is the mm em space a place to put

it? currencying the selloff hard, the mexican peso -- one is the turkish lira. even though the central bank has politicized with larger than expected rate cuts, the turkish lira is one of the strongest currencies in the last couple of weeks. that question of yield over quality, argentine bonds are attractive to people. francine: thank you, marc chandler. ray to have you with us. coming next on "bloomberg daybreak: americas," a global cio of fixed incomes have plenty o to say. ♪

"bloomberghis is surveillance." i'm francine lacqua in london. caroline hyde is in new york. john flint has stepped down from hsbc, just 18 months into the top job. that as the bank announced second-quarter earnings of up to

$1 billion. the stock is trading lower in london. a bloombergd by news banks reported. a lot of people were taken by surprise. we had heard of possible differences. how much of the focus will be on someone who can shakeup the u.s. and the asian franchise? >> it was obviously unexpected. report, theyour may potentially look outside for the first time ever, so we may coming fromo is not hsbc. topic forss is a hot the bank because it is not very positive there. extra liquidity they would like to use. those topics have been addressed during the conference call.

there was something that the chairman -- do we know if something -- do we know of something that the chairman was particularly not happy with? is it the share price, or how he handled something else? >> i would say probably his style. even if they had been denying this morning, they are in complete denial, just giving the same answer. are challenging environment conditions, so they need a new ceo. we heard about personality clashes. so potentially personality clashes. given he surprising, was such a long time serving person in hsbc. -- wee to remember that

are understanding their could be senior executives to go. do you have a sense of where they will take a key hit with his departure? had barclays as well as tweak announcing up to 2000 job cuts, so they are not giving too much details because obviously there are scared employees. they are just saying that the job cuts will be basically the units that are not generating enough profit. said, saying that there are areas that are not working, and so there will be job cuts there. he said basically they would be targeting senior positions. so may bere costs's, less job cuts. caroline: we thank you.

the bloomberg news banks reported. let's check in on hong kong. the hsbc gets its name. we are currently seeing a dialing down in some of the concerns that have been here, inh less teargas being fired these current pictures, but still there are traffic disruptions as antigovernment protesters kick off. going to if you are hong kong, flying to or from, check your airline. "bloomberg surveillance" continues on radio. treasury, aa stable global bond rally. ♪ hey! i'm bill slowsky jr.,

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of great society. ulterior motive are going to destroy hong kong. >> a warning from hong kong's leader carrie lamb as the strike cripples the city. the ninth straight weekend of unrest. and china fights back with ybeans to stop buying u.s. soybeans. global beyond -- bond yields sink. and the bank will fire more than 4 million people from hsbc. >> welcome to "bloomberg daybreak" on this monday, august 5. i'm david westin right here with alix steel. we have the mass shootings over the weekend but it's not the only geopolitical event. >> no. 29 people were killed over those two shootings over a few days in total, this is according to