us --ing up in bloomberg best, the stories that shaped the week. markets, as turbulence carries on. crisis.ssents into a stimulus as as session looms. -- onpressure keeps hong kong edge. >> we are operating with a desire relief clashes.

with noent negotiators deal chances rising. another round of earnings reports sends signals about the global economy. >> show me -- facing headwinds. jayederal reserve chairman powell speaks at jackson hole. of --are at a sort >> we have to be careful not to ease too much when we do not have significant problems. >> lower rates will stimulate our economy somewhat. >> i think we are where we need to be. >> it is all straight ahead on bloomberg best.

hello and welcome. i am rosalind chin. "bloomberg best." let's start with a day by day look at the top headlines. on monday, markets responded positively to news that trade tensions. >> the commerce department announcing the u.s. will review days soei waiver for 90 companies can continue to do business. >> they have 90 days for limited part of their business. this extends a reprieve. u.s. customers of huawei, particularly those who run networks that depend on equipment. headsetpliers of the business. itsre looking at google and

android software. this allows google to keep updating phones with security patches. careful about over interpreting this. there is a crackdown happening. addedpartment of commerce 46 new subsidiaries. retrievea temporary for some u.s. customers. germany could spend 50 billion euros in an economic crisis. that is according to the finance minister, who has put a number on the stimulus. fears of a recession pushing berlin to consider suspending its balanced policy. have the firepower to use that money. we have been lowering our debt

to below 60%. >> we heard recession is entirely feasible with a contraction any third order a possibility. -- thed the government government does have the money. it is running a surplus. if it does decide to spending is needed, the cash can be found. ministerly, the prime announced he is going to resign. attacking the premier. sitting next to him. calling the decision to spark a political crisis care responsible. by personal ambition. >> he is going to resign in a couple of hours. he is going to hand his

resignation to a president. this.ow, he will start what next? there isave to see if a chance to form an alternative majority. if he does not see those chances, it will go to the next election. he will name a new prime minister. form a government. >> the five-star movement and the democratic party are holding talks over a possible coalition. what are the chances they work together? >> the idea is having a limited program focusing on areas where interests do meet. ecology, civil rights. there is the possibility for common ground. it is a question whether they can bridge over differences.

befed unity appears to theing after the -- over gathering of policymakers in jackson hole. some ripplesent through the bond markets. what did you take away? >> it appears to ratify what they did. if they want to do it again in september, the conditions they were talking about, uncertainty remainade issues, cautious. we don't know how they are going to react. have been strong and so has retail spending. if inflation takes up, do they see to pause and wait and if something more is needed? that is a possibility. friday get a better idea

after jay powell speaks. >> china hits back at the u.s. with tariffs on $75 billion of imports. take place in two stages. echoing the tariffs on chinese imported goods. are they spinning out of control? >> it is a measured response. things aren of how escalating to read continuing the theme of the summer. both sides keep slapping tariffs on each other. the heat is rising. >> we are counting down to those headlines from the federal reserve chair. about to give his speech behind closed the worst. michael mckee has his speech. chair is not go beyond his promise to act as

appropriate, even though he says trade policy is a worrisome thing. remarks, the most important effects are felt with uncertain lags, the committee must look through what must be passing developments and deal with things that -- we will act sustain thete to expansion. does this meet the test of being dovish enough? >> two major stories hitting the economy and markets. jackson hole and trade. president trump saying he will respond to china slapping tariffs on u.s. goods. threatening the stability of markets. >> the only incumbent presidents

not getting reelected presided over reelections. he knows he has to rectify the situation. things are weakening. he needs to do whatever he can to stimulate the economy. >> the president saying, my only biggern is who is the threat? he has made a calculation he is going to double down on attacks on attacks in central banks. >> i think the reaction has been instructive. you saw stocks fall after headlines china was going to retaliate and raise tariffs on u.s. imports. after that, the speech, pledging toact as appropriate, enough push stocks up. president trump came out and gave us more trade development.

now the facts are back down. >> trump said he is going to respond and he has. he says china and many other countries have been taking advantage of the u.s. in trade and much more. our country has been losing hundreds of billions of dollars a year. administrations have allowed china to get so far past, it has become a burden to the american taxpayer. thisst balance relationship. china should not have put new tariffs on products, politically motivated. goods beinglion of taxed at 25% will be taxed at 30%. the additional goods taxed at 10% will be taxed at 15%.

>> still ahead, as we review the busy much more from a week. the men and women who make monetary policy talk about the path ahead. and earnings reports making headlines. >> there was a flexible way we were able to use our cash. we were ready for whatever the world might throw at us.

>> this is "bloomberg best." earnings season winds down, there is plenty to ponder. let's begin with a round up of the key players in china's tech sector.

the company fights to maintain its position. can we blame this on the trade war? >> they are facing headwinds in a number of macroeconomic fronts. theiro get most of revenue from the lower margin sales. they are trying to expand into businesses like selling ads. we have not seen sales take off enough to offset sales and other areas. investors have not seen a lot of promise in new areas. the connected device unit did you grow. biggest searched engine and china baidu beat rivals

estimates there putting out. where were the bright spots? basically numbers offered some reassurance, at least for now. grow business.to sendoff essentially a challenge from up-and-coming rivals. also, existing incumbents like tencent. >> the world's biggest miner warned growth in china and trade tensions are keys to prices. to aboosted their pay off record. >> with our strong balance sheet, the way we are able to use our cash, we are ready for

whatever the world might throw at us. cashn throw off a lot more and an upturn. >> is the dividend sustainable? have a progressive dividend. it to a flexible dividend. is based on a ratio of 50%. it will go up and down depending on how markets perform. it is one of the tools we have for choppy waters. that is why we are comfortable paying this. are australia's biggest gold producer. they reported full-year earnings up 22%, $561 million.

a record output. >> our priority is to get the best shareholder returns. we focus on where we can add strength in m&a. at new projects. also, returning shareholder funds to the shareholder. we increased our dividends by 19%. our methodology has stood up well over the last five years. we intend to continue the focus we have had. company came out with earnings, giving the green light to a $700 million expansion. that is in ohio. posted underlying profits, 900 $66 million.

australian. million australian dollars. >> there is concern about a and europe, no question we are seeing some softening's. the economy is still ok. automobile construction remains strong. we have seen some price softening. the chinese economy is strong. australia, softening in residential activity. just a moderate softening. from high historical levels. the markets are ok. t.j. maxx reporting earnings.

there may be more retail woes aheaes ahead. are quarter, inventories building up and they are not selling as much merchandise. >> the real trouble spot was home goods. said not great merchandise selection. the good news is, because of the way that inventory model works, they turn it quickly. when they lawn -- land on the wrong product, they are able to turn it quickly. in sales. we do see some early promise from this new initiative. accepting returns of amazon purchases. forhows the importance stores thinking creatively. they are something of a leader. at target, a record.

old feeling that back. third quarter they have done exceptionally well. comps up 3.4%. traffic higher. to ceo, turnaround hoping they have brought brands into the target stores, across different sections. apparel, furniture. consumers liking that. the delivery strategy, really working to bring down margins and drive more traffic. the turnaround showing up in a big way. >> let's have a look at qantas. the company says the leisure travel market has weekend. -- weekend.

lower profit. byyou have seen demands drop 10%. further weakness? how long will that continue? we have the flexibility of moving to slightly smaller aircraft. same product, less. we are going to do that over the next few months. anticipations this will continue for the next few months.

"bloomberg s.k to -- "bloomberg best." on monday, president donald trump urge the central bank to cut interest rates by 100 basis points, saying such a cut would aid the global economy. boston fed president was one of two members who voted against the cut in july. he explained this in an exclusive interview. it was tied to the fact economic conditions are still

pretty good. inflation is a little bit low. take out some of the outliers, it is closer to 2%. was you have to be careful not to ease too much when you do not have significant problems. the issue is not to do something that affects the exchange rate read we are supposed to vocus in on limit and inflation. easing.e costs to >> what is the cost? >> there are several costs. buy houseseople to and cars earlier than they otherwise would read you make an investment now because interest

rates are temporarily low. you make expenditures you might not otherwise have made. when we lower interest rates, we make the cost of debt lower. re morelds and firms likely to be leveraged. we have to think about the financials debility characteristics. want households and firms to be leveraged. as you look ahead to the september meeting, the question of cutting rates again, it will be on the table. are you watching the consumer closely as something that would tilt you not forward waiting to see but sane, no, i am on board? watching a number of things. consumer confidence is weaker. that is something i am paying attention to.

the retail number was strong. we will have enough consumption it is going to bolster gdp. i'm going to pay attention to concerns. brexit coming up in october. there are problems that could spill over. plenty of things to be worried about. i think we cannot be determining monetary policy too far in advance. forecasters expect reasonable growth. yes, bond rates are low but it is reflective of the global conditions. i'm not saying there are not circumstances where i would be willing to ees. i want evidence we are going into something that is more of a slowdown. if i'm growing at 2%, i'm not as worried. best,ing up on "bloomberg " more conversations with top fed officials. jackson hole was buzzing. and members share perspectives

on the policy debate. parks we have to be uber dative attendant -- data-dependent now. ♪

♪ >> you are watching "bloomberg best." this week, the federal reserve bank of kansas city hosted its annual economic policy symposium in phoenix, jackson hole, wyoming. it was challenges for monetary policy and bloomberg was there to discuss those very challenges with several central bank president's, beginning with esther george, the head of the kansas city sector. ♪ >> as i look at where the economy is, it is not yet time, i'm not ready to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting

weaker here. >> you are an advocate of raising rates to get ahead of inflation. if you were not ready to cut rates, are you happy with where rates are, given that inflation is lower than anticipated? would you be happy to leave them at this level for quite some time? >> i think that is going to be a process of have the economy unfolds. where rates are right now relative to the unemployment rate and inflation suggest we are at a sort of equilibrium and i would be happy to leave rates here, absence some weakness or strengthening that would cause me to think rates should be somewhere else. >> where would you put the neutral rate right now relative to where you are? are you tight? are you loose? the of? how do you see it? >> i would judge policy to be a neutral or even accommodative. if you think about where real interest rates are relative to

the rate of inflation and where the fed funds rate is we are operating close to zero. i can't believe that is tight in any sense for the economy right now. ♪ >> how much accommodation does the economy need? >> i like to think about the mid-90's example in the 98 example. i know some of your viewers weren't paying attention to financial markets at that time, but if you look at that, the fed was worried about the asian currency crisis, very similar to today, lowered the policy rate by about 75 basis points. the u.s. economy actually powered through that whole episode and the committee took those insurance cuts away later. i think that's a great baseline idea about where we are looking out now with a global trade war, global manufacturing and contraction, and possible spillover to the u.s. you want to ensure the economy

gets that and stays out of trouble. >> so you think 75 basis points, stopping at this point? >> that's what they did in 1990's. i don't know where we will end that you havehink the yield curve that is massively inverted and you have the funds rate as the very highest point on the whole curve. a downdraft in global yields. >> what is it you are insuring against question mark there doesn't seem to be a demand problem, there doesn't seem to be a cost of credit problem. credit is the cost of problem and i don't think there's a resolution likely anytime soon. the trade war is triggering other actions around the world, other countries thinking about reevaluation of their own trade , they could easily

feedback to the u.s.. that's not my base case. >> how does monetary policy do that? >> lower rates will stimulate the economy somewhat compared to what they would be otherwise, and that would help us power through the churning waters of the trade war. ♪ >> the disagreement within the fed i think is much more about how to manage the risk and the way i see the u.s. economy is that the u.s. consumer is strong. if the u.s. consumer stays strong we will not have a downturn. the issue is manufacturing is weak, global growth is decelerating, and if those intensify, that is going to seep into the rest of the economy. the consumer will be the last thing to go and what i'm concerned about is if those negatives intensify you could

have a negative jobs report in the next x number of months, and then you will see weakness in the consumer. if we wait to see that, we have waited too long. i'm very open-minded and constructive that we mean aid to make a policy adjustment -- but i'm keeping an open mind and they haven't made a decision yet. >> how big a policy adjustment in the long run do you think we need? his july 31 press conference, said midcourse correction, yet wall street is pricing in a rate cut cycle. >> i've been very open about saying unless i see meaningful further weakness, i view the adjustments needed as tactical. they should be unlimited, i don'ted, modest, and see this as the end of a rate cutting cycle. ♪ >> i think it is very important we watch the data. if we were ever data dependent

before, we have to be uber data dependent now, reacting to what is happening in the economy, not just as changes in sentiment, because uncertainty causes people to be concerned about what's going forward, but are they actually making decisions based on that uncertainty? in that case we might have to move. >> what our business is telling you? do they say things have gotten worse, that they might be seeing a step down because of the impact of what's going on? i every business contact talked to always mentions trade policy uncertainty, and the tariffs as being something that there's a concern of. the majority of the firms i talked to still say they are on their plan for investment for the year, they are still certainly seen tight labor markets, trying to increase wages to attract workers. the larger firms that have more multinational connections are affected by both the slowdown in global growth and the trade

policy uncertainty and they are reassessing their plans. it is sort of a mixed picture but i would say we have exposure to manufacturing and free-trade that has been more robust and able to respond pretty well to this uncertainty. they are very concerned about it and we have the next potential leg of the expansion on the consumer side. i think that could be a catalyst for changes and plans. but we haven't seen it yet and i would like to wait until we get more information on how they are reacting, responding in advance. ♪ >> i think right now we are where we need to be. that said, there are clearly downside risks. i think we would have to act as appropriate if those come to fruition, or even look like they are coming to fruition. the biggest concern i have right now is that when you talk to business leaders, nobody i talked to says the cost of

capital is inhibiting business investment. that has been the drag on the economy, not the consumer. the consumer has been the hero. if that is true, and business investment is not being held back by the cost of capital, that's reducing interest rates which have no effect. what's holding it back is the uncertainty around policy. >> is there anything for the fed to do at this moment? are you feeling pressure to be the savior of the economy because you are the only game in town? >> i think we have to act as appropriate when we see the economy having a shock. i don't see that right now so i don't think need to act. >> do you anticipate, from why your contacts are telling you, that the economy is going to deteriorate, or are they on hold? >> a lot of them are on hold. it is perfectly reasonable if you are sitting on a board to not make a big bet on the uncertainty resolves. it's a reasonable thing to do. ♪

♪ best." is "bloomberg let's resume the global tour of the week's top business stories in hong kong, where protesters filled the streets in the 11th consecutive week of demonstrations. ♪ thousands of protesters defied heavy rain in hong kong in one of the largest demonstrations since the unrest began in june. the rally was largely peaceful, it seems there's been a change of tone from the protesters. >> they were breathing a sigh of relief that we didn't see any violent clashes but the numbers are quite remarkable. organizers say 1.7 million people showed up. the governor -- the government puts it at 128,000, but it was a

stunning show of people power and perhaps a signal that public opinion hasn't changed despite china's condemnation of the recent escalation, despite the fact that we saw this backlash after protesters had a violent backlash with police. if this continues, if everything returns to calm, they can start dialogue once again. >> china has been using fake social media accounts to undermine the legitimacy of the hong kong protest, according to facebook and twitter. they have already taken down hundreds of accounts that originated in mainland china stop >> this is the first time we are talking about china. we talked about russia, iran, a lot of other countries that have tried to run these coordinated disinformation campaigns, but this is the first time the social networks are coming out and saying china is the problem, it's the beginning of what potential china has to these campaigns. ♪ >> the people's bank of china

will start releasing a new low primary on the 20th of every month, marking the start of long-awaited reforms. what does this mean, and will this new rate make lending rates a bit more market-driven? is that the hope? >> that is the hope, so the pboc plans to replace the current benchmark with this new reference rate, which will be announced on the 20th of each month. it will be calculated based on the interest rate for one year banks will8 separate then disregard the highest and lowest and find the mean of the 16 submissions. the banks are being told by the pboc to use this rate as the basis for new lows in the central bank says it thinks this can achieve the effect of lowering the real interest rate for loans. it will make it more in line

with other central banks like the fed in controlling interest rates across the board, the final mile in the long-awaited reform monetary policy. >> doesn't look like chinese markets were expecting a deeper reduction in borrowing costs earlier today? this is after the new one year prime rate was out .25%. rate has markets disappointed, doesn't necessarily mean lower rates going forward, and can it generate demand for new credit? >> i think it's a race to the bottom. leading,with the fed all central banks around the world are moving lower and i don't think china can escape that phenomenon. ♪ u.k. prime minister boris johnson makes his first public attempt to renegotiate the

brexit deal. hea letter to donald tusk, says he's looking to replace the irish backstop, and says he sees a legally binding commitment to not carry out as long as the bloc promises the same. are we looking at perhaps maybe brussels giving him something to he comesnson, or if back with it would it be enough? >> i think from the eu perspective, this is the best confirmation could have an illegally mandated backstop. effectively he is saying let's dispense with all the guarantees that are in the treaty and provide insurance policy and instead just trust us that eventually if it comes to it we will find a way to make it work and iphone think that is going to fly. the johnson administration is saying we tried in our positioning to blame the eu

later. >> angela merkel has said boris johnson's challenge to solve the border backstop within 30 days. she says it is up to the u.k. to put forward workable alternatives in the prime minister agreed the onus is on us. >> what we saw as the tiniest hint is the willingness to talk and perhaps if they would agree not to leave with the no deal they could find a way forward. -- the backstop is there until they agree on a future deal, perhaps if they can find some of that language, that might be enough to placate boris johnson but then he has to get it through parliament. but that's a really big gasket a short amount of time. ♪ world'sny held the first 30 year bond auction, offering a zero coupon, and investors showing little appetite, buying less than half the amount available. germany apologized saying the

option may have been too large. i'd be the understatement of the day. >> they are trying to cover the bases. it was good for bond traders to buy 30 year will bonds with zero coupon at a price above what we are going to get three decades from now, it was too much to bear and it is a real big risk because the further out you go on the curve, if germany decides to flip the switch, you can be looking at really large losses. it might have been too much to bear for bond traders. ♪ >> wall street regulators appointed by president trump have wrapped up a top goal, unveiling a long-awaited overhaul of the volker rule that uses restriction on banks, making speculative investments. >> this is more or less trying to make it clear what traits are banned and which are not banned. thanks claim in real time the

way they conduct activity, it is almost impossible to make those split-second decisions about can i do this for clients? the point of this was to go whichh and cleanse it this is an allowed trade, this is not permitted trade. that said one of the democratic board members blasted the effort today, he warned that we were going to go back to the banking because i hedge fund days we saw before the crisis. ♪ >> bloomberg has learned saudi aramco is taking advice on the oil giant for the biggest ipo, slamming a listing as early as next year. where do you think they are on the path? >> this is the world's biggest anticipated, and

aramco has listed them to advise it on this ipo. they will be playing key roles in the process, including helping with underwriters, listing venues, and managing expectations. i do want to point out one of the most interesting parts of this is that they did not make the cut in 2016 when aramco was initially planning to list. it did not choose them as one of their advisors to be part of the process but now it has. they're in a pretty good situation. ♪ >> the animal health company that spun out of eli lilly last year announced today a $7.6 billion share back, creating the world's second-largest animal health company. they say it was created in the first full year -- how does that work? >> it doubles our pet business, balances our livestock and pet business more globally, growth for both markets.

that helps. it is very much strengthening and accelerating the current strategy we have, and i think it all comes back to this -- we weng a long heritage, have been the leaner an online retail. today it's about 40% in u.s. pat purchases. we will be able to meet pet owners where they want to shop, more portfolio, more information, more price point. ♪ planning itschs is biggest hiring spree in years, but only coders need apply. >> they are not hiring commodities traders, they are hiring coders, which seems to be the trend everywhere. >> this is one of the biggest hiring spree from goldman in years, and they are hiring engineers. they had to go up and down the chain to win approval, it is significant in terms of what they had to put out to hide this kind of talent, yet all the

roles they are looking to fill our engineered, and that is critical because in some ways it tells you it is more like a structural commitment than cyclical, and that is where the entire market is headed. inworld leaders gathered france for the g7 summit, set against a backdrop of growing uncertainty which would provide a chance to address major international concerns. lots of different issues that could potentially be brought up -- what this top of the agenda? >> there are many issues that officials are worried about. they worry about trade and the global state of the economy -- they also worry about germany and the politics, because it is so shaky and unstable everywhere. brexit,a no deal president trump always unpredictable, many think italy could be headed for another election.

the bar is so low for any agreement that we are not even expecting a communique by the end of the session. ♪

♪ >> we are looking at the function on the bloomberg terminal where they are on some elevated volumes, well above the 20 day moving average. it comes as investors plan to sell more assets to pay down debt. that is illustrated here by the more positive new sentiment. >> there are about 30,000 functions on the bloomberg and we always enjoy showing you are favorites. they will become your favorites.

here's another function you will find useful, it will take you to our quick takes, where you can find important context in fast insight into timely topics. here's a quick take from this week. ♪ >> decades in the making, quantum computing is the technology that could make today's fastest supercomputer look like an abacus. teams around the world are racing to build machines with different approaches. while the technology is moving quickly toward reality, it is too soon to tell when it will get there. this is your bloomberg quick take on quantum computing. the computer you are using now processes information in bits that can represent two possible states -- one or zero. quantum computers use quantum bits which can represent one or zero or both at the same time. this is called superposition. they can also exhibit what's called entanglement, estate in which a change to one changes the state of another. these properties like quantum computers consider multiple possibilities at once, while in

normal computer plugs away at one possible answer at a time. >> if we figure out how to do these kinds of calculations we can solve absolutely complex and unfathomably long calculations that would take a traditional computer, no matter how good or fast it is, thousands of years to calculate. >> there's a lot of hype around quantum computers and researchers continue to make incremental advances. they promise machines that can break the most impenetrable coded messages, accurately predict weather patterns, and diagnose and treat disease based on a specific body. but there is still a ways to go. >> it is very difficult to actually make the physical computers, the hardware. a lot of the research is sort of in material science, figuring out what is the best hardware, and there are a few different options. you are just talking about the traditional silica and chips we see. use tinyctures either loops of super connecting wires,

superconductors, combinations of both, or even stranger approaches, like twisting subatomic particles into a braid. iny qubits can only exist temperatures colder than deep space. one company became the first to sell quantum computers in 2011, although their usefulness is limited to certain kinds of math problems. ibm, google, intel, and others all built working computers. >> anyone who knows the promise of the technology can't help but get excited about it, even if it is many years away and even if it never works out the way erratically it could. this is still something people think is worth spending money on. ♪ was one of the many quick takes you can find on the bloomberg. you can also sign up at bloomberg.com with all the latest business news and analysis 24 hours a day.

that's all for bloomberg best this week, thanks for watching. i'm rosalind chin, this is bloomberg. ♪

♪ emily: i am emily chang in san francisco. trade tensions tighten. china retaliates by vowing to slash tariffs and president trump signals that he's prepared to escalate.