treasuries all serve as higher interest rate differentials. but what is interesting is both a higher kb trait and a safe haven. benefits on both ends. what is interesting is that u.s. will continue to be in demand, especially with all the negative yield everywhere else in the world. caroline: for once, we saw a little bit of a selloff in u.s. treasuries and buying still on in the u.s. equities. up 1.2% on the s&p 500. not as stellar as friday's run, but every single industry in the that 50 day moving average. >> most of the strategists i talked to talked about 2300. you wonder, are we fully now fair valued? how much more do we have to go through year end.

romaine: let's dive deeper into the action with markets reporters. abigail: energy, checking in on the technicals. in the near term, there may be a bigger pump. about 30%.ugh, down what might be encouraging for the near term, the rsi coming off the bottom. we could just see the energy up.or pop back whenever you have one set in a bear market, it typically is not good overall. pop-term energy may just bullish lee higher. the rally -- in brazil, the worst performance of a major etf. the real was one of the weakest

currencies, down about 1.5%. biggestre among the drags on the vespa index. . trade with tend to 'sgentina and while argentina markets were closed for a holiday, there was troubling news over the weekend the economy minister resigned. it looks like tomorrow is shaping up to be a bad deal for argentina. sentimentt risk on dominated. investors did not find a need for safe havens. 1.3%has dropped more than during the day. we know it is at the lowest since early august. this comes as president donald

trump signals progress on trade negotiations with china and also protected networks and other customers of doing business with china's huawei technologies. taylor: michael, let me get a quick thought if you come to my terminal here, we have heard a a lot of comments from president trump wanting the fed to cut. we are below where the taylor rule said we should be. according to your estimates, which would be? -- where should we be? michael: i think the fed was walking back one rate cut too much in terms of december. i think they are likely to cut rates 25 basis points again in

september at the next meeting. then, everything after that. that is the insurance cut. after that, everything will be kind of data dependent, it will depend on how the trade discussions are going. caroline: fomc minutes. jackson hole. how much is the market holding its breath for the fed to do something? >> we do have a big week ahead of us. the market is expecting a 25 basis point rate cut come september. we've already a lot of posturing. we heard the president say he wants 100 basis points more. bullard said he doesn't see the need for an emergency rate cut. rosengren today. although he was one who did dissent the last time.

the market is expecting a rate cut in december. so what could come from any speeches this week is really just a reassurance that we could potentially see that. romaine: one thing that sarah mentioned earlier was this idea that maybe growth isn't that bad. when i look at the bloomberg terminal and i look through the g20 countries, you've got only six economies growing at 20% or more. 1% or in less than contraction. where can i take some comfort in the fact that the global economy is at minimum stable? michael: i think what is happening is the trade dispute has really resulted in this slowdown. trade flows continues to

be a challenge for economies outside of the u.s. we are seeing that in china despite the tremendous amount of fiscal and monetary policy. struggle toe to gain that kind of traction economically. i do think that the trade discussion continues to be the key narrative going forward on global economy can rebound. we are seeing a real pledge of support on fiscal and monetary policy. >> does your outlook make you go duration over credit? michael: it does a little bit. at this point, adding additional duration, i think the risks are skewed to the downside it where

we are in the credit cycle, looking to be shorter maturities with higher yields, and not extending too much interest rate or credit risk, while taking your risk elsewhere in the equities. that hedge against equity risk. forontinue to suggest that investors. i think adding on additional credit or duration risk at this point in the cycle, i don't think you are being compensated for it compared to where you earlier in the year. caroline: it is interesting that one haven that remains en vogue is the u.s. dollar. what is going on in terms of the flight towards the dollar and even emerging markets> -- emerging markets? sarah: you have the dollar at record highs, which is unbelievable. i went to a dinner if you months

ago composed of macro strategists, people who run different funds, not a person was long on the dollar. the fact is that the dollar continues to be your only choice. you look at the u.s. relative to the rest of the world right now. if you are not going to the dollar, where else do you want to go? to's -- continue continue to ca strong dollar. caroline: michael from state street advisors and sarah ponczek, breaking it down. that does it for the closing bell. "what'd you miss?" is up next where we will be looking at economics around the world. this is bloomberg. ♪

♪ caroline: we are live from bloomberg's what -- from bloomberg's world headquarters in new york. how u.s.snapshot of stock markets rallied. mood -- intry in the the green on the s&p 500. germany signals it is ready to spend more if a recession occurs. powell.r jay no deal yet. president trump again ties trade talks to the hong kong crisis. this as twitter and facebook say china used fake accounts to undermine the protest.

down rate for the nation's debt. central banks around the globe planning stimulus measures as they hedge against recession. the german government is preparing a series of fiscal moves if a recession happens and in the u.s., investors are expecting jay powell may signal another rate cut this week. atmorgan saying u.s. stocks record highs despite the inversion last week. primarily first of all about this german stimulus story. i don't know why the whole market is getting quite so excited. we have to see a pretty dire recession for the stimulus to become apparent. >> i guess it is a symbolic

thing. the germans have been so reluctant to do any spending, any softening of that is a positive. taylor: your world of sort of that reflationary trade. when trump was elected, you suntan and 30 year yields really rise. would this not also go to germany and you should see a reflationary left in yields? >> i think that is generally expected how that would play out. they have really been relying on monetary policy. thesee that play out in long this of the german curve. what caroline was saying, markets today were not that impressed. recession, a deep

bunds extend their decline, a 0.2% jump in the euro before we are back to where we started. romaine: jackson hole at the end of the week. the expectation of what people think they will hear from powell seems to be pretty high. they will address this in one day? it seems like a month-long conversation. >> this is something that powell has been talking about all year. tendedunfortunately has to misspeak, to go beyond what he intended, get a little off-the-cuff. that you want to be open to the markets but markets sees on everything you say. markets have been battered so

.any times caroline: it feels like the market was looking at what was announced this time on friday withoing out to the market 100, 50 year bonds. theit that that was driving selloff? >> it was a combination. you also had very positive huawei news. that announcement on friday took a lot of people by surprise. it was about 4:00 p.m. new york time, not when we would be expecting a major announcement from the treasury. markets are still reacting today. every few years, you get talk of an ultra long bond. is thought is that treasury just acting like any other issuer.

borrow more time to money. people are thinking there might be a better chance of this actually producing some issues and that is why you are seeing people act as you would expect. taylor: peter, what did you make of boston fed president rosengrant today? he continues to highlight the strength of the consumer which arguably may be one of the only thing keeping us out of a recession. i've been working on an article for bloomberg businessweek that is really kind of optimistic actually. i kind of sympathize with where rosengrant is coming from. it is not just the consumer. trade, everybody focuses on the weakness of trade in germany or china or whatever, but the u.s.

economy is one of the most in the world.ies has as. -- and the u.s. fairly high interest rate compared to the rest of the world. right now, maybe that is not as essential. romaine: no cuba-nigeria charts for our viewers. i want to go back to the president he tweeted this morning that basically wants another 100 basis point cut. continuing to put pressure on powell. whenever i hear people talk about how good the economy might be, how do we reconcile those two and is the market sort of over the browbeating? katherine: it definitely feels that way. if you look at the intraday

charts, there is virtually no .arket reaction rate u.s. team, at the data is still strong compared to the rest of the world. built,s a case to be insurance cut. 100 basis points, i think you would struggle for anyone making a justifiable case for that. it is tough to dismiss a tweet like that. romaine: 25 basis points. katherine: that is more within the realm. it kind of felt as if that was the pushback today. taylor: coming up, more bad news for argentina. the south african nation getting

hit -- the south american nation getting hit on all sides after resignation. this is bloomberg. ♪ ♪

romaine: temporary look at what stories are trending. terminal readers are reading managermidwestern money having acquired more than 400 new york city taxi medallion loans to become a dominant player in industry. has been amended by uber and lyft. someone who started a viral video dancing alongside bruno mars using a form of artificial

technology mimicking his moves. he turned the research into a startup called human ai which aims to turn the gimmick into an app and eventually a tool for studios and ad agencies. where the burden of china tariffs will fall far -- fall hardest. the burden will disproportionately fall on america's poorest. lower income consumers tend to spend money on lower income -- on lower price items imported from china. experts say that when tariffs go up, the result is more unemployment and higher inequality. it is all about argentina. their debt is getting hammered again. the cells -- the south american nation offshore notes heading to lowe's after being hit i-8 downgrade and resignation.

i want to bring chief emerging markets credit strategist. this is very interesting front. -- interesting. s&p comes out, downgrades it. i wonder, where is the fair value? >> the market has completely overreacted. they are justified obviously in the downgrades. we were just talking about the one that keyed off the holddown tick in turkey a few years back. just kind of taking a step, we -- 60%roughly 90% of probability within the next two years. debt currency, denominated , it is typical to fathom in a negative yielding -- difficult to fathom in a negative yielding world how bad that is. caroline: how worried should we

be about them getting the next installment and the threats by a man of that perhaps money right now. >> we should be worried without question. hek what macri did, suspended the vat tax. these are things that don't bode well with austerity measures. they are justified in obviously taking a little breather here. this will go a long way toward meeting with the fernandez team as well as mauricio macri. the verdict is still out. tok, fernandez holds true some of those things he has discussing, it could be painful for predators. romaine: is there a potential for sort of a bond vigilante impact to get government to move in a little bit different direction?

>> the imf was very firm with how they handled argentina coming out of it. i know you mentioned nigeria. other countries like nigeria, frontiera, these are markets. investors to come in, clipped those high coupon yields. controls in no place to prevent them. i think fernandez and his team have a very good point. you need to generate long-term sustainable growth and long-term investment opportunities and that is not what is happening right now locally on the ground. caroline: quick check on the business flash headlines. looking on the blockbuster saudi aramco sale, in pole position on the oil giant's second attempt. aramco is planning a listing as

early as 2020 and is expected to use advisors that have a relationship with the firm. the company has helped make northern virginia the most expensive housing market in the u.s.. it is harder for buyers in alexandria and arlington. , the blame the company for -- locals blame the company. target is launching a new label. they will appear on store shelves. target will be trimming its market -- that is your business flash update. romaine: softbank said it is going to lend employees up to $20 million for this new investment fund. this is according to reports from the wall street journal. it has been making the rounds

all day. fund two.vision romaine: the presumption was that this money was owing to be coming from outside investors and now it appears that a good chunk will be generated internally. taylor: i wonder if this is a way to retain employees. come in, put your money where your mouth is, employees now have a way to participate in some of the fundraising. caroline: and they have earned 62% returns and you're able to borrow just 5% -- well maybe that is a lot in today's yield situation. i wouldn't mind the opportunity but it does sniff of potentially desperation. romaine: we are going to pool our money. coming up, the people's bank of china takes the step toward long-awaited rate reform. what that change means.

asia head is coming up next. this is bloomberg. ♪

president trump is ofterating -- his criticism the federal reserve. on twitter, the president urged the fed to cut interest rates by at least one percentage point to help the world economy. he added that the economy is very strong and the democrats are looking to "will it to be bad" for the 2020 election. a new york police officer has been fired five years after the garner.death of eric

the police commissioner agreed with a ruling that the officer had been untruthful when he denied using a chokehold. garner was arrested on a staten island sidewalk for selling loose unfiltered cigarettes. with $130 supertanker million worth of light crude oil that the u.s. expects is tied to a sanctioned organization is heading to the mediterranean sea with its next destination reported to be greece. the tanker had been detained for a month for allegedly attempting to breach european union sanctions on syria. an out-of-control wildfire in spain's canary islands is throwing flames into the air, forcing emergency workers to evacuate people. the blaze began saturday. officials say emergency workers

are facing temperatures near 100 degrees and gusty winds that are blowing embers into the air and sparking fires. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm renita young. this is bloomberg. caroline: let's get you to the internet search giant over in tona, baidu, not living up expectations. it looks as if it is going to drop more than had been expected, to 28.5 billion yuan. still, overall, we are seeing that the company is rallying after hours. expectations with its previous set of numbers. second quarter revenue coming in at $3.8. of .7g the estimate

estimate of 25.7 billion. taylor: i'm going to stick with china in our asia and focus -- asia ahead focus. the people's bank of china taking a step toward rate reform. tomorrow, the move to change borrowing costs as the economy slows. shery ahn is here with the story. they talk about the loan prime rate, which is what households and consumers use, but now perhaps being tied to the pboc rate. analysts arewhat calling a de facto cut without really cutting. we continue to hear this rhetoric from the pboc that they won't go all out when it comes to monetary easing, and finally we are seeing these tweaks to provide more liquidity to the system.

9:30, everyppen at 20th of the month. it will be really interesting to see, we will be watching. because this is likely to be lower than the benchmark interest rate, which has stayed at 3.45% since over. the likelihood is that it would come lower than that. romaine: if you are an investor, you have to see this as a good move because doesn't give more sway to the market? shery: more flexibility, and hopefully that will follow the market moves more closely. -- thee the fed comedy ecb, coming, the out with rate decisions all the time. in china, it is always holiday weekends are moving very secretly. you finally have one rate, one time. bloombergchart on the

shows the tools available. it is complicated. what they are trying to achieve right now is basically get that dark blue line and white line in the middle, which would be the benchmark rate and low prime late -- low prime rate, closer to the yellow line which is lending facility, another lending facility which could allow for more liquidity in the market. analysts are expecting some moves on that rate. caroline: he said at the beginning that they are finding interesting ways to ease. why don't they just cut the rates? back in late 2014 and 2015, they cut interest rates. it didn't go very well. we had talked about property prices doubling, stock markets

rallying. there was a flood of liquidity. right now, you are hearing from pboc researchers saying there is enough liquidity out there, we are just not able to channel those. even if you cut benchmark interest rates, that will not go to the small businesses that need the capital. taylor: for more on these stories, don't miss "daybreak: asia"lia" and "daybreak: starting at 6:00 eastern. formore, michael, the head northeast china and asia from the eurasia group. we pboc, the loan rate, then fold this over into trade. is china sort of acknowledging that trade is hurting them a little bit and are they sort of -- first ones to blank

ones to blink. michael: your analyst put it very well. withouttrying to ease giving up the discipline. they are trying to let up. the trade war is a big part of that. i don't think we are at the beingof blinking we mean ready to fold. worried about the economy but not desperate is how i would put it. caroline: how do they feel about the 90 day extension for deals to be done with huawei? michael: it is pretty much the bare minimum of what they need to see. the issue is what happens with 'sture of about -- of huawei 5g business in particular.

the rollover, the temporary license helps, but they would really like to see substantial relaxation on this export ban. we just don't know if the political will is there yet. at what isoking going on in hong kong and the economic drag that appears to be having, is this something where, if these continue, that hong kong economically will be able to weather the storm? michael: it is difficult because this is not sustainable over the long term we don't know what will be the end of this crisis. exhaustests could themselves, or you could see political accommodation from the government in hong kong. hong kong is a territory with strong institutions and, generally speaking, a strong

economy. the really worrying aspect is aat happens if there is sharper intervention. the financial stability of hong kong is called into question. the long-term future is another issue rate -- another issue. is the territory a place for foreign companies to use their asia hub? the short-term risk we need to worry about is if there is a true crackdown in hong kong. taylor: how much meddling are we seeing in hong kong from beijing? twitter came out today at said about 900 counts they have shut down have been from china about the protests. you have a lending arm down to a strong sell, you saw the chairman resign. michael: we are definitely seeing the propaganda machine running at full tilt and we are

seeing what you could call economic coercion. it is quite notable. that is different from beijing intervening directly in a security situation, which we haven't seen in a significant way. beijing, for as long as it is sustainable, would like to leave this up to the hong kong government and authorities to address. they are clearly ramping up pressure internally and externally but overt intervention by the security forces, that is a line we shouldn't rule out what is still a fairly high barbara caroline: -- fairly high bar. caroline: the clients that are calling you at the moment worried about international headquarters placed in hong kong, what is the best case scenario for them? would they prefer that somehow protests continue, or are the

protests getting to such a difficult level now that maybe they see the long path being more beijing influence. ishael: i think there definitely a degree of significant skepticism about the long-term. likeof our clients feel the writing is on the wall. there could be an improvement if these protests lead to some sort of establishment of a new equilibrium. nobody thinks it is going to be anything like full autonomy or really even increased autonomy. but if the protests are effective, it would drive somewhat of a redline and i think that would lead our clients and others to at least think twice about accelerating their plans about, for example, relocating away from hong kong.

caroline: coming up, france's emmanuel macron hosts russia's a put in after protests in russia. this is bloomberg. ♪

presidentrench emmanuel macron playing host today to russian president vladimir putin. it was clear that one thing was not on the agenda, france saying it is not interested in playing the role of go-between between russia and the rest of the world. let's bring in will pomerantz. notow france says they are

going to be the go-between with russia and the rest of the world but macron seems to have developed a relationship with putin. they are meeting now at this seaside villa. is improving it but you have to realize that france is a part of g7 and an intricate part of the shanks and regime -- the sanctions regime. against oil, against financial institutions. it may be that macron wants to find an opening. there is a history of france wanting to play the go-between between east and west. there's a long way to go before france becomes a leader in changing geopolitics. amidst a waveomes

of protests in russia. does this, as they are excluded isosition in the balance or there deeper unrest at play? will: the current protests in moscow are related to the elections for local councils and the inability to register certain candidates. it is not an economic protest, not a social protest. fears is, ifputin he allows certain opposition candidates to be elected, they will have a platform with which to expand their base and potentially challenge putin in the future. caroline: it seems unwavering that he has a lot of popular support but sometimes the media is not the easiest to come by. can you tell us what happens

post 20-24. will: he remains popular enough that he is the unchallenged leader. it is 60% plus. he has made sure that no political leaders emerge to challenges status. there are certain economic issues troubling russia. not just the sanctions. the fact that a lot of russians have taken out loans they won't able to pay back. the economy hasn't really grown for six years. nonetheless, putin remains in charge of the security services. the one issue that you mentioned that he is facing is what is going to happen in 2024. that is the long-term element of instability that he faces today. protests seem to

be more frequent and also larger in size than what we have seen in the past. i wonder what is the threshold of where the government puts a stop to this or are they willing to let this go as long as it is contained? will: i think putin is using the strategy he has used. he arrests a lot of people, lest most of them go, he subject's a few people to administrative fines, and even a smaller number to criminal offenses. those charges will lead to three, for your sentences and russian prisons. sentences in russian prisons. he believes this selective punishment will be enough to counter this movement. taylor: all things russia. thank you.

pomerantz of the kanaan institute. bloomberg's kathleen hays spoke with boston fed president rosengrant. this is bloomberg. ♪

romaine: time for a bloomberg exclusive. our kathleen hays spoke with boston fed president eric rosengren. he said he wants to see evidence of a slowdown to justify a rate cut. mr. rosengren: it was tied to the fact that economic conditions are still good. inflation is a little bit low. 1.6%. but if you take out some of the outliers, then it is closer to 2%. my own view was that we have to be careful not to ease too much

when we don't have significant problems. the focus is not to do something that effects the exchange rate or something that takes care of the world economy. we are supposed to focus on unemployment, on inflation in the united states. there are costs to easing at times you don't need to. thats one of the ways monetary policy works is that you cause people to buy houses and cars earlier than they otherwise would. you choose to make an investment now because interest rates, you think, will be temporarily low. we loweris that when interest rates, we make the cost of that lower. firmseans households and are more likely to be leveraged. we have to think about the

financial stability characteristics and with that, how much do we want households .nd firms to be leveraged theleen: the signs from global economy, from the bond market in particular, even signs from wall street banks and recession indicators suggest that the recession risk is rising. many of those indicators are tied to financial markets. one way to gauge that is to look at the forecast. the blue-chip forecast for august and growth for the third quarter and fourth quarter both at exactly 2%, roughly the same as the second quarter. that is clearly not a recession. they also have unemployment rate at basically where we are right

1/10 less than- the forecast. the combination of volatile he in -- volatility in stock market. a few days ago, we lost 800 points on the dow. in subsequent days, we moved back up it the long bond is around 1.6%. one of the reasons is global weakness. the cure for global week this is for countries around the world to expand with fiscal and monetary policy in their own countries. caroline: a quick check on the latest business flash headlines. were lauder said sales higher in june. they say, while the outlook for

the current year reflects trade tensions between the u.s. and china, they haven't seen any slowdown in sales. one of the largest cryptocurrency exchanges wants other companies and governments to create a cryptocurrency to take on libra. they want to create a regional version of libra. apple has tried -- amazon has tried to get automakers to introduce alexa into their systems. only bmw and audi have signed on to the deal. of course, the reason it has been dominated by google and apple is because when you get into any car, you tend to sync up your phone, which amazon hasn't been that great at building so far. taylor: there was another crazy headline that state attorney general's are looking to move forward with some of the

antitrust probes of some of these companies. you wonder, after privacy concerns over facebook, the audio recordings, antitrust probes, how big is too big? romaine: i agree. i came in this morning in the company issued may back and -- company issued maybach and i told them to disconnect the alexa. i'm talking about sensitive stuff here. caroline: italy's prime minister will address the senate in rome. taylor: i will be watching home depot second-quarter results before the bell. romaine: toll brothers reports third-quarter earnings before the open. caroline: that is offered "what'd you miss?". romaine: "bloomberg technology" is next in the united states. taylor: have a great evening. this is bloomberg. ♪

♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." twitter and facebook say they have proof of fake accounts backed by the chinese government aimed to undermine chinese protests. plus, deadline extended. commerce secretary wilbur ross says they will ease huawei sanctions