trump says beijing wants to get back to the negotiating table. after this comment about forcing companies to leave china's royal market. u.s. futures have completely reversed their losses. seaside shocker. emmanuel macron surprises his guests by inviting iran foreign minister for a flying visit but trump says he knew about it and approved of the invitation. a violent weekend in hong kong. the police fire a weapon and use

water cannons for the first time . we are live on the ground in the 12th week of protests. welcome back to bloomberg surveillance. i am matt miller here. good monday morning. i am here for francine lacqua. let's go to live picks of the g7 meeting. somedent macron is getting statements -- giving some statements to the press. let's listen in. >> he is probably the best informed. a few words about libya as we agreed yesterday. at the conclusion yesterday afternoon. ok. >> thank you.

matt: all right. we are getting a little bit. macron saying they are going to bring up the subject of libya. it will be at really interesting when they discuss the subject of iran, as well as trade. we've gotten so much from trump earlier in the press conference with egypt's president el-sisi. we have some very disappointing german economic news. just breaking, the phone business climate number came out at 94.3. the survey was for an expectation of 95.1 so a big miss there. a big miss on the expectations and on the current assessment at 97.3. across the board miss on the german people -- german ifo

confidence numbers. an economy that is already -- has already been facing some headwinds certainly headwinds of forecastrisks of bad or outlook, that continues and you see the euro losing some ground against the greenback. --o going for one dollar .9 1.1119. we got that i've info president fused talkingts to us. here,,s of the outlook in terms of the current economy, we heard that everybody wants to be germany but the outlook is very different. let's get the first word news. >> this weekend g7 summit saw a surprise visit -- surprise visitor, iran's foreign minister , this as macron's attempt to

disc a late tensions between -- to de-escalate tensions between iran and the west. tehran's top negotiator was coming -- trump said that he knew that tehran's top negotiator was coming and gave his ok. -- that is the warning from australia's central bank governor. reserve bank of australia chief says politcal shocks are turning into economic shocks. he says the public cannot count on central bankers to bail them out if politicians keep turning up the heat. a trade deal between the u.s. and japan and principal. trump and japan's prime minister announced a pact at the g summit -- g7 summit. the agreement will delay the threat of additional levies on japan's auto exports to the u.s.. there could be a solution inside

for italy's political crisis. the democratic party is willing to act the lower house speaker and five-star lawmaker to become the next prime minister. it could help seal a deal between the two parties. they have until tomorrow to work out an agreement that would spare the election or the country a new election. a new virtual reserve currency. that is what mark carney calls at the annual retreat in jackson hole. it will be a radical overhaul of the global financial system that could replace the dollar as the world's reserve currency. oreo is home to some of the world's biggest reserves and orangutan habitats. president george cowrote odo is working to relieve pressure in jakarta. he hopes -- will help spread

economic activity. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am renita young and this is bloomberg. that thank you so much for . renita young with your first word news. let's get to our top trade story . s&p futures have turned positive after trump said china wants to restart trade talks. >> china called last night. and said let's get back to the table, so we will be getting back to the table. i think they want to do something. they understand this is the right thing to do. it. got great respect for very positive development for the world. matt: the president commented that he has the power to force american companies to leave

china sending the u.s. 10-year yield sinking to a three year low. , president made those comments here he has been there. what is the focus -- what has the focus been at the summit? has it been trade or ran? -- or iran? maria: the conversation has been all about trade. yesterday the white house told us the president was determined to continue with the strategy. he came out hard on friday when he put out a tweet that said there would be more tariffs on china and he would order american companies move away from china. today, it is a whole different world and a whole different shop -- different trump. he said that it was china that called and they called twice and they are serious about this trade deal and they want negotiations. trump says the table is ready

for talks and he is willing to listen to what the chinese have got to say. it is complete de-escalation and a whole different tone. in particular, that tweet on friday that had the market concerned about a potential escalation. we are looking at the de-escalation the key will be the reaction from the chinese. tadeo, she will continue to cover the g7. we have an important press conference coming up. one of them president macron and trump together. joining us is marie owens thompson. thank you so much for joining us on this monday morning. let me ask what you take from this optimistic turn, this consolatory turn that trump has taken in terms of the trade war? buta: it is very good news, i think it is impossible to

extrapolate on any of these sentiments, be they good or bad. i think we are going to be stuck in oscillation between negative tweets and positive tweets, and that the trade issue will not go away for the duration of this administration. matt: what has -- what have your clients been doing? we are seeing big drops in equity indexes over the last couple of sessions. risk assets are still trading at a fairly high level historically. would do well for management clients, what have they been doing with their money? obviously various investors have various strategies depending on their own situations. as a message coming out, we do encourage investors to protect

their exceptional returns that many of them have made since the beginning. bit favoring a prudent stance and favoring quality assets. that is totally justified in today's environment. jump we have seen a huge in the bond prices driving the yield down to a three year low. a big bid for other safe haven assets at the end goal. do you think those trades have been overdone? marie: clearly it skews the risk. you would think asset prices are very vulnerable to a big move in the other direction, but central banks are conducting very supportive policies. what can i say? 20% to 30%30% --

correction in the other direction. mitigated by the central-bank action. matt: what do you need to see from trade talks in order to be convinced that you can get really back into risk assets? do you think we will see new highs in any case? marie: politically, the two degrees of freedom that the president has in the u.s. under the current circumstances with the divided congress is trade and foreign policy. it is very unlikely that those levers -- that he would choose not to leave you those levers which is why we think trade and foreign policy will continue to perturb financial markets for the duration of this administration. the only solution would be a completely out-of-the-box solution, for instance if

congress were to take back the trade negotiation authority that it has allocated to the president since the 1930's. that is a very unlikely scenario. clearly, from these already very , anylevels and risk assets gains will be capped by these events. in europe, also capped by the brexit situation and indeed, as well the italian political situation. matt: marie, you are going to take with us. -- stick with us. we talked germany with the ifo president, clemens fused. that conversation after a disappointing set of numbers for the german economy. this is bloomberg. ♪

matt: economics, finance, politics. this is "bloomberg surveillance." i am matt miller. in hong kong, the 12th straight weekend of protests and violent clashes erupted between police and protesters on sunday evening at police drew their guns and an officer fired a warning shot. dozens were arrested as violence increased, water cannons, tear gas and rubber bullets were used . stephen engle is watching this. let -- lead us through what exactly happened and has this been the worst level in terms of violence? stephen: after a brief respite last weekend when we had demonstrations for 11 consecutive weekends. they were fairly peaceful. we thought maybe this could be

the beginning of a dialogue but that ended pretty quickly this weekend as the weather turned hot and extremely rainy. people got a little more frustrated. the protesters really frustrated at the local government says it wants to talk but it is not offering any concessions to their main demand. they are really fighting a political battle. this teargas, now water cannons. now notaid, they are hesitating to pull out their sidearm and six officers pulled out their handguns. one of them who felt in threat of his life actually fired into the sky. police were here at the headquarters for hong kong. they defendant the police action saying it was necessary and reasonable. it is a very tense situation with no end in sight.

much --ank you's very thank you very much. stephen engle on the ground. german ifo data came out, even worse than expected. business expectation came out at 91.3, that is the lowest level since the financial crisis. joining us from munich, clemens fuest. clemens, expectations were already low for this index. we have seen it missing those expectations and dipping down. how dire would you say the situation is? clemens: i do think the situation has become dire. we see that the weakness which was focused on manufacturing and spreading to other sectors within manufacturing. we see the weakness broadening. it started with the automotive industry. we now see it is across-the-board and it includes the chemical industry, electrical engineering companies. it is really brought and it is

affecting the services sector which is becoming weaker. these are services close to industry like logistics but also other sectors. there is a decline in the assessment of the business and also in the confidence. engage --would you how would you gauge the reaction of berlin? what would you expect the country to do or spend to get germany out of this crisis? the focus of berlin is on this to beeson policy -- is distribution policy. berlin has to wake up yet to the new situation. fore are tax cuts planned 2021. that could be brought forward to

2020 and blurring -- berlin needs to do something about copper tax. it is time to focus on this current situation. no reason to panic but this should be taken seriously. likelihoodis the that a spending package would help? one of the things we hear from politicians in berlin is that all of the headwinds, all of the risks to this economy are coming from outside. for example, the trade war or brexit, and that a stimulus package would not do any good. clemens: it is true to some extent, but there are also internal difficulties. it is true that spending on infrastructure, public investment, is not the solution. we need more public investment but the construction industry is running at full capacity. there is little to do their. -- do there. what government can do is cut

taxes and let consumers spend more. and improve investment incentives. china buys more and the u.s. buys less, it is difficult for the government to step in. what the government can do is improve business conditions, improve conditions for investment by offering an effective tax environment by offering stable conditions and reliable conditions for the energy sector. so the government can and should do things to stabilize development, in particular in manufacturing. matt: clemens, thank you so much for joining us. president of the ifa institute after those highly regarded numbers came out, worse than

expected. definitely a negative indicator for the future of the german economy. we have heard more. we will talk more about the g7 meeting in france. this is bloomberg. ♪

matt: let's get back to germany and the ifr figures. isie owens thompson, what

your take on the weakening german economy? for sure, we have in europe and the u.s. and many other economies totally confirmed the trend that growth is decelerating. we have pretty much eliminated the growth that we had over and above what we call the potential growth rate. the benchmark for gdp. we have eliminated the excess over potential but we are growing in line with potential. the big issue is the likelihood of these growth rates falling below potential. this number is one element that suggests this could be the case. is --r thing is important the second quarter gdp that was published in germany showed negative devolution of 0.1% from the first quarter. flat on a straight year on

year basis. working day adjusted, the number was a positive 0.4%. this is important because the definitions we choose to look at, color is our perception. i am trying to highlight that there is some good news. matt: you are. it is always good to get a reminder of that. marie, thank you for joining us. a lot of news, marie owens thompson. up next, we are live, back on the beaches to give you the latest on a turbulent and volatile g7 meeting. this is bloomberg. ♪

matt: trade turnaround. trump says beijing wants to get back to the negotiating table

and china's vice mayor warns against a further escalation. iran shuns the u.s.. the country's foreign minister says it will not be with u.s. delegation for the g7, despite confirming a four hour conversation with the french president yesterday. a violent weekend in hong kong. stocks slide. police fire a weapon and use water cannons for the first time, firing many weapons but one with a live bullet. many rubber bullets fired as well as teargas. you are watching "bloomberg surveillance." i am matt miller. let's check in on the biggest stock movers. exotica moving to the upside with a better performers in the stoxx 600. shares up 1.5%. they are taking a stake in the company.

he has met with the board of management and currently buying up shares. that has got some optimism into the market. the know via inclining today -- vonovia declining today after berlin planning to cap. we are seeing them saying we are going to keep the 2019 outlook and not change things for this fiscal year. rockwool issued a profit warning last week saying their outlook for this whole year revenue is going to be only as high as 5%. before they were saying 8% saying there is a lot of volatility. they make stone wool. matt: that makes sense. dani burger with a look at some of your individual stock movers. i am looking at some hong kong data coming across the terminal.

july imports fell 8.7% year-over-year. that was a bigger drop than the estimate which was already 8.3% drop. the 12 weeks of protests certainly having effect on the real economy. let's get first word news with renita young. >> a trade deal between the u.s. and japan and principal. trump and shinzo abe announced the pact at the g7 summit. slash tariffs on beef and other products. a solution be insight to italy's political crisis. the democratic party is willing to back the lower house speaker and five-star lawmaker to become the next prime minister. it could help seal deal between the two parties. they have until tomorrow to work

out an agreement that would spare the country a new election. central banks cannot save the world economy alone, that is the morning from australia's central bank governor. chiefe bank of australia says political shots are turning into economic shots. he says the public cannot count on central bankers to bail them out. hole it will be a radical overhaul for the global financial system that will replace the dollar as the world's reserve currency. borneo is home to some the world's biggest coal reserves and soon it could -- the president is looking to ease pressure on congested and he hopesakarta he says

to spread economic activity a set of indonesia's most populous island. zillow is sending the -- brazil is sending the army to fight the fires raging in the amazon. gettingident is pressure. he pledged action to control the fires. the u.s. has offered it support to tackle this disaster. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am renita young. this is bloomberg. matt: renita, thank you so much. let's talk trade. trump says china wants to restart trade talks and called the u.s. twice over the weekend, that is following comments from china's top negotiator who says the dispute should be resolved through measured dialogue. he added that the nation "firmly

opposes washington's escalation of the trade war." here are the u.s. president's comments after. >> china called last night. said let's get back to the table. we will be getting back to the table and i think we will do something. it hurt very badly but they understand this is the right thing to do. i've got great respect for them and for what they are saying. very positive development for the world. tadeo, what is the latest. we saw the world leaders sitting around a table talking with the host, president macron of france. maria: the conversation here is all about trade and potentially the trade deal between the u.s. and china. everyone here as an incentive for the u.s. and china to get to a trade deal. every european official made it

clear over the weekend and they told the president he needs to de-escalate. this is bad for the global economy. it is interesting the comments from the president. it is a very different tone where the white house said he would stick to his strategy on tariffs. he said the chinese have called twice and they finally understand they need to go back to the goat -- to the negotiating table and for real the comments on the president that hinge toward the escalation. we did get comments from the spokesman from china that did not confirm that call actually had taken place. optimisticone is that the tone, the mood music seems to have improved. matt: i can imagine a vice premier placing a call to a treasury secretary without telling the spokesman at the foreign ministry.

but, i don't know exactly how things work in china. the optimism should be the takeaway. it certainly is for futures. thank you very much continue to cover that for us. joining us now is burkhard varnholt. what do you make of the optimistic turn? burkhard: thank you and good morning. it is always good news to hear some positive, some confidence, war iss theoretic trade something we shouldn't read too much into. something we have learned is that it moves one day up and the other day in moves down to reality is, this is not a trade war. this is a geopolitical rivalry between two great geopolitical and economic powers. it is going to be with us for the next five and 10 years. shouldough, investors

remember that we are not investing into geopolitics. we are investing into businesses and business is remarkably adaptable, flexible and pragmatic in reacting to this trade war. that is what i take from what has happened over the course of this. i have seen a number of companies changing their supply chain, whether you like that are not. the reality is business adapts quickly and that bodes well for the way that corporate earnings should develop. invest in thisu climate? you've got donald trump and president xi trying to change the structure through which global business is done. you've got brexit happening, as well. a constant problem out of the italian political situation.

a german outlook that we saw from the i have phone numbers is disappointing -- the i fo numbers is disappointing. how do you invest in that situation? do you like companies prospect -- prospects? number one rule is we are playing the long game. patience is one of the simple secrets in the long-term success . at this point, there is no point in chasing bonds when yields already are negative. that is why our view is a diversified strategy. we have a neutral equity allocation which is constructive view of the world. at the end of the day, the equity market is the healthiest. you have mentioned some of the challenges that haven't gone away in europe.

what is maybe most important, we have tried to find sectors or cap the best of two worlds. where do you find it? for example you find a lot of it in i.t. related fields. security, robotics. those are themes we like because the fundamental prospects are here to stay despite the ups and downs of the world economy. fed wantsou think the to work with president trump enough to keep the u.s. economy from slipping into a recession? is it necessary for a big rate cut to make that happen? game of: there's a chicken going on between the white house and the fed. it is anyone's guess how that

plays out. one thing we can be confident about is when the economy really weakens and so for the u.s. economy remains in a favorable place. if and when it really weakens, easey the fed is going to monetary policy. just like any other central bank. at this part of the cycle, we would all agree that monetary policy can't do most of the heavy lifting. it requires school support just requires -- requires fiscal support. it is clear to us that at this fragile state and the world economic cycle and geopolitics, policymakers around the world seem ready to help, and they will for better or for worse.

it would be something that should support the market. matt: burkhard, we are going to continue this conversation. he is going to stay with us. up next, as risks increase, how will central bankers react? we will talk about whether there is enough dry powder and the barrel. we are back as the g7 meeting continues. this is bloomberg. ♪

matt: you are watching "bloomberg surveillance." i am matt miller. let's get the bloomberg this is flash. >> the world's largest asset manager could be adding to a foot print in the middle east.

blackrock is looking to joining israel's infrastructure. the government says the firm is discussing an investment. the state is making a push over the coming decade to revitalize everything from roads and ports to a metro in tel aviv. fortescue is doubling its dividend to a record after a full year earnings more than tripled. a surgeon iron ore prices helped tobeat estimates in the year june. it is a strong start so the world's number four iron ore exporter. tesla is looking at factory locations in germany. it is looking at sites in the lower rheinland areas. in june the ceo called germany a leading choice for europe. continentent -- the is the second largest driver of

electric cards only behind china. sendt suisse plans to hundreds of millions of francs on its own unit. the lender plans to make its investment banking activities a separate business to better serve ultrarich clients. credit suisse also plans to create a high double-digit number of client advisory positions by the end of 2020. that is the bloomberg business flash. matt? matt: german i fo data came out worse than expected. business expectation came out it 91.3. that is the lowest number on the index. still with us is burkhard varnholt. thate ask you a question we have gotten from a viewer. how well insulated is the german consumer from the german manufacturing section of the economy? because unlike the stereotype, it seems the german

consumer is still spending. burkhard: it certainly is. i was speaking to the ceo of a large consumer product company and he was confirming that german consumers are healthy. they are reasonably healthy because of low unemployment and still and comes have been benefiting. even today's ifo index which was worse than expected, let's face it, that is already yesterday's news. the reality is there is a very vibrant economy that, despite the weakness of the automobile manufacturing sector, remains vibrant and is well-positioned for the next recovery in the european economy. matt: in order to make that necessary, a lot of people were talking about fiscal stimulus. another writer writes in.

it is the likelihood for fiscal policy in germany relatively small? what do you think about berlin spending more money? are giving more tax cuts? or giving more tax cuts? burkhard: so far, we have seen the german government emphasizing saving. if you compare the german economy to all other european economies, it is the one that stands out both in its ability to ramp up spending -- it has never been cheaper. government debt to gdp is below the agreement. there is room for spending. course of this weekend, all other european governments who are present are pressuring

the german government to do what seems politically advisable at this point. that is to announce significant physical spending. matt: there certainly is scope for spending. they need to spend on military,ture, the broadband, et cetera we just spoke about corporate tax and income tax structures. let me ask you about the ecb. what do you expect from mario draghi as he heads out? are we going to see more quantitative easing and further big at of? what kind of problems does that bring with it? burkhard: it is monetary policy to the weakest link of the chain. it is a shame mario draghi wasn't able to during the course of his presidency raise rates but that is what it is.

the ecb will continue to kick the can down the road and to do what they can, even though they have made it clear that at this point, really fiscal policy must step up more significantly. that is not just physical spending, really far more important if you want to sustainably reinvigorate europe's ailing economies is to deregulate labor markets. taxes,simplify and lower corporate as well as private sectors. matt: burkhard, we are going to keep you with us. the cio stays with us. we are going to bring you the market reaction as the g7 leaders continue their talks. ahead of the press conference between president trump and president macron, there you see president trump's wife, the first lady speaking with some of

the other companions of g7 leaders. this is bloomberg. ♪

>> it will be a robust debate.

i think it is creeping onto the table here, but obviously the markets have it as a test case of 25 basis points. who i think it is important that we watch the data. if we were ever data dependent before, we have to be uber dependent now. >> i prefer not to have to make any adjustments. >> we have to act as appropriate when we see the economy having a shock. i don't see that right now. >> i am not ready to begin to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker here. matt: fed officials speaking in jackson hole about the rates debate as traders have jacked up the expectations or reductions this year following ongoing science that the global economy is weakening. we are getting details of the ipo. it is spinning off its holding

in tencent which is a whopping 31% of the chinese internet giant. they say that process will have a market value of about $100 billion and it will be listed in amsterdam. it will hold that entire 31% stake in tencent. let's get back to burkhard varnholt. let me finally ask you your thoughts on the safe haven trades that investors have piled into over the last weeks and months, pushing the 10-year yield down to 1.44%. obviously it has had affects on the yen and even the u.s. dollar. where do you think those trades are? d.c. any of those as overdone? -- do you see any of those as overdone? look, when japanese

and european bond yields grow negative, why should u.s. bond yields be significant he higher? there something like a global equilibrium. no country is an island. i think that is been pulling the u.s. long and lower. there is an abundance of liquidity seeking and hovering every piece of yield. that is why the bond yields in the u.s. has declined so significantly. matt: it makes sense that there. burkhard, it has been a real pleasure. this is bloomberg. this is bloomberg. ♪

♪ >> this morning, i hereby a

claim a calm attitude is in order, the vice premier of china single-handedly calms markets, the u.s. 10 year yields nears 2060 lows. it is different in hong kong. stephen engle reports on the protests, and too many p.m. coal mines. good morning, everyone. i'm tom keene in new york. nejra cehic is in london. the known world and the united kingdom off today, and this is the banking and financial deal out a bank work holiday in the united kingdom. what is a bank holiday? closed, theanks are and it absolutely dead,

is the hottest august holiday on record as well. the sun is shining. >> we saw that, the weather is absolutely extraordinary. huge news flow, huge market flow, good conversation for you. your first word news in new york city. says chinat trump wants to restart trade talks. the focus at the g7 meeting in france. china called last night, our top treat people, and said let's get back to the table, so i think they want to do something because they understand this is the right thing to do and i have great respect for it. positive development for the world. >> last week the countries escalated the trade war

tit-for-tat tariff increases. president trump in japan's prime minister shinzo abe have agreed in principle on the new trade deal. they are hoping to sign the treaty next month. they will cut tariffs for agricultural products to help american farmers heard by the trade war with china. the u.s. will hold off imposing new tariffs on japanese cars. macron had aanuel massive surprise on g7 by inviting the iranian foreign minister. president trump says he supports the decision to invite him but said it was too soon to meet with the iranian officials. in hong kong, tensions escalated during a 12th straight weekend of protests. they say the warning shot was the best way to deter demonstrators while china's official new jason sees suggest

beijing is losing patience. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm renita young. this is bloomberg. >> thank you so much. stephen engle joins us from hong kong, thrilled he could stay around for monday evening. difficult asian morning, then over to europe and a comment by the chinese minister is a big theme. right now a baited to the market is very deceptive. recursion coming in nicely, oil is stronger. 19.70, 10 year yield really extraordinary, a lower yield by nine basis points. story,ll of a sudden the

with the mexican peso burning 20. >> absolutely. you ask whether you want to take off the e.m. carry trade -- we're seeing it come through, a turnaround following what's happening in u.s. futures. the bund yields are up, the onshore you boo and weakening despite a stronger-than-expected pboc. gold did not quite as much, still about 1500. as of0 per ounce roughly 9:00 p.m. last night. let me go to the bloomberg, there's eight charts to show. index, ahe jp morgan nice blend back to 2007, this is long-term e.m. weakness. there is now a substantial depreciation bordering on 40% over the last 12 years.

that is an extraordinary chart if e.m. breaks down over the last difficult week. >> i'm looking at the 10 year treasury yield, not trading in the cash trade right now because of the bank holiday here in london. 7:00will reopen around a.m.. we have dropped to a 2016 low on the safe haven bid, we dropped nine basis points in the asian session and the question i want to ask is why have we not yet retouched that 2016 post-brexit record low despite all the risks. goldman sachs says we could get that record low. >> to reporters have been ,orking on the major stories still a movable feast of the news flow at the g7, and enda curran joins us, our chief asia economics correspondent. who is the vice premier and why is it important when he speaks?

is pretty important, he is the man that the president most trust on the economic side and is heading the trade negotiations for china, and amid all the conflicting signals we've been getting over recent days the vice premier came out with the message that it is time for calm and china is willing to work its way through these problems. we still get fiery rhetoric from state media, but this message from the vice premier was interpreted as something of a message that they are still willing to come to the table despite the mood music. >> what are you looking for into your monday evening and tuesday morning? what is the thing you want to listen to from china or from the president of the united states? china it would be interesting if we kept clarity around these weekend telephone calls that president trump referred to. a spokesperson said he wasn't

aware of them. if there was some concrete confirmation from the chinese side and the not that talks would happen, that would be something of a significant development, likely the cold water president trump spoke about. it is critical to see how beijing response to those remarks. point let's turn to our guests standing by, covering the g7 all weekend. has hadmments saying he phone calls with china and that he wants to do a trade deal -- is this a softening in tone given everything we've heard over the weekend? >> that's right. this is a completely different donald trump. he started by saying he was having second thoughts about china and the white house corrected that statement and said he was continuing with the strategy. today we got a completely different tone.

he says the chinese called twice and they are ready to engage in talks. he said "the chinese need this deal badly and they now understand how their world works. we were headed for further escalation and today it was a complete 180. he said if anything we are going back to the negotiating table and i can tell you the u.s. delegation spent the whole day talking up the trump economy, concerned about every european official who told trump this was the time to reconsider. if we were headed for an escalation that would be bad for the global economy. >> what more can we expect on this front in terms of global trade as we head into the last hours of the g7 summit? well, we are expected to hear from donald trump and angela merkel. the president said the media had read the entire summit wrong and that there could be more good

news to come. perhaps he has something he could announce but the press conference we are all waiting .or would be emmanuel macron it's interesting that they would do it together, usually countries would do it separately and every leader would speak to their audience, this time they decided to do it together. >> thank you so much. greatly appreciated. we will hear more through "surveillance" this morning. to begin the conversation, john hardy, head of ethics strategy, and captain peterson with allianz. you are picking up the pieces from friday. when did you write about over the weekend? how do we encourage, given all this news flow, to participate in the market? clearly the trade war continues to be a major topic for markets and continues to

overshadow other developments. on friday morning at the jackson hole summit investors were relatively content with jerome seats,for the fed chair which was pointing to some further easing or even another insurance rate cut in september. but then news concerning the trade war continue to overshadow this easing of monetary policy. was -- we sum up what will continue to see major uncertainty when it comes to the trade war, the theoretic announcement about one sign of this uncertainty. >> dollar-yen has turned around since we got the comments from president trump, saying china wants to talk and they had phone calls, but with this uncertainty -- is the simple trade to buy yen?

isthe problem across market you have so much correlation so whether you are buying along or whether you are long goal, it is all the same trade. that is what happens when everyone is obsessing. i don't think there's any safe haven trade. if you can tell me what's going to happen next i can tell you the trade but as we have seen we just don't know what's going to happen. >> we will suspend this with aation, john hardy litmus paper of the global fx system and we will continue forward on that. original chairman joins us, extraordinarily good news flow off the vice premier comments in china. stay with us. ♪

♪ this is "bloomberg surveillance." let's get the business flash. gold hit the highest level since 2013, used in demand for the traditional haven. prices inched closer to $1600 per ounce. gold was at more than 20% this year and the price of silver was also low. credit suisse plans to spend hundreds of millions of dollars on digitization and new staff added swiss unit. it also will make a domestic investment bank a separate business. credit suisse wants to serve ultrarich clients and institutions better. nowe's reliance on china is looking like its biggest handicap. the world's most influential consumer electronics company lost $44 billion of market value on friday after the u.s. and

china escalated their trade war. almost all the world's iphones are made in china. it would take years for apple to move production elsewhere. and that's the bloomberg business flash. >> thank you so much. a very deceptive market this morning. we really have friday follow-on, even though equities are green on the screen. catherine peterson's at allianz global investment and we are bringing you john hardy at saxo bank in copenhagen. he writes extremely physical notes on the exchange market. i want to start with an open question. what is the ethics thing i need to know as icy see dollar strengthening indian deterioration? emstrengthening and deterioration? we have some technical difficulty/ hopefully i've got audio with stronghow do you this dollar, in particular the new

weakness in the currency, new low yield. how do you for that strong dollar into an equity market analysis? comes to the dollar, it is pretty much with the time but could continue to hold up well. we see some very interesting developments and we expect the dollar will appreciate against yen currencies, particularly the renminbi and asian currencies, while depreciating against safe haven currencies for current account surplus countries. that is our expectation which seems to play out. markets,of the equity the dollar is fundamentally

but as long as there is some potential for weakening in the dollar, this will continue to be supportive for emerging markets and equities. might we see the two year treasury yield retest the 2016 record low, or even go below it? depends onthink it recession probabilities for the u.s.. for the time being we think in the near-term the recession risk , and inively low medium-term recession probability has seen a spike so we think over the next 12 months the recession probability is above 80%. unfolds andation the fed continues to use policy and political risks don't go

away we might well see those low levels again. >> i believe we have john hardy back with us in copenhagen. we have moved on to a more general conversation that i want to come back to fx but over the , secretary mnuchin doing a unilateral currency intervention. does saxo bank even see that as remotely possible? i see it is highly possible. i wouldn't want to put odds on it. look at the tweet from trump to powell after his jackson hole speech. this is the declared enemy of trump. trump wants to see powell on his side as a currency warrior and do so by 100 basis points. the goal context the rate should be zero and it should be doing

massive qe to absorb these trump deficits. action from the trump administration, i think the probability is rising very rapidly. they stay with us. coming up, we speak with the tgif fixed income and chief economist, 1:00 p.m. in london. this is bloomberg. ♪

♪

>> i'm there a change in london with francine in new york. by tradeork pulled tensions, reversing after president donald trump said china wants to restart talks. we are back with an catherine peterson, it looks like we could have a higher open when the u.s. market gets going -- would you be buying u.s. equities here? well, i think within equity land, the u.s. equity market might hold up relatively well as it tends to be less cyclical but morell it has become cautious and the fundamental validation for risky assets to go higher is lacking on a global level, and add to this uncertainty that the trade war

hasn't gone away. point, is this the time to scale back the emerging market carry trade and fx? well, i think that time has already passed. we saw a lot of fx on the defensive already so we are all keen to understand what will happen next and there is certainly two-way risk. we could see a lot of enthusiasm for em if we do see more profound or sustained relationships, a much better start after the em space. we can go just as far in the wrong direction so like almost everything else there is too much correlation and the main thing we can do is keep risk exposure modest and be aware of those correlations. >> it is the g7 right now without a statement but that doesn't preclude statements from the leadership of the u.s. and germany.

here is president trump and chancellor merkel. >> [indiscernible] that just a about capturedes ago and we isis, they are captured. are in various locations but predominantly in one. set came from europe and we i hope you'll be able to take them back and do something so it is something that we discussed with the various nations. the united states did a great to take 100%e able but we have thousands of isis fighters and some are very dangerous. we think they should go to the country from which they came and i think we had a pretty good meeting that had not reached a terrible conclusion.

merkel --and misses >> we haven't discussed iran too much but i think it is a very important thing. g7 everybody agrees that iran should not have nuclear weapons. >> [indiscernible] >> i can only repeat that [indiscernible]

>> [indiscernible] think we really made good progress with respect to iran in terms of unity. ,here has been great unity flawless in that sense, and we but witht of fake news the fall of the seven countries -- it has been really good. we still have a meeting or two left but we have had a great unity, even with iran and a lot of progress and we have come to a conclusion and the greatest

part is they can't have nuclear weapons, so we've had a very successful g7, very opposite of what you have reported. there was a report where i hadn't even landed yet and you said i was and it is viewed. that was your predisposition. states -- talks are going on with china. sure whatnt to make was just reported by bloomberg , time to just put out a statement -- the talks thate just came out. we will continue those shortly. >> [indiscernible]

do you still believe that the u.s. is worse than the eu? >> i say it with respect. tough andey are very the united states has been not treated particularly well and it should have been the other way the european union is tough. they are tough traders. the united states has lost a decent amount of money over many years with the european union, and i don't hold that against the european union, i hold it against the administrations that did not do a great job. i respect the european union and china, to do what they've done for the united states over the years, and you look like sleepy joe biden, that he would allow us, to do what they did to

when i'm doing with china should have happened 25 years ago, not just president obama but many presidents. bush and clinton, many presidents should have done something about this. taking out hundreds of billions of dollars per year, intellectual property theft by the billions, it is not right. i'm not blaming china i am blaming our representatives in leadership that are doing a bad job. >> [indiscernible] >> this doesn't sound good. [laughter]

>> we wish to talk about this continueid we want to to talk about the european union and there are tribulations between the european union and the united states and we want to bring those functions to a close. [indiscernible] know, we made a big deal with japan, with prime minister abe. we hope to have a deal with the european union, good deal for everybody. >> will you be able to attend the working session on climate and ocean? >> [indiscernible]

>> the question was is the dream team of g7 -- [laughter] >> that's a good answer. have had really great contributions. >> [indiscernible] >> yeah, we are getting close. we are getting close. >> we said we have the intention to find an institution for each

and everyone and that will be to the benefit of everyone. >> correct. >> is germany committed to take back isis fighters in syria? germanyve a lot from and we will work something out. >> we should say that we have already established -- [indiscernible] we want to find a solution

together. >> i think we've done a really great job. we defeated them, we took over 100%, not 99%. we did 100% and we did a good job, and we have very good talks. it is not fair that the united areas, not to these just from france, we have a lot from france and a lot from the u.k., from a lot of different countries. >> do you think it is possible that talks will advance in you can reach a deal to delay or cancel the tariff increases? >> anything is possible.

much more meaningful than any time and i think for the most part it is because we are doing very well. country, igreat consider him a great leader. they are losing millions and millions of jobs, they are going to other countries, and if i were them i would want to make a deal. madenited states has billions and billions of dollars and most of these products haven't even gone up because thea has manipulated and product can save the same price or it wouldn't be a competitive product. and iost a lot of jobs think they want a sensible solution. i think we are probably in a and ietter position now

know we couldn't have gotten here without having to go through this process and maybe i'm alone but i think we are in a position to do it for everybody. we have a very meaningful talk. >> is the chancellor pressuring you to de-escalate the t.r.y. no trade war? >> you would like to see it worked out. not pressuring. she is a brilliant woman, she understands exactly where everything is, she would like this worked out. >> [indiscernible] bloomberg.co

>> i don't think there will be any surprises. g7,e had a very successful it will probably be in miami next to the international electric location. sometimes you have hours and hours of driving and you will only have a five minute job, which is good. we think we will have a very successful week and i think they did a really good job, even

architecturally, the way the rooms were designed. we have some good ideas from this g7 but there won't be any surprises. think that russia -- we had a talk, we had a talk about russia. some people disagree with me and some people don't. people won't agree with the 100% but we did have a discussion maybe at this time i think i could say without being specific -- we will see what happens. everybody is right next to the , itort, it is a great place

, hundredsdous acreage of acres, we can handle whatever happens and people are really liking it. were 50-70 units in each so you had various havetions, and they could buildings with the crosswalk, great -- we are thinking about it. and we another location like the fact that it is right next to the airport, and it is miami. great area. we haven't found anything close to compete with it, especially with the location right next to the airport. long and youso need helicopters and all sorts -- iings, it's really

think they will appreciate them. >> [indiscernible] [laughter] and want to be -- two talk we wish to see progress made

even though much was already try and i think we have to to bring that forward in the next months to come. i have every interest in continuing the solutions to this. mr. president, the g7 is about to lose its only female leader. worldu concerned that the is failing to promote female leaders? >> i'm still here. [laughter] >> she may surprise you. i don't other you are right about that. leaders,ng on female where -- >> we are looking at it carefully. we had some very good meetings. really productive. it is something we are looking

at very seriously, as an endorsement. >> [indiscernible] >> it may come up at the very end and we could be discussing that a little bit. it's a big thing, monetary policy. fiscal policy. >> [indiscernible] >> i invited the president of the ecb [indiscernible] >> we will be there. honored by the invitation. we will be there. i have german in my blood. i will be there.

haven't thought of that but it could happen. we will be in poland i guess and we will be there very soon. thank you all very much. >> the president of the united states with the chancellor of germany. this november it will be 14 years as chancellor of germany, an extraordinary run. we were briefly there with the secretary of treasury, commenting on the chinese market. which headline did you see that really stuck out to you? >> president trump is saying we are in a much better position

for a china deal in the market seems to be reacting positively to what he was saying because we saw u.s. futures extending gains along with nasdaq futures and seeing european equities in the green. >> john hardy was a very special export importmer bank president for the united kingdom, chairman and president. i want to go to you with one key question -- how correlated are the markets this morning? they have the very correlated, whether you were talking about the long bond metals, riskious appetite, everything is moving up and down and it is very typical of markets when we are looking for the next headline. obsessing.arket is the former export import

chairman and president working with president obama, with the president of the united states. i guess that is looking forward to 2020 as well. you will not only for yourself, but this presidency unique trade policy and how he said it's not about china, it's not about europe, it's about our previous presidents. discuss that, please. >> somehow we have been a victim of china and the eu and others. nothing could be further from the truth. we are the second largest exporter, we were the largest exporter at the beginning of the century.

what we have favorite is a more rules-based approach, to get people at the table, to agree to a set of rules. as a result, perhaps we sometimes give up ground in order to get everybody at the table. that was a calculation that was made by previous administrations. george bush, bill clinton, that was a good deal. objectives other like climates, human rights, president trump sees everything through the prism of profit, a trade deficit or surplus, and that is not how previous administrations are most economists look at the world. >> let's look at china, because we had the global times editor tweeting over the weekend that it is a mouthpiece for the communist party, we have nothing more to lose while the u.s. is just starting to lose china. does that have a ring of truth

to it? >> generally, customers have the upper hand. you can choose where and where not to buy. however with supply chains and integrated supply chains, they are frequently much harder to unwind and cannot be unwind by in order. supplier,you are a you have to commit to making any component part for at least 13 years. the idea that you will just rip this up and move on is not very thoughtful or understanding the dynamics of the days global business. >> when they tell companies to move out of china and invoke the emergency powers act -- >> the problem with president trump's we never know. trying to a company

make investment decisions, that puts a wet blanket on investment, and that is not good for the global economy. this, we saw a stronger than expected fixing by the pboc during the asian session. the yuan weakens nonetheless. does that tell us something about china's approach, the fact that we had all this noise over the weekend and a stronger-than-expected fixing? suspect it is along the lines of the friendlier tone and the de-escalation tone, that they don't want to ratchet it up further. i think it was a friendly overture. >> thank you so much for being with us, particularly for sitting through the press conference. we will continue with our guests. check.do a futures

off -300need to know in the sunday new york evening, it is a nice five point swing up, with recent comments are china and president trump. stay with us. this is bloomberg. ♪

♪ >> this is "bloomberg surveillance." let's get right to the bloomberg business flash. bankers are heading to saudi arabia to make their pitch for the world's biggest ipo. bloomberg has learned that starting tomorrow dealmakers representing advising firms will go to saudi aramco headquarters to compete for a role on the shared listing. they have invited more than 21st from the u.s., europe, and asia to take part. disney and target are teaming up for the holidays. the discount retailer will create a dedicated section for products inside some of the store for the shopping season. the designs to boost sales of

everything from dolls to light sabers. and that's the bloomberg business flash. >> thank you so much. a former export import bank in the united states, we want to talk about a number of things. continue to hear is we will do a deal. you mentioned this in the last section of a transactional president. what is the outcome we could get with a transactional president? want to improve intellectual property right, if we really want to stop tech transfers to china, those things will encourage more u.s. china,es to operate in which is the exact opposite of what president trump and stephen bannon recently said they want. confusing to the business community what exactly they want. the more china place by the

rules, it becomes a better place to do business. >> what should u.s. companies be hoping for in 2020? so many people say to me trade deal, no way. >> i think it is hard to predict, but i believe china may just decide to hold out as long as they can. their own negotiating tactic could become more and more desperate. we heard the president is quite concerned about a recession and payroll tax cut and other things. one thing we have all seen this week, donald trump very hard to predict. he would like to have more tariffs, then less tariffs, and more tariffs. that is part of his game. that is part of his strategy. if you keep people guessing, he is always in charge. all the eyes are on him. >> you are more qualified than

anyone i know to speak on mr. bezos and the miracle wrought by amazon. i would say it was before amazon -- what are your thoughts on the death of retail? the calculus to solve the battle with amazon? obviously products lend themselves more to online shopping. we started with books, fashion as a very high component, oil and gas -- you can't fill your car up online. 10% of the economy is done online, it very seamlessly by sector. only 4% of groceries are online, i suspect that will rise rapidly, particularly with amazon buying whole foods. we will see more and more ability to shop online,

particularly for commodity goods. >> this has been wonderful. thank you so much. we have much more to come. futures were lifting up, now giving back. there has been volatility in asia monday, the europe monday, now over to the united states. 500 point swing all in all. please stay with us, another hour of bloomberg "surveillance." ♪ ♪ from the couldn't be prouders

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designed to save you money. save up to $400 a year on your wireless bill. plus get $250 back when you buy a new samsung note. click, call or visit a store today. tom: this morning, this monday, after that friday, i hereby a

is ina calm attitude order. says china, beijing will cave to u.s. pressure. it is different in hong kong. stephen engle reports on week 12 of difficult protests. there are too many em coal mines. the mexican peso -- we hereby the take on various and sundry canaries. an extraordinary morning. " in newrg surveillance york. nejra cehic is in london. moments ago, an important tweet from an important voice from "the global times." tell us who this gentleman is at "the global times." nejra: we can see the tweet there, the editor of "the global times." seen asy that paper is a mouthpiece of the communist party, so it is watched with eager eyes on the trade war between the u.s. and china.

he is saying that the phone calls present trip was referring to, which listed u.s. futures and european equities, did not actually happen. the technical talks are happening, but china has not changed its position and will not caved to u.s. pressure. setting us up for an interesting day of economics, investment, international relations, and certainly the politics of this world. you need a monday briefing. there is renita young. renita: president trump says china wants to restart trade talks. the president spoke at the g7 meeting in france. pres. trump: are top trade people said let's get back to the table. some will get back to the table and i think they want to do -- they are hurt very badly but they understand this is the right thing to do. i have great respect for it. this is a very positive development for the world. the twolast week

countries escalated the trade war with tit-for-tat tariff increases. japan'st trump and prime minister, shinzo abe, have agreed in principle on a new trade deal, hoping to sign a new trade -- a new treaty next month. otheran beef, pork, and agricultural products -- that should help american farmers hurt by the trade war with china. there will be new tariffs on japanese cars. emmanuel macron pulled a massive surprise on his g7 guests by inviting iran's foreign minister . the two met for 30 minutes. president trump says he supported background's decision to invite him, but said it was n'ssupported mccracro decision. in hong kong, and escalation in the 12th straight week of protests. weapons and global

news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries, global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries,-- i am renita young, and this is bloomberg. tom: equities, bonds, currencies commodities. there was a fixed income reset in the last number of minutes. futures up 12 come up 30 at the end of the trump miracle press conference. with positive, euro-dollar a bid right now, fractional but nevertheless we are looking at every tick, oil as well. 20.36, the vix, much better than we saw last night. explodes, the renminbi , 7.14. they were mentioned moments ago. nejra: the clear risk off we saw

through the asian section is definitely calming down now. with u.s. futures, the 10-year bandh deal is higher -- the 10 need-year bund deal is higher. gold is still bid up a quarter of a percentage point, about 1500. tom: we begin a conversation are guest. snored v there is nothing funny about this. and the major thing is the structuring that has developed, foreign-exchange pairs, with the continued erosion and weakness of em currencies. the emre canaries in coal mine? the trade escalation in early august, when it kicked off again, it was a warning signal for em. what we have seen since then,

and it is something we have tracked carefully in our databases, is that foreign capital is coming out of em now. we have had three weeks, four weeks, where there is dramatic selling. this escalation of the trade war and the fact that the chinese currency has moved through seven was the catalyst for the whole currency to start move, and that is still playing out. tom: the chart right now -- we nordvigthese with jens and no one else. we have a new breakdown to weakness in em currencies. do you look at this as discrete or could you get some lessons from history of em collapse on this? or is it so odd and so different now it is a discrete event? jens: these are different because the trade tension and the equilibrium for chinese

currencies is weakening. it is a special circumstance dragging everything with it. if we use the framework we used the last five, 10 years, it would be the ecb is about to ease policy, may be due quantitative easing. that would be positive for em currency. the fact that that is not happening i think is a function of this extremely unusual, and something that has not happened for decades, escalation. to 2%,-year bond back up showing higher yields in the last 20 minutes. nejra: it is interesting that that precipitous drop we saw in the asian session across the treasuries curve in terms of yields, that is abating a little bit. , also notable was a .tronger fixing by the pvc what does today's fixing tell us about the direction of the dollar-c and y for the rest of the week? a lot of people have

models for what the fixing should be before they come out. on the model. they allowed the normal map to work in terms of how they set the fixing, but this still allowed the spot to move, so there has been a significant 7.07 up tossentially 7.17. the fixing was not a signal that they don't want to currency to move. i think the fixing was a signal that they did not want it to celery -- to accelerate beyond what the cna market had been cycling during the market. essentially everything points to the currency now being in the 7.20 to 7.30 range, and i think we will gravitate toward that unless there is some rabbit out of the hat improvement on the trade side. nejra: what traits would you put on with that in mind? i know you look at -- what trades would you put on with

that in mind? unique think we have a situation where the equilibrium for the see ny is shifting ny -- theo dollar-c big question is, how much is the dollar going to be hurt by this? we have a fed that has a new framework where uncertainty around trade has the potential to dominate all other variables, and that means there might be more of a consideration of other expressions, to be cnh versus the yen, could be the cnh versus aussie. week iscolating this the beginning of the discussion about what i am going to call unilateral intervention by secretary mnuchin and president trump on the dollar. what is our history to successful intervention by one nation by itself? jens: the first thing i would say is we do not have much

history and that we have had a long consensus for a couple decades that intervention was a bad thing, and we tried to invoice -- two avoided by all means. except as kind of a natural disaster like we had in japan in 2011. so unilateral currency intervention is a no go. so in mainstream monetary policy circles, mainstream academic circles, so it is really something we have not seen for three decades. the track record is not very good. a survey of 100 professional participants in the fx market a couple weeks ago. almost everybody said that for a currency intervention to really move the dollar, it would have to be communicated that it was in unlimited amounts. tom: unlimited. jens: unlimited. it has to be a commitment that we can do unlimited. tom: this is incredibly important that we hear from jens nordvig on the mass scale that

we would need with an intervention. this will drive forward the conversation. coming up, jens nordvig will be with us. john hudak of brookings governance studies, their senior fellow. this will be really important. hudak,rdvig and john coming up. on the president's comments that we heard, angela merkel. please stay with us. worldwide, this is bloomberg. ♪

"bloombergs is surveillance." gold hit its highest level since 2013. the trade war boosted the demand for the traditional safe haven. $1600 anched closer to

ounce. gold has risen more than 20% this year. the price of silver was also up. credit suisse plans to spend 100s of millions -- hundreds of millions of dollars for new staff in a swiss unit. it will also make investment banking activities a separate business. credit suisse wants to serve its ultrarich clients and institutions. apple's reliance on china is looking like it's biggest and he cap. -- biggest handicap. the company lost $44 billion of market value on friday. that happened after the u.s. and china escalated their trade war. almost all the world's iphones are made in china. it would take years for apple to move production elsewhere. that is the bloomberg business flash. tom: we are thrilled to bring you the markets improving dramatically off last evening. futures up 30 after the trump miracle press conference.

-- after the trump-merkel press conference. i want to show you a tweet right now. john hudak of brookings governance studies -- we feature this moments ago, sort of the zeitgeist like friday, moving to a tick, this from the leading print authority for china, hu xijin of "the global times." based on what i know, chinese and u.s. negotiators did not hold phone talks in recent days. the two sides have been keeping contact at technical level. it does not have significance that president trump suggested. the china will not caved to u.s. pressure. john hudak, where is u.s. pressure coming from? is it unilateral trump, or is he actually having dialogue with his team sitting next to him, mr. mnuchin, mr. lighthizer, and mr. bolton?

get: aides are trying to through to him on the economic world stage, and the president plus rhetoric and the impact of that rhetoric. but like most of the trump presidency, what actually ends up mattering is what the president is thinking and what he is saying. at times that is influenced by aides and at other times it is influenced entirely by the president. tom: you are inside the beltway. let me ask a global question. will the president be affected by the markets somewhere? you sit in political washington? -- you sit in political washington. what the president -- will the president care what equities do or what the dollar does? john: it is clear that the president does believe that the stock market is a clear reflection of both the strength of the economy and the job that he is doing, and i think the president backing away from some of his rhetoric from friday is a clear indication that he is getting that.

but it is obvious that the stake isthe american economy going to have an impact on the president in his ability to work with congress, and most importantly, his ability to get reelected. president talked about the international emergency economic powers act, ordering u.s. companies out of china. he and his aides did argue that president trump does have the right to do this. the question is whether he actually will there he softened his tone a little bit in terms of some parts of the relationship with china since tariffsouncement on the over the weekend. will he back away from his comments on terrace as well? jens: there is no -- john: there is no question that he will backtrack on his statement about ordering companies out of china. particularly within circles that thepowerful in influencing

beliefs and behavior of the republican party -- i cannot imagine the u.s. chamber of commerce would stand for something like this. it also sets a pretty dangerous precedent in terms of a tosident possibility influence the individual decision-making of companies that is not -- of a president's ability to influence the individual decision-making of companies that is not an emergency. nejra: whether it was because he saw the stock market reaction on friday or because he got a nudge from other leaders at the g7 -- what is your thinking on what might have influenced the change in tone, and therefore what tone he might take the rest of the week? jens: i think one of the -- john: i think one of the situations in which the president moves from what is a seemingly staked out firm position is a confluence of things happening at signaled to him that there is a problem. i would have no doubt that the stock market reaction to his rhetoric on friday, combined

with his own aides frankly better understanding how the economy works and how trade -- and sixs, and a american allies coming to him in france and saying this is not just a problem for you and for china, but this instability and volatility is spilling into our economies as well. here onef john hudak the pair that matters that indicate dollar dynamics. is it dollar-yen, is it a blended index? what is the indicator john hudak should use to indicate trump dollar strength in all that angst? jens: a lot of people look at the dxy index. tom: we look at the bloomberg dxy. jens: i'm aware. tom: john hudak, do you have a terminal on your desk? john: i do not. tom: riley, make a note.

john hudak needs a terminal on his desk. jens: you want to look at what the euro is doing for sure. you want to look at what the yen is doing, and then you want to look at what the chinese currency is doing and then at high-yielding emerging-market currencies. they have been diverting dramatically. the dollar very weak against the yen and the euro, and very strong in em. these are situations where it does not make sense to talk about the dollar is one thing. tom: john hudak from brookings with us as well. and jens nordvig as well. i have been studying this. 2200 miles from copenhagen. we will cover that with jens nordvig. this is bloomberg. ♪

tom: bloomberg surveillance, nejra cehic in london, tom keene in new york. udak with brookings and washington -- john hudak with brookings in washington. have a phd from the university of south denmark, jens nordvig. i am fascinated to ask your thoughts on a president who has decided he will take greenland from denmark back to 1814. how did you respond to that? jens: so somebody told me that the danish queen, or the danish

king, that has been around for more than 1000 years, they have never had anybody reject their invitation when there is an official invitation. so i think people were surprised. tom: we are going to leave it there. but it is extraordinary. maybe we will get you and nielsen on set. you and copenhagen, remote with nielsen and jens nordvig as whelp or john hudak with us from brookings. that's get back to g7. when are we going to see -- let's get back to g7. when are we going to see g8? john: if the president has anything to do with it -- and of course he does -- russia would be back in for this summit. there is still a tremendous amount of skepticism about both president putin and his intentions around the world, and i think so long as the current makeup of leadership in the g7 stays in place, we are going to

see russia kept at bay. we are -- for a lot of world leaders, they are looking to what the 2020 election looks like in the united states and meddlingr election president putin potentially has before seeing readmission. nejra: do you think the conciliatory tone that the president has struck on iran, saying the g7 were united on that, is that something that will likely hold beyond this weekend's meeting? john: i think it is not likely to hold. i think the president's words suggest think operation -- suggesting cooperation between the g7 and iran is kind of fake. everyone is aware that the president withdrawing was particularly a mistake in europe, and the path forward is likely not with president trump. his views are divergent from most of the rest of the world on this issue, and while the president can say there is

cooperation, the reality is far from that. nejra: thank you for joining us, john hudak, brookings senior fellow. jens nordvig stays with us. coming up, violence in rupp ding -- violence erupt in in a 12th straight week of violence in hong kong. this is bloomberg. ♪

nejra: i am nejra cehic in london, tom keene in new york. as we continue to digest all the headlines coming out of the g7, we have had u.k. officials

briefing reporters saying an ongoing dialogue with e.u. is on the backstop in the coming days. boris johnson on sunday sets up his campaign to convince the e.u. to reopen the brexit negotiations. is a little softer after two days of strength. in hong kong, a 12th straight weekend of protests and violent clashes erected -- erected between police and protesters. -- erupted between police and protesters. stephen engle is in hong kong. stephen, great to have you with us. what does the escalation over the weekend tell us about the new phase in these protests? : it tells us there is a continued standoff and there is no real dialogue or solution. they talk about wanting to have dialogue. the government says that, but there is no dialogue going on

right now, and i can tell you, living in this city and having a hong kong wife and family, there is a lot of frustration. that is where we stand right now. that frustration boils over on the streets again this weekend because last weekend we had a brief respite. no tear gas no arrests. but now we have police officers, six of them, pulling their sidearms. one of them fired a live round into the air. you have protesters coming at the police with steel bars and molotov cocktails and bricks. there is no solution, there is no standoff. that is what is frustrating to the people of hong kong. tom: we see two images of protests. we see hundreds of thousands silent and quiet with umbrellas, and we see the images of violence. is there is an diagram where they overlap, or are they two discrete protests? stephen: they definitely want

the same things. there are five main goals, but the three main ones they feel -- attainable if carrie lam if carrie lam, the chief executive, we tick off some sort of consensus. have a bit of an amnesty for those who have been charged with rioting, and have an independent commission of panels to investigate alleged abuses on both sides. the government so far is not giving in. you have the radical element that goes out on the weekend in crowbars,shirts with antagonizing the police. small part ofvery the protests. but then you have, in some estimations, 2 million ordinary citizens of all ages coming out and protesting. sunday is going to be a big test, calling for a big citywide march again. you soephen engle, thank

much. our chief asia correspondent today from hong kong. right now with a news briefing, renita young. renita: let's get the first word. president trump says china wants to make a deal. according to the president, the chinese want to restart trade talks he spoke at the g7 summit in france. china called our trump trade people -- our top trade people and said they want to get back to the table. i think they want to do something. they are hurt badly because they understand this is the right thing to do, and i have great respect for it. this is a very positive development for the world. renita: last week the two companies -- countries escalated the trade war with tit-for-tat tariff increases. nies are compa concerned with president trump's threat to ban them from doing business with china.

the president of the business roundtable said -- fears the dispute is spiraling out of control. agreed. and japan have in principle on a trade deal. president trump and shinzo abe announced the agreement at the g7 summit. the deal would/tokyo's tariffs on beef, pork, and other farm products, and the u.s. would delay tariffs on auto imports. former illinois congressman joe walsh has launched a longshot challenge against president trump for the republican nomination peered walsh told abc news that the president is erratic, cruel, and incompetent peered walsh was a one term congressman who now hosts a radio talkshow. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more i am renitauntries, young. this is bloomberg. tom: thank you so much. a market movement we have seen,

there is business news as well. amgen, what is important is the size of the transaction. skin and arthritis, amgen to buy , psoriatic --a tezla. it will be a robust debate, so i think it is creeping onto the table here. markets have it as a base case of 25 basis points. >> i think it is very important that we watch the data. if we were ever data-dependent before, we have to be huber data-dependent now -- we have to be huber data dependent now. >> i would prefer not to make any adjustment. >> we have to act as appropriate when we see the economy having a

shock. i do not see that right now, so i don't think we need to act right now. >> i am not ready to provide more accommodation to the economy without seeing an outlook to suggest the economy is getting weaker. nordvig.ck with jens at long anticipated speech jackson hole feels like a lifetime ago with what happened over the weekend with the trade war. dropping the language around the midcycle adjustment, should we brace ourselves with a long and projected rate cutting cycle from the fed? jens: the first thing to point out is that we have a split fed. we have people who are explicitly advocating that we should stay on hold. we have people that say we might want to cut rates further but it should be gradually. and then we have powell, who sort of opened the door to everything but did not commit. so i think he is probably quite happy about the market not

moving dramatically on friday, and the eyes were shifted to a different topic, so the pressure comes off a little bit. the bottom line is this is a very split said, and he will now be walking in the coming weeks to get a consensus of what they are really going to do the safe option is to do 25. 50 is something that will cause a lot of tension within the fed. if we have a very split decision, it will not give a lot of comfort to the market. in positive2 curve territory again. it was inverted earlier. what do we need to see in terms of cuts to meaningfully read steepen that to meaningfully read steepen that curve? think you have to look at what is going on here, not from just the u.s. economy perspective and not just the u.s. monetary policy. there is something going on globally, where we really have a , and the ecb rally

is a part of that. we have an ecb meeting coming up in the next few weeks that will be historic, where they potentially restart quantitative easing. we have a slew of central banks around the world cutting rates aggressively, many of them surprising. this is not just about the u.s. i personally think there is too much focus on the curve. it is harder to interpret that then it was in the past. given that we have negative yields in many parts of the world already. tom: we have been talking about em depreciation. you see that in the indian rupiah as well. trumpr we had president with the leadership of egypt and germany. , the primeh mr. modi minister of india, speaking here. let's listen in. >> thank you.

president, can you clarify your position? >> it is a very important meeting for me. india is the largest democracy and we had our election season, 700 million. trump telephoned -- indiatulate me and -- and theted states weeral days we have these

work toward the improvement of humanity and for the world. are there continuous concessions on these issues, in the united states, discussing on a routine visions andonomic we have welcomed u.s. traditions. together we are working in the area and making efforts to take this forward. the indian community in the united states has made investments over the years. active.e been very -- for that ites would like to thank president andp, his administration, the people of the united states. president, can you

clarify your position on -- pres. trump: well, we spoke last night about kashmir, and up prime minister feels hit he has it under control. that feels that he has it under control and i'm sure they will probably be able to do something probably very good. we talked about it last night. tom: bloomberg at the g7 meeting. i am going to call it, near 12 noon. we have different authorities meeting with the president, and we see the president with mr. mnuchin and other attendees. this is the prime minister of india, mr. modi, celebrating a resounding victory recently as he moves to year five of his tenure as the 14th president of india. it really is indicative of the

distinction between india and china. everything has been china, china, china, but you wonder when india becomes a main part of president trump's dialogue. nejra: a number of people i speak to say india is one of the countries in the aipac region that stands to benefit from the u.s.-china trade war, so that is something to digest from all the headlines over the weekend. tom: the president responding and we have a translation of mr. modi right now. the president careful in his words on india and pakistan in what has been a timeless effort as well. let us listen again. this is the english translation of the prime minister. and all that we are facing, working together. that -- we message

are also talking about i lateral issues. >> would you like to have trump -- president trump involved in negotiations with pakistan? --i believe that >> india and pakistan have their own issues with bilateral media, it is hard to do anything

with issues like this because they are bilateral. that even afterwards we could find positions to discuss. pres. trump: i am here. i have a very good relationship with both gentlemen, and i am here. they can do it themselves very well. they have been doing it for a long time. it sounds significant that the calls -- pres. trump: i don't know what you mean by that. low level? the vice premier is low level? i don't think so. >> we have been communicating -- pres. trump: the vice premier is not low-level.

>> i agree. -- unaware ofhat the calls happening. pres. trump: at the highest level. at the highest level. look, in the meantime, our country is doing great. we are doing good. the prime minister just congratulated me. everybody i have met has congratulated us on what we are doing in the united states with our economy. our economy is phenomenal. when the trade deals are done like we did with japan yesterday, we did a tremendous -- we have others coming. we are negotiating now. they want to do that. they want to do that. i do, too. when we get these deals done, our country will be transformed. it will be monetarily transformed.

it is such a difference between the horrible, one-sided deals that we have in the past. and frankly, past administrations should be ashamed of themselves for allowing that. -- one of them is hopefully that will be -- everybody wants it to happen, so hopefully we can make that a bipartisan -- we have many trade deals doing very well, including china. and i think it was necessary to go through this, you would say a rough patch, but i would say it is maybe much more than a rough patch. billions and billions of dollars -- you know that prices have not gone up and there has been no inflation and we have put a lot of money in the treasury. tens of billions of dollars, and i have given it, a lot of it, to the farmers who were hurt. because we gave them $16 billion

and we give them $4 billion the year before. with the amount of money china invests in our farmers. the farmers have been amazing, but they are very happy with the job we are doing. but eventually they will be a 180 -- they will be one of the biggest beneficiaries. whether any conclusions to -- pres. trump: i am going to. in fact, it will be in our next session. i want clean air and clean water, and we right now have the cleanest air and the cleanest water on the planet. that is what i want. i want absolutely clean air and clean water. you made a comment about wanting calm. pres. trump: calm. >> exactly. do you have a comment about the -- pres. trump: i don't want to

talk about that. we have had calls at the highest levels. it is a to -- i think -- a good word to use, calm. it is not a word i use often, but it is a good word to use. i think it is one of the reasons they are a good country and that they understand. with respect to hong kong, i think it makes it easier for hong kong to do something. --hink that president she that president xi will do something with hong kong. i think that is a good message with respect -- it is always a very positive message, and we appreciated it. we appreciated it. what else? anything else? president, what is -- can modi, could you

please respond to that? pres. trump: we have not been happy with the wto. we had a very recent victory. they are being treated more fairly on the wto, which we appreciate. >> [speaking native language] speaksrump: he actually very good english, he just doesn't want to -- [laughter] >> the g7, however -- pres. trump: he is a proud man,

he has done a real job, and why would he ask? it is something we discussed, and from the discussion, i would be inclined to say yes and so would others. and some probably would not. i would think he would do that because he is probably -- because he is a proud man. i am sure he would say yes. >> any indication from them that they would accept? bes. trump: i think it would good for russia. i think it would be good for everybody. i think it would be a positive. the discussion we had was a very interesting discussion. people like the idea. >> mr. president, what would be your message to the american people?

achievements from the g7? pres. trump: we have had a lot of achievements. we are doing a lot of trade with india. that is an achievement. dealnk obviously the japan is a tremendous achievement because it is one of the trade deals we benefit directly from. hundreds of millions of dollars worth of corn, he is buying that. japan is buying all of that corn at a fair price. was their input. i also think that unity is very important. you saw me with chancellor merkel. the relationship is great. with seven nations. in addition to that, we have other nations like india and others that came in. australia came in. we have a lot of people who came in. you, it has been -- there

has been no dissension. there are no fights or arguments. there have been no anything. there is great unity here. honestly, the papers have not reported how good it has been. >> what was the most common ground? pres. trump: i think we have a lot of things. the fact that we are all getting along so well is one of the big things from this. we really have good relationships and we are doing a lot about a lot. give it oneg to more crack. when you were referring earlier to the statement, was there a call last night or was there not a call last night? let'sre were discussions, put it that way. pres. trump: and there were last night. and before last night. ahave been saying that for

reason. we want to get something done. and why wouldn't we? we want to get something done. the supply chain has been hurt, and once the supply chain goes, you want to get it back. a great run by really leader. i think he is a great leader. he wants to do something. he lost over 3 million jobs in a very short period of time. they want to get it done. i could have told you that without talking, -- that we are not talking, but we are talking. it depends on whether or not we make a deal. if we make a deal, i would like to see him stay there. he does a great job. >> do you have an updated timeline? pres. trump: there is no rush. we are there. soare a peacekeeping force,

if we could -- so we could win that war in a short period of time. we are working along with the taliban, with the government, and other people, too. and we will see what happens. thank you very much. we are going to be doing a news conference in a little while. if you need one. do you need one? i don't need one. i mean, i cannot imagine. i just want to thank the prime minister. he is a great leader, right here. election results. once]ters all talking at the unitedesident of states and the prime minister of india, as well. we will squeeze in one question with a gentleman from jackson hole. michael mckee joins us.

let's talk the papers. -- what stuck out to you beneath the headlines of jackson hole? michael: the central banker for cypress presented a paper suggesting ways that the central banks can better communicate. a lot of it technical. what stood out was the next day, philip lowe, the reserve bank of australia, criticized the paper and said this is no good to me in my life because most people do not understand economics, don't understand economic formulas. we have to tell stories about how policies are tom: affecting our people. -- how policies are affecting our people. tom: was this sobering? michael: it was.

one person said, "i left here more depressed then when i arrived." tom: stunning. maybe 08 was more like it or 09. michael mckee, thank you. nejra, what do you see? nejra: one strategist said the markets are weirder than 2008, in terms of what president trump is able to because with his unpredictability. he has been able to have high-level talks with china and other voices. tom: thank you so much. coming up with john -- what's his name? farrell, -- jon ferro, bloomberg radio. this is bloomberg. ♪

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specked for the fact that china called. it what to make a deal. and i have great respect for president xi. alix: we will speak to nathan sheets, pgim fixed income chief economist. losses ases pare trump talks of a trade deal, while the world's biggest wealth manager turns bearish on stocks. with adysfunction, surprise visit from iran's foreign minister. welcome to "bloomberg daybreak" on this monday, august 26. i'm alix steel. westin is off this week. you have s&p futures up by 4/10 of 1%. the yen finally falling. you have a bend in -- you have a bid in the bond market. it was a much