put in effect. president trump talks up china, where larry kudlow downplays recession fears in a media blitz. pboc changes lending rates to prop up businesses. and fiscal put in effect? theesbank warns country considering fiscal stimulus. david: welcome to "bloomberg daybreak." i'm david westin, welcoming back alix steel. we missed you. did you get to watch any of the sunday programs? it was not subtle what the administer she was doing. they sent everybody else to say -- what the administration was doing. they sent everybody out to say the economy is just fine. pres. trump: i don't see a

recession. blockbuster: have -- mr. kudlow: we have blockbuster retail sales. most economists on wall street towards the end of the week had been marking up their forecasts for the third and fourth quarter. david: do you think they had a message? alix: a little bit. that was just a little bit of the networks they were on. markets, the question really becomes where are the actual recession fears, and where are we actually ok? you can see that playing out in euro-dollar right now. living a bit higher, we can take a look at where the markets are trading. after the news broke that germany is potentially looking at stimulus, specifically targeting job creation, that is giving a lift to the markets. david: big news as we were coming to the air. alix: we sort of knew this. david: but now they are signaling targeting job creation. let's get to the morning brief, where we look at the week ahead.

home depot, t.j. maxx, and kohl's reporting tuesday earnings. we get to see the fomc minutes from the last meeting. we get u.s. jobless and market pmi numbers. on friday, the big one for the week, fed chair jay powell addresses the central-bank symposium in jackson hole, wyoming. do you think people will be listening to that, or what? alix: where will you be at that point? david: i won't tell. [laughter] david: it's time now for bloomberg first take. we are joined by marty schenker and gina martin adams. marty, we were just talking about this. , "weew over the weekend have to be able to muster that, and we can muster that."

this morning, there's an announcement they are preparing something specifically targeted at jobs. marty: germany has been criticized as being the engine of europe without any fuel in likeank, but now it looks they are stepping up and inject funds into the economy to get a going. alix: what would actually work in that respect? gina: that's the question. two germany's credit, they've done a lot to clearly reduce debt as a share of overall growth. dave kept the deficit quite stable, so they do have some notable flexibility eligible to many in the rest of the world economies. that said, they are somewhat subject to what happens between the u.s. and china, and that has been very clear. -- over the last year, we have seen german pmi's decelerate to spec the fact that most of the world -- what they

will have to do is stimulate the domestic growth enough to offset the ongoing pressure of trade, which is really tricky when you are not a consumption driven economy. so you've got to do longer-term infrastructure plans, they've probably got to do some business investment. they've got to figure out ways to shore up the financial sector, probably the weakest part of the economy, in addition to the auto sector, which is clearly the weakest part of the manufacturing segment. there are a lot of hurdles to surpass, and i think we are still waiting for detail on how they are going to do that. alix: it really brings us to the overarching theme of this hour, which is where are the puts and how do central banks and governments go into that put? "theies's sean darby says, new mechanism allows the actual lending rate to be more market-based and significantly loosening policy." puts, the race for the

it's really hard to tell. i think it's interesting that donald trump's comments on china trade dispute over the weekend, that things are going well. what does that exactly mean? does that mean he's pushing the pressure points and he still has a ways to go before he's willing to cut a deal? his definition of how things are going is quite unclear. david: i also wonder, when we talk about these various kinds of puts, it is not evenly needed. in china, they are certainly slowing down. it is not as clear in the united states. this is a problem with china and germany more than the united states. gina: i think it is a global problem that is being created by trade tensions. it is restraining investment and ultimately dragging global growth slower, on top of some structural issues that existed. issues has structural

with the auto sector that existed before the slow down. i do think that, with respect to how the market trades, there are a lot of mixed messages here. one thing we haven't discussed is huawei. the u.s. administration's technology policy is this impact on theuous tech sector. it's fits and starts. it's difficult as an investor to get a true readthrough as to what is going on when you get one message from the of administration figureheads and another message via the tweets, which is the reality of the last couple of days. david: while way is a real puzzle -- huawei is a real puzzle we will find out the answer to soon. alix: will we, david? [laughter] david: that takes us back to trade in china, and what it means to be going well. this is what president trump had to say in bed been stare over the weekend -- in bedminster over the weekend. pres. trump: i think we are

going to end up doing a very good deal, and i think china, by the way, need to deal much more than we do. david: that's the thing i'm interested in. does china need a deal more than we do? particularly, more than president trump needs for 2020? marty: he has said that trade wars are easy to win. they are easy to wage, but they are not easy to win. chinaot clear to me that needs it more than the u.s.. what is clear to me is that he will want to get a deal done before 2020. he would like to run on that basis, and to the extent he's able to do that, it will be a win for him. alix: to your point, we were talking earlier, how scared is donald trump actually about a recession? how worried is he now versus a couple weeks ago? david: there are reports from "the washington post" and others that he is actually very concerned because this could

loosen the election. marty: and that he things a lot of the predictions are the economy are partisan -- productions on the economy are partisan and manufactured to make his administration look bad. the fed is doing its part, and it really is not clear that there will be a recession in the u.s. alix: the more the data comes in stronger here, the more you are ee a stronger dollar, which is not good for companies. is it a careful what you wish for thing? gina: it's very good for the importers in the u.s. consumer, which powers to domestic growth. so a stronger dollar actually is a very big positive for domestic conditions for a. number of reasons. it's indicative -- for a number of reasons. it's indicative of capital continuing to flow into the united states. it constrains the price at which they are past -- they are

passed onto the consumer. he stronger the dollar is a restraint on growth, but roughly 2/3 of the index and more of the economy will benefit from a stronger dollar and this ongoing tension. it does put the u.s. in a position of relative strength. relative strength when all boats are sinking is not a good position to begin. that's where i think we are testing that line right now. yes, we are the relatively strong portion of the global economy, but all of the leading indicators are deteriorating with respect to our growth, too. it is not clear the monarchy policymakers can do it. alix: with the bundesbank now warning of another recession. david: exactly. you were gone last week when they had that report that came in for the gdp for last quarter, which was negative, part of what

triggered that whole thing with the yield curve. a year ago bundesbank was saying, we are fine. it's just a little blip. david: we had officials early on saying it was idiosyncratic. alix: marty schenker and gina martin adams, thanks so much. you can find all the charts we are going to use in the next two hours at gtv on your terminal. check it out, gtv . coming up on this program, bond on whethertle inversion means recession, or if it means you don't want to buy stocks. this is bloomberg. ♪

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viviana: this is "bloomberg daybreak." tesla has a plan to revive its flagging solar division. the company is now offering no contract packages as part of the relaunch. chief executive elon musk tweeted, "it's like having a roof."rinter on your it comes less than a month after tesla reported its third consecutive quarterly decline in solar installation. of itsllion expansion northstar project in ohio. each year, the investment will extrahe company an investmen steelmaking capacity. from august 20, new loans must be priced mainly with reference to a rebalanced benchmark that tracks the price of credit to banks' best customers in china.

that is linked to the price the pboc charges lenders for cash over one year. that is your bloomberg business flash. alix: thanks so much. last week, wild ride. u.s. treasuries causing a reaction in the markets. concerns of recession on the horizon. bloomberg spoke to bank of america ceo brian moynihan, who said he's not concerned about imminent recession. brian: we have nothing to fear about a recession right now except the fear of recession. you are seeing a lot of people say if trade war continues, if this or that doesn't get solved, you could see this finally getting to the consumer confidence in the u.s., which is a critical thing to maintain. us on set, alessio de longis, invesco senior portfolio manager. good to see you. is that true, that we are just talking ourselves into tour moyle -- into turmoil in the u.s.? alessio: i think it is a very

important point. i think this conversation on the recession come on the yield curve any possibility it may lead to a recession, is not really focused. as market dispense, the real question is ultimately what we think about asset prices rather than yield currents about that or not. i think there i am elements to keep in mind. the yield curve has a long lead as a leading indicator of future recessions. they were between six months and two years. chances are, because business cycles don't last forever, a recession will occur, and we will look back at it and say the yield curve was right again, but that is not really the point. the point is to look at what tends to happen historically between the yield curve inversion and before a recession. to see those economic developments is the real indication that the recession might be occurring, that is lending standards tightening or a slowdown in economic growth.

those are typically caused by a yield curve inversion, and those things eventually cause a recession, not the yield curve inversion itself. david: there's more than one yield curve we need to look at. i will put a chart up that compares u.s. with japan, germany, and u.k. one of the things brian said was germany has a real problem. china is concerning. u.s. doesn't. we tend to lump it all together, but they are different stories. alessio: they are, but the pricing mechanisms are very powerful. every bond market tends to get a signal -- all the bonds are competing for each other. there's an enormous demand for duration and limited supply, also because of all the crowding out coming from central banks. is global yield curves, it important to focus on the because they are sending us another signal. this goes to the other point about the limited discussion on the u.s. recession. the reality is europe is pricing

in a recession already. european markets are growing below trend and still decelerating. 30% to 40% of the s&p 500 a revenues come from abroad. -- the s&pto focus 500 revenues come from abroad. as market dispense, that is more the right call, to focus on these global dynamics. we see the global price of risk is far more important for domestic asset prices then even just the local price of risk in the u.s. alix: let's tie this all with an unbeaten bow and look ahead to jackson hole -- with an unneat bow and look ahead to jackson hole. "unprecedented policies will be needed to respond to be next economic downturn. monetary policy is almost exhausted as global interest rates plunged to zero or below.

we will struggle to provide stimulus in a timely fashion given the typical lags that limitation -- lags of implementation." that comes from blackrock, and stanley fischer as an author. what do we see for jackson hole? alessio: i think these are the precise challenges, and it is very good we are discussing these things. at the next global recession, we know monetary policy is not going to do the trick. it worked to a certain extent, but it is not going to deliver much more. what conventional monetary policy can do is only an void that deflationary track, but in order to create a meaningful rebound, in my opinion we need, and this is where coordination is needed, global coordinated fiscal expansion. just like into thousand eight, we had global monetary easing -- had globaln 2008, we

monetary easing. we need to have a global supply of bonds that is competing for debt demand for bonds. fiscal expansion globally is the only thing that can try to overcome the savings glut that we have at the private sector level. what is the danger that you talk yourself into recession because the market will say, is it that bad? we need to react to that. think the way animal spirits tend to work is always unpredictable. i think ultimately, the real economic data and businesses decision will matter more. i thinklenge there, and these conversations are needed because the long lags with which

fiscal policy tends to operate, you cannot find yourself two, three quarters into recession and then act. i find it very comforting that the ultimate bastion of fiscal austerity, germany, is already proactively talking about fiscal packages. i think that can show a lead for europe in the first place, and a europe that will likely battle again, butt debate also show a lead with respect to policy leaders around the world. i think that is a very healthy debate happening in germany. david: alessio de longis, we will come back to you in just a moment. ahead of this year's jackson hole, we are going to bring you met exclusive interview with the boston fed president. that's coming up at 1:30 this afternoon eastern time. coming up, europe's largest economy prepares stimulus measures as contingency for a crisis. we are going to talk about that next. this is bloomberg.

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♪ david: economists may debate whether the u.s. economy is headed for trouble, but there's no debate about the weakness of germany, with reports just this morning it is preparing new fiscal stimulus are getting job creation. german finance minister roll up shulztz -- minister olaf suggested how big it might be. still with us, alessio de longis of invesco. we've been talking about fiscal stimulus from germany for some time. is 50 billion euros enough given the size of the economy? itself, itr germany might be enough. despite the savings glut, the german economy has been doing very well, and the unemployment rate is extremely low. this is that economy that is fine.

it does not have some of the structural challenges we see elsewhere. the problem is really the spillover effects. is 50 billion going to be enough to offset some of the weakness they will inherit from the rest of europe? that's where we have to be more concerned. the deflationary trap and confidence trap that countries such as italy or spain could get themselves into. this estimate does not include the fact that we have brexit to deal with. that is also a wildcard happening at the same time. , it is not about the 50 billion itself. the point we were trying to make earlier, what level of coordination will there be domestically within the region? i'm sure the rest of europe will be plenty happy to do some fiscal spending if germany gives the green light. but we need the same from the rest of the world as well. , thisto your point, david potential stimulus we got before

we came to air is to bolster the do domestic economy and consumer spending to prevent large-scale unemployment if it gets really bad. it is not like we are thinking about it today because we want to prevent it, or because banks are really bad. it is if it gets really bad, which is a little bit concerning, too. alessio: exactly. many of the shocks that germany may inherit are actually external shocks. bewe need to be able to preventative of this type of situation, especially because of the year very low inflation rate that the german economy carries and the very high current account surpluses. you run the risk of getting into this balance sheet recession mentality, where any handouts that you give goes straight into paying down debt or increasing savings rates. the fiscal expansion has to be targeted to the specific sectors where you want to create jobs. it has to be spend it or lose

it. what we have to avoid in europe, but globally as well, given the high propensity to save, is the possibility that that money just goes back into higher savings rather than being spent. so spend it or lose it. alix: forget back into bonds. you only have -67 basis points, so just go back there. alessio de longis of invesco will be sticking with us. coming up, argentina facing credit downgrades and an economic minister resigning over the weekend. more on that next, and what it means for emerging-market flows as well. we seem billions and billions of dollars exiting the entire area in the last six weeks. this is bloomberg. ♪ from the couldn't be prouders

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designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you pre-order a new samsung note. click, call or visit a store today. alix: this is "bloomberg daybreak." i'm alix steel. happy monday. i missed all the turmoil last week on vacation, so now i'm

here to update you all. we have a nice relief rally here underway, up triple digits in the dow jones industrial average. in other asset classes you're getting some calls. we have seen the lows when it comes to treasury yields. goldman sachs liking those steepeners. eight basis points on the twos tends spread -- on the 2-10 spread. crude up only 3/10 of 1%. talk about a crazy oil week last week as well. i was shocked we are only up 3/10 of 1% when there is a drone attack on a saudi arabian oil field. david: i'm fascinated by this. there was a drone attack, but apparently it did not do that much damage. i wonder, are these just not that potent? alix: it was a drone attack. [laughter] alix: you're right, everything is fine.

but also, who cares? et was a drone attack by thos indirectly supported by around. well, argentina facing some new turmoil as well. the new credit rating received a by two.de, isning us now for more bloomberg's correspondent and sao paulo. first, the downgrade. three notches. what happens here? what is the likelihood of losing its credit rating altogether? reporter: it was a pretty drastic downgrade, but if you take a look at the market, it was mostly catching up to what the market is already saying. at the end of last week, the market signaled argentina had a probability of default in the next five years of 80%. thehat seems to fit within

ccc category that fitch put argentina in a muscle it was a very dramatic week. not just with the double downgrade, but with the economy minister resigning, which was late saturday. alix: walk us through the info occasions of the economy minister resigning, and what that means over the next few weeks as we go to that first run of elections. replaced bybeing the economy minister for the province of one osiris -- of buenos a race -- of buenos aires. the election is still at the end of october. we are still a few weeks away. he's been announcing economic measures and to try to contain the impact the selloff in the peso is going to have in the elections and the economy itself. it was a 20% drop in a week, and it is going to affect the economy by october. we don't know yet exactly what

the new finance minister is going to do. i think one important thing for investors is what happens to the imf talks. that was really his mark in the administration. leite,bloomberg's julia thank you. for more, we welcome damian sassower of bloomberg intelligence. still with us is alessio de longis of invesco. we have seen a version of this before in argentina. does the experience of the past give us any indication of where we are headed this time? damian: i hate to look at the past in the case of argentina, but it is a serial defaulter. sovereign rating agencies are always going to be behind the curve, but taking a step forward , the departure on saturday, the emergence as a holdover from the kirchner campaign, it opens the

door for returns to capital expansion,iscal things that argentina doesn't necessarily need, nor things written into its imf agreement, which is something that duchovny was pretty instrumental in restructuring. david: i want to focus on the imf agreement. i wonder if part of the reason finance minister left is because of the incoming president. what does that mean if the imf is faced with a demand to renegotiate? damian: i don't want to bludgeon the imf, but some of the austerity measures baked into some of those agreements were very stringent and very difficult for the economy. it only back since. if you look at other countries in that situation, places like nigeria, ghana, there are capital controls to prevent speculation at the short end of the curve, which is exactly what was going on in argentina. when those are removed i'll let

once, you saw deterioration in the peso. it was a record move. you got a lot of investors hurting today. alix: on the flipside, you have overear yield bonding 100%. in and: for argentina, of itself, it is not the problem. it is not going to create the contagion for the rest of the region. it is too small. but is it indicative for investors? is it reducing the propensity for investors to take risk? we come from years and years where we have high-yield or's -- high-yielders at any cost taking risk because there was no yield to be found. is this an indication of how fragile the market can be and it's mostly liquid spaces? the risk to contagion is more of a signaling effect. it is not an economic transmission. defense in thef market is we getting too much

because the global backdrop is at risk, am i going to be able to get out of these positions when the time comes? right now, given the current economic backdrop, depending on your time horizon, you need to adjust your strategy. if you have a very long time horizon and you don't want to put all your eggs in one pass by allt -- one basket, means, continue with that strategy. but if your time horizons are somewhat shorter, this macro backdrop is not supportive of taking risk. david: right now we are looking at basically what happened in the yield on argentine bonds, which shot up through the roof. is it unique in argentina, or are there other situations like that, or something could have that type of phenomenon? alessio: we've seen at this moment argentina as more of a basket case. this is more of an isolated story. in the rest of the region, we are seeing much better fundamentals, much more consolidation of debt dynamics.

despite the week growth outlook, we have really priced that weak growth outlook in the region for many years. most emerging assets have been underperforming developed assets. capitalseen overall markets have been doing very well, but when you read through the tea leaves, emerging markets have been underperforming for quite some time now. that is the indication that the pricing is not too excessive, and we are still waiting for the positive catalyst that leads to em outperformance. what is that? ultimately a massive reduction in interest rates, especially on the part of the federal reserve, and the beginning of a dollar weakening cycle, which is still a few months or quarters away. alix: if you get that. [laughter] alix: damian, you agree? damian: it is hard to make a case on being a bear for the dollar. it just is for me. meeting going to be

with the governor of the be cra -- of the bcra. on tv they will have both fernandez and macri telling people what they believe, what the deterioration of the peso means for their economy. we just don't know where fernandez stands with issues like the imf negotiations. to get some color on what his take on that, what his forward look on that, is key for investors. alix: you know what his vp thanks. david: that is the big question. what influence will she have? will it be a kirchner government in practice? damian sassower and alessio de longis of invesco, thank you. viviana hurtado is here with first word news. , marchesin hong kong for an 11th straight weekend. one point 7 million people

protested in hong kong. it spread beyond the park where police say 100,000 initially gathered. the demonstration was largely peaceful, in contrast with the increased violence of recent weeks. current owners aren't giving up greenland, even though president trump confirmed interest in buying it. denmark says it ruled out selling the sparsely populated island, the president calling the move "a large real estate deal." next month, president trump is set to meet with dana his officials. conserves -- with danish officials. concerns from tim cook of apple, worried about samsung getting an edge because its products, unlike apple's, won't be subject to tariffs and they are imported to the u.s. on september 1, products like and air pods are set to be hit by tariffs. 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. hurtado.na this is bloomberg. david: it is fascinating come of the relationship with tim cook and president trump. sometimes they love each other, sometimes not so much. they had dinner, and tim cook said we are really at a disadvantage to samsung. this is what the president had to say. pres. trump: it's tough for apple to pay tariffs if they are competing with a very good company that's not. i said, how good a competitor? he said they are a very good competitor. so samsung is not paying tariffs because they are based in a different location, mostly south korea, but they are based in south korea, and i thought he made a very compelling argument, so i'm thing about it. david: the question is, what -- i'm thinking about it. david: the question is, what is he thinking about? what is the solution? alix: when you look at other things, apple has so much more space. if you have to eat some of the tariffs, you can eat some of the tariffs. other phone motors -- other

phone makers like lenovo, it is a totally different story. david: they are not inclined to do that type of thing in the past. they like to keep their prices up there. alix: if you have to pay that price on a phone, you probably won't balk. i know because i have that phone. [laughter] meantime,the wilbur ross is speaking on cnbc -- i beg your pardon, foxbusiness, talking about huawei, in part, whether they will extend the license on that. he says they will haven't update today -- they will have an update today. alix: it was yes, it was no. over the weekend it was yes. david: it was expect they would redo the 90 day license, but then president trump said no, i think it is a big national security concern. alix: exactly. we will see. i think there will definitely be some kind of negotiation. and china.hsbc

the bank already dealt with departures of key positions. more on the turbulence on today's wall street beat. if you have the bloomberg terminal, check out tv . you can check out the charts and interact with us directly. you can also ask us a question. this is bloomberg. ♪

♪ this is "bloomberg daybreak." coming up later today on bloomberg radio and tv, an exclusive interview with eric rosengren come boston fed president -- eric rosengren, boston fed president.

here's your bloomberg business flash. recession risks are low because consumer spending remains strong. that is the take from bank of america chief brian moynihan. he says global concerns have largely driven recent bond market turmoil. moynahan citing the slowdown in europe and china, and businesses having to rework their supply chains to deal with the trade dispute. u.s. tech companies will be in washington to testify in support of the president's possible tariffs for france. representatives will be at a public hearing opposing france's proposed 3% tax. the proposed tariffs could impact imports like french wine. porscheion for a car by failing to sell in california. in minutes, the auction was terminated because no bids over $17 million were made. the controversial car has been expected to sell for about $20 million. i'm viviana hurtado. that is your bloomberg business flash. david: i want to correct

something. i misspoke earlier. wilbur ross is talking on foxbusiness news, but he gave us the answer, which is they will get another 90 days for huawei on that license, so they do now have another 90 days, which takes a little bit of the heat off of china. alix: it is likely tit-for-tat, coming closer, not there yet. all part of the same narrative of that trump put. we now turn to wall street beat. we cover three things wall street is buzzing about this morning. china excluding hsbc from interest rate reform. after a week of wild swings for stocks and bonds, jpmorgan strategists have a conference call to make sense of markets. got lower supply in the fight i district -- in the

fidi district. i did not make of these names. david: we haven't talked much about this reform in the pboc's way of setting rates, which seems accommodating of growth, but it turns out they excluded hsbc very specifically. reporter: they did. istg kong released a l of 18 banks, and the pboc is set to be releasing that as soon as tomorrow. this is a list of 18 banks, so a pretty large amount of banks. citigroup, standard chartered are both on the list. is bothina business smaller than hsbc, but hsbc is clearly being excluded, so that has some asking, what is going on? is there some tension between china and hsbc? david: and that takes us back to huawei. sarah: we can't get away from it, but supposedly, "the financial times" recently reported that the former ceo of

hsbc who resigned earlier this month, as well as their head of greater china, sat down and was brought in for interrogation for the bank's role into the arrest and prosecution of huawei's cfo. it goes to show that there's probably nothing they can do about it. the ceo did say, look, we just had to release the information they were asking of us. we couldn't really say no. but now "global times" in china an saying they c potentially be included on an unreliable providers list. alix: including fedex. alix: so there are tensions between --sarah: so there are tensions between china and hsbc. in the western world, you say it is the rule of law. you have to comply with a subpoena. i'm not sure china sees it that

way. it is all politics. alix: let's go to our second story, which is volatility. strategists are going to hold a call with clients on volatility. and? sarah: this isn't not normal. many banks do this across the spectrum. they have calls with clients. things are going pretty crazy. clients get a little worried. they want to be told that every thing is ok, that every thing is actually ok, but this time j.p. morgan is holding its conference call. it is being held by the head of systematic trading over at jp morgan, so what they are really going to focus on is the mechanical aspects of what is going on. what is happening as it relates to liquidity, and as it relates wan -- selling -- took to quant selling? we've been hearing about the

inversion of the yield curve, but what about a lack of liquidity? david: you have to wonder whether there's a larger effort to calm everybody down. alix: but isn't that the guy who always says you can seat and billion dollars more worth of see $10-- can billion more worth of selling? sarah: he's mainly a part of systematic selling, so it all goes to the point of if stocks go below this line, you could see more selling, but it really is also a focus on liquidity. they have very largely focused on the same topic back in december, when we were seeing extended selling and liquidity was the main issue as well. so we will see. jp morgan clients will be in for it tomorrow. david: so let's get some real estate. sarah: in fidi. the financial district is, in

fact, called fidi. in the aftermath of 9/11, they really focused on building out fidi and new to the elements. now there seems to be a glut -- and new developments. now there seems to be a glut. , youhe past two months have seen apartments in the financial district remain on the market for longer than apartments in brooklyn and long island city. that begs the question, when these developments were made, there was a focus on both foreign buyers and people who work on wall street. now a lot of people don't work on wall street. supposedly, demand for foreign buyers is coming down. david: we are talking about 50,000 less people in the financial markets. it's a lot of people. alix: i also feel like the china angle is quite important.

there were tons of chinese investors on the open house circuit, and now there's none. they are having a much more difficult time selling. that could also be a big part of that story. sarah: it's a different buyer at a different price point. the prices for the apartments, you are seeing inventories rise in prices fall. david: bloomberg's sarah ponczekdavid:, thank you for being with us today. coming up, big tech siding with president trump when it comes to france's proposed digital tax. alix: if you're jumping in your car, tune into bloomberg radio across the u.s. on sirius xm channel 119, and the bloomberg business app. this is bloomberg. ♪

♪ tax.: france's new tech they're parliament, back in july, said let's impose a 3% tax on digital services for french

citizens for really big tech companies, of which there are several, almost all of whom are u.s. within five days, the u.s. said let's retaliate to that if you do it. macron said i'm going to sign it anyway, so it went into effect. today we have u.s. tech testifying on that, and they could have sanctions against france within the next several days. alix: and isn't wine involved? tech versus tannins? david: president trump in the past has said he's interested maybe in taxing french wines, and said france just put a digital text on our great technology companies. if anyone taxes them, it should be their home country. he reports from his notorious fundraiser in the hamptons, he said if they go for this, but 100% tariff on all french wine. alix: i have stats for you. bottle of wine,

0.059 peroking at $ bottle. where it could hurt is the margin or barrel, the cheaper bottles of wine. if you are paying $100 for a bottle of wine, if it goes up to dollars it won't be any difference. but if it goes up from $8 to $12. they do send their wind to us. coming up, barry knapp will be joining us. what he think so the potential 50 or 100 year bonds in the u.s. this is bloomberg. ♪

♪ alix: trump put in effect.

president trump talks up china, kudlow and peter navarro downplay recession fears in a media blitz. monetary policy runs out of steam. and flirting with the long and again. the u.s. treasuries testing the idea of shirking 50 to 100 year bonds. david: welcome to "bloomberg daybreak" on this monday, august 19. the talk of the morning has probably been germany and maybe some fiscal stimulus. alix: euro area inflation actually downgraded in july to 1%. two, the bundesbank saying growth can be pretty scarce in the third quarter. third, potential stimulus. david: we had the german finance minister over the weekend who said how large stimulus might be, basically said it could be 50 million euros. alix: still, the news today

is about bolstering the economy if there is art skill recession. that is not the scenario today. it is preventative stimulus that it seems the market once, but that is not what came through today. david: although gdp was down for germany the last quarter, and there are people who think they are coming close to it. alix: in the markets, let's take a look at what this is doing. it is a reflationary story on the back of that. as be futures up by a full percentage point. -- s&p futures up by a full percentage point. the bond market in full focus. a selloff anywhere you look. yields up by about five basis points. elationthat is a camp -- is a cannibalization. if you get any fiscal stimulus out of germany, that would do something as well. david: may be bottoming out. time now for the morning brief,

looking at the week ahead. big week for retail earnings, with home depot, t.j. maxx, and kohl's wednesday, followed by nordstrom and lowe's wednesday. thursday, the ecb posts accounts of its july meeting, and we get u.s. jobless and market pmi numbers. on friday, it's when fed chair jay powell addresses the central bank symposium in jackson hole, wyoming. alix: and david will be in a different time zone. get week's wild ride, you concern of recession on the horizon. joining us is barry knapp, ironsides partners managing partner, and on the phone is priya misra, td securities global head of rate strategy. riya, what do you think now? priya: we haven't really changed

our call. it is a little odd to be talking about the 50 or 100 year at this particular time. normally the treasury brings that up four times a year. i think the fact that it came out sort of outside of a concern. does give you i think there's a little bit of hope here to steepen out the curve come about in terms of the in 2017what happened was a lot of people want yield. because of the complex adjustment, there's a big difference between the 30 year and the 50 year, let alone 100 year. so the yield will actually be .ower cost pers the lowest bonds for taxpayer, they can certainly go out and issue it, which will take a while because they have to prep the market, but if they do they will probably have to show it a little cheap on the curve. is there isrent now

a lot of demand for positive yielding bonds, so they can get it done, but it's hard to make the case that it is the lowest cost to the taxpayer. there's a lot more investors in that part of the curve. so i'm still not sure there is that much demand. alix: barry, what do you think? barry: priya's points are all valid. i would add that they probably can't sell enough to make much of a difference. there's duration going back into the market already anyway. the fed is going to continue to shrink their agency mortgage-backed securities portfolio. right now, duration on that portfolio has shortened a lot because of all the convexity in the rapid prepayments. we saw the index really spiked last week. but when the market goes the other way, that's how convexity works. in essence, what the fed is

owns theen the fed mortgage-backed security market, they change the ration ship -- the relationship between interest rates and interest rate volatility. a prepayment risk held by fannie and freddie and others , when they held that and didn't hedge it, they drove volatility down. one of the biggest impacts of quantitative easing was to suppress volatility. even when they stop contracting their balance sheet, they are allowing $20 billion a month to go back to the private sector. that mortgage prepayment risk, the biggest single source of interest rate risk in the market, is going back to the private sector. they said later in the year they are going to discuss the duration of their portfolio, and should it be the same as the issuance, the whole treasury issuance schedule, which would imply them putting more

long-term duration back into the market as securities expire. so there is this duration going back in the market. i think the 50 year bond was a bit of a red herring. i don't think they can have that much impact. but that dynamic is already occurring. it just hasn't gotten to the point where it is really impacting the market. david: i think the central question is would it have that much impact. we have a tendency to look at the 50 and 100 year bond as a matter of bond trading. there's another aspect to this. people like larry summers are saying, let's go out and borrow long-term money at and historically low rate for things like interest spending. does what they do with it affect the economy? priya: that's a great point. back in 2016, there was talk of infrastructure. ultimately we need to raise aggregate demand in the system. between now and the advection, i really don't see much of a chance of any fiscal stimulus. what would have big bang for the

buck is if we were to do a massive infrastructure project. these things tend to have pretty long shelf life's. 50n you go out and issue year bonds, and that can raise aggregate growth. but what are the chances of getting that between now and the end of next year? i'm not even sure the republicans are on board, and for the democrats to give the president a win politically, i don't see that. but then you can have a pretty bit impact if we were going to do a big infrastructure plan. alix: i love that you brought that up because this remind me of the blackrock note that talks about what you're going to do in the next downturn. it is in some way offered by stanley fischer. the nextto respond to economic downturn. monetary policy is almost exhausted. fiscal policy on its own will struggle to provide major stimulus in a timely fashion even high debt levels and typical lags of implantation."

they are basically talking about just that. issue a lot, spend a lot, tighten controls. is that the world we are going to be headed into? barry: quite possibly, if the next recession in the u.s. were to occur after the next election , then we would probably be in a position to issue long-duration debt and do infrastructure spending. i'm struck by the idea that that is the solution in germany because i don't think that is the solution in germany. what they should be doing in germany is actually cutting individual tax rates, cutting corporate tax rates, cutting bad tax rates, trying to stimulate domestic demand and move away from all of their excess manufacturing capacity. i think it is a completely different solution in germany then it would be in the u.s. or china, where they have over invested in all this excess global manufacturing capacity. in the u.s., though, that's a likely outcome in 2021 or so. david: i find it interesting how

quickly we sort of passed over monetary policy, just that it's got to be fiscal and things like that. right? i will put up a chart of what we are discounting right now, the september meeting, where markets are dead sure there's going to be at least a 25 basis point cut. is that going to have any effect on the economy? if jay powell's goal is to extend the cycle, is it beyond his power? priya: i think it is a little beyond his power right now, but he is most likely going to cut this 25. i think there's a lot of hope that jackson hole will see this big shift in terms of him saying we will do what it takes. i'm not sure the fed is there yet. i think jay powell faces a pretty divided committee. half of the committee in june didn't even want to cut once. it is all about how do they sell this. is this still insurance cuts? that's what the market is not going to like to hear. a jay powell keeps calling it

midcycle adjustment, the market is not going to like it. risk assets are still close to their highs. treasuries have room to continue to decline because the only game in town really is monetary policy, and it is somewhat ineffective because rates are already low. alix: even if you look at forecasts for the 10 year, it is still just under 2% for this year. real quick, your top trade in the market right now in the bond market. priya: i am long tenure treasuries. i've extended my target because -- 10 year treasuries. i've extended my target is the only hedge to risk assets here i would take is the 10 year. it is not the front end. just give me a portfolio to hedge against any underperformance in risk assets. barry: i like the 530 steepener. alix: you and goldman. is that because you feel guilds have kind of bottom tier? ?- have kind of bottomed here

barry: i just think it is an opportunity to reload. i think the curve is flattening largely because of external factors. global trade is in recession. this isn't about the u.s. global outlook. this is really about the global environment, so i would fives-30'sput on a steepener. of tdpriya misra securities, thank you so much. barry knapp will be staying with us. coming up, it's a warning from germany's central bank. europe's largest economy potentially preparing stimulus measures as it prepares for a crisis. we discuss that next. this is bloomberg. ♪

♪ viviana: this is "bloomberg daybreak." u.s. commerce secretary wilbur ross says the u.s. will renew the huawei waiver for 90 days. he announced the move on foxbusiness despite president donald trump calling the company a "national security threat." bluescope approving a 700 million dollars expansion of its northstar project in ohio. each year, the investment will give the company and asked right hundred 50,000 metric tons of u.s. steelmaking capacity. tesla is now offering no contract packages as part of its solar relaunch. musk executive elon tweeting, "it is like having a money printer on your roof."

this comes after the third consecutive quarterly decline for tesla in solar installation. david: thanks so much. reports this morning or that germany -- reports this morning are that germany is preparing finance stimulus in case of any economic crisis of 50 billion euros. still with us is barry knapp of ironsides partners. give us your take on the german economy. we hear a lot of people say the problem is not in the united states, it is in germany and perhaps china. how bad is the situation in germany? barry: i would describe germany, china, japan, south korea is all having the same problem. ofyou think about the period globalization which reached its denier month after china -- it's

after china entered the wto, all of those export-dependent economies have a real issue, which is they are geared up with all this massive manufacturing. china is selling autos to the rest of the world. they have excess capacity they have to cut. the more the ecb lowers rates and impairs that creative process, they don't cut that capacity. the problem just lingers on. david: this chart illustrates what you're saying, it decline in world trade as a percentage of gdp. and it started before donald trump came into office. barry: to me, donald trump isn't making history. history is making donald trump. this was inevitable, that we were going to get this sort of backlash. it is similar to the interwar period. germany has got to restructure their economy like they did in the early 2000s, when labor laws left them uncompetitive in global trade. 2002, 2003, two

thousand four labor law changes that made them competitive. they have you stimulate -- they have to stimulate to domestic demand. suggest, no one cares what my opinion is necessarily, cutting corporate taxes, trying to stimulate domestic demand. they have a 7% current account surplus. that would help europe immensely word german consumption -- immensely were german consumption to pick up. it is actually starting to restructure. alix: i feel like the longer they go, the harder right will be to turn that around. an author for bloomberg opinion had a great point. "when sentiment in germany is this weak, negative yields, and flat yield curves combined to make it all most impossible for the economy to turn around." barry: that's absolutely right.

the entire credit channel is completely impaired because of negative rates in the system, which actually brings me to another point about china's credit. the thing that struck me as the most important or interesting number last week was when you look through the chinese total financing statistics, the interbank lending number actually plunged. they had a bank in mongolia, a couple of other banks in inuble, and the whole change their small and medium enterprises, the change in their lending program they will talk more about tonight. that credit channel is impaired, too. there's no credit channel in japan to speak of. korea's got similar problems. germany clearly has a big problem. china's problems are even more complex.

david: if the problem is, in your note, a recession in trade, not in the u.s. economy, what is the solution? you say we have a similar problem in japan and germany and korea. david: they are going to have to bite the bullet and restructure their economies, except the fact -- economies, accept the fact that the world economy is not going to grow in the same way, and stimulate their demand. it doesn't mean a giant infrastructure project. it means trying to give the money back to the consumer and corporations, and get more on the cutting edge of innovation. if you look at gdp per capita in innovation, you've got the u.s. in the upper right corner and china in the way lower left corner. there's a huge gap there. the only way they're going to close that is not government mandated. david: but is there a middle course? take germany, where the auto

industry is so important to them. could there be some thing like anh for clunkers if you buy electric car? david: i suppose --barry: i suppose, but i view that similar into what happened the u.s. 2001, when they tried to stimulate investment and we had 25% fiberoptics capacity utilization. you had to work through the excess capacity. germany has excess auto capacity, excess capital goods capacity. they actually want to give the money to entrepreneurs, individuals who are going to say, where is the real opportunity? it is not to build more cars. i am a trust the markets person. david: barry knapp of ironsides partners, thank you for being with us today. more in today's bottom line. this is bloomberg.

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david: time now to look at three companies worth watching this morning. first of all, huawei. the deadline was coming up on the new license. president trump over the weekend says he worries about the national security concerns there. pres. trump: ultimately, we don't want to do business with huawei for national security reasons. >> not even a temporary extension? pres. trump: we will see what happens. i will make a decision tomorrow. david: today we have wilbur ross saying they will extend it another 90 days. maybe having to do with trade? i don't note. alix: i actually don't know. i don't know anyone who actually knows. i'm taking a look at softbank here. some great reporting over the weekend saying softbank is going to lend its own employees money to then give it money for a

second vision fund, basically citing a funding gap. part of it is, ok, if you are going to incentivize the people that work for you and your employees are going to have a vested interest in making that work, the other is, i don't know, isn't saudi arabia not allowed to put money in the second fun? so they need money from somewhere -- the second fund? so they need money from somewhere. david: exactly. alix: and these are big numbers. david: and they still owe the money back to softbank, right? alix: right. david: third company, we are taking a look at tech. joining -- at tegna. joining us is brooke sutherland. i had to look it up, it is the old get net stations -- the old gannett stations. brooke: it is. . of course, gannett is selling itself to new media. a may be selling

itself to apollo, merging it with koch media and northwestern broadcasting. david: this is an interesting possible merger that is not so much about saving costs as it is having more at the bargaining table. brooke: there are some cost cuts involved in this, but it is about having more negotiating leverage because of the sheer amount of consolidation we seem. if you look at the deals at&t has done over the years, that tells you why we are seeing consolidation at this level with tv stations. alix: why now versus before? there's been a lot of consolidation. brooke: the fcc actually change the rules come i no longer cap -- change to the rules, and no longer cap ownership levels at -- cap ownership of the same levels. you have seen that unleashed a

wave of consolidation. tribune sold itself to next are, star, had already -- to nex which had already sold itself. alix: brooke sutherland, thank you very much. coming up on this program, argentina facing some credit downgrades. the chief government minister already resigning -- the chief government minister resigning as well. we are getting a bit of a relief rally, at least in the equity market, as reports indicate that potentially germany could ready a stimulus boost if things get really bad. what that would look like remains to be seen. this is bloomberg. ♪

--x: david: there were also be interesting meetings without a doubt. they said basically we can have a hard border. says that'sgove kind of old information. an official document that was found i think in a pup. -- in a pub. alix: oh my god.

. let's get the politics in a different country. country's credit rating receiving a downgrade by both the s&p. deterioration in the macro economic environment increases the likelihood of a sovereign default and restructuring of some kind. the countries minister resigns over the weekend. joining me now is the ubs emerging-market strategist and still at the is barry knapp. what happens now? country october 20? -- october 28? >> there is no weakening in emerging markets. think there is little to no

new information to investors. deep into junk territory. this is pushes the country deeper. to look intor has argentine assets. i would expect this development to have little to no market impact given that everybody is aware of what is happening in the country. david: let's talk about the effect of the primary election. this compares it to zambia default swaps. this is the white line comparing credit default swaps. it just i rocketed. the election result was a big surprise and points to a new base case scenario. as a result, 20% depreciation of the peso against the u.s. dollar. is this meaningful for the debt outlook? has $325 billion.

it is over 90% of gdp. the most important piece of information is ever a percent of this debt is foreign-currency denominated. ,hen you get a 20% appreciation the likelihood you'll be able to meet your obligation goes down. that is what the line you were highlighting is reflected. alix: the question is do you want to buy when you have a 100 year bonds yielding ever 12%? barry: i would probably throw it back to the other side. have you assessed value? -- how do you assess value? none of this should be surprising that we start having emerging-market difficulties after the latest round of terror tweaks -- of tariff tweets. it is just a relationship and correlation effects that are

particularly obvious. last year we went several rounds of tariffs on china and lo and behold down 11%. tariff on another 10% 300 billion, how could you not think the renminbi was going to fall? how could you not think that was going to reverberate through all the economies that compete on the global trade markets as china does? these are all effects. correlation with the great lesson of the financial crisis. said inr ceo congressional testimony that one of the things he underestimated were the correlation effects. donald trump is learning a lot about correlation right now. you start to have these problems which permeate out. i have not done the work to say where value is, but my suspicion is 48% is probably overdone. david: what is the best case for

argentina right now? is in the upside proper elections, two months from today, he stages a comeback. a low likelihood event but not impossible. we could have some brexit like guilt on the voter side. they realize they the market impact has been significant, their power has been diminished, now they have another .pportunity to revisit that is the best case scenario. the second-best is that in an opposition government, you have a presidential candidate and a vice presidential candidate, the former president. gethis new dynamic, we another with the upper hand when it comes to the economic policy. alix: this also brings into efficacy of me the

a 100 year bond which is coming into play. something as cheap as argentina's century bond has proven to be cheap for reason, but the seductive equipment of the austrian equivalent should not bring any false sense of comfort because risk takes many forms. what is the inherent risk in these long-duration bonds as we learned from argentina? if you have liquidity crisis, you have to be removed. luke: this story -- barry: this story gets replayed over and over again. the last book i read was a 1931 crisis -- my last book was about germany, theis in second attempt to restructure the reparations. it keeps getting replayed over and over again.

i do not know why he would buy a 100 year argentinian bond, other than the fact that it is not really 100 year bond because you will have your money back way before that. that notwithstanding, they do not make a lot of sense. i do not know why you would buy the asset anyway. alejo: that brings us to another good point. a lesson to what is happening in argentina. how many countries have last 100 years experienced a 75% or more collapse in their equity market in dollar terms? bridgwater put out the list just recently and you would be surprised the countries you find in that list. the u.s., canada, japan, germany. one key takeaway on what is happening in argentina is that argentina has had a history of difficult macro economic environments, but this can

happen in a lot of places and there is nothing cheaper and better for investors than international diversification. both for beingu with us. now let's get an update on what is making headlines outside the business world with viviana hurtado. viviana: germany is preparing a stimulus plan as a contingency for a deep recession. the program would boost consumer spending and create jobs. the plan will need parliament approval. the german finance minister says the plan calls for 50 billion euros of extra spending. two russian monitoring stations designed to detect nuclear radiation have gone silent after explosion from a missile test. critics say the russian government is trying to restrict evidence of the accident. america's business leaders are shifting their opinion on corporate decision-making. the citizens roundtable will change it purpose on the porpoise -- will change it

statement on the purpose of a corporation. the shift will account for employees, customers, and society. 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. hurtado.ana this is bloomberg. alix: this is kind of a big deal. you are taking the focus away from we will return and help shareholders, to a cohesive thing, and i wonder how much is a push from shareholders, a change in corporate culture, or what? david: populism. europe has been far ahead of us on this one, but there has been sort of a movement around what has been written on this subject . what we need to do to address in commonwealth -- income and changeinequality is to corporations. alix: interesting. we'll take a look coming up at

the transformation occurring in your supermarket. that is coming up next in today's follow the lead. bloomberg users, interact with the charts we use on gtv . this is bloomberg. ♪

viviana: coming up, an exclusive interview with boston fed president. , several u.s. tech companies will be in washington to testify in support of the president's possible tariffs.

representatives for amazon, facebook and alphabet will be opposing france's 3% tax. the tariffs good effect imports like french wine. move is aimed at pushing down borrowing costs. from august 20, new loans must be priced with a revamped benchmark. it tracks the price of credit to banks best customers. that rate is linked the price of pboc targets. the option for the car by porsche failed to sell in california. the auction was terminated in minutes after no bids among $17 million have been made. the car had been expected to sell for some $20 million. i'm viviana hurtado and that is your bloomberg business flash. david: it is time for follow the lead, a deep dive into headlines making headlines and moving markets.

we begin a weeklong series on the food industry called "how we eat." one of the biggest changes is the advent of land-based meet substitutes -- plant-based meat substitutes. emma: the shift has been about alternatives. things like alternative milk. they've been around for years. october has been -- 2019 has been about alternative meet products. chart is the dark blue and green lines. that is the u.s., canada, and the u.k., decline or leveling off on meat consumption as consumers in those countries say they are cutting back on meat. the business opportunity this creates is best evidenced by the dramatic public debut of beyond meat.

it went public on may 2 this year priced at $25 a share, now trading at $144 a share. it has surged above $200. it also supplies the likes of carl's jr. and soon subway. competitor impossible food said that this month 10,000 restaurants now offer plant-based products. this creates a dilemma for the traditional meat companies and the big consumer giants. a number have said publicly they want a piece of this pie. bloomberg intelligence says this could be worth $10 billion in the long-term. some of those have said they want to be a part -- tyson foods , one of the world's biggest traditional meat producers. the ceo saying people looking for more protein and they are developing new products.

nestle, their earnings call just recently, saying they are one of the only companies that has the ambition and perseverance to be major players in this area. alix: thank you so much. for more this consumer shift and how companies are responding, we are joined by robert moscow, credit suisse packaged food analyst. who is winning the beyond meet fight? -- the beyond meat fight? obert: there are two competitors that have developed technology much better than what is on the market. beyond meat and impossible burger are the ones that have found a way to weave together the proteins and fats so you can replicate the taste, the aroma, and texture of real burgers. i'm a big consumer beyond meat,

a lot of people prefer impossible. these have a head start against the big food companies that have been slow to develop those kinds of capabilities. they do not have the r&d technology. beyond spends 15% of its sales on r&d. craft spends less than 1%. their technology will continue to advance so that bigger companies will be chasing. david: this is the hot new thing, and starting from zero. will it ever get big enough to transform the food industry? it is hard to tell. it depends what you call transform. i think this could be a $30 billion category in time in the context of the $270 billion meet business. about 13% of the meat industry would be, similar to what plant-based milks have done.

even if we are half wrong and is only 7% or 8% of the category, that is still an enormous category for beyond, impossible, and you can see what the stock prices are so high. additional --do what do traditional companies do? do they look for a new different product and get ahead of that? robert: all these big companies have done is recognized their expertise will be in distribution and scale. it will not be in the early stage to element of new technology. most likely they will have to buy small companies. alix: as in they buy a beyond meat? robert: i think so. i do not know when beyond meat will ever be for sale, and i think that is what has had -- what will happen. tysons has developed its own

product, but i think it will be narrow. we'll see how successful it will be. david: going beyond beyond meat, talk about the larger trends. what are the things making a difference? we have seen a lot of packaged goods people struggling with their brands. to what extent is the label versus the brand that is transforming the business? robert: private labels have been around for a long time but the reason i've been so bearish on this sector for the last couple of years is that these companies have old, antiquated brands that have not been able to keep up with consumers desire for healthier food. consumers are looking for more organic food, more authentic experiences. when you think about kraft or can come up kraft with an organic version, but organic kraft is kind of a contradiction of terms.

what they are trying to do to smallis trying to divest brands within their portfolio that are off trend and then paint big multiples for companies that are on trend. we are in a transition and it will take a while. alix: when we talk about beyond meat and the potential and how far they are head of other companies, is the selloff overdone? robert: there is more upside to my target price than there used to be. i met a $170 target price. the stock is at $145. i need significant upside in order to make a change in my rating. in that so much priced has to go right for beyond and i do not see any headwinds reasons why it will not go right. fate inchange in their terms of getting delisted by customer or having a health issue would happen outsized

impact on the stock. david: it was in the driver seat between the producers of foods and the big store chains? for example, amazon with whole foods? robert: the retailers have gained significant negotiating power, much more than i've ever seen in my years of coverage. they've invested in data analytics, supply-chain capabilities, they have captured the point-of-sale and made it harder for a big company like kraft to have a connection with the consumer like they used to. that is why we will see more margin erosion in big names because retailers have invested more in their margins and companies will have to do it next. alix: which company is best poised to navigate all of this? robert: i like monfils. they are 30% of their sales in north america. it is a big international

emerging-market platform. it makes snack foods that are still on trend, oreo, cap very. -- cadburry. people want healthy food, but they will not say no to an indulgence like an oreo. that has more growth than u.s. based companies. alix: i may have had some oreos on vacation. robert moskow of credit suisse, thank you very much. coming up, iran warns the u.s. against seizing an oil tanker that is now who degrees. greece.is now headed to if you are in your car, go to bloomberg radio, heard across the u.s. on sirius radio channel 119 and the bloomberg business app. this is bloomberg. ♪

alix: here is what i am watching. one vessel in the middle of the mediterranean. this is the grey swan -- the

grace one. this is a ship held in gibraltar by the u.k. because it reportedly held iranian oil being sold to syria. the sanction was against syria because the eu has strict sanctions against syria. now it is out and abroad, reportedly heading to greece. the u.s. is not mad because they have iranian oil and they petition to keep the you the ship -- to keep the ship in gibraltar. david: the british court says you do not make your case. there's speculation that it might be going to greece. alix: for me exemplifies the tension we are seeing between particulard iran, in how the u.s. and europe have different approaches when it comes to iran and how iran is in the middle of that. iran warns the u.s., do not touch our vessel? what is the u.s. going to do when the conflict is going to be thrown, when they're also drone

attacks happening in saudi arabia backed by iran. david: in the meantime there is a warrant for the rest of the vessel from a southern district new york court. i do not know how you enforce that. alix: when we talk to experts, we say want to avoid in unforeseen accident. -- you dogs happen not try to make an issue happen and all of a sudden there is a war. i'm definitely watching that ship. that does it for us. markg up on "the open," connors, global swiss had a portfolio -- head of portfolio as reflation risk -- this is bloomberg. ♪

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there is human ingenuity. ♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coming up, global equity markets bouncing back. treasuries dropping. the yield curve steepening. the german government indicating it is willing to spend more, but a recession needs to hit first. waiting for jay powell. investors look towards friday's that gathering in jackson hole wyoming. here is monday morning price action. have we become desensitized to big moves,? in the treasury market, yield softer, up four basis points. the euro a little firmer. euro-dollar around 1.11. let's begin with the big issue. waiting for chair powell to break his silence. >> jackson hole. >> jackson hole. >> jackson hole has been a big turning point. >> what can the fed