nejra: good morning. in londoncehic alongside manus cranny in abu dhabi. morgan caution, stanley's ceo warns against the fed cutting too easily and gives bloomberg his take on where rates set now. >> i would be very surprised that where rates are. thisected by the end of year, the tenure would be 3%. i was dead wrong. president trump said he fired his national security advisor. crew drops on the news but surges on stateside data. apples cutprice streaming service ways on shares of netflix and disney as the tech

giant announces an updated product line. welcome to "bloomberg daybreak: europe." good to be back ahead of the most important ecb meeting of the year. trade ineing a risk on asia, green on the screen for the msci asian-pacific index. we have a tweet from "the global times" talking about china putting measures to mitigate the trade war giving lift to risk assets. we see sweet nothings on the s&p on a headline level. what has been going on beneath the surface for sector and factor rotation moving from more growth to value. looking flatres, so another day of perhaps not much to do on the headline level.

the big moves have been in bond yields. jumps into year and 10-year. hitting its highest since august 5, down a touch today but sitting on 1.66 handle. great to see you and great to be back. manus: yes, indeed. yields just off the one-month high. we will talk about what james gorman had to say. to show the oil market because what has gone on is john out.n, this was the biggest pricing dislocation last night anywhere in the asset classes. it was in the crude market, down it went by 2% because if john bolton the hock is out, what does it mean for sanctions and supply? then advisors come and they go. one thing that remains ever and constant, the supply of oil. to that end, a reprieve in the oil market this morning because

the inventory drawdowns were better than expected. the risk is a material de-escalation of iran and that means more supply. with gold and the 10-year government bond yield, it is off of one-month high. $24 billion worth of supply coming to the market tonight. the correction you have seen in the bond market, this outsized move in august is not a turn of trend. it is just really -- a slow moment of realization in the bond market. let's have that debate because it is about fed policy, isn't it? is it heating up as we go to next week rate decision? morgan with an opinion, stanley's james gorman has weighed in with a note of caution. cutting ratesnst "too easily," but supports the reductions made so far. bloomberg at the

columbia business school in new york. >> at one level, we've got record low unemployment. we do still have global growth. the u.s. economy, the most important economy in the world is performing strongly. china is performing strongly. europe is obviously mixed but it has been mixed for two decades now. on one level, the fundamentals are quite strong. level, the sense of confidence -- there isn't a confidence and a sense of inevitability we are three -- at the end of a cycle. statistically, there is a recession every seven years. begin with a 15% chance of recession but it doesn't have to be. you now strut you, they haven't had a row. >> why is there so much pressure on the federal reserve to cut rates? james: because the economy is

slowing and the job of the fed is to balance monetary policy and fix fiscal policy. whenshould feather rates, the economy is getting hot, their job is to slow it down and the reverse. i supported the latest rate cut and i suspect they will do one or two more. ton, it is time for a pause absorb this because cutting is one of the few tools you've got. if you give it away too easily, what if we have a real problem? >> something you said a minute ago, squaring elements out there. businesses that seem more cautious with a consumer that isn't showing much signs of caution at all. square those things as you talk to your customers and what do you see out there that could explain that dichotomy? james: we are in a bit of an echo chamber. if you are a business leader, you go to business leadership meetings, we bounce off each

other so a little of it is we must be at the end of the cycle. the fed is cutting rates, we must be about to have a recession. we have an inverted yield curve, which is highly predictive. there is some hard evidence things are more likely to slow down at this point. as executives, whose job is to think about multi-years, you would be prudent in being cautious at this point. consumers aren't yet experiencing that. they've got cheap debt, housing is starting to recover. consumer credit apart from student loans sadly is in strong shape so the consumer balance sheet is still very strong and that is why it is lagging where the corporate attitude is. nejra: that is james gorman, morgan stanley ceo speaking to bloomberg in new york. joining us, the global head of that strategy. great to have you with us. let's talk about what has happened in rate markets the past couple of days.

you said fixed-income markets have gotten ahead of thlves in terms of the underlying fundamental outlook. are we more realistically priced after the moves of the last couple of days? >> i think we are getting there. weeks, the big story has been central banks pushing back on expectations. you have the rba, bank of canada, riksbank, and behind the scenes, the bank of japan buying a lot less fixed income and particularly at the long end of the curve. central banks are telling you the price -- fed has priced too much. confirms what was get a sense in terms of liquidity, if we see bond markets spin around as we did, negative to positive, 1.20 5 trillion, 10-year at a one-month high. not take much to push these yields much higher, is it? we've learned the fat

-- last few years is liquidity and market is less than it used to be. that was the case in august. things are improving now but these are not the types of liquid markets we were used to seven years ago. nejra: at the moment, we've made inone third of the move august, so a way more to go to the upside in yield. economy, i the u.s. know you've look at sign's the u.s. economy isn't looking as robust as some think. what are you seeing below the surface? jim: even above the surface, you see some real weakness in the corporate sector. last week, looking at global pmi data, and most interesting message was the u.s. catching down to the rest of the world and in the export sector, which ving an impact.rade war is has heldhe consumer up reasonably well that it typically is the corporate sector that leads the consumer

when we get to real problems with the economy. one of the things i saw this morning -- i want to go back to your original point, the pushback from central banks. is the biggest risk in the bond market in the u.s. that the ecb disappoints? jim: i think it is a real risk this week because we've had really a global bond market in recent mons and therefore if central banks are going to push back, it will have a big impact across the board so the two big central banks are coming up so we have the ecb, the fed next two weeks ago, the market was pricing in close to 50 basis points of easing in september. we don't think that will happen, but this is not an environment where central banks are going to be able to reach expectations. nejra: what would be seen as a disappointment by the fed?

the 25 basis point cut expected so what might be a disappointment that could affect bond markets more if we get a disappointment? jim: i think there is still this debate, notwithstanding fixed-income in august, whether this is the start of a real rate cutting cycle or an insurance cycle. it would be a genuine disappointment markets to get a sense that 25 basis points next week let's sit back and take a look. i think that is a real risk because the one thing you see is a division with the fomc of where people want rates to go. on the rate hikes, unanimity, unanimity, to cutting, some would say is healthy debate. deutsche bank says 100 by the end of the year, gorman says one to two. the market is unsure and wrongfooted, isn't it?

jim: it is because we talked about this before. the framework by which you follow central banks is much harder than it used to be. if you step back and look at the u.s. economy as it stands today, some could be asking why we are cutting rates at all. i think it makes sense to be cutting rates but it is a difficult environment to understand quite what central banks are trying to tell you. much more work to do. jim mccormick, our guest from natwest markets in our london studio. let's get the first word news with annabelle droulers in hong kong. president trump says he has fired his national security advisor john bolton. the notoriously hawkish bolton left minutes before a scheduled briefing on terrorism. five minutes after the

announcement, he contradicted the president saying he'd offered to resign on monday night. the white house says bolton and the president had been disagreeing on "many, many issues." to u.s. farmers, china's opening the door to u.s. sort -- soybean shipments from argentina. beijing has processed imported beans itself. a report in the china morning post said a deal is being worked on for beijing to step up american farm imports. saudi aramco is said to have picked banks including j.p. morgan chase for top roles on its planned ipo. bloomberg learned aramco is considering selling a 1% stake on the saudi stock exchange before performing an overseas -- pursuing it overseas listing. the big ipo decision will ultimately be made by shareholders themselves. south korea says it will file a wto complaint against japan.

at exportnhappy curbs in chips and display manufacturing. was politically motivated in taking the steps after a south korean supreme court on wartime forced laborers. a leader of northern ireland's democratic unionist party says prime minister boris johnson has confirmed his rejection of a northern ireland only backstop. a group of mps suggested the change as one way to move brexit talks forward. the bank of england governor mark carney says sterling's volatility is currently at emerging-market levels. >> australian volatility, as you know, is at emerging-market levels decoupled from other economy pairs for obvious reasons. theatters tremendously

brexit outcome. annabelle: 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. . nejra: annabelle drouler in hong kong, thank you. eyeing the stimulus package ahead of the ecb meeting. investors will wait to see how much easing the central bank provides. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe. i'm nejra cehic in london. manus: i'm manus cranny in abu dhabi at the world energy congress. talking oil and gas, a constant theme.

there are worlds and markets beyond oil and gas. juliette saly has that in singapore. juliette: seeing asian stocks had a five-week high. the bond selloff continues with yields on australia's 10-year note climbing. the nikkei is on track for a seventh session of gains, its longest winning streak since september. the yen weaker for a third session. momentum coming through in korea today. we have apple suppliers on the move. korean unemployment had a six-year low and quadruple. byg kong being listed developers, a surge before the weaknessak but seeing and mainland chinese stocks, the csi 300 down by around .5%. you have seen gains in some of the china brokerage companies. i want to show you this chart because what we heard from authorities in the lead up to the 70th anniversary is another form of stimulus in the sense they have actually scrapped

foreign investment limit in bond and stock market after years of raising the bar, reflected by the red dots. authorities are trying to show willingness to open the market long ons seen as symbolism and a little short on impact. going to boost chinese stock markets according to analysts we spoke to. that is going to be a good sign or positive sign authorities want to see in the lead up of the 70th anniversary coming through on the first of october. nejra? nejra: juliette saly, thank you. let's get the bloomberg business flash with annabelle droulers in hong kong. announced apple raft of new products and services including the iphone 11. it features enhanced cameras and battery life, incremental improvements over -- before a more substantial overhaul next year.

a new aggressive pricing strategy has price cuts to existing products. saw a-year-old iphone xr $150 price drop, bringing its price to $599 in the u.s.. we work considering major changes to governors -- governments in a bid to save its ipo next month. lead advisor its jpmorgan and goldman sachs have concerns about an offering that could value the company as low as $15 billion. the operator lost $690 million in the first half of the year, bringing total losses to almost $3 billion in past three years. is analyzingale ways to save in costs. it is part of an effort to win back investor confidence. the ceo is under pressure to go beyond existing job cuts. socgen is already planning to eliminate 1600 jobs, mainly in

its investment banking unit. that's your bloomberg business flash. let's turn our attention to the european central bank. its two-day meeting starts today and markets are waiting to find stimulusshape the could take an mario draghi's second to last ever meeting as president. doubts the ecb will do all that is expected have pushed government bond yields on both side of the atlantic from multi-year lows in recent days. which the mliv question, assets are most at risk going into the ecb meeting? on ibhe debate, mliv team + tv on your bloomberg. jim mccormick is from natwest market. there is a lot of pent-up

expectation. what do you expect is going to be delivered and is the bar high to keeping this all happy? -- if we are underwhelmed by the ecb, where will it manifest itself the most? is probably the most consequential ecb meeting in a long time and like most ecb meetings, there is a lot of modality so it is confusing. think a 10 basis point rate cut, quantitative easing at $30 billion a month, some form of rate tiering and limits increased. that has been our case since june and it was viewed as aggressive three months ago, probably not aggressive enough two weeks ago and probably neutral given the hawkish pushback we have gotten in recent days. what is the real risk? probably peripheral bonds. if you get any cb that underwhelm's where the market is

very long and in need of a dovish delivery, bonds like spain and italy. i would worry, having been bullish on those bonds if the ecb disappoints, i would be worried there. delivers one ecb what you outlined, that could see a rally in peripherals and in the five-year five-year inflation swaps. the hawkish rhetoric he pointed to, do you read into that as any kind of warning signal, or would it be an attempt by the ecb to manage market expectations? jim: i think it is a little of both. if you take a step back at tenure german bond yield, -70 basis points one the composite pmi in europe is not that far from the long-term average. is the market pricing a lot. all central banks have tried to get markets to get back to something more realistic but

there is a risk that they may quantitative easing tomorrow. we think they will but that is a real risk. i'm going to try and speak over -- there is a wonderful voice your. the future of energy. we'll see you then. let's talk about in the bond market -- she's a very good friend of mine, this announcer. christian sewing at deutsche bank says interest rate policy -- or she goes again -- our are discounting the challenge is to come from a more negative rate. take it away, jim. jim: i think or for bonds in europe -- corporate bonds in

europe and across the globe are priced to perfection. you got an environment where the corporate sector is starting to weaken. thegot an environment where global manufacturing sector is under significant pressure and yet corporate bond yields are at very tight levels. i'd be very worried about that asset class if the ecb disappoints. nejra: in the expectation the ecb might disappoint, we've als seen steepening across the rman cve. uld you be trading that? jim: the german curve is tricky and we talked last time that has long as you are in an environment where the policy stimulus is mainly going to come was the ecb, our thinking you would get a significant flattening of the curve. thinkouble is, we still eventually fiscal policy becomes a more central part of the stimulus and that's deepens the curve. we have seen in the last few months is that transition

starting to take hold. you have a massive flattening, a little steepening, and the market is starting to wonder when do you get that fiscal stimulus? curve is trickier than it was a few months ago. manus: thank you very much. jim mccormick from natwest markets. my apologies to you. the question we've got to ask ourselves is whether the backup yield will be one of the most splendid opportunities we have seen for some time. that will be the debate. nejra: absolutely, particularly if you think it is a slight correction rather than a change in the bond markets. we've been talking about the impact on european bonds and the potential ecb disappointment. he pointed to the impact on treasury yields, something to watch. iphonennounces the new and might have thrown down the gauntlet to netflix. this is bloomberg. ♪

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manus: this is "bloomberg daybreak: europe. -- "bloomberg daybreak: europe ." i'm manus cranny in abu dhabi. 2019, thegy congress politics at play in the last 24 hours are surreal. bolton, the extreme hock in the u.s. administration that many say was responsible for some of the policies on venezuela, iran, he is out. the oil market, down she went on the back of that and we had tom pao and steve mnuchi -- pompeo and steve mnuchin saying it is steady as you go.

definitely a big geopolitical theme we are watching. we've also got headlines crossing that china is unveiling its first list for tariffs exemptions on u.s. goods. that is all the details at the moment. we are waiting for more details and of course this feeds into the risk rally we have seen through the asian session after some comments on twitter at the china ismes saying looking to offset the impact of the trade war. the trade story, we will get into with our guest host in a few minutes. manus: one of the first things they have applied an exemption to, china approved an exemption oil..s. lube and these first set of tariff exemptions, coming up to the 70th anniversary. china opens the door to bigger and more ownership of china, bonds, equities, emancipating

the yuan. window, a be a small small olive branch. john bolton is out, a little tariff exemption, maybe laying an the breakfast table -- easing. nejra: that is one way of looking at it. the other is china may not want to in any way back down or look week versus the u.s. as we approach the anniversary but we are getting that discussion in a moment. greats around the world, to have you both with us. investors seem to be anticipating more government driven stimulus given waning consumption. is that playing out much in the market today? you and yes,ng to completely. over the last three or four days.

may be this news you were talking about might help it further but for now, it is and notin the green just today. over the last five days, the markets have done well. this move leads us to the fifth straight day of gains and by virtue of that, indian markets are poised for the longest since march 2019 and that seems to be a long time considering how quick cycles are moving around. let's see if these last but for now, green for sure. thank you very much for the roundup. at the bond markets in asia, they've got to catch up with that treasury selloff overnight. $24 billion worth of paper coming to the street this evening. how is your market looking? look at the gmm screen under the sovereign bonds section, it is nothing but red.

even though the treasury selloff has eased to some extent, asia is catching up with the rest of the market and the moves are remarkable with the aussie yields, new zealand as well. yields now about their highest in a month. in currencies, we are seeing risk on reflected. might be china exemptions that are helping move things out quite a bit. looking at the yen, coming off as the aussie dollar rallies. the pair has been moving in opposition to each other for six straight days. on track for their longest streak in about six months. you can see a lot of that equity is moving to the upside, that the new zealand market might be reflecting some of that -- those gains in the dollar. i also want to talk about the rotation in equity markets. it happened earlier this week and is continuing to happen in the factor section. marketsto watch, global you can see that value continues to gain. cheaper stocks tend to be more risky.

at the same time, momentum, the most popular stocks. one of the biggest losing factors and the rotation to start the week was its most drastic pick up in value since 2009. a lot of this are hedge funds short covering risky names, quants coming on but a lot is prompted by the move in bonds. nejra: great work. a lot of the trades that have worked a lot of this year. cross assets seemed thrown out the window the last few days. she was talking about the exemptions from china. let me update you on the latest lines. china has released u.s. tariff exemptions list effective september 17. it doesn't list corn, soybeans, pork in the first tariff exclusion. let's get a first word news with annabelle droulers in hong kong. morgan stanley's ceo

james gorman is sounding a note of caution on more rate cuts by the fed. he warns against putting -- foring "too easily" supports the reductions so far. >> i supported the latest fed rate cut and suspect they will do one or two more, but then it pause to absorb this because cutting is one of the few tools you've got. if you give it away too easily, what if we have a real problem? annabelle: saudi aramco is said to have picked banks for top roles on its planned ipo. bloomberg learned aramco is considering selling a 1% stake on the saudi stock exchange before pursuing an overseas listing. the big ipo decision will ultimately be made by shareholders themselves.

the leader of northern islands democratic unionist party said boris johnson has confirmed his rejection of a northern ireland only backstop. a group of mps suggested the change as one way to move brexit talks forward. meanwhile, bank of england governor mark carney says sterling's volatility is currently at emerging-market levels. >> sterling volatility, as you know, is at emerging-market levels decoupled from other advanced economy pairs for obvious reasons, because it matters tremendously the brexit outcome. annabelle: 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? manus: thank you very much. annabelle droulers in hong kong.

apple has announced a range of new products including an aggressively priced iphone 11, and details of its new video subscription service. the smartphones present camera enhancements, improved battery life and the company wants a buying ahead of the most substantial overhaul of handsets in 2020. nejra: as the u.s.-china trade war rumbles on, the idea of a tech convergence between the countries is gaining traction. let's look at apple's stake in china. the american tech giant has built a complex supply chain across the country's coastal region and lists more than 300 production facilities as suppliers. in 2017, it had created and supported 4.8 million jobs in china. in august, the trump administration delayed a 10% tariffs on chinese made products. joining us is bloomberg's tech opinion columnist alex webb. we will talk about the trade angle but let's look at the launch and unveiling.

is this going to be enough to draw in android users and boost sales of the iphone generally? >> it will be interesting to see if it affects the top line. it might boost unit sales. this is a huge strategic change for apple. they are cutting the price. this is not something we have seen before. you seen them gradually pick up the price and what we have seen now is they have kept the price the same for the top-of-the-line models and reduced it for the one below, which is the iphone 11. the iphone 11 pro on the high-end and the iphone 11 below that and all the products below that, they are retaining and keeping the price lower. that is a gamble that will undercut the samsung galaxy's cheapest phone. to get it is enough people buying in growth markets like india remains to be seen and i'm a little skeptical. alex, i read stories like this and watch theatrical moments from lots of presentations.

i wonder if this is one of those moments for apple where they need you users. they need more market share because we are now price-sensitive to apple. alex: i think when they breached the iphone,rk for that was a moment in itself, it indicated a high water mark. there was a sent some of the lower spec iphones have been doing a lot better. that might have been expected in previous years. they are pivoting toward services and the cheaper you sell your iphones, the bigger the installed base which means you can sell more services to those people. the question remains whether those services are in fact going to deliver the margins that had -- investors had gotten used to with the iphone. the apple tv was also surprisingly low.

over will be a huge fight streaming video services over the next couple of years. that means there will also be less margin to share around the media companies. nejra: bloomberg has reported apple is prepping bigger changes in 2020 so you ask whether people just want to wait for those. comment about a china needing apple in its trade war against the u.s.. alex: the expectation is apple is a total for china to say if we crackdown on apple, that will create problems for the u.s. and they won't do it. china needs apple as a lobbying tool in d.c. in one sense, tim cook, not from his own choosing or that he is in cahoots with china, but his interests align a lot with the chinese government when it comes thereforend tariffs, he is an important voice to be able to go to trump and say please don't put duties on our products. nejra: alex webb, great to have you with us. lasting with trade, in the

few minutes china has unveiled its first list of tariff exemptions effective september 20 -- september 17. corn, soybean, and pork are not exempt but lubricant oil made the list. jim mccormick is with us. of "thed a lot of news global times" saying china is looking to mitigate the impact of the trade or. is this a sign of easing intentions or is that reading too much into it? jim: the market has had a tendency to read too much into it. this is part of the underlying process, the exemption list. even some of the olive branch process that has been put in place the last few days is the same thing that happened back in july, and yet, all that keeps happening is tariffs keep going up, exporter sentiment keeps going down, and the trade war keeps getting worse.

i am very skeptical about getting super positive on these headlines. manus: we'll all get a little more tempered. can i get your opinion on bonds in china? i was looking at some of the data this morning. have returned 3.5% 2019 but that is below some of the returns in some of the other bond markets. we've put it into our bond index at bloomberg. jpmorgan has, as well. what do you need from the pboc to deliver a bigger return on chinese bonds? the last we spoke, you were a buyer of chinese bonds. what does it take to buy chinese bonds? is there more upside based on the next policy round from the pboc? jim: i think chinese bonds are starting to behave a little bit like a global bond and therefore , you could ask yourself the

same questions you asked about other fixed income, which is where is the economy? where is policy? the one thing that is very clear in china is that policymakers are putting in place -- i wouldn't say an enormous amount of stimulus but a relatively large amount of stimulus to the impact of the trade war. that should be net impact positive for china's income. china's credit impulses picking up but in your latest inearch note, a stabilizing china's economy is good and bad for markets. side would air on either good or bad? jim: lasting you need is china's economy going over the cliff. people were worried about that a few months ago as the trade escalation started up again. china has a lot of stimulus in the system and you are starting to see some stabilization in the numbers. my worry about stabilization of numbers is what motivation does

china have to step down when it comes to the trade war if it has gotten its economy to stabilize? it is good and bad, and we will find out how good and how bad the next few weeks as we see trade headlines continue. jim, what does it take in the data to perhaps push either party? manufacturing in the u.s. is in contraction, as is manufacturing in the china -- in china. what is the creek on the bubble -- prick on the bubble in china that causes them to do something on trade? jim: in china, it is more about the data and a comprehensive significant shift down in the data would be a big concern. one thing i point out in china is not in cmy terms, local

currency terms, exports from china are the same level as at the start of the trade war. the weak currency has created an offset. in the u.s., it is slightly different. heading into a presidential election, it is the level of the stock market and frankly, the stock market is not far from all-time highs so i don't see a significant motivation by the u.s. to step down significantly, neither. manus: thank you very much. jim mccormick from natwest market. thank you for giving us your time this morning. all the moving pieces in china. butre in abu dhabi on tour, in south africa, there is some pretty big action. taking its unit public today with a breakdown in the numbers. we find out what is behind the story. new units will contain

assets with a value of $100 billion and a 31% stake in tencent as well as businesses spanning from brazil to germany in industries such as online food delivery and classified advertising. aspers will keep his stake in at least 73%, making onlyhe third largest, dwarfed by unilever and royal dutch shell. type tliv on your terminal for all of the details on the story. traveling to work, tune in to bloomberg radio live on your device or on dab digital in the london area. this is bloomberg. ♪

nejra: this is "bloomberg

daybreak: europe." i'm nejra cehic in london. manus: i'm manus cranny in upper darby at the world energy congress. we are on tour but that doesn't stop us from considering politics. president trump has fired his hawkish national security advisor john bolton, saying he disagreed stronger leave many of his positions. news after the recover -- before recovering some ground. this is the 24th event in this calendar. ofning me now, the ceo crescent petroleum. good to have you with me. supply andassess the demand side? can you give me your take at the moment in terms of the demand side of the equation? do you see any slowdown from any customers in any way? what ise demand side,

most impactful is what happens with global growth and particularly asian growth. the trade war has certainly had an impact and you saw most recently a tweet on a possible deal on the trade war could send even higher than geopolitical events happening with tankers in the gulf a few weeks before that. because the looking demand is from china and india and indonesia, not from d.o.a. on the supply side, what is essential in u.s. shale is investors wanting profitability and not just production growth there. these will be important aspects when you look at the global price rains. -- range. manus: what about spending for you? do you spend time looking at the

daily machinations of oil when looking at capital expenditure decisions? in terms of your project rolet -- rollout to bandwidth on oil price? majid: absolutely, all oil and thecompanies need to have price they will use to screen project and look at investments for the coming year. we are using $60 for now, looking at where that may change. in our region, which is where we focus, the cost of production is noso much the challenge. we have more challenges above delayed payments, compound security challenges, and regimes in our region need to change, particularly targeting more gas. what we've been hearing is the growth of fuel for this century in this region. manus: the margins on gas are under pressure.

the egyptian oil minister was under serious pressure in the gas markets he's seen. majid: globally when it comes to there has been downward pricing -- pressure on pricing and a big pressure has been the u.s. shale revolution. liquid gas prices of two dollars, which no one thought possible and the u.s. becoming a competitor to producers in the region and lng where is 10 years ago, we thought the u.s. was a market for lng. we operate very much on regional markets. you want to get the same international pricing perhaps, but it still can deliver robust returns. manus: let's take it to the markets you are involved in. iraq is something we want to know more about. what progress has been made?

i think it is $300 million to $400 million, possibly in a bond. can you give us a window into that? majid: i don't want to be premature. manus: be premature. brca headline. we arcurreny producing 400 million cubic feet a day of gas and the plan is to take that up through two trains from the field up to 900 million cubic feet and possibly even one billion cubic feet over the next three years. producing for years there. the outlook we see is quite positive and iraq overall, we have both the ministers of petroleum and oil and electricity at this meeting. having defeated isis, having a

transition of government and the regional government, better communication between the two now on solving some of these historical issues. we see the outlook is quite positive and the resource base is unparalleled. manus: can i ask you about gas production in kurdistan? have you agreed to sell to turkish buyers? has that been finalized? jim: currently, there is a big domestic market. sittinge power stations that aren't even fully supplied yet with gas. that is the immediate focus. there is also demand within iraq, with a neighboring governor, particularly the ones liberated from isis. iran is still importing gas. we've announced 15 trillion cubic feet and there is the potential for exports. manus: thank you so much for

joining us on daybreak europe. the ceo of crescent petroleum, majid jafar. we will dig into lines from -- on trade from china. this is bloomberg. ♪

nejra: good morning, i'm they re change. -- im nejra cehic. >> these are your top stories. unveils its first list of tariff exemptions on u.s. goods. pharmaceuticals and oils are on the list but coin soybeans, and pork are not. a note of caution. morgan stanley's ceo warns against the fed cutting too easily and gives a bloomberg his take on where rates sit now. >> i would be very surprised.

i thought the tenure at this point i expected it to be around 3%. i was dead wrong. manus: president trump says he has fired his national security advisor. crude oil drops on the news but reverses on stateside inventory data. nejra: welcome to "bloomberg daybreak: europe." great to be back and great to see you in upper darby. dhabi.bu this is confirming the for ambitious revenue growth x fx. the first half were current operating margin comes in at

34.8% versus the estimate of 34%. but confirming the full-year goal for ambitious revenue growth. is also the first-half profits beating estimates on outstanding asia, so asia doing well is what we understand. , confirmingenting that full-year goal. saying that the asian extra pound first-half performance is still outstanding. that might include china as well. but first-half recurring operating profit is 1.4 billion committee be on the estimate of 1.12. manus: the handbags are not as expensive as the average work in, but i to you this month first half sales 1.8 2 billion, a little lighter than expected. $.44 per share.

and what i can tell you is this, first-half sales grew by 7%, setting new records for revenue profits. sales are up 5% in the first half and positive growth and geography in stores and online. so, of course, sales and online sales increased by 8% in the first half and we keep an eye on that. interesting isbe what happens after 14 weeks in hong kong of those major protests we have seen and how is that going to play out? i know you have got this update on china and this is what could move markets. nejra: we already have seen a bit of her risk assets after some tweets, talking about mitigating impacts of the trade war on china.

but the line you are referring to, china basically releasing u.s. tariff exemptions, a list of effective on the 17th. the crucial line is that it does not list soybeans and pork in exclusion but does approve an exemption for u.s. lubricant-based oil. an question is if this is easing of tensions. we have been here before and things just get worse. juliette saly in singapore has more for us. are we seeing reaction to the latest line of the tariff exemption? >> i'm looking at the safe havens them and to be honest, no. a were saying markets were little puzzled because it comes on the back of the tweet we had earlier manus on and participants are more puzzled terms of what has been excluded from this list as you mentioned, it is some of those key farm

,rojects, essentially saying are there limits to how accommodating china will be? when you look at the safe havens, you're seeing the dollar more been and the gold price is actually falling. terms of asian market moves, we're still holding onto those gains we had seen earlier for the news was broken. so let's switch it out and have a look at how asian markets are tracking. the nikkei is closing higher for a seventh session in a row as we see continued weakness up by 1%. a lot has happened south korea's market. we have at unemployment at a six-year low and apple stocks looking good. hong kong's market is being driven by domestic issues, so a rebound and a lot of those property players. what comes to china's market itself, it is still holding onto the losses we saw earlier in the session, so down by .6%. it does not look like there has

been too much market reaction, mainly because people are still scrambling to see what is in the list and what has been excluded. get a glass of water let's talk about the debate around fed policy. this is ahead of next week's rate decision. james gorman has weighed in with a note of caution, warning against cutting rates but saying he supports reductions made so far. >> i have supported the latest cut and i suspect they will do one or two more but then, it's time for a pause of to really absorb this. the problem is it's one of the few tools i've gotten. what do we do if we have a problem? our guest is the head of

ishares at blackrock. is betting on three rate cuts by the end of the year. gorman is suggesting one or two. how much of a disappointment undergroundthe fed and only did one more cut? good morning. if you think about a dovish fed repricing early on in the quarter, we also agreed that maybe it has gone too far, which is why the house view is underweight. we worry the fed may not deliver , however, looking at what's going on in terms of trade and the latest data releases, we think that going into the end of the year to rate cuts are likely. -- two rate cuts are likely. have had a lot of news

over the last hour. crucially, not including the u.s. farm products. facttake that into the that china has been scrapping investment limits, is this a sign of easing in trade tensions or have we just been here before? this is the latest flow when comes to trade discussions. when comes to analyzing the situation, it is important to take a longer-term perspective and frame it in the context of strategic confrontation. case, we don't think the chances of a comprehensive deal in the near or medium-term are likely just because of the attention of a harder stance on china. , we do think it is possible that, on a headline basis, things could be getting better at it a potential meeting

later this quarter. so having seen the latest development, we also see chinese markets doing really well. if we look at a year-to-date basis onshore is up by 20%. this compares to u.s. equity markets and goes to show that, despite the headlines, domestic performance is reasonably ok and that has to do with the fact that the authorities are more internally. manus: you know, that picks up something i was looking at. i was looking at the shanghai composite and nuances of what's going on on mainland. the shanghai composite is the best performing index over the last 30 days in the world, up 9%.

part of that is the interest rate easing we have seen come through, but how much more china do you want to take? from an international investor perspective, the strategic direction of travel is going to be more china. more china rather than less china, also because many of our international clients, the starting point is very little china. and we talk about the equity , if you look at the bond side, they are moving as well. we have seen inflows and an appetite for china bonds. we also expecth, to be announcing further inclusion measures and demand is for china bonds is picking up. nejra: we started the conversation with the backup in rates and treasury yields.

we have seen an unwind something like a third of the moves we saw in august. underweight treasuries, but everything that worked this year suddenly did not in the past few days. there has been a real up ending in a lot of trade. are you changing any of your tactical strategies as a result? for example, would you be looking at value stocks versus growth or making any of those sorts of changes under the surface? we haveve -- wei: definitely seen upending and the trends that have worked this year. value growth, momentum. we also want to take a larger term stance such a look at the last couple of days, the y value performance has lots do with curves steepening and rates going higher. perspective,-term

strategies like quality tends to do better than the broader market and other factor exposures in late cycle and that is what we are sticking to. we also want to be more responsive to market movement as which is why we come against the broader backdrop of overweight u.s. equity market and neutral in europe, we do see potential for investors to incrementally think about european equities a little bit more going into the ecb meeting. nejra: we will pick up on that in just a moment. wei li from blackrock stays with us. but get your first word news. president trump says he has fired his national security advisor john bolton. the notoriously hawkish bolton left just minutes before the scheduled briefing on terrorism.

bolton contradicted the president, saying he offered to resign on monday night. the white house says they have been disagreeing unquote many many issues. saudi arabia is said to have picked banks including goldman sachs and jpmorgan for top roles of its planned ipo. learned aramco is considering selling a 1% stake on the saudi stock exchange before pursuing an overseas listing. they say the decisions will ultimately be made by the company shareholders. the leader of northern ireland's democratic unionist party says boris johnson has confirmed his rejection of a northern island only backstop. of mps has suggested the change is one way to move talks forward. meanwhile, mark carney says that sterling volatility is at emerging-market levels. >> sterling volatility, as you

know, is at emerging-market levels. it is decoupled from other advanced economy pairs for obvious reasons. theatters tremendously brexit outcome. >> global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thanks for the roundup. coming up, tariff exemptions. china unveils its list of u.s. goods exempt from duties, but where does that leave the trade talks? when you are traveling to work, tune in to bloomberg radio, live on your mobile device or dab digital radio. this is bloomberg. ♪

nejra: coming up to 1718 -- 7:18 a.m. in europe. i'm in london. and i'm in dubai -- abu dhabi at the world energy conference, 2019. it is all about oil and gas were id., but the big breaking news is that china has unveiled the first list of terror exemptions. corn, soybean, pork, they are not on the exemption list. we know that lubricant base oil is one of the products that is on the list.

now, our chief asia economics correspondent. very simply, is this a bullish move or a job on move -- jog on move? >> maybe a bit of both. paper, it sounds perhaps like a move towards conciliatory ground in terms of the trade war. what they have done is really a fairly narrow group of products. 16 categories in total, you mentioned some. the big ones that still remain under tariffs are pork and soybeans and that goes to the cracks of the u.s. farming industry and the cracks of the whole tension between the u.s. and china. you could read it as something of a positive gesture, but there's clearly a long way to go . nejra: is it an attempt to send

any kind of message ahead of the trade talks we are expecting? >> on face value, you could say they are doing it take pressure off sectors of their own economy , perhaps areas that are suffering badly, but it is fairly small stuff. they have to say going forward that china may be willing in the future to remove tariffs off goods, including soybean imports. to we know they also wanted tariffs removed off of chinese goods, so it will be critical to see whether the mid-level talks go well enough we get the big level talks in october. nejra: a lost to play for. thank you for joining us. bloomberg's chief asia economics correspondent. let's turn to the european central bank, the big

centerpiece for markets. markets are waiting to find out what shape stimulus could take in mario draghi's second to last ever meeting as president. doubts that the ecb will do all that is inspected have pushed the government yields up from multiyear lows. today, we are asking the question, which assets are most at question -- at risk going into the meeting? li from blackrock is still with us. how are you positioning ahead of this meeting in terms of your expectations of mario draghi? we think that this is probably the most important ecb meeting this year. there is room to surprise on the upside when it comes to the s and theref rate cut could be some sort of tearing announced -- tiering announced.

but the chances of a broader asset purchase program has been diminished because of the dissenting voices. keept's not a bad thing to ammunition in the bank as you get further into late cycle so there is a bit more to add to the fire. so all in all, we expect a package, somewhat comprehensive, going into this meeting. as a result, we have become a more favorable upgrading equities from underweight to neutral and we still have an overweight position in government bonds. manus: any backup in yields? if you are still overweight, any backup on these ttp's or record lows, do they present buying opportunities in your opinion? tying back to your question of the day, what could be

vulnerable should the ecb disappoint market expectations would be the peripheral government bonds and maybe some of the i.t. credit exposure. view,have the favorable but given how well the have already done since upgrading, this is certainly an exposure that could be vulnerable heading into this important meeting. nejra: he talked about equity flows, what have they been like? we have seen significant inflow into the european fixed income space. they are benefiting investor appetite for the asset class. ,ut beyond the expectations

they are also thinking that the need to have verification the portfolio is very. so even if the yield stop compress further, they want the in-depth portfolio and we strongly believe that be the case. you talk about a factor tilt. i wonder to what extent that involves europe. andontinue to add quality we tilt our portfolios with a factor helping to boost resilience. where are they hidden? wei: when we look at quality companies, when it comes to investing in european markets, the question we get asked of the most is which index. , manyhough on the surface give you exposure to brought europe, it pays to dig deeper under the hood. , do youg on your view want to be defensive, cyclical, , that's what we

have ramped up our analytical offerings within ishares at blackrock tell clients big under the hood and really identify the index exposure that gives you access to this investment preference. comes to qualities, think about broader indexes that are not very concentrated in the banking sector or peripherals. broader europe actually has a better balance in comparison to ss fight you -- ss 5e. nejra: our last guest has gone -- for the left first time in the last five months. he says that we are inching towards a key inflection point for the brexit protest at a time when the market is very bearish. do you share that view? wei: we have been not constructive on u.k. assets for

a while and that in part has to do with the brexit uncertainty, , but also in part to the fact that the economy is very close to an outright recession. because of that, we have been speaking to clients about exposures outside of the u.k.. we think theret, is opportunity within u.k. markets from the perspective that the boe will have to be more dovish than previously thought. that is why we have seen appetite and inflows. within the equity space, there is room for relative value if you think it could get more volatile or we can. manus: thank you so much. head of ishares at blackrock.

there is only one topline go about the china exemption on u.s. goods, but of course, they keep pressure on the farms. ♪ here, it all starts with a simple...

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daybreak: europe." we are live from bloomberg headquarters in london. matt: today, the market say to dump growth and by value. equity markets continue a mass rotation into previously under loved stocks as a selloff in treasuries ease. futures point higher ahead of the open 30 minutes from now. ♪