bottom. new zealand's central bank unexpectedly cuts rates by 50 basis points and warns of negative rates. of lowerbanks warn interest rates and margin compression. and the force is not with you. disney surprises the street with disappointing earnings after bungling the opening of a star wars theme park. david: welcome to "bloomberg daybreak" on this wednesday, august 7. cbs just out with earnings. they had a nice beat on earnings-per-share. also took up their forward forecast on earnings. alix: we are looking at 30 year yields that just hit its lowest level since 2016. one of these things is not like the other. david: stocks don't agree with bonds at the moment. alix: which in essence, you could make the argument that this is what fed president jim bullard is referencing. he says he doesn't want to cut

rates because they have already accounted for trade. --id: we've taken caracalla we've taken care of that, i didn't have to worry about every up and down in trade negotiations. >> the nature of the war is that you have tit-for-tat going on all the time. it is not reasonable for monetary policy to respond to all of these threats and counter threats. we've already taken that into account. trade regime uncertainty is high , and we are putting that into the monetary policy calculus. alix: then you have a three month tenure curve that doesn't want to listen -- three-month-10 year curve that doesn't want to listen. david: i don't think markets believe him. alix: it is an extraordinary day shaking out. equities continue to climb. we are seeing some followthrough buying, watching some moving averages. in asset classes, it is a really unbelievable day. money flooding into all bonds. europe.ves over in

almost -60 basis points in the tenure german bund yield. amazing actions by central banks across the world, new zealand in particular. that currency down over 1% against the dollar. it was a shock and all. quite frankly, that's what investors wanted from the fed last week. david: time now for the morning brief. at 8:30 this morning eastern time, chicago fed president charles evans speaks to the media about the economy. u.s. treasury auctions off for your notes. samsung is expected to announce its new galaxy 10 note at an event in brooklyn. over the course of the day, the president is visiting dayton and el paso to address the mass shootings over the weekend. now for the bloomberg first take , we are joined by gina martin adams and jackie simmons.

gina, i'm going to put you out of position and talk about central banks in asia. we are going to get back to equities. this is a table of what's going on. alix said, unprecedented. what is the expectation for central banks going lower and lower, and yet the stocks hold up? gina: stocks are driven by liquidity and earnings growth potential. when the coated he improves, the outlook for stock markets -- when -- when income liquidity improves, the outlook for stock markets improve somewhat. when you have more money, it it to go somewhere, and inflates asset prices to some degree. a lot of this is focused on asia, which makes a lot of sense considering these are the economies most exposed to china, which is clearly the most rapidly slowing portion of the world given all of the trade tensions. alix: what i found fascinating

was a 50 basis point cut from new zealand, and their economy is not that bad. take a look compared to germany, with industrial production terrible. what do you make of those growth divergences? reporter: i think for one, you have been seeing a sort of tale of two economies. you have seen certain industries under duress. in the case of india, you are seeing strain with the auto sector, consumption down, the outlook uncertain. all of this is playing into a narrative of let's be very careful when we look at the forward outlook. i think that is affecting perspective, and we are going to see the race to the bottom in terms of other cuts going forward in that part of the world. david: the eu is driven in part by the desire to keep gross up. why are central banks so concerned about growth? it's got to be more about trade. jacqueline: but at the same time, europe consumption is not

there. demand is not there. they are very exposed in certain sectors to china. all of this is creating the echo chamber of uncertainty. alix: let's talk about that in relation to european banks. they just started to get it together to cut costs, and now they get hit potentially with more negative interest rates. here's the commerzbank cfo speaking to bloomberg. >> it is getting harder to a certain extent, especially if you believe forecasts like this, but on the other hand, i think it is a reflection of what we have seen over the last year. the question is not how hard is it. the question is what do you have to counter the issues, and i think to a certain extent, growing with assets has been a been a very good way of dealing with it. alix: do you feel that european banks, for instance, have actually been able to rerate lower to where they should be? gina: well, they've been in a d rating process -- in a de-rating

process for years and years. there appears to be significantly greater room for further compression in margin expectations. i say that because if you take the top 15 banks in the euro stoxx 600, these earnings expectations over time, so far this year the expectation for revenue lines has dropped by $17 billion. the expectation for the cost line has dropped by only $7 billion. so there's this huge gap in margin expectations that is only going to be exacerbated by future interest rate declines at the ecb. when you have that constant pressure on expectations, it is really hard to suggest you finally have had a bottom in valuations in terms of forecast expectations. so where is the bottom?i think it is still anybody's guess. there's still a lot of bank closures and cost cuts to come. we just started to see another wave of layoffs in europe, and i would expect that to continue through year end. david: put it simply for me. as a bank, you have how much money you lend and what rates

you can get for what you are lending. how much is the problem what is being lent as opposed to the interest rate margin? jacqueline: that is a good point. the lower rate environment is taking its toll, clearly. oomphven't seen sustained on the european side for investment banking activities. you have this constant low rate environment. this is what we are seeing today with unicredit and commerzbank. this is going to take a toll on their margins, on their lending rates. it is not a pretty picture. what is interesting is on the trading front, they did marginally better. -- -- on the side credit side, than the u.s. banks. david: this is a chart that basically illustrates what is to which the extent

these companies are really getting hit right now if they look at china for revenue. gina: you have to dig to find the companies, frankly. the big move in the market is more a move of sentiment. nonetheless, if you look at the s&p 500, less than 5% of revenues come from china. you have to dig pretty deeply to find these companies, but you do have companies in the semiconductor space in particular that are definitely suffering as a result of their china exposure, and it is not just necessarily because china growth is slowing, but because there this broader uncertainty as to what is going to happen with tech sourcing and production supply chains. you've got industrial companies. it is a name by name basis. it doesn't necessarily mean the market is going to trade that way. the market trades in broad swings of sentiment. taking out not only be china exposed names, but the whole market, when you see moves like

we saw last week for the president. alix: i have a historical correlation chart of the last 30 days, the s&p versus the dollar and the offshore yuan. yuan you -- when the gets weaker. that's an unbelievable move. how much of it is going to be micro versus this macro move leading equities? jacqueline: if you look at manufacturing, you are starting to see sentiment swinging in terms of the foreign look. sayingists are basically s&p forward-looking earnings are not what they are. but just a word on europe, you see pockets of positive indicators like the drug companies this quarter, not too bad. a jury good companies largely exposed to -- luxury good companies, which are largely exposed to china, pretty good so far. but you still have this overhang in the manufacturing sector.

exposed toin germany the car industry, already having this thing with technology and electric vehicles, basically having to cut jobs right now and possibly asset sales. the industrial manufacturing base not looking so good on the global trade front, but the real economy, it depends on where you are looking right now. david: we are talking a lot about manufacturing. what percentage of the united states gdp is manufacturing? it's diminished as services has really grown, so why is factoring in so much? gina: even in recessions, consumption doesn't fall. it stays positive because consumers have to spend to maintain some degree of lifestyle. they spend it on services. where they cut back is always the goods component. that is what creates the big decline in growth. we watch investments carefully

not necessarily because manufacturing is a big portion of overall growth but it is that swing factor that matters so much. alix: gina martin jackie simmons, thank you very much. good to see you. you can find all the charts we use throughout the show. go to gtv on your terminal. coming up, more on the global race to the bottom. how trade tensions and risks of currency wars are weighing on the economy and central-bank interest rates. invesco chief fixed income strategist, will join us next. this is bloomberg. ♪

♪ viviana: this is "bloomberg daybreak."

googles -- c-suite pharmaceuticals' cfo is stepping down. -- spacex launched a rocket from cape canaveral carrying a space satellite. in 2016, an explosion on the destroyed its headlight. disney posted quarterly earnings and revenues that missed estimates. profit at disney's domestic theme parks slumped this bite the much touted opening of the star was attraction at disneyland resort in california -- the star wars attraction at disneyland resort in california. >> in hong kong, we have seen an impact from the protests.

obviously they are significant in nature, and while the impact is not reflected in the results we just announced, you can expect we will feel it in the corridor -- in the quarter we are currently in. there's definitely been disruption that has impacted our visitation. viviana: iger says disney hasn't seen any impact on the shanghai theme park from the trade dispute. that is your bloomberg business flash. alix: thank you so much. issue about hong kong, i don't think we are going to be the only company to hear from that. that will have some kind of marginal effect o businesses. david: i agree. if this keeps going, we will have more and more companies getting hurt. alix: and totally separate from what is happening with trade. speaking of, it is a race to the bottom for central banks. three asian central banks making a surprise move to cut rates. the move comes at a time when

escalating trade tensions threaten global growth and the risk of currency wars threaten the global economy. tuning us is rob waldner, invesco -- joining us is rob waldner, invesco chief fixed income strategist, and damian sassower. damian: it's growth and inflation, growth slowing, inflation remaining slow. they didn't do the full 50 basis points, which would have been pretty aggressive. is a little bit of give-and-take with where market expectations were. how much of this is it going to help our economy, and how much is it because everyone else is going down? rob: i think they have no choice

because there's low inflation. inflation is under shooting targets, and i think the fed has set this bar globally which is, we central bank's have a big risk undershooting our target because if inflation continues to go down and goes to zero, you get japanification of the world. alix: so what do you do as an investor? you have almost -60 basis points on the bund yield, the curve continuing to flatten, and you have asian central banks cutting rates. do you think you want to go for some carry? rob: it is an environment where we have seen this year, once the fed made their pivot, it was very supportive of financial assets. why we have this trade war going on and uncertainty around the chinese currency, and i think this is a very big deal, the chinese will let their currency go above seven. it is above seven again today. they have warned corporates

that they need to prepare for hedging both ways. this can lead to a period of dislocation in markets. david: damian, you have a chart out and they note in answer to alix's question. you look at carry, currency, and duration. as you look at rates, it changes where you might want to be invested. david: if you decompose em local debt into its main factors, carry has been fine, but really duration,de between gains attributed to climbing yields, or currency, which we don't even know where that is going to go. that is the real risk here. as these economies and central banks lower their rates, what that does is it should basically weaken their currencies fundamentally. we will see if they can move adeptly. alix: will it lead to a weaker currency? damian: it should.

investors like that carry, so if there is no real incentive for them to convert their dollars to thai baht or philippines peso, whatever it is, they are not going to do it. i really think we are going into this market last year, where it is going to be relative yields that drive capital flows. rob: i would say the problem with em is currency weakness and also lead to financial tightening in emerging market countries, which can sometime lead to higher yield. for in emerging markets country to manage this because if the currency starts to applying to quickly -- to decline to quickly, it can discourage. damiean -- damiean, shouldn't all -- damian,

shouldn't all central banks want a weaker currency? damian: thailand was the economy that kicked off the 2008 financial crisis, and today they are one of the most sound and safe economies out there. what they are concerned about is -- they want to kind of temper those flows that are coming into their economy right now. david: to put a larger point on this, this is what led to britain woods, the fear of people competitively -- two brenton woods, the fear of people competitively cutting rates. it is a race to the bottom. rob: we are in the process of undoing the globalization. u.s. sits at the middle of this in our view. the u.s. economy is in the strongest position from a trade perspective, and has the most to itable to cut, so it is when

becomes in the u.s. interest to do that is when we get it, and our view. our -- damianseth sassower, thank you for being with us. rob waldner will be staying with us. coming up, disney parks draw fewer guests. shares are down in premarket. we will talk with the shareholder next. this is bloomberg. ♪

david: disney disappointed with earnings reported after the bell yesterday, as it invested more than expected in its new streaming service, had difficulty with the integration of fox, and had a downturn in theme park attendance. walter todd of greenwood capital joins us. we inspected -- we expected more investment in the streaming, but

particularly with fox, they seem to be having some hiccups. walter: no doubt. bob iger said this was the most, gated earnings call he's been a part of, and that certainly proved to be the case. a lot of this detailed information about the put and take with the integration of fox assets and it turned out they took for some of those assets were disappointing, but at the , i think they longer-term outlook for the company in terms of , the pricing of the bundle think is very compelling at $12.99. theme park downturn, you don't want to see that continue, but there were some special circumstances with price increases and a little bit of a flubbed launch of their star wars attraction at disneyland. david: that's the one i guess that stood out for me because that was supposed to be such a great thing, that star wars

theme park in anaheim, and yet they fell behind in theme park attendance. that's something we do expect disney to manage terribly well as they have in the past. walter: no doubt. there seems to be some error in communication and people concerned about crowds that were going to be there for the new attractions that may be kept people away i think that kind of washes out as they fully launch these things over the next couple of quarters with disney world in florida. i am not too concerned about that, but certainly something you want to watch over the next couple of quarters to see if it starts to pick back up. alix: so are you buying the bid today -- the dip today? walter: i think so. we have been a long-term shareholder for disney. we seem quarters that were messy or misunderstood from the

company, and we have been buyers of those dips over the past seven years, so i don't think this will be any different. could see the stock continue to come in over the next couple of days when we find some stabilization in the mid to low 30's, but we like the long-term outlook for disney and for our clients. alix: walter todd of greenwood capital, think you very much. did you finally see open what avengers: end game -- see "of enters: end game -- see "avengers: end game?" david: no i did not. alix: it is so good! this is bloomberg. ♪

alix: this is "bloomberg daybreak." dead caps are still bouncing. s&p futures up after the biggest rally yesterday that the s&p has seen in about two months, but it

doesn't change the overall picture. we still had $1 trillion wiped out from the global equity markets in the last few days, yet equities today don't seem to care, despite the unbelievable buying we are seeing in the bond market. over in europe, -58 basis points on the german ten-year. that is another record low. aso seeing the 230 curve industrial production disappoints. actually, that's the three month-10 year. it is still continuing to grind its way flatter in negative territory. all of that really helping gold. above 1500, the highest level since 2013. not only is it central banks are buying, but that can tell you a lot. to me you have commodities, currencies, and the bond market telling you one thing, and

equities telling you something very different. david: as you pointed out, when you look at gold versus commodities, it is quite a story. they are going in opposite directions fast. now let's find out what is going on outside the business world. viviana hurtado is here with first word news. viviana: today, president donald trump is likely to face a cool reception when he tries to console residents of el paso, texas and dayton, ohio. the president will pay tribute to first responders in both cities after mass shootings there over the weekend. the visits are, gated by the president's historic anti-immigrant rhetoric. plus, he opposes gun control measures proposed by some politicians after the attack. north korea's latest missile tests are a warning to the u.s.. kim jong-un is trying to pressure the u.s. to end joint military exercises with south korea. defense secretary mark esper says the drills are needed to maintain readiness. a trade group warning american tech companies will pay the price for tariffs on more

chinese products. the consumer technology association says u.s. firms would pay an additional $1 billion a month or more. president trump says he plans to add a 10% tariff on essentially all remaining chinese imports. that includes a raft of consumer and tech goods. 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 to be on our tonto -- i'm viviana hurtado. this is bloomberg. david: that is $1 billion a month. alix: that's a lot, but a month. david: we had larry kudlow tell bloomberg last friday, it is not really going to affect consumers much at all. now we are going to find out if that is right or not because we are starting to get reports from the people selling the goods saying this is going to cost a lot of money to u.s. consumers. alix: they said the tariffs are taxes, and increasing costs on companies puts consumers in the middle of president trump's trade war.

with think of that in terms of retail and consumer goods, not necessarily when it comes to tech, but it is both. $1 billion a month. who's going to eat that? are they going to be able to pass it on? take disney, for example. you have high prices for the star wars theme park, and there was a response to that. will there be that for consumer goods? david: it's got to come from someplace. that's not going to be good for the presidential election come 2020. alix: absolutely not. david: in the meantime, let's focus on the u.s.-china trade dispute. it escalated this week without a doubt, and migrated into currency. the president's senior economic advisor said yesterday they expect negotiations to go forward despite heightened tensions. mr. kudlow: we are planning for the chinese to come here next month, and if there is a good deal or good progress, we may reconsider some things. similarly, if there is no good deal, no progress, he may also

consider some things on the other side. david: we welcome now from hong kong and the curran, bloomberg's -- hong kong enda curran, bloomberg's chief asia correspondent. chinese are at a seaside resort, an annual get away for the top leadership of the party. observers who watch this closely say if anything, attitudes on the chinese side, the hawks in the beijing don't want to give any concession to mr. trump because they fear that if you give him an edge, he will want to take a foot. as you go deeper into the election cycle, president trump will want to exact more and more concessions from them. on the flipside, the chinese are seeing note evidence of any concessions coming towards them in terms of tariffs getting lifted off goods, and they want the treatment of

huawei. alix: echoed by the pboc director, speaking earlier about how they look at that currency manipulation title, here's what he had to say. >> if the united states has unreasonably slept china as a currency manipulator, it will cause turmoil in in the market that will hamper international trade and i, recovery, and hurt their own interests. it will have a negative impact on the stable relationship of the international monetary system. alix: the discrepancy between china digging in their heels and how the u.s. and investors are looking at what tit-for-tat means, can you walk us through the big chasm between the two? enda: there are many fronts on the currency side of things. china hasn't actually been driving its currency lower. they have been propping it up to support it from becoming too weak. nowll accounts, the focus

is on just how far will they allow it to weaken? afraid tensions tensions how frayed are, but the impact on their economy and what they can get via the exchange rate, that is why everyone is talking about china's daily fixing. it is all important to see where that level is set tomorrow because the currency has gone over the seven against the dollar mark, but the fix has remained below 1.6996 today. if we had over the seven levels, that will indicate china is serious about having some currency weakness. that will cause volatility, which is what the pboc was referring to. it is a pretty sensitive time for the currency, and the important thing to watch is the yuan against the dollar. alix: thank you so much.

if you go into the bloomberg, this is the correlation over 30 days between the s&p and dollar and offshore yuan. as you have the yuan moving lower, s&p follows. waldner ofus is rob invesco. now i have to look at the volatility and what levels the yuan is trading at to know where stocks are going to go. how do you understand where we are going to go from here? rob: i think it is important to therstand in our view that natural result of increasing these tariffs would be a currency weakness to offset it. china has been defective supporting its currency over the last several months -- has been defective supporting its -- has supporting its currency over the last several months. chinese is once the

financial markets are very large, when you get some momentum going and capital outflows coming, it is very disruptive for the global financial markets. david: one of the things many of the things many of us are struggling with, connecting monetary policy and trade disputes. the market seems to assume when there is more friction on the trade side, we will get lower rates. we had mr. bullard yesterday say, not quite so fast. this is part of what he had to say. >> the nature of a tit-for-tat trade war is that there's threats and counter threats occurring all the time. some of these might be implement it. some might not actually ever get implement it. but the nature of the war is that you have tit-for-tat going on all the time. it is not reasonable for monetary policy to respond to all of these threats and counter threats. david: so are the markets over pricing lower rates because of the trade dispute? are they getting ahead of themselves? rob: the markets are listening

to what he has to say, but also what this impact could be on global growth. as i mentioned earlier, inflation continues to under shoot, so inflation is very low globally. central banks are resetting their structure here. there risk is really that they don't get inflation up. think that's why we are seeing so much stimulus. we have the lower growth, inflation and the trade war weighing a bit. it is an uneasy balance. alix: that's why i don't understand why stocks keep rallying. you have a huge move into bonds, out of commodities. i have to wonder if it is as simple as you need your yield pickup. the s&p dividend yield is now over the 10 year yield for the first time since 2016. is it that simple, what is happening right now? rob: financial conditions are what is driving things globally right now. lower yields come of the short end of the curve in the u.s. is very steep, so we are expecting

a lot of fed cuts, but the long and is still not inverted. that is telling us that the expectation of fed cuts and other cuts globally is boosting these financial markets. david: there's expectations of fed cuts, but why are they cutting? the easier conditions are because they think bad times are around the corner, which is not good for stocks in the long run. rob: there could be bad things around the corner, but i think it is important have tried to reset this toward the need to get inflation up. they need to do everything they can to get inflation up. alix: do you want to take on risk or go to safety? rob: you need to be cautious. the markets have done very well on the back of this odyssey since the turn of the year. we have a lot of headwinds out there. our view would be to stay in high-quality credit, stay in the u.s. to get some yield, where the economy is still relatively, is not headed towards recession.

right now we have an awful lot pressed into the market from a monetary policy perspective. to answer your question, you have to really understand how the trade war is going to play out. but if we continue to have very low inflation, the 10-year could go lower. david: how much lower? the question is, how far down?he fed get rates in the near term, we don't think it is going to get too much lower. david: so what do you anticipate this year in terms of further rate cuts? rob: we would expect at least two. david: so 50 more basis points, but not 75. alix: if you say you want to go to safety, where is it? rob: investment-grade assets, assets tied to real assets in the u.s. economy, that sort of thing. david: rob waldner for invesco, great to have you with us today. coming up, commerzbank and

unicredit issue warnings. europe's top banks says lower interest rates will cut into earnings. more on that in today's wall street beat. alix: that is a surprise. [laughter] alix: check out tv online. check out our charts and interact with us directly. tv on your terminal. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, weight watchers international ceo. this is "bloomberg daybreak." here's your bloomberg business flash. ceolators sending tesla

elon musk a cease-and-desist letter. they also subpoenaed the carmaker for information on several crashes, according to documents posted by a nonprofit advocacy group. no comment yet from tesla. iron ore extending an epic selloff. in singapore, prices fell by as much as 7% as u.s.-china trade hurts appetites for raw materials. a little more than a month ago, it treated for 100 teller far dollars -- it traded for $100.4 a ton. it is now in the 80's. upper right, that's former goldman sachs ceo lloyd blankfein. on the lower left, jeff bezos. on the lower left, hollywood mogul eva geffen -- david geffen.

the simple group has a net worth of more than $120 billion. alix: i love and that picture, lloyd blankfein is just a dude. david: that that picture was taken and posted, david geffen has been taking various friends on his yacht every summer for years. but i've never seen a photo of the yacht. i'd love to know who took that photo and posted it. alix: that is a great point. it is something you don't want to do. david: you are not supposed to do that, normally. alix: this is not the 1% story you want to be telling right now in this world. we turn now to wall street beat. european banks see low rates as a threat. commerzbank and unicredit warn of weaker earnings. ok to jonc gives the

corzine's application to register his hedge fund with some conditions. david: droning us is sonali basak best joining us is sonali basak -- joining us is sonali basak. about berkshire capital -- in burke for -- in burke for capital. burford is already fighting back, so they will fighting back, but it does have a blow immediately. david: burford says they have fight of itsrior work. to explain a little bit, this is one of these funds that invest in litigation. sonali: exactly. litigation finance is a hot strategy on wall street right now. burford capital is one of the biggest. they help fund lawsuits and take

some of the claims when they come in. woodford is already having a hard time this year with other unlisted assets and things. david: you can invest in lawyers. alix: it is all about actual lawyers. with carsonpeaking block a little later on. our second story is european banks. no surprise that they talked about lower rates and how much it hurts. commerzbank cfo saying just that. >> if you believe forecasts like this, on the other hand i think it is a reflection of what we seen over the last years. the question is not how hard is it. the question is what do you have to counter the issues. i think to a certain extent, growing with custom assets has been a very successful way of dealing with it. alix: for me, they are just

starting deep cost cuts, and then this happens. sonali: that's exactly what i was going to say. you have erosion on the top line because of interest rates, and to make more profit, you have to cut costs. remember, commerzbank also has the german government, so they can't just fire people be. it is a tough thing. how do you make money and reduce costs up the same time? how do you stay competitive? david: how do you come up with a strategy? sonali: for commerzbank, the strategy was to lend more. now when that strategy is facing these interest rates, how do you --? commerzbank is working with a lot of german corporates. they are also impacted by the trade war, so they have a double way me. david: they see more reserves,

don't they? because there was so much stress injure betty. alix: unicredit -- stress in germany. sonali: that is more troubling to me than the interest rates. when you really have to worry about the credit quality of your consumers. alix: it's not like they were rocking to begin with. [laughter] david: the third story, jon corzine is back. alix: i remember sitting in a newsroom when this happened, like on a friday, thinking oh my god. i just can't believe this story. sonali: he's back, but with shackles. i thought the quote in the story today was quite harsh. "i really don't understand what magic corzine is going to pull off with these kind of shackles. " that's part of the issue here. he can't invest in things with a lot of liquidity, and markets are becoming more liquid in general. david: it's understandable that

they said you've got to make sure we don't get in the jam we got into last time. alix: and let's just remember what happened. bets ona lot of prop european assets and lost out on billions of dollars. sonali: that's exactly right. there will be restrictions on prop trading as well and being able to it money aside. that is not going to be happening for him in this scenario. david: but he's back in the game. alix: unreal. i remember it like it was yesterday. sonali wasik, thank you for being with -- sonali basak, thank you for being with us. coming up, three chinese banks reportedly helped fund north korea's nuclear program. alix: and if you are going to head out to your car, don't miss anything. tune into bloomberg on sirius xm, channel 119, or the

bloomberg business app. this is bloomberg. ♪

david: here's what i'm watching ofay, the u.s. investigation chinese banks. we just learned in the district court in washington that the judge has said three major chinese banks, three of the 10 largest chinese banks, have to comply with subpoenas looking into whether they have been financing north korea's nuclear program. a big contest. they didn't want to do it because they didn't go through the united states, and the court said i don't care whether you did or not. if you have a presence in the united states, we get to find out. alix: there are many things worrying about it, but to focus on one that is more market oriented, how do you separate

geopolitics like this into trade conversations? is it possible? david: that takes us back to huawei, doesn't it? they keep saying it is about national security, not trade. the two really come together. alix: what are the recompression's -- what are the repercussions to that? david: you know president xi is not taking it well. at the same time, the u.n. has come out with reports from the security council that there is a larger set of problems over north korea figuring their way around restrictions on financial transactions. they are harder to trace, including for banking systems and cryptocurrency transactions. more than 30 overseas represent --m's best representatives more than 30 overseas say northtives koreans have raised $2 billion.

alix: you also see iran getting around sanctions. this is more legit, with what the european countries would trade, not through dollars. you could also put oil into that as well. tankers are taken off of their trackers and can pre-much go wherever they want david: there was that report -- pretty much wherever they want. was the report in "the new york times." alix: coming up on this program, tannuzzo, columbia threadneedle deputy global head of fixed income. this is bloomberg. ♪

♪ alix: central banks race to the bottom. new zealand's central bank makes

lay cutting rates by 50 basis points and warning of negative rates, while the reserve bank of india delivers an unprecedented cut. commodities say trouble is ahead. brent entering a bear market. gold hit the 2013 high, potentially sending warning signs for the global economy. equities defy bonds. markets continue to bounce, while the bond market sends a warning signal from the german yield curve. even more calls for lower yields in the u.s.. david: welcome to "bloomberg daybreak" on this wednesday, august 7. you just said over $30 trillion in real yields. what struck me this morning, it's going up so fast. it was only $13 trillion three weeks ago. trillion.$15 that subzero yield is growing quite quickly as well. brian chappatta had an

interesting quote talking about, what do you do with cash? an investor beliefs trump administration disputes, you consider cash as a haven from the growing pile of lower negative yielding debt, this doesn't have any muster when you still have to move into bond markets. one thing is not like the other, at the end of the day. david: we have some breaking news right now. fedex has just decided it will deepen its pullback from amazon as its ground delivery deal ends. earlier this year they pulled back on air delivery and said they will not deal with amazon anymore. they are competitor is much as a friend. they say they will do the same thing now for its ground business. it hasn't been a large part of fedex revenue, and they have a long time with walmart. only to your point, it was about 1.3% of fedex sales last year, but it will be interesting to see that versus ups, because ups is doing the opposite.

it feels like an at&t or verizon thing. which one of you made the best sense? in the equity market, we are rolling over a little bit. s&p futures now down by about 1/10 of 1%. finally responding to the huge move we are seeing in the bond market. in the u.s., yields down six basis points. the move really over in europe. -59 on the german ten-year. euro-dollar goes nowhere, despite the fact that industrial production in germany was terrible. it makes people think third-quarter growth is going to have to roll over more than we think, and yet if the currency is stable, money is moving into the bond market. david: interesting. might we see something from the ecb in september? alix: or just the carry trade reversing. david: let's turn to the morning brief. at 9:30 this morning eastern time, chicago fed president charles evans talks to the media about the economy.

at 1:00, the u.s. treasury auctions $27 billion in. 10 year notes at 4:00, samsung -- in 10 year notes. at 4:00, samsung expected to unveil its galaxy note 10. president trump will visit dayton and el paso to address the mass shootings over the weekend. equity futures are headed higher this morning after yesterday's rebound. this trait uncertainty still hanging over markets, will it last? oversell conditions tend to be self-correcting. >> it does seem a bit premature. >> i think it is hard to jump into this market and feel confident in risk. >> i think we are likely to see another shoe drop as the week progresses. >> if the stock market begins to price in trade war risks, perhaps more likely bond market is, 10 year yield is still going to go a lot lower. >> one of the things investors need to really contemplate is just raising some cash. >> i think the first thing is of

course, not to panic. >> if your time horizon is two years, this is as good an opportunity as you are probably going to get this year. >> in this kind of set up, you need to be very much aware that you don't chase risk down. you find ways of basically trading this quite actively. >> in this uncertainty, we still have central-bank support. are there opportunities to add more yield or carry to your portfolio? david: to correct myself, equity futures have turned slightly negative now, not positive. we welcome, in any event, stuart macro head of equities and derivatives. and with us also is gene tannuzzo, columbia threadneedle deputy global head of fixed income. it seems like equities are pricing a more bullish birth

outlook than the markets are. our estimate was that they are discounting ism in the mid-50's. i think a little bit of this is just natural optimism from equity markets. another bid is this rally in equity markets that has been very defensive driven. the market is more conservative, safe type stock that has led the rally. i think the third piece is u.s. exceptionalism. if you follow that theme, it has pushed u.s. yields out as we are getting hit by foreign yields, but it has also decreased demand for equity markets. gene, help me. you get the 30 year six basis esh recorda fr low in the u.s. what do you do as a bond investor? walter: yields in the -- gene" yields in the u.s. are

into uncharted territory -- gene : yields in the u.s. are into uncharted territory. really, the reaction in the bond market is not unusual relative to the decline in data with the -- in data we saw. if you look at the weakness in industrial production in germany or even at the weakness in port volumes, rail traffic, the movement of hard goods, you could argue that u.s. rates should be lower. i think still maintaining a more cautious stance is prudent here. alix: how much lower on a 10 year basis, and where do you go buy? in the near, heading towards a 0.5% is the place we would target. i think in the fullness of time, if we do have the fed go into a

purebred cutting cycle, that could bring the 10 year closer to 1%. i think there is more upside in treasury prices if we do have that downside economics scenario. all of the leading indicators point to that scenario at this point. stuart,stuart -- david: same thing to you. what do you do on the equities side? stuart: investors are in a little bit of a weird spot right now. essentially a bit of a holding pattern. our view from u.s. equity strategists is you have a reasonable amount of downside from here into year-end. want to remain patient with this. our view is that this as much is a trade issue as a political issue. the election cycle will play a lot into whether or not it is get resolved. sometimes, a summer

other times a boil. the buy-dip level is. alix: if you see more of a bond market rally, where is the safety in the market? within u.s. equity markets, it's been low volatility stocks with more stable earnings growth outlooks and who higher dividend yields. stuff like that stocks like microsoft have benefited from that kind of thing. i think you will see stocks that have outperformed over the last 12 to 18 months continue. but weuld still be down, don't have a basis. david: we heard from mr. bullard yesterday, who said we've done what we think we are going to do. but it was note,

unanimous. this is what mr. bullard had to say yesterday. >> the nature of a tit-for-tat trade war is there is threats and counter threats occurring all the time. some of these may be, limited. some might not actually get implemented. protect -- you had tit-for-tat all the time. tois not necessary for the direct to respond to all of these threats. look to a 2016 example where, around the summer of 2016, we saw the markets nothing, andlowing that turned around very quickly. that is possible. now,nk what is different and unfortunately with bullard's comments, the fed is now on the back foot because the global economic situation is actually worse. if you look at global trade, global industrial production,

that is flashing a red signal at this point in time. the fed may not want to react to every tit-for-tat trade war come but they do react to economic data. we are seeing the economic data decelerate. not everywhere, not every --ment of the economy, economy, but in general the sectors that tend to be leading are still climbing concerns. stuart kaiser and gene tannuzzo, thank you both for speaking with me. coming up, you've got commodities sailing from caution ahead, iron ore extending its brutal selloff. more on that next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." cvs has raised its 2019 earnings forecast for the second time this year. the chain reported higher prescription sales in the drugstore business and pharmacy benefits unit. still, shares have lost 70% year to date. spacex did a do over lunch last night for a customer. a falcon nine rocket lifted off from cape canaveral carrying a communications satellite for israel space communications. in 2016, an explosion on the launch pad display -- launchpad destroyed one of their satellites, so spacex is launching this one for free.

>> re: underpricing it? probably yes. the market seems to be putting its weight behind economic slowdown and trade wars, and slightly underpricing the risk that supply could be interrupted. viviana: asked about a trade war, he said, "we are not planning for the worst." alix: thanks so much. but what he did say is he downgraded hit is estimates for oil demand growth this year and next year. next year is better, but lower than the previous year's forecast. a 400,000 barrel a day difference or more from what the iea says. david: that is a big spread. that?are we priced for

that, but that's not right. alix: staying on the commodities sector, you got some big moves, signaling to me at least, proceed with caution. iron ore extending a brutal selloff. what does that tell us, and how do you trade that? joining us is stuart kaiser of ubs investment bank. there are definitely leading indicators. for years, people looked at iron ore as being an indicator of china growth. that is how you get people's intent is up for an equity perspective. all of this plays into the

debate globally and in the u.s.. there's something for everyone in the data. this probably some data you can hang your hat on, especially on the consumer side in the consumer market. i think if you are an investor, you see commodities trading this aggressively. if you look at how risk has been priced, for the last couple of months you've been assigning a risk premium to that three to six month outlook because you weren't sure where growth was going to go. you've seen folks still invest in equity as equity trends higher, so i think that likely continues until we get a little more resolution on data or trade. alix: here's what i don't understand. occidental is coming into a market with a $13 billion corporate bond sale, and on duration they got 2.25 yield. explain that, the same day brent enters a bear market. gene: investors now are stuck in

a bit of a pickle because you have the low yield environment everyone is talking about, so investors are looking for the next safe haven. that is really investment grade fixed income. they don't want to take on too much risk, so we do see high demand for large investment grade issues, particularly capital structures like that that have at least an intention to deliver over time. i think what you want to do is look up the commodity complex overall, particularly energy, and be a bit more cautious here. if you compare this to where we wendy 14 or in 2015, weakness was based on too much supply. it is really based now on demand. that could cause defaults overall to pick up. it does mean that the weaker

hands won't have capital available to them. a viewerne, we've got writing in, saying, isn't there just a no-brainer couple of trades? one is to go long u.s. dollar versus the yuan, and also to go long gold given the fact that we've got yields down and going lower. is that the answer? gene: typically when we see the fed start to cut rates, you see the dollar appreciate, usually because of risk off type symptom meant -- type of sentiment. i think we have seen that, but the dollar is at a very expensive level. i think at this point, to see a -- at this point, i wouldn't say anything particularly different for gold. i think the dollar and gold will be safe havens, but probably

won't keep up with treasuries on a risk-adjusted basis. alix: let's add in copper. if you come inside the bloomberg come of the white is the gold to -- the gold to .opper ratio if you look at that chart, do you see more downside for s&p or see that there is more safety trade happening? stuart: i would say it is more of the safety trade happening. i think you see this across assets, generally speaking. i think you almost get a discussion of potential versus kinetic energy. hasooks like it potential to catch up to other assets. vol: lowball stocks -- low stocks are expensive. and you keep up with these guys?

stuart: some of these debt issues, that is where the yield is. if you are looking for yield, you might say i don't want to buy bunds at -10 basis points, a 40 youget to made can take out some of that. it is a supply issue. when yield and safety are so scarce, those are going to trade at a large premium. this exists, but the question is ultimately, what will cause that to unwind? our view is what you need is improvement in the medium-term growth outlook to give people confidence to move up the risk curve from an equity perspective. that is exactly the debate we are having right now. until that begins to resolve itself, it's going to be more of the same. david: stuart kaiser of ubs investment bank and gene tannuzzo of columbia

threadneedle will both be staying with us. coming up to my disney theme park straw fewer guests, and -- theme parks draw fewer guests, and integrating foxes harder than it looked. this is bloomberg. ♪

david: time now to look at three companies worth watching this morning. first of all, disney. i used to work there. disney earnings after the bell disappointed the market. they came up short, very unusual for them. the first quarter they had all of fox in. turns out it is harder to absorb fox than they thought. the surprise was really the theme parks. alix: and $1 billion they are spending on content this quarter. david: that is absolutely right. $900ter is going to be million. it is harder than what they expected, but bob iger says they are taking on netflix. alix: i'm looking at cvs. solid earnings coming out.

they actually raised guidance for the second quarter in a row. they did really well on pharmacies and drug benefit services and wellness health insurance. we talk about earnings revisions to the downside, earnings being exposed to trade war, this is an insulated company that is working. david: and they've got they regulatory thing off their back. fedex.urn to to talk about that, we are joined by brooke sutherland. fedex has said no thank you, amazon. brooke: no thank you on the ground service. this follows an announcement in june when they said they were going to stop u.s. air delivery service for amazon. when they made that announcement, they were at pains to indicate this does not affect parts of their business, and now it seems they are changing their tune. this reflects to me the fact that amazon is becoming a much more legitimate competitor and

logistics, and fedex has waived this off, but they are coming to grips with the fact that amazon is not going down. they are getting cargo planes, investing in delivery drivers, -- investing in delivery drivers. i think focusing on that number can masks the fact that amazon could still be a real threat in terms of the way fedex and ups do business. you look at the amount they've been spending to try to adapt their networks to e-commerce to keep up with the demands of the retailers for one day, two day shipping. the idea that they won't be disruptive just because it is a small amount of the business is not necessarily the right way of looking at it. amazon really has a way to pression their margins. alix: they also pressure fedex through ups, too, because they still have the partnership.

viviana: ups is continuing business with amazon. they recently expanded to seven-day service, overnight delivery, which has driven a big surgeon volumes. they seem to be taking a very different tack, trying to meet amazon's demands and making them happy. it will be interesting to see how these divergent strategies play out. alix: thank you very much. coming up, the race to the bottom for central banks. currency wars weighing on the global economy, causing severe and surprising actions from asian central bank. this is bloomberg. ♪ ♪

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save up to $400 a year on your wireless bill. plus get $250 back when you buy an eligible phone. click, call or visit a store today. alix: this is "bloomberg daybreak." i am alix steel. we are a selloff in the equity market. the dow jones off by triple digits, a racing the biggest jump in equities in the u.s. in

two months yesterday. european stocks holding on to their gains but definitely rolling over, the dax only up 1%. i have now -- i have not found a headline that said why, but we are getting equity selloff. the yen the only currency in the green. a humongous move into the bond market. 10-year german bund yields down. they were down about one when the u.s. was down nine or eight and now they are catching up. the three-month tenure spread, -37 basis points. continuing to flatten. gold popping as oil rolls over. the equity market down over 1%. classic safe haven trade. david: risk off. the rates race to the bottom is what we are talking about.

asian central banks made a surprise move to cut rates. we welcome michael mckee, bloomberg international economics and policy correspondent. michael: what everybody was worried about is what is starting to happen. surprising, given what people thought. the bank of thailand was not supposed to move at all, they go 25. the bank of india surprises everyone with a 35 basis point cut in the bank of new zealand sends its edge mark rate down 50 basis points. quite a surprise. let me show you one thing quickly. this is where we were when we went out of the recession. we are way down now. a lot less room for these banks to cut. they may have to do more. if currency wars are heating up, they may have to do more. the kiwi and the australian dollar, the australian dollar on

hold. they are at their lowest in years as the currency plunge because banks are coming rates. japan is the only safe haven. what are they going to do about the yen? it will hurt their economy of something doesn't change. they do not have a lot of scope for movement, nor do other central banks because we are way down below where we were. this is where we were going into the last recession and they cut rates sharply. now here is where we are. the fed has the most room, but we are not in recession yet. what is the bank of england, japan, and the ecb going to do? qe is coming. we hit recession and a big way because there's nothing else left. david: great set up -- alix: great set up. our guests are still with us. the new zealand rate cut was quite striking because their

economy is not that bad. take a look at the numbers out of germany, which were terrible. how do you invest in this environment outside of the u.s.? gene: there is a lot to be concerned about in the global economy and i think the new zealand central bank cut for good reason just as many others have. the economy is not permanently impaired and not every recession is like the financial crisis, even though we are conditioned to think that way. it was the most recent large downturn. we have had several downturns not led by consumer balance sheets which leads you to be more comfortable with -- domestic in nature or service-oriented in nature, which allows you to be more comfortable with domestic exposure to utilities, telecom, food and beverage. make you more comfortable with mortgage and asset-backed securities. you want to think about some of these industrial cycles.

even if it is not a big recession, you can still have a lot of industrial weakness and you want to be defensive on cyclical areas like energy, commodities, and autos. you do not have to go completely to cash, but you do see these and you will see more chapters to the story of central banks cutting rates. alix: do you still do carry trade? does that make sense? .> i would not do carry trade i think that will be washed out in this volatility. carry in terms of high-quality income producing assets, even the higher-quality emerging markets make sense. that does produce carry and the income that is becoming more scarce. david: what does the student em equities? -- what does this do to em equities? >> equities tend to behave tactically. structurally or strategically

they will respond to the growth outlook. banks are cutting rates because they are genuinely concerned about growth, that that highlighted uncertainty is about growth. that would be a headwind. u.s. equities have performed well in a defensive manner. to some extent you grit your teeth and you own equities in a defensive way because you need to be invested in equities and that has driven the dislocation we see today. alix: you would not want to play kerry right now -- play carry right now? >> in which asset? a dollar expert but our strategists make the point the dollar is defensive and carry. this is probably one of the reasons the dollar has remained so strong at a time when the fed has been cutting rates. equities you are seeing the carry trade play out. it might not be doing it in the

traditional fashion, though that has been happening. i think you are also seeing on a cross sector basis, within tech and discretionary, folks are opting for that stronger earnings growth even within the more cyclical area. things have permeated outside of the classical cyclical defensive. it is a cross sector. david: it strikes me we are talking about the dollar as a safe harbor. same time we have a president who says he wants to drive lower and is telling people he wants to do what they can to get that done, including trying to tell the fed. as the market looking past all the threats from the white house about a weaker dollar? gene: i think the u.s. dollar is part of the monetary policy toolkit, even though the federal reserve not responsible for currency policy. it has adopted a framework rackley correlated to financial conditions and the dollar impacts financial conditions. ,f we see conditions tighten

the fed will want to lower interest rates to try to weaken the dollar. will not be explicitly targeting the currency but that is part of the package. is what we will see, whether comes directly from the president bullying the fed chair or the financial response. point are we going to have to have central bankers meet somewhere and say we cannot keep doing this. there cannot be rates at zero and beyond. we have to fix this. what we have to have that conversation? gene: we have to believe we are at that point. we have negative interest rates and full yield curves in europe and negative territory. not clear that is producing a stimulative effect. over the next several years, we see a pivot away from ever lower interest rates and towards more balance sheet policy. a greater degree of asset purchases. perhaps more targeted asset purchases in areas they want to stimulate. david: it strikes me that at a

time where multilateralism could be put at a premium, whether it is trader currency, we have a president who very specifically says he does not like multilateral. he wants to go it alone. to what extent is that a market risk that the market has to take into account? stuart: it is a risk from a policy perspective and a growth perspective. we have seen trade volumes declined substantially. that is because you break the barriers to trade globally. the idea of central bank quarter nation is interesting. the banks are communicating behind the scenes quite a bit. what would help his more coordination between the banks and fiscal and the banks and the government. japan had the bank doing all the work and had to go to this three-hour approach where they combined with regulatory and spending. that is something that is missing in europe. they up the negative yields but they do not have other policy

coordination. we talk about coordination globally, we also talk about it vertically. maybe that is a solution. ubs andtuart kaiser of gene tannuzzo, thank you both for being with us. now let's get an update on what is making headlines outside the business world with viviana hurtado. good morning. viviana: kim jong-un says north korea's latest missile tests are a warning to the u.s. he is trying to pressure the u.s. to end joint military exercises with south korea. donald trump's new defense secretary says the drills are needed to maintain readiness. president trump likely to face a cool reception when he tries to console residents of el paso, texas, and dayton, ohio. the president will pay tribute to first responders in both cities after mass shootings. complicated by the

president anti-immigrant rhetoric, plus he opposes gun control measures. in california, a walmart employee has been shut out of the company's network after organizing a protest against the chains gun sales. thomas marshall asking employees to call in sick today and leave work early tomorrow. he wants walmart to quit selling guns and ammo. the el paso shooting taking place in a walmart last week. there was another fatal shooting and a walmart in mississippi. 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. i'm viviana hurtado. this is bloomberg. david: it is fascinating the extent to which walmart is being put in the crosshairs of this dispute over gun safety. they have got back on the amount they sell guns already. it was the walmart store in which a horrific shooting happened in el paso. a lot of pressure being put on them. at the same time, people say does the second amendment and

you cannot do that. alix: pressure from employees but also public figures and the companies. the move has to come from the private sector and not from federal regulators. esg is huge now. how much sway can institutional investor have against walmart? david: is not just walmart, it is what walmart can cause its suppliers to do. it is a big organization that deals with a lot of the economy. to what extent do they have a responsibility to use that or refrain from using that? alix: and that puts them in a difficult spot. david: coming up, weight watchers seeing the oprah effect. add featuring oprah winfrey pay off. we will talk to the weight watchers president and ceo. alix: bloomberg users, check out our charts at gtv . them to yoursave

desktop for future reference. this is bloomberg. ♪

viviana: i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up, cumberland advisors chairman and ceo. here is your bloomberg business flash. more costs on the way at walgreens. the drug store will close 200 locations in the u.s. in addition to 750 closings already announced. arereen says the cuts necessary to overhaul many parts of its operation. the moves will result in charges of up to $2.4 million during fedex cutting another connection

with amazon. delivery contract with the world's largest online retailer will not be renewed when it expires at the end of this month. two months ago fedex said it would no longer fly amazon packages. fedex is holding its own shipping network. tariffs leading to u.s. import surge, now where houses are full. that is true outside the port of los angeles at one of the world's largest warehouses. it has the capacity to house 9 million parts but is described as bursting at the scenes -- bursting at the seams. spare room down to no more than 2%. that is your bloomberg business flash. david: time for all of the lead. a deep dive into headlines -- into stories making headlines and moving markets with insights from industry insiders. we are focusing on the weight watch industry and one of the prime movers, weight watchers. weight watchers the expectations on earnings-per-share and

reported a growth and subscribers. grossman, mindy weight watchers president and ceo. give us your take on your earnings. what did you like and what would you have rather been better? mindy: we were thrilled to end the corner at 4.6 million subscribers, and the highest subscriber base in the company's history. the way i described the corner is steady, sustainable improvement and growth. we had a difficult january, but incredible credit to the team to be able to respond and see sequential growth since the beginning of the year, which sets us up going into the back half of the year. we had the strongest july of the year as well. we should return to growth in the back half of the year. i think that is what people are responding to. brand was relaunched in

january, and if you think of the accomplishment of the team in that time, a complete global relaunched around the world, the development of a full ecosystem of not just weight management but wellness and nutrition activity, mindset, motivation, , thenity, personal support assets we have invested in technology, the community of vence we have created, and we have both the highest engagement subscriber base, as well as retention in the company's history. it is definitely resonating. like any kind of transformation, it is not a linear journey, but we feel confident in the strategies moving forward. david: is not all within your power. what is the main phone from in your power -- the main fulcrum in your power that is what you can do? mindy: we have to deliver the

best product, backed by science come in the world that will be livable and help people with sustainable weight loss but overall wellness. we have to embrace the power of community as one of the key attributes of our brand, and we have to innovate and create an experience for our members. we are very excited to be coming in with tail winds into our 2020 launch of our new innovation, which is our most personalized and science backed in the history of the country. to have this momentum going into the back half, going into 2020 innovation, along with a lot of the other of vence and experience we are creating, has been very exciting. alix: how you look at all of the emerging food trends. all of those different food trends, how do you think about

them and how to move your business forward? mindy: we do not do anything that the science does not tell us is going to be the best program for our members. we have been a brand that has been changing lives for 56 years. there have are always -- there is always going to be competition. we liked as a our greatest competition is people trying to get healthy. what we want to do is be there trusted source. there is so much conflicting information out there, this is good, this is bad. we need to be the place people come to that are trusted, that will give you the experience and the program that will help you lead your healthiest life. david: you have a pretty prominent shareholder in opera. to what -- in oprah winfrey. to what extent can you involve oprah in your marketing or

advertising. does it go up? is it a one-to-one correlation? mindy: we are thrilled to have her as a board member and advisor. in certain markets where it resonates and she feels motivated to be part of our efforts to help people change lives, certainly we will maximize that. for our fall campaign we had 10 members in memory -- in maui and it is joyful and emotional and she can bring that out. we have ambassadors around the world. if you look at our second-quarter results, it was across every market. the key for us is to make sure the messaging is consistent globally, and then we executed locally. -- we execute it locally. alix: we talk about your sensitivity to global events. consumers insulated to the trade war, to the markets, etc.

do you expect that to continue the growth picture continues to roll over? mindy: in our business, we are not caught up as much in the trade war's because of the type of business we are in. anything that is distracting is going to have a negative impact on customers, whether it is purchasing or other, is not good. we have to continue to watch it to see what dynamic is to be created in any market that we may have to respond to. david: -- alix: great to catch up with you. mindy grossman of ww international. coming up, currencies on the move. we will talk to mark mccormack for more. aboute have a trump tweet the fed lowering rates. if you're heading in your car, tune in to bloomberg radio. jenna 119 on the bloomberg -- channel 119 on xm radio and on

the bloomberg business app. this is bloomberg. ♪

alix: here is what i am watching -- the correlation between equities in the u.s. and the yuan. this is the s&p versus the dollar-yuan. joining me on the phone is mark mccormack. do you agree with that chart? how much of the s&p do we know will move based on what is happening in asia? mark: it is an important question, because you see a reflection of global inflation. gets,ronger dollar-cnh the more likely it is to deflate global equity prices. we think about corporate leverage held in u.s. dollars. the stronger the u.s. dollar gets, the more it will weaken corporate profits and have a negative impact on the outlook for global corporations. it is an important correlation that will remain focused for some time, given the escalation of the trade war's. alix: we also got a tweet from

president trump talking about the central bank has in india as well as thailand and new zealand , talking about how the fed needs to cut. he says the federal reserve is behind the eight ball. where's the market going to take its cue from? will be in the philippines? will it be what the fed is or is not doing? mark: for the fx market and some of the other risk markets, the msci world is implying global pmi below 50. right now it is at 49. it is saying the market should see signs of growth. the concern is the global risk market is not priced for the escalation of trade wars. when you link it back to central banks, they are trying to cushion the escalation of trade wars, but again you have slowing blanking impacts. the other concern is most of the

central banks are dealing with little ammunition. we are close to zero bound on the major central banks. there is room for yen central banks to cut, but this is -- room for em central banks to cut, but this is not going to save global growth of the trade weakens the chinese economy, and it will have spillover effects into germany and europe. the concern is monetary policy is not going to sport global growth because it will not boost the credit cycle. what we need coordinated fiscal, and that is lacking at this point. alix: mark mccormack, thank you so much. that does it for luber daybreak. -- that does it for "bloomberg daybreak." coming up, "the open" with jonathan ferro. this is bloomberg. ♪ from the couldn't be prouders

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on edge, fixated on the next move in the u.s. china trade dispute. central banks out in force, thailand, india, new zealand delivering rate cuts. the complaints from eurozone lenders piling up. 30 minutes until the opening bell, good morning. here's your wednesday morning price action. futures rolling over in the last 60 minutes. -29, down 1%. euro-dollar little changed at 1.12. in the bond market, the tenure maturity, 1.63, and the 30 year yield heading toward an all-time low. there are some of your price action cross assets. let's begin with the big issue. central banks coming out in force. >> the central bank of india. >> new zealand. >> thailand also cuts rates. >> we are seeing the global easing cycle. >>