place to rest, we donate tens of thousands of mattresses to those in need. experience the leesa hybrid mattress. right now, it's on sale. order today. go to leesa.com. "daybreakome to australia." sophie: we're counting down to asia's major market opens. i'm kathleen hays in jackson hole. here are some of the stories we are covering at this hour -- the pressure is on powell. the fed chair opens the kansas city symposium at the jackson lake lodge with three regional fed bank presidents saying now is not the time to cut. : the aussie dollar has been a key shield for australia, but it easing poses a threat, and

boris johnson beats a brexit blockade in paris as mccrone -- as emmanuel macron says any potential changes to the deal would be minimal at best. shery: we have some big guests coming up on "daybreak." first, let's get you started with a check of how markets closed on this thursday session here in the u.s. it was a bit of a mixed picture. we saw the doubt at about 50 points, but the s&p 500 gave up morning gains. we had more cautious commentary coming out of that officials when it comes to future rate cuts, so that really helped curve.rt that 2/10 yield materials and health care stocks leading the declines, weighing on the stock markets.

we are also seeing manufacturing pmi's coming in a bit soft, so that did not help sentiment. we saw the nasdaq down .4% as we continue to see fears of recession creeping in. at the moment, u.s. futures not doing much, but let's see how we are setting up in asia. sophie: we not seeing much in the way of action just yet. you just nudging lower in sydney and seoul. banks in the drivers seat. on thursday, bank of indonesia surprised with a rate cut and trimmed its gdp growth, and today, the boj will be looking to its cpi report for july, likely to have shown further weakening with rises seen easing withd autumn and singapore its inflation for do today, likely to see another slow reading. bond traders very much on high alert with global yield at multiyear lows, so we are seeing

a surge on treasury futures as indicated by the chart on the terminal right here. two puts fory every one call. that is a near multiyear high. rates could be bottoming out. paul: let's head now to jackson two puts for hole where the fed symposium threatens to reveal widening divisions among senior policy makers. chairman jerome powell is under increasing pressure from president trump to cut rates, but at least three regional fed losses have told bloomberg they opposed the idea. they say this is not the moment to cut. economy is, it's not yet time. i'm not ready to begin to provide more accommodation to the economy without seeing an outlook that suggest the economy is getting weaker here. paul: let's head over to wyoming and kathleen hays is standing by

in jackson hole with a renowned .conomist kathleen: import me, john lipsky is more than a renowned economist. he is someone who has been at jackson hole for at least as long as i have, attending this very important fed symposium. firstalso the former director at the imf. he is currently at the johns hopkins school of advanced international studies. john, it's great to have you back. >> glad to be here. kathleen: one of our annual jackson hole chats. what a time this is. the fed is not just in a bind, a difficult spot. session,l opens the and what the world is waiting to he iss the affirmation worried enough to leave the door open for a cut in september, or no, he's going to wait and see. what do you think?

>> oh, it's very easy. for sure, the fed's latest move they said was to recalibrate essentially policy in line with where they perceive the economy to be and going forward, it will depend on, among other things, how the economic data develop, maybe how policy conflicts internationally could influence expectations. it is a complex environment, and to beect they are going definitely in a wait and see will react quickly if they see away from their baseline expectations for economic performance. kathleen: if the context of fed immediacy and rate cuts and signals, and more away broadly,e context of the symposium, last year, jay powell gave a very ,nteresting speech about stars our stars and north stars, and he seemed to be saying we really don't know what the stars will be telling us. a year later when he says we will wait and see, and the less

press conference he said one of the things he is worried about his low inflation. is it incumbent upon him in any way to follow through and let us know where he is leaning? forget the rest of the committee for a minute, but where jay powell is leaning. >> i suspect the chairman news to remain a spokesperson for the consensus on the committee. i don't think it would be helpful for the chairman to be saying, "well, i think this, maybe the committee will not agree with me and maybe we will not do what i think is right," though that has happened at other central banks. i look to the bank of england. but the fed is in a special place and especially now, they need to project a notion of steady confidence about where they should be moving policy. kathleen: let's put on one of your former hats. i for many years. >> not quite, jpmorgan. kathleen: even better, jpmorgan. .ook at the u.s. economy for us

if you were advising jay powell and his colleagues on what needs to be done now, how would you advise him? >> there are an awful lot of uncertainties, but the basics are that consumer incomes are growing at a relatively solid ise, that consumer spending continuing at a relatively solid pace, non-spectacular but solid pace of improvement, confidence numbers remain high, but an area that had been better and is now weakening is corporate investment. for sure, extended weakness in corporate investment is not for the long-term outlook for the economy. however, it's not likely that short-term monetary policy is an important variable in determining the investment behavior of u.s. corporations. kathleen: are you saying the fed has nothing to do to boost the economy or boost inflation with short-term rates at this point? -- not nothingo

to do, but you should not expect the fed at this time to have their hands on magic switches that will affect the broader in the near-term. the area where you think the fed has the most effect, they do not seem to be having a problem. consumers are doing quite well. marketn: what about signals? we had a very important yield curve invert. it is not inverted, but it is close to in writing again if it wants to. a fed survey out today showed a survey of major bond players in the market that does not expect the 10-year to go above 2% the next decade. in the past, the history is if it says that, it will be below. are there logical reasons for the fed to cut rates to adjust to a world where rates are lower for longer? >> no question, you are asking the $64 question. this is one that is going to be

the most difficult and perplexing to answer. what you see is bond yields lower than anyone had expected, but outside the united states, you see some key international and markets, government bond markets trading at negative yields, something that never would have been expected over a sustained period of time. how do you interpret that? does that represent long-term effects in the economy that we had not foreseen clearly, or is it a result of short-term uncertainties? the answer to that question will determine to a large extent what central banks should be doing. we did ask what are the possible explanations. one, there are some long-term ones. demographics. as the population ages, they are probably more risk-averse than they were in the past. technology and globalization seems to have an effect on measured inflation. you have seen some scholarly studies just in the last few days published saying that the

technological change means we are overestimating inflation, for centralsuggest banks they need to react. on the other hand, there is lingering uncertainty from the global financial crisis and the policy disarray and uncertainty from abrading of central bankers to trade conflicts to the uncertainty in europe. all that will have a short-term effect. this is not easy to see your way through. kathleen: are you surprised that with the global economy still in , there may betory signs of recession risk rising, but there is no recession risk on the horizon, that the fed is talking about dusting off quantitative easing? other central banks are talking about it, too. we are not in a financial crisis. what's going on? >> well, there's an easy answer. no, there is no easy answer.

if you are a central banker and think part of the problem is thattations uncertainty could be assuaged by quantitative easing, maybe that would be the thing to do. certainly in the wake of the initial shock of the global financial crisis, there is no doubt that aggressive monetary easing and ultimately here in the u.s. what we call qe1 had a real impact and probably most importantly on combing fears and settling uncertainties. would that be true today? with that kind of action have the same affect today? i think there is a lot of doubt about that. : donald trump trade war, what is it doing to the economy? >> cannot be good unless in the long run it results in more open trade. after all, the president says what he is really looking for is a level playing field, fairer itde, but in the short run, looks like we are heading down a road of tit-for-tat in the near

term that is causing a uncertainty. if what we end up with, contrary to the stated goals of increased trade barriers, that is not a good sign for anybody. that is a lose-lose outcome. kathleen: donald trump criticizing jay powell and fed policy. what is the impact? >> i think everybody needs to take a deep breath. the fed certainly needs to keep his eye on the main chance. it has to do what it thinks is right and react to the fundamentals. the president's parading of the fed is something new, and i think even if over the long-term it turns out to be right, i suspect that in the short term, the operating of the fed causes uncertainty. hard to see it as helpful. kathleen: it was helpful or you to join us today. >> it is a pleasure as always. skate -- john lynch

, thank you so much. thank you for taking time out of this gorgeous scenery here at the jackson lake lodge to join us. we will be continuing these conversations ahead of jay powell's important opening speech. the first speech at the kansas city fed symposium friday morning. for now, back to you. as kathleen mentioned, we will have a whole lot more in-depth coverage including interviews with a string of top fed officials. let's get to first word news with jessica summers. jessica: french president emmanuel macron has poured cold water on any hope of a new brexit deal after talks with u.k. prime minister boris johnson. he tempered any optimism by chain -- by saying changes to the current deal will not be significant. johnson is demanding the e.u. .crap the so-called backstop he still thinks he can negotiate

a new deal. clear to yoube that of course i want a deal, and i think we can get a deal. jessica: hong kong retail sales have plummeted this month as street protests and flicked growing damage on the economy. the retail management association is calling on landlords to cut shop rents in half for the next six months and once the government to provide other relief measures. the value of retail sales dropped 6.7% in june from a year earlier. that is the straight want of declines. cathay -- that is the fifth straight month of declines. some staff at cathay pacific were have down to have taken part in hong kong's protease -- protests. the company has said it could violate the demand of china's

aviation regulator. china has said any employee who engages in protest activities could be fired. i'm jessica summers. this is bloomberg. very much.s just want to get you across some news on the bloomberg terminal, earnings from aia. first-half operating profit $2.9 billion. the value of the business was up 16%, bang in line with estimates. the value of new business, up 16%, in line with estimates. plenty more to come here on "daybreak australia." we will be back in jackson hole on centralalysis bank policies. plus, rba's philip lowe

may need to tread carefully in wyoming. he will want to have his messaging right to avoid upsetting the aussie dollar. this is bloomberg. ♪

shery: it was a bumpy day on wall street for stocks and bonds in the regular session. there were all those, it's out of jackson hole and we had so much data. kathleen: there's a big wait for jay powell's speech later friday. let's listen to what he will have to say. notice we had banks showing strength, financials coming on strong. tech was an area of weakness and earnings continue to come in apace. let's look at some of the big movers. boeing was up. there were analyst comments about the max jet getting back toward a return of service.

nordstrom rallied after hours yesterday. they beat profit expectations. united health showing continued weakness in managed health care. certainly a week sector in this latest session. called stocks over bonds. we are seeing stocks and bonds on a bumpy ride, but the s&p dividend yield of late is outweighing the 10-year treasury .ields interesting to note as investors are very much into shifting allocations with the changing tailwinds we've got. keenan, thanks very much for that. let's look at what else we should be watching as trading gets under way in asia. adam, just hours away from jay powell's speech at jackson hole. sure ay they are not so

rate cut is the right thing to do here. adam: absolutely. the bond market is starting to shift away from more aggressive rate cut bets that worked pretty well. tothe 10-year yield drops 1.52 or so, we have seen the awayctory slowly grind up from that as we have heard from, as you say, a number of fed officials, just putting a little bit of caution around the idea of it we are going to see ultimately a more aggressive fed or more aggressive sounding powell. alicia anything from the bank of new york mellon said the market was setting itself up for a little bit of disappointment. we are still not far off those all-time highs, and as i said, yields have rallied off that, but what you are also seeing is that traders are hedging for a

rise in treasury yields, and that's pretty interesting. you look at the put/call ratio on treasury futures. you see that slowly slide upwards where people are starting to take that hedging that a little more serious. you would not expect a huge amount of movement in the friday session in asia. i think it will largely be a case of people not wanting to ahead ofhuge changes hearing from powell himself. fact that wee the have seen some pressure on u.s. stocks, the s&p 500 still remains close to its all-time highs. this, of course, as we continue to talk about figures of earnings growth. what are we seeing? adam: to the extent investors should be continuing to worry pressures around earnings with the ongoing trade war and the concerns around global economic growth, it makes sense, but if you look at one bloomberg

indicator that our bloomberg intelligence folks use, it does suggest there may be some sign of upside for earnings growth looking into this quarter. the proportion of s&p 500 companies that have got positive and earnings growth, and for the first time in about a year, that last green bar on the chart, you see how it is starting to potentially .2 a slightly rosier picture. picked out by our chief strategist in new york. she's making the point that the forecast for earnings are still pretty poor, but the proportion or the bulk of companies looking towards earnings growth may actually give us a little bit of sign of hope in and around the market is struggling to gain traction. so much for you that. of course, you can find adam's libraryn the g tv

on bloomberg. plenty more to come on "daybreak australia." this is bloomberg. ♪

paul: china's high-profile campaign to funnel more credit to private companies has stalled according to private surveys and reports, adding to concerns over slowing growth. our china correspondent has the story. what do we know?s na: there has been an ongoing campaign to get more credit to these private companies, but that is stalled and private surveys are reflecting that. china is dealing with a very difficult trilemma, trying to fund state owned enterprises, get more money to private companies, and at the same time, deleverage the economy. many economists say if china does not ease up on one of those

areas, let up on the crackdown on shadow banking sector or get more incentives for these things to lend to private companies, this could lead to a liquidity crisis. we have then following the implication of the new loan prime rate that new loans will be priced against, and this is seen as a positive development to eventually lower those , but manycosts analysts say that's really not enough and that there is more targeted easing measures that for thise implemented credit to actually funnel to the real economy. shery: we had some strong earnings out of china. .hina life, china telecom give us the details. all these companies aren't vastly different sectors but also reported surprisingly positive earnings. if you take a look at china life, the country's largest insurer, net income jumped on

the backs of its industry tax in news well as growth businesses, and that reversed its 24% decline a year earlier. also announced growth in 5g plans, following a big government push to develop this as fast as possible, and it concernsy investment and pressure to lower costs that this would be road carriers' profits, so it looks like china telecom is still on strong footing. jumpnergy also had profits , mainly driven by an increase in gas consumption in china, which has been going through this gold to cash gas consumption upgrade, as well is this really reflects a recent bloomberg news interview with an executive who said that they are very confident the chinese economy is still on strong footing. much forank you so

that. coming up, we head back to and look for to jay powell's keynote speech. constance hunter discusses what we can expect. this is bloomberg. ♪

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: 8:30 a.m. friday morning. we have the market open 90 minutes away. futures currently pointing a little weaker by about .25% after we saw a rather mixed day on u.s. equities markets. in new york it is 6:30 p.m. you are watching "daybreak australia." let's get to first word news. jessica: the fed's jackson hole symposium threatens to reveal widening divisions among policy makers. chairman jerome powell is under increasing pressure from president trump to cut rates, but at least three regional fed bosses have told bloomberg they

oppose the ideal. they say this is not the moment to cut. >> as i look at where the economy is, it's not yet time, i'm not ready to begin to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker here. jessica: south korea is withdrawing from an intelligence pact with japan as the feud between the neighbors widens. its planified tokyo of to abandon the three-year-old arrangement despite appeals from u.s. officials including president trump. this a the move is due to japan's decision to remove korea from its list of trusted export destinations. has disabled more than 200 youtube channels involved in what it calls attempts to coordinate and influence operations tied to the protests

in hong kong. youtube does not say which channels have been shut that says they are consistent with recent action related to china by facebook and twitter. the company says accounts linked to the chinese government have been trying to undermine the legitimacy of the protests. and some of the world's most high profile companies have signed on to a new effort to spread the benefits of global growth, saying economic inequality is a defining challenge of our time. the initiative will be launched g7.resident macron at the jpmorgan,includes version, unilever, and goldman sachs. 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. paul: thanks, jessica. let's head back to jackson hole and our global economics and

policy editor kathleen hays. how is the mood headed into this weekend? think, isthe mood, i what is going on in the world of central banking. isllenges to monetary policy the kansas city fed symposium theme and they have an uncanny ability to set a theme in the end that is so timely as this one is now. constance hunter joins me now. she is a chief economist at kpmg in new york. reportedly, she is also president of the national association for business economics. welcome. me.hank you for having kathleen: what do you think jay powell's mood is? there is so much talk that he is under pressure. >> opening the door to a rate cut he has to signal he will go through. >> i think there's pressure from several sources. there's pressure from the bond market, for sure. desks talk to major bond

in new york, you definitely got the sense the bond market was going to force the fed's hand because it a not move, you would see this snap back in yields, which would really negate some of the job owning that was done when they change their stance from three rate hikes to the pause. some people have said there's pressure from the white house, though i don't think jay powell for thembing at all first time. i think the minutes revealed deep is so much conversation about this. the fed is not monolithic. there is not groupthink. there is serious debate, so that also believes some of the pressure, i think, from jay powell because he can hear a plurality of views, and there can be a debate and a decision that comes as a result of a robust examination and analysis. kathleen: let's look at the

other side of the coin. recession risks are rising by many measures. trump ramped up the trade war again. is there a risk in waiting too long, and not being preemptive? >> this is the right question, but the problem is we do not necessarily know the answer. at the beginning of the year, i was thinking the fed's next move might be a cut because i saw the deterioration in the global economy. there was already some deterioration in the u.s. in terms of a residential housing market. certainly corporate investment was at risk. my thought was they probably are not going to do these hikes. they probably will end up having to cut, but when i looked back the 1995 example and the 1998 example, those were different times in the business cycle. somewhat while it was

late cycle, obviously not as late as we are in this cycle. really, the question is how much juice can you get and what do you get from prolonging the expansion? we know you get continued employment. the consumer has been the backbone of the expansion and backbone of the economy. you have interest rate sensitive sectors like manufacturing that are hurt from the trade tensions, so lower rates help them. backboneit certainly is seeminp real estate a little bit. kathleen: to your point, given that today we have seen factory orders contract since 2009, when do you start seeing the manufacturing pain start hitting the consumer? are going to need to see a shift in the hiring pattern of manufacturers before you see it hitting the consumer. in 2015, we had a mini global manufacturing

recession emanating also from china, and it did not end up spilling over into the rest of the economy, so it depends on ,ow long and how deep this goes if it ends up impacting the service sector, which is obviously such a much bigger part of the u.s. economy, and that is where the majority of the jobs come from. paul: it's getting hard to a lot ofe notion that the problems being created are as a result of the trade war, in particular the global slowdown. how aggressively do you think that will be discussed this weekend? >> it is certainly going to be discussed, but let's remember china was slowing down long before the trade war started. china was reducing its monetary stimulus. you can see that very clearly in their data, and that was sort of leading to this global slowdown. we see it really most pronounced in auto parts sales and auto

sales, so you saw this reverberating into germany, which is really another bellwether manufacturing economy, and then trickling out around the rest of the world, so, of course, the trade tensions do not help the situation. ted phone from brookings just put out -- i'm sorry peterson just put out a piece that said if the full tariffs are implemented, then china will be paying a lot more for their imports. basically, he estimates 1.6 off of chinesets gdp. that puts them really at risk. this is an economy already spending close to 20% of gdp on debt servicing and a slowdown in growth would be very challenging for them. kathleen: what do you see the u.s. economy doing? ,f you were sitting at the fed

what would you be voting for? >> on the hot seat. i guess i would be voting to cause right now, but watching very closely with certainly a tilt toward examining the value and the trade-off, i guess, fire nowolding one's so you have ammunition later, versus doing another cut now and how much it would impact the economy, i think for those that believe that the u.s. economy is at risk, that is the real question. kathleen: unconventional tools will be discussed again very much here. again, we are not in a great recession, not in a financial crisis and every central bank in the world practically seems to be talking about them, but is there really that much you can do now with quantitative easing? particularly if your goal is to boost inflation. >> forward guidance did a lot this year. look at what happened when the stance was shifted to "we are

pause." cause." -- this happens with lags. we are just now seeing the effect of that forward guidance on the actual economy. let's give it time to see how it plays out. do i think the fed can prevent visitors cycles from occurring? no. will still have business cycles, but at this juncture, can they help extend the expansion a bit? i think so. kathleen: it feels like we are yields, world of low low inflation, maybe low growth. what does that mean for central banks? >> i think we are in a completely new paradigm. we have never before had this mixture of increasing on

jeopardy and lower birth rates. the whole world is organized so that we have younger people coming along to boost the to fill government coffers that allow them to help provide for retirement for our older populations, and that entire paradigm has completely shifted. it is no longer sustainable. we know that when you have increased longevity and a majority of your population is an older population, you have much lower inflation rates, much lower growth rates, it is impacting everything from investment to consumption, and of course, that impacts where rates are and what monetary policy is doing. kathleen: thanks for joining us. have a great time here at jackson lake lodge. we are going to go back to you. we have a lot more coming up. big day ahead and for us, a big day ahead as well on the show. paul: thanks very much.

the reserve bank of australia say, will have a lot to but you might want to tiptoe around one subject. the aussie dollar has dropped reaffirming its role as a key shield frustrate you, meaning he must take care not to upset one of the few metrics that is moving his way right now. if the fed does cut, it will not be good news for the aussie, will it? >> a lot is about the way in which the fed cuts. after all, the fed did just cut, and the aussie dollar in fact ended up heading down, and that is precisely because powell talked about insurance cuts and midcycle adjustments. he pushed back against the idea that the fed is, you know, just going to cut rates by 100 basis points in the space of a year. that means the rba retains some of the advantage it's got from

earlier,that it moves hasoves two times, and lowe been a bit more open about how he still stands willing to cut, even though he traditionally has expressed skepticism about the effectiveness of rates if you go too much lower from here. he stands ready to cut again and discussion,d that some with theoretical, of what qe might look like in australia, that was detailed in the recent minutes. that's part of him trying to strike that right tone, not only for the currency markets' sake, but for the economy's sake, that he is still willing to go again. shery: we know a strong economy usually helps countries like comes to exports and competitiveness. how much does a weaker currency hurt australia?

>> it is definitely playing a role. role have been enhanced by the fact that australia's commodity prices, the prices of us trillion's commodities in u.s. dollars have actually been quite strong. longer, ihigher for think, than the rba really expected. some of that has been to do with supply shocks due to the tragedies and so on in brazil. iron ore, which is a very important component for strega, that is now coming down a lot. coal is a bit stickier. with those commodities, because they are priced in u.s. dollars, a weaker aussie immediately enhances cash flows not only for us trillion companies but for the us government, so that has played a key role in helping those parts of the australian economy. thatorry for lowe has been

the consumer here has been very weak and as long as the consumer stays weak, australia needs to have that week australian dollar otherer to enhance those parts of the economy that are most sensitive to the australian dollar. thank you so much for that. coming up next, markets are in wait-and-see mode ahead of jay powell's speech later friday. this is bloomberg. ♪

shery: i'm shery ahn in new york. paul: i'm paul allen in sydney. you are watching "daybreak australia." let's get a quick check of what to watch in the markets this morning. sophie: here we are with the offshore yuan, just trading above that 7.09 handle.

ame dovish fed commentary, wonk with that we data we got from germany that could show signs of a recession for that it, and we have seen this adding ton the yuan growth worries. we saw the onshore rates fall to a much 2008 low. take a look at what is going on with this chart. that's what i want to show you right now. more copper weakness is anticipated going forward, given factors like investors' positioning. jumping to the next terminal, which indicates what is going on with chinese stocks, which have is theall as well, this shanghai composite and we are seeing it hit its head against a resistance level that may see rebounds come under threat. the index has risen 3% in the past two weeks, but we are

seeing that somewhat flat line. shery: thank you for that. abouttalk a little bit the outlook out there. see weakue to manufacturing numbers, if it's here in the u.s. or the eurozone as well, not to mention china, but the consumer seems to be strong. labor day that is -- labor data is strong, so what is the fear of actually talking ourselves into recession? >> i think that is the fear because we have been doing that both in the bond market and the equity market, and i actually we're doing is setting up for a better than expected fall. we have covered a lot of ground. we have gone through seven in the renminbi. we had a major collapse in the imaging in argentina, and we finally crossed the rubicon and

inverted the yield curve. now we can see what happens next and what happens next is typically a recession, should one come, is he year and a half away and the s&p is up in the year after that first inversion. i think we have covered a lot of ground. we do not expect a recession. we are in the lower for longer global growth camp and we do think the consumer in the service sector is going to be sufficient and we are close to the end of the manufacturing slowdown than the beginning. yet in the meantime, we continue to see moves and asset positioning turning defensive. the third quarter, for example, yen,ve seen gold rally, and bonds, but then stocks underperforming. are we a bit stretched in this trade? >> again, you are right on point. we have been positioned for an uptick in growth, so the last couple of weeks has been difficult for our portfolio. when we looked to see if we

should change things, we realized the things we wanted to sell were oversold. might want to buy, anything defensive, gold, treasuries, etc., where way overbought. really, i think we are going to work off those conditions and i think the might want to buy, long-duration assets are very, very dangerous here, very expensive. if we get a couple of decent data points, i think the switch is going to come very quickly, and the way i have approached it is it is almost like a schoolyard bully fight. the bully of late has been these duration bulls working directly counter to what the fed wants to do. the fed wants to steepen the yield curve. what we have seen in said is a flattening of the yield curve. we see some decent growth numbers, we get good news out of the fed, jackson hole, going forward. i think we can start to see a different dynamic take place with a long it will steepen, stocks will do ok and some of

those defensive havens will come under pressure. paul: when you say expect some fed, i'm from the expecting or assuming you mean more easing coming down the track. you say stocks are oversold, but if we look at earnings, they have been a bit mixed to tepid. strong u.s. dollar is likely to weigh on the next quarter as well. do you feel like equities markets are getting a bit reliant on fed sugar hits? >> that's an excellent question. we're looking at for signposts to guide is going forward. the easing cycle is the most aggressive since 2009. i think things are much better today than in 2009. second is the trade front. we think the action in the markets of the last month is going to convince both the u.s. and china there's not much good to be had from going further into the fight. we think we have a cause there -- pause there.

the third is how close we are to the bottom. i think the fourth is likely to be where the earnings bottom comes into play. the last thing i'd like to say about the fed is not so much that i expect a lot of fed easing from here. i think the market is ahead of itself, but what i am interested in is to see if there is talk of this melding of monetary policy and fiscal policy together. blackrock put out a paper in the last couple of days time for the jackson hole gathering. basically, it says we need to go beyond pure monetary policy, bring in fiscal policy, bring the two together, and that can really generate growth. i think particularly in europe -- this is really important -- in germany in particular needs to start to stimulate. the good news is germany has plenty of room to do so. were they to take that step, that would send a strong signal

to investors on the equity side and the fixed income side that we do have both monetary and fiscal policy coming into play. paul: once the of and subjects in whole are out of the way, the next thing we look forward to his u.s.-china trade talks coming up in d.c. there were signs of the u.s. , the delay oning terrorist heading into christmas that maybe things are starting to fight for the u.s. is that likely to bring both parties to the table in a better mood to negotiate? >> i think there's room on both sides for compromise, and a ticket is becoming very clear to the administration that the uncertainty around trade is having a negative effect on the u.s. economy, not so much on the consumer, but much more on the side. was actually negative in q2 -- capex was actually negative in

q2 for the first time in many years. i think the president has reached out to many people to get their take on what is happening and i think that is a sign there is room for some rethinking of the u.s. position, which i think would be beneficial. i do not expect a deal imminently, but i expect more of a pause or cease-fire and that should allow room for positive asset price performance when put in place with the fed meeting in september, the ecb meeting in september and the opec lust meeting in september. there's a lot coming down the pike. .e covered a lot of bad news to me, there is a fair bit of upside ahead. paul: plenty more inflection points as well. thank you for joining us. more ahead on "daybreak australia." this is bloomberg. ♪

shery: we have big guests coming up on bloomberg from jackson hole. plus, j.p. morgan chase's international chairman. we'll also get the latest inflation data out of japan with insight from a former boj member. this is bloomberg. ♪ ♪

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>> good morning. we are under an hour away from the market open in australia, japan, and south korea. from bloomberg's headquarters in new york. hays in jackson hole. here are the stories we are covering. the pressure is on powell. openedkansas city fed its symposium, he is facing resistance from three presidents. one says the senate is not needed to cut rates right now. paul: