>> good morning from dubai. this is daybreak europe. nejra: and i am nejra cehic. these are today's top stories. the big breach. d by that.ile calls china ap currency manipulator. asian stocks are paring losses. erasing gains. 10 year treasury yields ticked higher after dropping to the lowest level since donald trump's election. and bigger cuts to calm as

markets gyrate. the fed -- manus: a challenge of outlook for deutsche bank. -- deutsche post. , 4 full-year earnings billion-4.3 billion. previously, that was 3.9 euros. that is what the market most likely will focus on when it becomes the actual numbers confirming the 2020 forecast. and the second quarter even. ahead of the estimates

of 756 billion euros. it is all about the guidance for deutsche post. loweringaw was the imf the basis points. lowering the outlook for air freight volume. and they expect ocean container growth of just 2%. you're seeing a negative skew from the various highs in terms of what we can expect. i'm expecting a very big parcel delivery for you this week. good morning. nejra: manus, i cannot wait for that. ray to have you back. let us turn to the markets focusing on the u.s. naming china as a currency manipulator. droppedy, the s&p 500 3%. the biggest drop this year. turning positive. up 0.2%. and the 10 year yield after

hitting a 2016 year low -- after a 2016 low yesterday. gold hitting a six year high in yesterday's session but we lose a little bit today. just about steady. anus: yesterday was shakespearean tragedy. rescuenese came to the today. they acted to limit the plunge on the yuan resetting the agenda. my question for markets is very show of- was it a strength for the u.s. or was it a self-inflicted wound? yuan is for markets on could the u.s. moved to intervene to strengthen the yuan in the markets? it is a 20% possibility. to the rest of the markets --

jgb, we went through the floor at 0.2%. hit somewhere has between plus 20 and -20. that is what the bank of japan wanted. -- question we ask ourselves will the bank of japan moved to widen the bandwidth. stepping back from the market angst. giving oil a little bit of a reprieve. toiette saly is always ready talk about these markets. good to see you. how is it looking in singapore? down for a fifth session in a strength isyuan's giving a reprieve to the stock markets. the nikkei down 0.9% in tokyo. by almost 3%own

earlier in the session. japanese stocks are looking attractive. by about00 weaker 1.5%. and the hong kong hang seng also under pressure due to the geopolitical concerns in that city. down for a 10th session in a row, the longest losing streak since 1984. india is a little bit higher. and us really is market is the weakest performer, down 2.3% on the asx 500. the biggest fall since early december last year. and the rba decision came through. the aussie dollar has been strengthening, up by about 0.4%. we weree expected as expecting from the rba but they did come through think it would likely take longer than expected for cpi's to return to 2%. and it is reasonable to expect an extended period of low rates. rbc bringing forward their next

fromate cut to november february. and of course, we also saw the aussie 10 year yield falling below 1% for the first time amidst haven demand. the aussie dollar paring yesterday's losses. nejra: juliette saly in singapore, thank you so much. the trade war is as collating further with the trump administration labeling china as a currency manipulator. however, in response, china has taken steps to slow it be you once dissent. today, we are asking the , what does itiv mean now that china has been named a currency manipulator? silvia us now is dall'angelo, senior economist at hermes investment management. we are trying to work out what

the pboc is trying to do in terms of allowing the weakening yesterday and today the stronger fixing. what do you think the endgame is here? silvia: in my view, it looks like chinese policymakers are expanding the tools they are using in order to ease trade tensions with the u.s. into ade war is turning -- work. and the message from the pboc yesterday was quite clear. a line in the sand. the yuan against the dollar. chinese policymakers want to be very gradual and therefore, has been suggested that they will adopt a gradual approach to the use of fx as a cool in the trade war with the u.s. manus: yesterday was one message

and today it is completely different. i think it is very difficult at this stage for any of us to say what will happen next. one big story building momentum is jp morgan is saying that you could see the u.s. intervene to strengthen the yuan. this is perhaps one of the more dangerous repercussions to come from the white house. a 20% possibility of this in the next three months. what do you think the possibility of that is? i would say the probability is quite low but clearly, given the unpredictability of policymakers here and we are talking about both sides in these u.s.-china trade tensions, we cannot sort it out. the decision will come from the treasury. abidee fed would need to to whatever affects policy is --

fx policy is. the probability at around 15% of any to wrecked intervention by the u.s. in the next few months. nejra: where would you put the china selling down its treasury holdings? the impact could strengthen the want. theia: the possible -- issue for china is it is a double-edged sword. selling its holdings of the u.s. treasury. for once, if china were to sell its treasuries, about $1.1 trillion, it would shoot itself in the foot because the federal yield treasury would decline. and china is another problem because china needs to preserve a decent amount of reserve and treasuries are the most obvious

tools to keep. will need tohina walk a very careful line. that wene of the themes will pursue in the next hour is for the land of the brave. osi on thek at the s&p 500. one could argue that it has been a cathartic moment. the markets need a re-pricing. the s&p, it buckled. do you see any kind of opportunity in the substantial repricing that happened? how do you look at this prism of re-rating of risk? silvia: that is a tough question meaning that i also think there -- fundamentals of

-- economic data on the u.s. has been more mixed recently. and the guidance for earnings is increasingly negative. however, there is also some support. we are talking about monetary policy and the fed cutting rates last week and we will probably follow through in the coming months. , while i think there are some reasons for a repricing, i think we will see more of the correction and then relief rallies. nejra: you said more cuts from the fed are coming. the market is pricing another 100 basis points of cuts over the next year. some are saying we could get a

50 basis point cut in september. where do you sit on that? silvia: i think we should not go ahead of ourselves in terms of expecting the fed cutting aggressively. the fed's actions will depend on the economic data coming in and also crucially, on how the u.s.-china trade tensions develop. i think the fed would probably cut rates by 50 basis points by the end of the year. and they need to be cautious in using its policy space. days, the fed used to cut by 500 basis points to respond to recession. basically the fed is half of the policy rate space. which means it could resort to a

conventionally minded policy. thise all know conventional policy has some traction. i think they will move carefully going forward. fed is behind the curve. and we have just shown the rate cuts expected, three more by 2020. you are a little more than the market. my a last guest suggested it was the fed being held captive by the markets. not necessarily by data. is the fed hostage to this kind of swagger from short interest-rate futures? fed is subject to all kinds of pressures. political pressure. market expectations. clearly pushing for more. and what we have seen, especially after the rate hike in december, is the fed listens

to financial markets very carefully. and while that makes sense in the fed's framework, financial markets are the main channel to monetary policy, therefore, if thated wants to ensure conditions are for the economy, it has to fine-tune rate cuts of according to market expectations. adviselly, the fed will to what the market wants. manus: indeed. ilvia, stay with us. let us get your first bloomberg update. four former federal reserve to use are making a joint statement. op-ed,ll street journal janet yellen, ben bernanke, alan greenspan, and paul volcker

commented on president trump's recent attacks on the central bank. they say the chair must be able to act independently. president trump has delivered his most forceful condemnation of racism and white supremacy. this following the mass shootings this weekend that killed over 30 people. the president did call for new restrictions on gun ownership -- did not call for new restrictions on gun ownership. that thet recognize internet has provided a dangerous avenue to radicalized, performedminds and demented acts. we must shine light on the dark recesses of the internet and stop mass murders before they start. prime minister boris johnson's opponents are heartening plans to stop a no deal brexit.

jeremy corbyn is signaling he will call a vote of no-confidence next month. mp saysbel to worry there is a growing number of hardrvatives against the brexit. china has reiterated its support for carrie lam as the financial hub cleaned up after a day of traffic chaos and more violence. according to the people's daily, china will not tolerate while protest.olent it says china's top priority is to punish criminals and restore order. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. breaking news. from the u.s. retail sector. barney's filing for chapter 11 in the southern district of new york. bloomberg was reporting yesterday that bankruptcy is a likely option for barney's and a

filing could come as soon as monday evening. barney's has been in talks with a potential buyers for the rights to its name and trademarks. its advisors have been searching for ways to sell footage the luxury retailer. we were reporting that a sale of at least intellectual property would produce cash. part of its efforts to keep the doors open at this luxury retail chain. manus: if you look at this story, this is the epitome of the juxtaposition of the likes of amazon to deliver everything online. our entire lifestyle. oldestwhat is one of the luxury bastions of retail. although we evangelize about shopping online and the momentum -- andon and that is an that is undoubted, there is a

structural change in terms of what is going on in the u.s. and globally and there in lies the point. an absolute institution that is toast. nejra: with the latest escalation in the trade war with more people saying the u.s. consumer will be had, you have to wonder what this will mean for these retailers as well. europe's largest economy is feeling the heat. we will discuss that next. this is bloomberg. ♪

manus: it is bloomberg daybreak europe. i am manus cranny in dubai. nejra: let us get a check in on the markets. we have seen some reverberations. houses lowering the yuan forecast.

the u.s. futures are turning positive after the worst day for the s&p 500 yesterday this year. 3% of a drop. manus: 10 year government bonds have had a reprieve. gains as wesing the saw the chinese adjust the agenda. big options. will the chinese show up? dollar-yen on doing a lot of that banks to. today, they turn it around and there is a turnaround, up 3.5% on gold. you have a little bit of a move there. let us get your business flash headlines. bill ackman's quick vision for united technologies and adt he decided to sell his united

stake rather then sign the takeover with raytheon. marriott is jumping into the all inclusive resort business and announcing plans for to new destinations costing a combined $800 million to build. the projects are in the dominican republic and mexico. preventing frequent customers from booking with rivals. and keeping them competitive. that is your bloomberg business flash. nejra: thank you so much. for thent of truth german economy. factory orders are due shortly followed by industrial production numbers tomorrow. the numbersexpect to show a deepening crisis. with more, it is dani burger. exportany, all of these

reliant nations are affected by the trade war. behind the statistics, i have been listening to the earnings calls from german corporate and we hear them increasingly ringing the alarm. the first to do that was a company slashing their expectations. slowing from mark -- slowing markets. also hitting siemens. saying they are operating in a challenging market environment. hurtingalso cut -- chipmakers in germany. we really see this anytime the trade headlines with bob. the chipmakers in germany are high beta. the most recent jorma and corporate to express concern was recent german corporate to express concern was

linde. the ceo said i see a weakness of across the eurozone. despite a more than positive outlook. i want to put some of this german data in context. andee germany manufacturing u.s. consumers, two pillars of the global economy. when we look at the spread, the german manufacturing climate is at its lowest versus u.s. consumer confidence and the 1990's. tous: what a lovely way leave that conversation and we pick it up with silvia in just a moment. just a quick correction. gold at the bottom of your screen is the one you will want for trade. is with us'angelo from hermes fund management.

when you look at that chart relative to german manufacturing and the u.s., where are we in the cycle at the moment of your concern levels for european growth? clearly, recent developments in german manufacturing sectors are quite concerning. the manufacturing sector he in germany slipped into a recession in the last year. the narrative was that there were special sectors at play particularly the auto sector where new emission rules meant that production in that area contracted quite sharply. signd see some tentative of stabilization this year when manufacturing was flat in the first quarter. ip, industrial for anothers set

contraction, 1% on the quarter. the second quarter of this year. nejra: great to have you with us, silvia dall'angelo. coming up, the half point cut debate. we will discuss the impact. ♪ hey! i'm bill slowsky jr.,

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nejra: this is bloomberg daybreak europe. i am nejra cehic in london. manus: and i am manus cranny in dubai. 24 hours, two very different messages. have swag and today, resetting the agenda one could say and recapturing the grind saying we won't reset and slow the demise or the drop of the you want. it is either a very smart move or a policy error. it is a hard debate. nejra: and you wonder if what happened yesterday was some signaling rather than the start of a new policy from the pboc.

macro traders really starting to question what the pboc is going to do next. how do you trade this that is the question for many this morning manus: what is the risk that the theyd states of america, have not intervened to move the value of a currency. what is the probability of china -- nejra: that could have the effect of strengthening the yuan. and it all feeds back to what

the fed will do next. people are talking about 50 basis points cut in september. manus: just over a 35% possibility. we will check in with goldman sachs to see what they will say. let us check in on the markets around the world. over to you. despite asia falling, we have seen some repricing there. how is the indian market looking? >> good morning to you. the indian markets are doing a bit better. we started off in the green and we stayed that way for the first couple of trading hours of the day. the currency is trending a little in the session. the move from china in today's happy it- they were

happened before the market started. aboutre talking [indiscernible] maybe a couple of those factors combined with the fact that they have so much more than the counterparts. bit ofsee if there is a a sustained bound. back to you. nejra: thank you so much. the global markets are stabilizing somewhat after yesterday's risk off session. >> we are seeing a little bit of stabilization. we have seen equity pare some losses. there is a decline in the australian dollar. the csi is lower. the nikkei is down 0.8%. in, comes as china stepped stabilized the currency and provided for a stronger fixing.

the u.s. dollar, stronger against the japanese yen. the yen down 0.7%. the potential for a more risk on attitude during today's session. the 30 year yield is higher this morning. in commodities, wti and brent crude reversing losses, up 1%. what i'm looking at is the australian 10 year yield. for the first time ever, it dropped below 1%. dropping below the official cash rate. the rba left unchanged after cutting it in june and july. it goes to show you we are seeing some easing but investors are still looking for havens amidst it escalation of the trade were between 10 and beijing. manus: let us see where the next the takes us in that agenda. good to see you guys. let us get the bloomberg first word news with annabel to list in hong kong. >> thank you.

fed chiefs are making a statement. op-ed,ll street journal janet yellen, ben bernanke, alan greenspan, and paul volcker commented on president trump's recent attacks on the fed. ablesay the chair must be to act independently and free from fear of removal or demotion. president trump has delivered his most forceful condemnation of racism and white supremacy following the mass shootings over the weekend that killed more than 30 people. newident did not call for restrictions on gun ownership instead blaming the attacks on mental illness. that thet recognize internet has provided a dangerous avenue to radicalize, disturbed minds and perform demented -- demented ki acts.

acts. read -- china has reiterated its support for carrie lam as a financial hub cleaned up after a general strike. according to the people's daily, china will not tolerate violent protests and says the top priority is to punish criminals and restore order. the wealthiest 500 people on plunged the. stocks most on escalating trade tensions. 21 members of the bloombergs lost.naires aboutezos is still worth $110 billion. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

manus: thank you very much. u.s. equities were slammed in monday session. after president trump landed china as a currency manipulator. he called the move to allow the you want to weaken a major violation which greatly weakened china. the s&p 500 slumped 3%, the most this year. this morning, futures have tick up into positive territory and asian stocks incurred some of the losses. nejra: the trade back and forth leaves central banks in a precarious position after jay powell's midcycle adjustment last week. a half point adjustment in september looks more and more possible. our next guest says bullish investment sentiment -- different positioning indicators

. he adds that with less scope for monetary support, better global growth needs to take the lead. joining us now for the rest of the hour is christian from goldmanman sachs. great to have you with us. with those losses we saw yesterday and last week in the s&p 500, how much more of a drawdown would you need to see in u.s. equities before thinking, now is the time to buy the debt? have a toughu setup coming into this because for most of this year, markets were boosted by financial policy. you look at the level of growth you currently have come you have the highest drawdown risk since the financial crisis.

you have not seen growth pick up alongside that. continuedions have going up being boosted by the search for yield. we always like to look at the risk appetite indicator. , they always give us a good signal when they drop to minus two. we are currently at minus one. we dropped only 0.2 in the last week. performing.y the drawdown could continue. manus: it certainly could continue. christian, good morning to you. we have tried to translate that sentiment into a chart. globally, stocks had their biggest movement yesterday since february 2018. where are we in the trade war angst?- trade war

christian: the big problem has been that throughout the year people have been struggling to see a positive growth story. you have the global manufacturing moving into a recession. the services sector have held up nicely. but there is a real lack of growth. the trade for is partially responsible for that. as a result of that, it is a key sentiment driver. we have seen that throughout the year. now, the trade war is escalating. this is why yesterday was such a day dl. arena.nto the fx china is responding by the currency. arathi been a lot of concern about competitive devaluation. the reason why that matters is it is essentially a world where you are already fighting deflation in other places in the world. if you are falling behind, you

have the risk of importing inflation further exacerbating stagnation problems. that is the key issue you are facing. investors have already struggled getting excited about growth. and now you enter a deflationary stretch on top and that is weighing on investment sentiment. after 1.5 years of global growth deceleration, we are only now starting to see profits suffer. far, in the search for yields, people were satisfied with a lower bond yields. and there were opportunities but now people are questioning the dividend. nejra: what does this mean for volatility? as au look at the vix measure, -- christian: i think there is a

real concern here which is route the year growth has decelerated. moreowth normally means volatility. if you have global growth below 3%, u.s. growth below 2%, you historically have a higher vix. you're not really seeing that this year and the reason was the center of angst step in and stabilized of volatility. there has been a subtle regime change. the yield curve has not been sorry, not stayed stable but flattened further. the market is shifting from a template where fed easing is good and stabilizing markets to a template where it is increasingly being perceived as a risk. near-term, the risk of volatility staying high is there up to the point where the market is willing to take the recession risk again. manus: you talk about the risk

to profits. and you used the word recession. or the potential. we have at the yield curve. we have popped into the library. feddebate is whether the would go 50 basis points in september, three more rate cuts this year or is the fed held captive by what the bond traders are doing? what is your answer to that this morning? saidtian: i mean, as i earlier, monetary policy has been in the driving seat and the bond market investors have been down.ng it is difficult to satisfy investors these days that we think the potential for three cuts has increased. yesterday evening have increased the probability for three cuts to more likely than not.

we still see the probability of 25 basis point cut at the next like 75%. 15% probability that you get 50 basis points. 10% that you get nothing. the important shift has been is well bond market ahead of that. already pricing 100 basis point cuts over the next few months. we think there is a certain risk you hadntually -- when pivot at theh beginning of the year, people profited. and then there was another period where the bond market was right. eventually, you are going to run out of the surprises. we think central bank policy is at risk of being increasingly disappointing. we have run out of surprises in the box. some say that is the biggest risk of all.

that this federal reserve does not have the ability to emulate what greenspan did in the 1990's. christian stay with -- stays with us. let us take a quick check of what you should be watching this week. speaking at the national press club in washington. disney is kicking off a round of notable earnings. i will not sing the song. would you like me to sing? will sing along with you. i went to see "the lion king recently. has numbers coming out tomorrow and on thursday, we hear from uber. and watch out for a u.k. economic update on friday. the british economy has retracted in the second quarter by analysts' estimates. this is bloomberg. ♪

manus: this is bloomberg daybreak europe. i am manus cranny in dubai. nejra: let us get the bloomberg business flash. united technologies. firm boostedsquare its investment. it decided to sell its united look into thethan takeover by raytheon. saying it lacked strategic sense. apollo is taking on wall street with a massive newspaper loan deal. the private equity firm has agreed to provide debt financing. todayal would bring usa and over 200 other publications under the same roof. it is one of the biggest ever

arranged outside of wall street. airport staff has suspended its strike after a new pay offer. the union represents thousands of ground staff. the united labor group will take the new and improved offer and will hold off on plans for a walk out. is jumping into the all-inclusive resort business. the world largest hotel company announced plans of to new destinations that will cost more than $800 million to build. the projects are in the dominican republic and mexico and are designed to help keep marriott competitive. that is your bloomberg business flash. manus: thank you. for the roundup. the latest escalation in the earlier, wear -- talked about the 10-year gilts.

donald trump and his election victory in 2016. some ofs have erased the gains but recession signals are flashing. move onthe most extreme the yield curve inversion since the lead up to the 2008 crisis. goldman sachs expects the u.s. trade tensions with china to linger to say the least. our guest things investors should hold treasuries in the short term but over the next months, they say focus on cash is the economy rebounds. christian mueller-glissman is our guest. let us talk about the havens. i want to focus on your dollar-yen call. a moderate repricing. as the chinese grabbed the high

moral ground. you say that ultimately we will see a move higher in yen. to what kind of levels and over what kind of period? and is that your chosen haven? a target ofe have three months. we do think the yen has the ability to appreciate more. the currency that has other factors that can drive weakness. europe is exposed to global trade as well. is one of our favorite safe havens because what we have seen in the last few months is a big disconnect between yen and gold. gold has gotten a huge amount of consideration.

what we see in the options market is a strong positioning of gold right now. risk reversals are majorly decoupling between gold and yen. also volatile on the downside if you have a risk on rally. my sense is to regard the yen as a metric. nejra: speaking of other safe havens -- yesterday, we dropped '10 yearldman sachs yield calls. how much further could we fall on the 10 year treasury yield? would you be changing that call to hold them beyond the three-month period event how far we have fallen? christian: the market is shifting towards pricing recessions.

in that type of setup, we have a polish duration by buyers. especially in the u.s. you have bund yields at -65 basis points and that is our target as well. gdp is complete -- jgb is completely out of the picture. the treasuries in that regard still make sense in the portfolio that the he or important thing is we still believe that in the second half, you will see a stabilization. you will not see a u.s. recession. we are coming back to a midcycle narrative. when you have a midcycle, treasuries do really well and shortly thereafter but moving towards a more midcycle, cash is a place we find outperforms

treasuries and treasuries can come under pressure again. especially at the level we are at right now. symmetry overay the next horizon is not that likely. manus: that is the base case. and it sounds from everything you just said that it is a glass slightly more than half full. let us go to the right-hand side of that trade and talk about outside the u.s., where else do you want to be long risk assets. e.m. has taken quite a bruising. and the correlation between em and yuan is quite high. where outside of america do you want to be positioned potentially for that midcycle as

you say reprieve? is we are the thing fx and emerging markets under pressure. my sense is over the second half of the year, there would be opportunities to ask risk of their. a toughear term, it is place to be. especially going into the third quarter, the area we do like the most is europe and european carry trades. the ecb has the potential to deliver a dovish package. we do like european carry trades and peripheral sovereign's like spain and portugal. there are certain areas we think have a question because the central bank input is there. outside of the u.s. though, i think we are still limited. nejra: christian

mueller-glissman, from goldman sachs. coming up, we report earnings and we will speak to the ceo. this is bloomberg. ♪

>> good morning from the city of london, i am nejra cehic. manus: these are today's top stories. markets railed, at -- equities dropped the most after president trump grants china a currency manipulator. stocks curb their losses as beijing resets the agenda with a stronger yuan fixing. raising gains. 10 year treasury yields climb from the lowest levels since before trump's election even as negative yielding bonds hit a record $15 trillion.

and bigger cuts to come as markets gyrate, monitoring developments closely so is half a point reduction in mid-september a possibility? ♪ nejra: welcome to daybreak europe. as we keep our finger on the pulse of the global economy, let's get to germany factory orders. year on year what we're looking at for june is a drop of 3.6% area did not as bad as what was expected. a drop of 5.2% that was expected. month on month we are seeing a gain of 2.5 percent in those german factory orders. what was expected was a gain of 0.5%. we talk about a reprieve in markets for other reasons perhaps a little bit of a

reprieve here. at least relative to expectations for german factory orders. you've got breaking news on the corporate front. manus: is it a reprieve or repost, are we testing some of those manic levels we saw? intercontinental hotel's already headlines, $1.0 billion in terms of first-half revenue. -- ihg,ook for iht revenue per available room was euro .1%. so in the u.s. that was flat at 0%. plus .3%.ina intercontinental hotels has exposure on the ground in hong kong. say will keith bar have to to us about that question mark we will have that conversation a shareves shareholders

dividend. intercontinental hotels first-half operating profit 410 million area the red headline is revenue, one point zero $1 billion. a little bit of rolls-royce. nejra: that will be an interesting conversation with keith bar. 700me get to rolls-royce, million pounds plus or minus 100 million pounds. rolls-royce on track for its for your guidance, that is what we are hearing. costs up 100yce million pounds across the next three years. those are the lines we are getting through from rolls-royce. let's talk about the broader market given the flip-flopping you could call it from the pboc. manus: we will get to that in a moment. i wanted to reset the agenda. i mentioned the dividend, a 10% increase. if you are yield hungry check in and pick up intercontinental hotels. 10% stake in umt.

vivendi the media operator ofloring other areas commercial operation with tencent and pursuing the sale of an extra umt minority stake. the due diligence process there. let's talk about bond markets. they was a huge whipsaw in the us treasuries. we had a conversation with goldman sachs, they talk about goldman sachs in the bond market midcycle. bonds do well in you move that are. outperforming in the bond market for that. they quite like carry trades based in europe. they can be long german and short germany, long italy, long spain, long the periphery. the conversation we have had. the risk disappointment is high from central banks. that was the message from our goldman sachs guest in the last hour. you can see the bond market is

toricing as the channel go reset the agenda by setting a higher yuan fixing level. sending the message, hold on, it is not a one-way trade. you have to get a ticket to be on this bus and it is not all the way to shanghai. nejra: care is what happened in equity markets. you had u.s. naming china a currency manipulator. we had the biggest drop yesterday, drop of 3%. we are seeing u.s. futures turn positive in today's session, we saw european equities yesterday dropped 2%. futures are setting a mixed picture, ftse 100 weaker, and what comesn he comes next. we are seeing some stabilization because of the stronger yuan fixing. the yield curve very much inverted, most inverted since 2007. those are the background dynamics but stabilization reflected in the equities futures. manus: let's talk about the

internet to -- internet -- intercontinental hotel revenue. profit coming in at $414 million and the group opposed to 10% hike in the dividend. shares in the company are up almost 20% since the beginning of 2019. keith bar is the ceo of intercontinental hotels. always good to see you on bloomberg joining us. it want to focus on the word you used, you're confident about the rest of the year. i am curious, where does that level of confidence come from given the angst that nara and i have spoken about for the past hour? is it manifest in your business? keith: it does. we had a record level of signings and openings of new hotels around the world. that drove our net systems growth up five point sent -- 5.7%. profit up about 5% when you

factor in some timing. and he gives us the ability to raise our dividend right 10%. a solid start to the year. the excitement is that growth we have in the business. record number of hotel signing so we are strengthening our existing brands with the bulk of our growth coming through with the holiday in rent family. we are launching new brands, we have 200 signed and buying great .ew brands great momentum today but even more exciting growth momentum in the future. nejra: great to speak you this morning. -- two you this morning. lots of things in the pipeline. we want to ask you about hong kong. you do operate some hotels there and i want to know whether you see any impact yet on business and if not, what sort of impact you might be bracing for if the -- if things get worse. keith: we did not see the two real impact in hong kong.

we have seen a slowdown as they progress. that disruption and uncertainty goingave an impact forward. it is a small portion of our oval are -- our overall global business. hopefully this will result in the near term. manus: one of the dislocations that we are looking at now is we're trying to define what is happening in the u.s. -- the u.s. red par is flat. what can you tell me about the traveling brands in the u.s.? those are probably the first to show any signs of change in the economics of america. how is it shaping up? keith: on a macro perspective, what are we seeing right now? we are seeing industry forecasts coming down, bit going forward but muted growth around world. by first half was impacted tough comparables and you had commonwealth games and hurricane

impacts. we are seeing a slower ref part environment around the world. how do you brand -- how do your friends perform so are you getting market share or losing? in china, we outperformed the market by 252 basis points. our brands are performing and in the u.s. we're still seeing line withrforming in market segments where we compete. there is so much global uncertainty and headwinds so overwill have an impact rev par on a global business. nejra: we just outlined the latest moves in terms of the u.s. naming china and fx manipulator. the yuan is your seven. we have seen it stabilize a little bit. you see that you are outperforming in your chinese brand. are you concerned about any impact on the chinese consumer and therefore on your brand if

you do see a continuing weakness in the yuan? chief executive that says they are not concerned about a trade were between china and the u.s. is not being honest with you. the great thing about our business is they are critically domestic is this is. ourave celebrated anniversary. inhave 300 open and 400 plus development. we are not that dependent on international travel. as long as we see gdp growth and rising wealth which we know will happen for the long term, it is a great market for the long-term, performing well in the short-term. we want to make sure that investor confidence in china does not wane and consumer confidence does that wane. we are seeing growth happen in the u.s., particularly in the ledger space. manus: all of this conversation we're having, that warner -- warning or that reality check will be observed but you have --

absorbed. you have targets. i wonder if there are any threats to your margin targets which is an increase in operating margin this year. theh: when you look at inst half, when you factor the timings we are at 110 basis points. we were able to deliver that 80 to 120 basis points and margin year after year and we are confident. even though the more muted environment, we are showing consistent growth. driving revenue growth, profit growth, significant cash generation and drive our business going forward. we have two levers to grow that. it is how many hotels we are opening up. that would drive the growth for today in the future. nejra: i have another question for you in terms of the global risk out there. we have a new prime minister in the u.k. and a lot of people

seeing an increased risk of a no deal or a general election in the u.k. can you talk to us about anymore preparations you are making for the business with the potentially increased risk of no deal? he's: the no deal brexit issue is one that challenges most industry business leaders in the u.k. there are a few aspects. it is the free movement of peoples, one of the things we have in talking to the never -- government about. thegnificant portion of hospitality industry are staffed by u.k. nationals in skilled labor. that could damage the tourism industry for the long-term. we're making sure we are engaged with government through the cbi to make sure they understand the tourismsues, the industry is a key driver. one in 10 jobs has the ability to prosper going forward. and no deal brexit does not help us in that at all. message,other clear

you said you are working through cvi. have you had conversations, even brexit,in the impact of have you had direct conversations? in a: yeah, i have been number of times talking about our industry in general. the job creation, the value duration the hospitality tourism and hotels bring to the u.k. economy going forward and how can we work together? we have created a sector deal and we are moving forward and creating apprenticeships, investment in new hotels but providing clarity to eu nationals about their ability to work here for the long-term. clarity about what skill level will be allowed to come into the u.k. when they have the confidence to invest in what is an amazing destination and an amazing industry. i will continue with other leaders to engage with the government to make sure we're doing the right thing. nejra: you have given us a lot of clarity as well.

we appreciate that. ofnk you so much, keith barr intercontinental hotels. juliette saly has more for us. what are we saying after the stronger-than-expected pboc fixing that stabilize some markets globally? aliette: we were down for fifth session but that was the focus for traders today and we -- when we saw that stronger-than-expected fix, we saw the yen move substantially having its biggest drop in a month. that has paired the losses on the nikkei which is closing out 1% afteron down .7 of earlier being down by as much as 3%. you have chinese stocks off the lows of the day. currently down by .9 of 1% on the csi 300. still watching weakness in hong kong with the msci hong kong and dax on track for a 10th session of losses, the longest losing streak since 1984. you have reprieve in india's icici bank andto

australia was one of the worst performers by 2.4%. quite a bit of weakness coming through and look at aussie assets, we had the rba rate decision. note change -- no change expected. the r.b.i. said it would say -- take longer to return to 2% and they expect rates will be lower for longer. the aussie dollar taking up, a big down yesterday. we have been watching what is happening with the yield on the 10 year which at one point dropped below 1% for the first time on record. the move that you have seen in singapore iron futures which have dropped below 100 entering bear market territory. no surprise that weighed on the minors and the flow into the big mining stocks in the european session as well. that was you scrolling

yields into 10 years. juliette saly there keeping us honest in singapore with the latest on the markets. in honge jewelers is kong. four federal reserve chiefs are making a plea to central bank independence. janet yellen, ben bernanke, alan greenspan, and paul volcker commented on raising attacks on the central bank. they say the fed and chair must be able to act independently. president trump has delivered his most forceful condemnation of racism and white supremacy. this following the mass shootings over the weekend that killed over 30 people. while the president did not call for a new us rate -- new restrictions on gun ownership, on mentalthe attacks

illness and cultural depictions of violence. president trump: we must recognize the internet has provided a dangerous avenue to radicalize disturbed minds and perform demented acts. we must shine light on the dark recesses of the internet and stop mass murders before they start. annabelle: prime minister boris johnson's opponents are hardening plans to stop and no deal brexit. leaderion labor party jeremy corbyn is signaling he will call a vote of no-confidence one parliament returns next month. said a number of conservatives are turning against a hard brexit. 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. .anus: thank you very much coming up on the show. conflicting signals. china switches its weakest currency rate for a year for

fixing stronger-than-expected. what is the message, is that currency manipulator label having an impact in beijing? more on that story. this is bloomberg. ♪

manus: it has gone 7:21 a.m. in london. we are 38 minutes and counting down to the european trading day. it is daybreak europe. i am manus cranny in dubai. nejra: i am nejra cehic in london. let's get a check on the markets. a currencymed china manipulator. seeing stabilization and markets after the 10 year yields dropped 14 basis points. upper little today and dollar-yen turning around a 106.49. manus: you have dubai and abu

dhabi running, a contagion effect here from yesterday's trade. we are down .6 of 1% in dubai. darby, down .2 of 1%. around afterurning the chinese free set the agenda on the yuan where they set a andnger level on the yuan that reset the agenda. u.s. equity futures rise as the yuan gains. we plunged the most in 2019 yesterday. that was a whipsaw of the day. it certainly was. china's currency policy is taking center stage in the ongoing trade were with the u.s. the trump administration yesterday labeled china a currency manipulator after beijing allowed the u.s. -- allowed the yuan to fall to its lowest level in a decade. plunging 3% the most this year. futures have checked into positive territory and the

fixing desk the yuan is fixing stronger. -- and the yuan is fixing stronger. we are in a bit of fun i'm when it comes to the trade war. what does it mean for your credit market? the situation is ebbing and flowing. everyone was thinking we were coming to a resolution. a 10% on 300as billion, it has ebbs and flows since then. what does it mean to the economy, what does it mean for global trade and growth question mark we are sitting around 3% or 2019. if it goes below that it is worrying and clearly for the corporate's and companies we invest in, the risk year end of the spectrum am a that can be troubling so that is why you see the price action as we did yesterday. it mean fordoes

treasury pricing? the market is shifting again. in the run-up to the july it be shock and all, now we are back at that conversation, shock and all in september question mark the markets are pricing in 30% person -- 30% probability. we need some shock and all -- awe for you? the u.s. economy is doing ok. it is 2% plus for the year in terms of growth. where the fed feels emboldened is it this one of the key measures is inflation, it is subdued. not that much inflation coming through. get the cutsay coming through with the fed with one eye on the financial markets with one i would is happening on the trade and paris.

seems to change every few days. with the inflation measure being as low as it is now that gives the fed the scope to cut without inflation being an issue for a while. the world is sitting on almost $15 trillion of negative yielding bonds. 25% of investment-grade debt is negative yield. are investors becoming more comfortable with holding negative yield -- yielding debt? guest: they would have to be. we have crossed a rubicon. people were trying to avoid debt. negative yielding it was a absolute story. now it is a relative story. there is a chance that it goes even more negative. where can i invest my money to lose as little as i can and people are getting more used to that. credit is a beneficiary as put themselves

into positive territory. guest fromlast goldman sachs, i asked where do you want to be long outside the u.s. and he said it is spread trading for him in europe which is long a periphery and how you fun that, i can leave that up to greater minds than i. is that something that trades for you? -- translates for you? guest: we are seeing some stabilization and the economic basis, it is coming down to her that 1% level. within the credit market, we have the ecb and there is an expectation, the potential that pspp program will take on again and that has a massive technical impact. we are concerned the economic data is weaker, when you have such a strong technical with the central bank buying credit, that inflow is so strong into the asset class. the next 24is

hours. that is it from nara and i. annae handing it off to and matt for the european open. this is bloomberg. ♪

manus: good morning, welcome to bloomberg markets, the european open. we are live in the city of london. i am and -- and edwards alongside matt miller. matt: how high can a dead cat bounce? not that high. futures point to small gains of the open. less than 30 minutes to go. ♪ anna: manipulation or mitigation? the pboc