manus: good morning from abu dhabi. live from the world energy conference, this is "bloomberg daybreak: europe." asian stocks brush off weak export data out of china as a --ple are cut lift sentiment rrr cut lifts sentiment. another high-profile resignation. and saudi arabia's king replaces the energy minister with one of his sons. don't expect policy to change.

>> i would rather be dead in a ditch. what would the world do with further delay? it is pointless. matt: good morning from frankfurt. i am here for the auto show. one of the brand-new bugatti's yesterday. all the focus in the markets today is going to be on what goes on with the china rate cut, what goes on with the oil situation where you are. manus: you must be in seventh heaven. all the expensive toys to look at. place here at my favorite , the world energy congress number 24. one word. it is about oil.

five days in a row, it is all about the rainmaker. minister.udi oil good morning. >> good morning. we will be following that story closely. take a look at the equity indexes in china, first off to see how they are doing after that rate cut news. you see there are gains, only slight. you look at hong kong, you would see they are down a little bit. more of a risk-on scenario when you look at safe haven trade. the yen is gaining a little bit against the dollar, but you can buy 100 seven, basically ¥107 for your dollar, a decent amount right now for the greenback. gaining 10 year yield 1.57%. use the u.s. 10 year yields

rising as the yen is going for -- is going strong. mentioned --manus: i mentioned oil. ziz push for steeper -- the softerno the data, the higher the hopes of rate cuts. roll it over because we are going to have the jail emcee at the end of the week. here is the rest of your markets. to your paper last week told an incredible story. recession angst was at its peak followed by the biggest one-day rally in yields on thursday. what is happening in the bond markets?

gold is up. volatility is at the highest since 2017. we rallied for four months. the sterling market, the gold market, we are going to keep our eye on. i mentioned the shift in tone. it was all to do with china. the pboc is going to cut the amount of cash banks must hold in reserve to the lowest number since 2007, a move that will release $126 billion worth of liquidity. an unexpected contraction in china's trade in august underscored, what economists were already saying about stimulus efforts. still not enough to put a floor under the economy. exports decreased from a year earlier. sales to the u.s. tumbling amid escalating trade wars between the two nations. today we are asking the emily question. which -- mliv question. you can join the debate. we are all involved.

pitch in as you which -- as you wish. benjamin, good to have you with matt and i. here we go. we have china on a roll. do you expect more rrr or more of a move on the lending rate? where's the next lever going to come from? thisina is going to keep -- keep his hand on easing. you have to be careful about the way they do it. they are still keeping this , making deleveraging sure deleveraging of the system is not getting out of control. cuts over the weekend widely expected. i don't think it's the last one. i think there are going to be tweaks around markets. go.said a floor -- sorry,

reading the word synchronized. people are talking about the fact these rate cuts from global central banks look like they are -- what do you think about that idea? the fedis going to cut, is going to cut, the chinese are cutting rrr, may lowering their lending rate. is that going to have the kind of effect on the global economy? >> i do not think a major effect. you have this impotence in central banks, and that is becoming consensus in the market as well. concerted cut and easing in monetary policy are not going to appease the trade war concerns. it is not going to stimulate corporate's to spend. it is not going to stimulate consumers to borrow and spend. borrowing costs are not constraining consumers or corporate's all. -- at all.

i showed you service ratios in the u.s. at record lows. it is the uncertainty around trade. unless we get that fixed, i am not optimistic that is going to happen in the next few months or so. that is going to keep people from spending and developing capex in and putting place. that does not mean it is going to have an impact on markets. the stimulus is a lot more liquidity into markets, that is good for equity, that is good for bond markets. that is not good for oil markets. but it is good for gold. a lot of things look attractive, even though you have this slowing. us take a little bit, you have the state street market

global index that shows investors are less confident for equities then at any time during the financial crisis. i just wonder, is this one of those awful changes, which is buy the dip? is that what you're putting forward? any correction in these markets is an opportunity? that was the question for us are month or so ago. was it going to be may or october? was it going to be short-lived or was it going to be something deeper like q4 2018? one thing we are seeing from ?lients that have a lot of conviction and markets the moment. we have a very uncertain u.s. administration. tweet. can change on a none of us can take any decent view of it. a viewmpossible take out

on what is going to be the outlook for british policies the next day, week, or month. at the same time, you have this liquidity from central banks. it is putting liquidity out there. it will be ultra-positive. keeping investors a little bit on the sidelines we are seeing right now. is there any equity market you like? we see the u.s. consumer holding up fairly well in terms of brexit. looks like there's going to be the extension you would have probably put your money on anyway. of ftse 100 is also made up export stocks. europe has seemingly slower data. we still see 15, 16% year to date gains.

>> the most would be u.s. equities. we are long-term u.s. equities, but we see no reason to adjust our view. that is the market is still has the best momentum. the best quality earnings. most of that quality earnings comes from the tech sector. are going trade wars to damage the tech sector and that is the most overvalued area of the market. we would disagree with that strongly. a lot of the companies, particularly software and services, are not exposed to trade war at all. they are not areas that generate a significant portion of their earnings from china? , the proportion of earnings that come from china are very small. will bethe semis exposed because of supply chain issues. we see that baked well into prices already. i still sitak and u.s. equities

being the place to be. europe would be the place where i could see further absolute gains perhaps because of this liquidity argument. i don't think it is the best in.ty market to be invested it's going to underperform. it is made up of largely banks. when yields are going lower, the yield curves are staying flat or reversing, that is a terrible environment for banks. not to sound like a broken record. not the place to be. going to stay with us. we have a lot more from benjamin jones out of state street on daybreak this morning. right now, i want to get the bloomberg first word news. >> u.k. prime minister boris johnson is pushing on with his hard-line brexit strategy despite the risk of being taken to court and the threat of more resignations.

on theious attack government, which he said is no longer serious about a deal with the eu. meetsits dublin today to with his irish counterpart. johnson'sorted boris approach. i believe i was right. it is the consequence of now 21 senior colleagues expelled and a lack of planning on actually getting a deal. >> saudi arabia's king has installed one of his son as oil minister. solomon islaziz bin an older brother to mid home it been salmon -- mohammad bin salman. minister does not expect -- >> i'm not expecting changes. of thesonality they know

prince, he is very decisive. he has a strong personality when it comes to the markets. >> plans to drop the china extradition bill have failed to stop protests in hong kong. tens of thousands marched to the u.s. consulate to appeal for help from president trump. the city was hit by small pockets of violence with protesters vandalizing subway stations and starting fires. arrivals have dropped nearly 40% from the same period last year. a typhoon is made landfall near tokyo, causing widespread destruction -- obstruction for commuters. 900,000 homes saw power cut. it is the seasons 15th typhoon. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

manus: thank you. welcome to "daybreak europe," by the way. energyup, we saw the industry live from the world energy congress in abu dhabi. we have the u.s. deputy secretary for energy next. later, we speak to the international energy agency. then we sit down with the ceo of -- don't go anywhere. it's conversation you don't want to miss. tot: when you are traveling work, tune into bloomberg radio live on your mobile device or on dab digital if you are in the london area. to know in to hear those interviews. this is bloomberg. ♪

matt: this is "bloomberg daybreak: europe. are onto her -- on tour for the world energy congress. juliette saly is standing by in singapore. we could see more from chinese authorities because of the weekend data. asian stocks rise on hopes of more stimulus. the nikkei up by 0.5%. the end study. -- the yen steady. korean wonone -- the trading at its highest level in weeks after we had that cut on the u.s. dollar. the csi 300 up 0.5%. moment,g is flat at the reverting earlier losses. weakness in the likes of the hotel makers and other retail

and tourism stocks. this is after the finance secretary wrote in a blog on the weekend that tourist arrivals are down 40% over the month of august. hotel occupancy rates are down by 14 to 70%. let's have a look at what it means in terms of stock implications on the mainland. we have a lot of these chinese stocks listed in hong kong. you are seeing the hsc i index underperform the overall csi 300 index, underperforming the most since 2016. a lot of these are not even related to what is happening in terms of the hong kong protests. , time to buyng this index which is underperforming over the quarter. thank you very much. oil is the game here.

the saudi arabia and regime ousted its energy minister. he has been replaced by one of the king's sons, who has been a long time official. the move comes ahead of an opec meeting later this week in abu dhabi. minister says the group has knowledge of the industry and will continue on its work amid drama at the world energy congress. joining me now is my next guest, the deputy secretary for energy. for the u.s.. let's get to it. we have a new man at the top at saudi arabia. have you been in touch? >> we would love to meet with him this week. we have enjoyed a long-standing relationship. we expect that continues.

not only at the government level, but at the industry level as well. manus: have you already had conversations? we have. we will meet perhaps later today, perhaps tomorrow. nots: the president does support these cuts. is that the message to opec? >> we are more interested in u.s. production. we are working hard to produce more oil, which is going to have some impact, we think, on a saudi arabia. we are more concerned about what we produce. is the number one priority energy independence? >> i think it is. we are more concerned about that 12.5 million. we expect that to continue. 13 million barrels per day for the end of 2019, perhaps as high as -- in 2020. the president is focused on doing what we can to reduce

regulatory burden, to reduce any sort of burden on production. dhabi.we are in abu the special envoy said there are more sanctions to come on iran. what are you going to target next? >> we are going to continue to target what we have already targeted. maximum pressure. the president has been very clear about this. we are going to work quickly with state department allies as well as industry partners to ensure iran will stop this behavior. manus: are there products you are going to target? people are saying production is already hunkered down to low levels. >> what we are seeing is exports around the world. we are working with other countries, india, china in particular. some purchases. we have been very strict and very firm in our conversations, which are led by the state department. we are going to continue to clampdown exports. manus: help me understand what

has changed. at the g7, the president intimated he would support this credit line theory to iran. that hasuld appear shifted. clarify for us. >> the president has said, the secretary of state has said, the secretary of energy has said anything is possible. we have indicated very clearly we will negotiate with no preconditions. manus: is there a potential for a waiver to be granted? >> perhaps. is.aps there i can tell you everything is on the table. we want to end this behavior. manus: we understand there could be talks between president rouhani and president trump. does that come with no preconditions from the american side? >> that is what the president has had very clearly. manus: the credit line bruno le maire wants to impose in terms of the impact, that is something

the world wants to see the united states lean on. what does it take to get you to move on this? >> he is leading the conversations we have had with the u.s. government. you are going for higher than 13, 13 and a half million barrels. iran, eased up on supply-side will increase presumably. >> presumably. manus: that would help energy prices lower. is that not with the administration wants? >> the administration wants energy efficiency and we want affordability for american consumers as well as world consumers. we talked about this in europe. we don't set a price. we don't seek a price. we don't medically markets. we said we want affordable energy. countries noted being compliant with regards to

iran exports. efforts wouldl you take to bring china in line with these sanctions violations? >> active trade negotiations are going on. i'm sure ambassador lighthizer has factored in these conversations. they are seeking alternatives for iranian oil and we can help them do that. there are other alternatives available. we are going to assist them any way possible. do you think it is going to feature higher in the trade war? >> i have to defer to investor lighthizer. manus: lighthizer has done a lot of analysis. >> he is in a very important role. region?hat about the we understand there is still some product coming from iran

into the uae. have you had discussions? >> i will later today. manus: what will your message be? >> we have to know what they are buying and how much. our expectation is they have been compliant. we expect they are going to continue that. some of the purchases are really at the margins. they are very specialized products. we are going to be very candid with them. maximum pressure does mean maximum pressure. manus: would you reprimand the uae? >> that is for the state department, the treasury department, others. i am here to deliver the message. better whynderstand they continue these marginal purchases. we are going to ask them to stop them. manus: deputy secretary for energy. if you get to see mr. abdulaziz, tell him to have a talk with me. wish you well.

next, we are in i would be, but never far from our mind is the brexit conversation. is refusinginister to back down on his brexit strategy. do or die for brexit. this is bloomberg. ♪ ♪

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manus: this is "bloomberg daybreak: europe." boris johnson is pushing on with his brexit plan, despite the threat of legal action. ministers report the prime minister plans to defy legislation requiring him to ask the eu for a brexit delay after the resignation of the work and pensions secretary. she told the bbc why she could not go on. >> i supported boris johnson in

his approach and i believe i was right. it is because of the consequences now, 21 senior colleagues expelled and the lack of planning on getting a deal. joining us now is anna edwards, my cohost on the european market open. bring us up to speed. what have we got so far? nejra: forrest johnson -- anna: boris johnson continues with his strategy. rudd saying 89% of the with planningdone for no deal, trying to do a deal. the question is whether boris johnson will follow the legislation that looks set to be passed that will require him to seek an extension if he cannot get a deal. we saw very interesting use of

language from various cabinet ministers, including dominic raab saying the government wants to test the limits of what it does legally require. boris johnson has no intention of going to ask for an extension. he has already told us he would rather be dead in a ditch then go to the eu and ask for more time. the language gets richer and richer, doesn't it? .esting the limits 35% of the country back the tories. what can we expect today? will has election bid the defeated again? -- anna: it does look as if that bid will be defeated. alliance standing firm. they do not want another election until they are secure that they have avoided no deal,

that they have taken no deal off the table. beis johnson is going to meeting the irish leader, who has already downplayed the potential for success here. is not afood area suitable replacement for the backstop. 30% of what crosses the border is food. seen the french foreign minister downplaying whether the eu 27 would be keen on giving the extension the rebel alliance once the prime minister to ask for. a lot of focus on that october 31 deadline. could we see boris johnson at that meeting in october with a request for an extension, but extending supporting paperwork that suggests there is no reason for it? or could we see him voting

against his own request to veto it at the european council? all kinds of incredible things seem to be possible in brexit land. thought it when we could not get more interesting and diverse, it moves again. great work. edwards at westminster, keeping it real for brexit on bloomberg. let us stay with that story. boris johnson sticks with the plane to exit the eu by the end of october. there are number of scenarios for how the exit could play out for the u.k. economy. here to explain his any burger. burger.ni >> the different economic scenarios, so of course, boris johnson defies the law. it is easy to imagine a scenario where there is just chaos at the borders. that is going to determine the severity of the shock. a halt, flow grinds to

analysts see a year-long recession where output drops to 2% and the bank of england takes rates to a lower bound of five basis points. inflation would also spike if the eu crashed out. there is a benign no deal. goods continue to flow. it is really the hit to the economy and sentiment that is weighing on the economy here. it would call for immediate interest rate cuts and a boost. let's say a deal is cobbled together at the last moment. growth in business investment spending would accelerate around the turn of the year. the pound would also appreciate. keep in mind, this would be tempered by a shaky global backdrop. let's go over sterling estimates. on currency moves around changes in the betting market. if i no deal gets priced in

fully, it sends sterling down 13%. that rivals a 10% raise, should no deal get priced out or if another referendum gets put on the table, at this point, it is really an extension. that looks more likely than that. burger looking at the brexit possibilities. ben jones from state street is still with us. i wonder what set of assumptions you approached brexit with. do you assume for example that hard brexit is unlikely? >> at this stage, you have to him make no assumptions. there is an awful lot of possibility on the table. it is impossible at the moment to read the political situation. at the moment, i would say there is a higher probability on that delay coming through, but as boris has said, door died.

he wants to exit the eu on the 31st of october. anna was saying, will the eu allow that extension? that is key as well. it is a shaky backdrop. every day this goes on, sentiment towards the u.k. is getting weaker and weaker. for that, with a margin of bias to sterling living -- moving lower. manus: it is fascinating to see dominic raab's language. are we under assuming the risk in sterling? it is going so badly for johnson that pound traders would prefer a jeremy corbyn administration. it would bounce. a torythan administration led by johnson. when you subscribe to that view of a risk-on rally for sterling

in a jeremy corbyn government? >> i would not. a jeremy corbyn led government would be almost as bad as no deal brexit for sterling. the way most of the finance industry is looking at a corbyn government, they are deeply worried about that. significantly negative for sterling, certainly in the short term. whether that happens in the subsequent months with his stance on brexit, we know he is one of the most opaque policies out there at the moment. it will be very short-term negative. i don't some scribe to that. matt: when you look at the possibilities of another referendum, is that a positive or is it just going to cause more uncertainty? >> more uncertainty.

uncertainty will prevail, rather. i'm not sure uncertainty gets greater than it is now. uncertainty is at its peak at the moment. another referendum at the margin, slightly positively, but again, it is very difficult to see how that will pan out. i was certainly wrong on the first referendum. i did not think brexit was going to win, and i was wrong. even now, sitting in the bubble we live in, you could quite uncertainty at the moment, everyone will say, it is clearly so difficult we are going to change our minds. if you venture outside of london, sentiment is different. people generally do want the government to get on with it, consequence be dammed almost. it is an interesting

move, isn't it, that that is where we have gone to? that is building. of people who say rip off the plaster, from an economic point of view. from a market point of view, there are repercussions for the gilt market and the irish bond market. it has been on a roll. many people have said, hard brexit, 40, 50 basis points. now they are saying zero. maybe negative rates. is that a problem? will the irish bond markets unfurl and give a barnstorming return if there is a hard brexit? >> in hard brexit, you have to assume gilt yields are going down. is veryal backdrop uncertain. a race to the bottom into negative territory around the

world. against that backdrop, it is very clear u.k. rates go lower. a bit of a spread with irish rates, perhaps, on the back of that. thanks very much, benjamin jones. manus: on the bloomberg aggregate there -- matt: go on, manus. manus: then, thank you. .tay in that seat let's get your first word news. drop hong kong, plans to the china extradition bill has failed to end protests. tens of thousands marched on the u.s. consulate to appeal for help. the city was also hit by small pockets of violence with demonstrators vandalizing subway stations and starting fires.

arrivals have dropped 40% from the same time last year. the u.s. is moving ahead with an investigation into french plans for a new tech tax. a senior trump official into u.s.looking companies including facebook and amazon. french wine could be hit by retaliatory american tariffs. tokyo, causing widespread destruction. rail services were canceled and 900,000 homes saw power cut off. that is the seasons 15th typhoon. just one evening to sell all the .imited-edition models head of this week's motor show, the ceo announced plans to produce 30 of the cars. he spoke exclusively to bloomberg's matt miller. it was to make the company

capable to finance. this is going to succeed. we are in a good situation right now. the next move, yes, i can imagine we could find new approaches on how to finance a second model. an ipo is not on my mind. matt: can you share any of the approaches you have thought about? porsche has just on a promissory note -- done a promissory note. partnerse think is -- on the board helping us to finance. these are things that have to be agreed in the group. >> global news 24 hours a day

powered by 2700 journalists and analysts in 120 countries. matt: this is bloomberg. thanks very much. your first word news. don't miss a stellar lineup of interviews from the frankfurt auto show. we are going to speak with the likes of the volkswagen group ceo. co -- ceo and the bmw chief finance officer, plus more for my interview with the bugatti president as they unveil this fastest model yet. the fastest production car in world history. you don't want to miss those interviews and more. manus: let us know when you get the test drive. next, we speak to the international energy minister -- energy agency.

this is bloomberg. ♪

matt:matt: this is "bloomberg daybreak: europe." and i am in abu dhabi for the world energy congress. wti is trading higher today along with brent as the saudi arabia ousts its energy minister. he has been replaced by one of the king's sons, who may have been a long top energy ministry official. the move comes ahead of an opec meeting later this week no nasty the jmsc. known as

rinse has knowledge of the industry. havem not expecting to changes. with the personality of the , he has a strong personality when it comes to the markets. manus: all the drama right here at the world energy congress in abu dhabi. good morning. good to see you. is the new abdulaziz man in town. what can we expect as the new minister for oil? >> he is not the new man. he has been around. he is a man who knows the numbers. he knows oil diplomacy and all the intelligence. arabia'sxpect saudi

oil policies will continue with prince al-falih -- prince abdulaziz. manus: the saudi's need $88 to breakeven. does this policy need a big shift? >> there is a need for a big shift, but not in the oil market. mainly in the economy. .ore than any time in history these countries in this region, they have to diversify their economies for two reasons. first, these economies rely on oil prices. a lot of oil is coming from the united states. shale oil. according to our numbers, last summer the united states growth -- gross exports became number one over saudi arabia and

russia. higher,orts would be second on the consumption side. electric cars. efficient planes. .emand is weakened for production, new players are coming into the market. you cannot rely only on oil revenues in this region. it is time for diversification. manus: i hear that from every ceo and minister in the region. you are saying in the iea -- oil oil demand my demand is three times the number we saw in the first half. long-term, but does that demand numbers stack up? are you sticking to that? this is the last warning.

u.s. oil is coming very strongly. demand is getting weaker. second point, our demand numbers it isxpect this year weaker than in the past. trade tensions between the u.s. and china, brexit and others, growth, mean economic therefore, lower economic demand. manus: you're coming down to one million? >> overall, taking into account the first half. but we need to think longer term. .emand cannot be so strong are becoming much more efficient. planes are becoming more efficient. will be slowerth

than in the past. growth.il demand i just talked to the deputy oil minister -- energy minister for the u.s.. 13 and a half million barrels a day my next year. could that push prices significantly lower? your take on that number for the u.s.? >> very simple. in the next five years, 70% of the world oil production growth comes from the united states. a lot of oil coming into the market putting downward pressure on the prices. more and more oil coming from the united states. >> you have got to say that we can expect an extension of the

opec plus relationship. with that being of merit? a production cut, we should bring prices higher. manus: which has not been done for three years, by the way. higher,e price comes u.s. production growth would be even higher than now. more oil from the united states. once again, coming back to what i said in the beginning, more than any time in history, they need to diversify. this is high time because production from the united states and let's not forget, demand growth for oil. for climate change reasons, for other reasons, weaker than we have seen in the past. in terms of recession risk, china and the u.s. need to

do a deal, but there is pent-up demand if a deal comes through. would you share that view? >> yes. if there is a recession, we will see much lower oil demand growth then in the past. not only that, a economy is a very important part, but technological advances impact oil demand. manus: what about recession risky? globally, first of all. >> there are many determinants. one of them as trade disputes between major economies. manus: are we under-assuming the risk from european tariffs on the united states of america? >> this would be another important factor, but not to be compared with the trade dispute between the united states and china. i would say this is important risk.

manus: sizable tariffs from the u.s. in europe -- could that tip europe into recession? what kind? >> it is a big assumption such a policy from the u.s. will be pushed toward europe. could have serious negative impacts for europe. for being withu us. the structural changes and what the world needs to grapple with in oil, trading at $62.15. have to say?ulaziz thank you to my guest, the executive director of the iea. an electric bugatti. there is a concept. matt: i think that is pretty far off. right now, the 16 cylinder bugatti is going to be using a lot of oil people at that conference are producing. coming up, as tensions escalate

between india and pakistan, we will speak with india's foreign minister. this is bloomberg. ♪

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♪ >> good morning from frankfurt. i'm matt miller with manus cranny life in abu dhabi for the world energy congress. this is "bloomberg daybreak: europe," and these are the days top stories. looking ahead, asia stocks brushoff weak export data out of china, as a rrr cut lift sentiment. will crash again as the prime minister suffers yet another high-profile resignation. in saudi arabia is king replaces the energy minister with his son. they say don't expect policy to change.

think with the personality of the prince, he is very decisive, he has a strong personality when it comes to the markets. ♪ >> a warm welcome to "daybreak: europe." we are right here in abu dhabi with the new minister for saudi arabia. alive,eeping the dream continuity is the word in the i have written down -- the softer the data, the higher the hopes. good morning.

>> good morning. it certainly seems that the oil price has benefited from this whether he change his or not. we have seen again for four days in a row and we see also the rrr cut helping out the index, a little bit of lift in china for istain, but the question is this central-bank activity going to spread to the ecb? do for thell that global economy? will it create more demand for areblack gold the saudis so good at pumping? >> absolutely. let's take a look at futures. by the way, there's the red headline from lloyd's, let's have a look at it because it is going to play out.

suspend onides to the buyback -- i just want to get the headline details because that could play out on the rest of the banking news. they have sent the remainder of the buyback progress in 2019 and our guest host -- they are increasing their ppi division -- this is big news that will impact. 1.8, the buyback is suspended for the rest of the year. shelley have a look at the bond market? lasthing really happened week with negative yielding bonds. take it away on the bonds. >> let's definitely check it out. see what the markets are

thinking. change, futures driving a little bit, futures falling, and maybe we see that isead wide and, although it far from the widest point. right now you see the bond futures down in the cash trade is down as well with the yield rising up to about 1.56%. the pboc, which will cut the amount of cash banks have to hold in reserve, the lowest level since 2007 and a move that will release 120 $6 billion of liquidity into the economy. an unexpected contraction in china's trade, underscoring what economists were already saying, that there is still not enough to put a floor under the slowing economy. we are asking the question of are set-- which assets to benefit the most from china lowering rates?

on yourreach out to us bloomberg terminal. answer,us to give her the head of investment strategy at rbc wealth management. what do you think about this cuts? which assets will benefit the most as the chinese central bank continues to loosen policy? we welcome this news of loosening monetary policy -- we have seen emerging markets in asia respond positively, it is good for them. china this situation is very complex in some sectors are overheating while others are weakening. it is clearly suffering a lot from the trade war and since last december we have seen the loss of jobs, clearly a sector

that needs to be looked after. whether it will be enough remains to be seen. morning. we just got this in the last hour, a coordinated policy response. you moved to a more defensive position in may -- given the pboc, given the proclivity of the fed to move, have you shifted or are you about to shift from equal weight on equities? >> we have become slightly more have beenand we market weighed for a very long time. we have been monitoring things very closely and our efforts are focusing on the u.s. market and whether there is a recession. have hadoted that we

two recessionary indicators, ,hich have shown more caution and also inventories which have turned negative. difficult withre a one-year view. having said that, the yield curve is a good indicator of recession but not a good indicator for markets. in the past, we have had instances where the market peaks before the yield curve and somewhere they peaked after. this yield curve inversion has opened the door and you want to continue to participate but we think over the next few months, some of the indicators might

shift, and there is a risk-reward balance that might become less attractive. >> there used to be an assumption that we would see some kind of trade war truce before the 2020 elections in order to help the president's chances of winning another term. what do you think the likelihood is that we have seen some sort of trade war peace breakout? .> the truth is it is possible authorities realize how negative it is for the economy, but a comprehensive deal is probably less likely although damage is being done at the moment and you would have to step back a lot in order to improve the situation. things have really escalated over the last few months in a comprehensive deal because it is about intellectual property, it

is about reforming the chinese economy. it is difficult to see all of this happening over the next six months before the presidential election is in full swing. is one chart that really caught my eye. sometimes we need to go underneath the data -- if you had back at last week, we peak recession angst and then we had this reprieve on thursday with the services number. this has gone above zero for the first time since february. are we thinking about the risks to the downside? they are part of the economies that are still doing well. , the.s. consumer underlying factors are still very strong, but parts of the

economy, the manufacturing sector is really suffering and it is difficult to imagine how that will improve going forward. let me finally ask you about what you think of the u.k. amidst all this brexit drama. double-digit gains for continental indexes and the fence easily looking at 7% year to date. if we see some sort of resolution that doesn't involve a hard brexit by october 31? >> the u.k. is a market where there was ample risk and there is a path whereby u.k. equities perform better, that would be a second referendum on the table. the path to that outcome is very

uncertain, it is a very multifaceted situation that we theencountering, but given aluation in u.k. equities, yield of 5%, we see some potential upside but a lot has to happen for us to get there. >> thank you so much. welcome. good to have you. we will get you miked up. thank you very much for joining us. let's get you up to speed with the first word news headlines. >> thank you. the u.k. prime minister is pushing on with his hard-line brexit strategy despite the risk of being taken to court and the threat of more resignations.

the senior minister quit the cabinet with a ferocious attack on the government which she said is no longer serious about a deal with the eu. johnson will visit dublin to meet with his irish counterpart. >> i support him and is approach and i believe i was right to do it. the consequences now, 21 senior colleagues expelled, which has made the position untenable. plans to drop the china extradition bill has failed to stem protests. tens of thousands marched to the u.s. consulate to appeal for help for president trump. they were also hit by small pockets of demonstrations. according to hong kong official, is other arrivals dropped nearly 40% from the same period last year. the u.s. is moving ahead with an investigation for a new tech cap , despite an apparent agreement at the g7 summit. they confirmed the probe is

looking into effects on u.s. companies including facebook and amazon. french wine is among goods that could be hit by retaliatory american tariffs. made landfall near tokyo, causing widespread disruption to commuters. rail services were canceled and some 900,000 homes in the region. 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. this is bloomberg. >> thank you very much. rounding out the news flow from london. let's turn our attention to the main story of the day, oil trading a little higher, coming ahead of the meeting later this week in abu dhabi. i am at the world energy congress. joining me now is the ceo --

good to see you this morning, how are you? markets,oking at oil they are saying we are at an unprecedented uncertainty in the oil market -- how do you look at the markets? it is not so different from the last five years. honestly, i don't look at the oil price, i look at what i can control and what i can control is my company. that is what i did in the last five years. we reduced costs about 30% and now we can lead with this kind

of prize. volatility is about $55 per barrel so we have to be resilient and we have to be more efficient. we trained ourselves. >> i have been speaking to you for five years it do have done very well, which begs the question -- you mentioned debt. can we focus on that for a moment? italian debt is at a record low yield. are you going to come to market with record low yields in the bond market? do you think it is time to issue more debt, repay the more expensive debt? are under running position produces a good free cash flow.

we go directly to the market and -- wek we can clear increase our rating and it is activities.r our clearly the debt has been one of -- we said no more than 20% and also our leverage is now 15%, very low. we will want to continue to be really efficient in our activities.

it is very flexible from a financial point of view. >> i'm worried the bulk of your freedom,omesthere is a degree f and our solution is not so unique. recover andrope can -- we cannotk continue to use coal for energy, and coal is still the first -- that cannot continue. think it is a good space for it to grow. -- that will do for a

couple years and also it is going to create good return for everybody. >> low leverage, churning out cash. last time i saw you, you spent $45 billion in abu dhabi. are you actively seeking more opportunities? we already made a big -- evolving project, 900 million barrels per day, going to 1.6. 1.6 is still under anonymous,

have a verythe large possibility to receive these clues. >> what about egypt? are you staying active in the egypt market? ,> we are continuing to develop continue out the door, they are covering everything. compensate,ng to because we are one year in , and we have to reach 3.3. it's an area where we continue and --

sport.ys a good if there's a trade deal, if there is a substantive trade deal, where could be rally to? what could be in this market? >> in brent? it brings back the $65. of i don't know. have less geopolitical situations, and more stability in the relationship between countries. increasehe only way to consumer confidence.

that is one of the main .ssues >> you are always a good man and we wish you well. here,s the ceo joining me have a good day. let's head it back off to you. >> excellent conversation, thanks. let's get back to brexit. boris johnson is pushing on with his plan, despite the threat of legal action. fuels to at her reports that the prime minister plans to defy legislation requiring him to ask the eu for brexit away, this comes after the resignation of amber rudd,

who told the bbc why she couldn't go on. >> i supported boris johnson and his approach and i believe i was right to do that. now, 21e consequences senior colleagues expelled and the lack of planning that has made my position untenable. >> our guest is still with us. let me ask you about the underlying economy -- what are the effects of this uncertainty? >> on the u.k. economy? >> yes. seen a well, we have weakening of the economy, people point out we haven't had a monetary -- a lot of support in stimulus, that coincided with the global economy was doing particularly well. repercussions the

and the pmi is indicating a much weaker economy. >> in terms of the risks in the market -- sterling is perhaps -- do youndicator think we are underpricing the risk of a hard brexit? the market seems to be not as as a potential new boris johnson administration -- how do you look at sterling? sterling, the worst-case scenario seems to be a hard brexit and last week this probability seems to have decreased but that remains to be seen, given the geopolitical events. i think the liberal government

would be of concern if they indicated that there would be a for now it seems that if it would get in it would be as part of a coalition with lib dem and s&p that would probably obey the most hard left policies of capital control and nationalization. >> let me bring it back to the core and ask your take on the german data. it has been very bad lately, disappointing economists and the possibility of stimulus -- do you expect berlin to make a move? >> we see the german economy is particularly geared toward

gdp in, more than 50% of germany, and manufacturing is particularly important to the economy in the u.s. it is manufacturing suffering as a result of the trade war which is suffering in particular. we do expect a big package this expect a cut interest announcementect an on taking the sting out of the negative interest rates. we are not as optimistic as others in terms of a qe program -- we don't expect all the details or programs to start now. we expect some discussion about it but we think it is not discussed enough, and the central bank would get inflation if it has stayed below target.

that interest rates will be negative for a prolonged period of time. >> thanks so much for joining us. they had an investment strategy at rbc wealth management. manus, thank you very much, it has been a pleasure. i am here at the auto show. don't miss more --

♪ >> good morning, welcome to the european open. we are live this morning from westminster. i am alongside matt miller in frankfurt. >> good morning. can this be a coincidence? , and the feds rrr next week. futures are on the rise ahead of the cash trade, less than 30 minutes away. ♪