everybody is focused on the central bank and the possibility of rate cuts from the fed. the bank of japanusing the right language in terms of more headroom. max headroom is global, that's for sure in terms of the equity market. of where themoment central banks are the heroes. rhetoric.he heroes of now they must deliver in terms of their actions. to the bond market, which is the defining prism of risk along with fx. farbond market has gone too too fast. bunds advance. comments again coming this morning. money is coming out of the bond market. commerzbank says mario draghi's take on inflation is nothing but wishful thinking. keep an eye on italian government bonds. there is a drag according to -- robeco.robe aco 10 year u.s. treasuries declining in price. morgan stanley say the latest rally will retrace, they are calling for a re-steepening after tariffs have been delayed with mexico. let's get to juliette saly and see how the asian session is marching along today in singapore. is risk on on, it the latest news regarding mexico tariffs. a lot of strength coming through in the automakers in

this is the bank of japan dominating the jgb market. those white bars, the bank of japan holdings.ed bars are everybody else. is that sustainable going forward? how long can that persist? flipside,ean, on the they only on 45% of the market, so they could go further. but no, there are practical limits to this. you know, because there's always going to be an amount of -- a minimum amount of jgb that financial institutions are going to need to hold for lateral purposes. one sort of issue that is lingering under the surface for the boj's operations right now is the shortage of eligible collateral. they tried to address this issue in the policy meeting, but i think that, you know, they cannot keep up at this forever. paul: you mentioned it at the beginning as well. riskse a lot of downside for inflation going forward. what does this mean for the sales tax? will that be introduced or increased at the end of the year as planned or is that pretty much doomed now? as i said earlier, i think the likelihood of a delay this time around is actually quite low. that does not mean i agree with it.

as far as the bank of japan is concerned, the inflation rate is only 1%. omething to the 2%. so, the situation among the three central banks -- should: that give the bank is a japan some comfort that governor kuroda does not see any need to change anything, not even the fact that fed could start changing makes a difference. he was very clear that if they have to do anything, cut, taking any steps that could hurt banks, the mix of tools they use will be specifically designed to mitigate those potentially negative impacts on the big banks. if you want to hear the interview in its entirety, we have a posted on bloomberg.com. we'll hear more from governor kuroda about what he sees next for japan and next for the boj. paul: global economics and policy editor kathleen hays. joining us right now from washington is the deputy director for geo economics. thanks so much for joining us there. we were just hearing from governor kuroda. he's saying the bank of japan has got enough ammunition left to do something big if required, but be that going further into negative r

of japan. yes of course our president donald trump was over there recently but i want to look at this headline about what the bank of japan is doing and this is a tweet from daniel a colony says the bank of japan now owns 73 percent of all of the country's e.t.f. market if you think buying bonds stocks and e.t.f. supports growth and jobs you may also believe that dancing in circles attracts rain so you know this the black section there is the bank of japan and the red section is the rest of the market participants. crazy you know thing about capitalism is just false to create companies they compete they make products some of them fail some of them succeed there's a central bank there in case the banks go under as the lender of last resort and that's the way it was designed stance of bully but now or in a situation where the central banks become the buyer of 1st order their constituency or the people who own these companies and whenever they want to go. options portfolio to take more cash out in not in a capitalist way but in a neo futile as we've talked about neal feudalism the banks central bank is there to bloo

bank. if one of the big three starts reviewing its framework and says, we have changed -- have to change, does that mean the bank of japanays we are going to review our framework? the fed bank president in new york said we should be looking around to percent. is that something the boj would do? the bank of japan is likely to maintain the 2% inflation target. one thing they are discussing is the inflationn target and how tune communicate with people and so on and so forth. we just started normalization, , and thebefore that inflation rate is still less than the target. 1% perhaps, or something. japan, based on inflation rates, on halfway or something. the three central bank's are different. japan governorof speaking exclusively with bloomberg's kathleen hays at the g20 finance ministers meeting. trade tensions also dominated conversation. officials from around the world said while growth appears to be stabilizing, risks remain tilt to the downside. -- tilted to the downside. matt: joining us now is kathleen hays to talk about this. i thought was interesting kuroda said they can do a lot. with such a high debt to gdp in ja

of japan now the bank of tokyo the b.o.j. and secondly it's becoming state owned so this the taxpayers owning these companies this is also we're in a situation of global deflation japan has led the way it's been in deflation for at least a decade or 2 longer than everywhere else that has resulted in them being the 1st mover and terms of crazy economic crazy monetary policies to fix so-called fix the markets and fix the economy you can look forward to the u.s. and european nations getting in on this of course switzerland has already copy of this smaller nations can do this with huge savings pools like switzerland like japan and they're buying up stocks now remember during the last global great the deflation which was in the 1930 s. you know 1st mover advantage to go to some countries like the u.k. who pulled themselves off the gold standard and whoever devalued their money whoever devalue their currency against gold. basically got out of their depression earlier than the others at the cost of the others so this is also you coul

of japan now the bank of tokyo the b.o.j. and secondly it's becoming state owned so this the taxpayers owning these companies this is also we're in a situation of global deflation japan has led the way it's been in deflation for at least a decade or 2 longer than everywhere else that has resulted in them being the 1st mover and terms of crazy economic crazy monetary policies to fix so-called fix the markets and fix the economy you can look forward to the u.s. and european nations getting in on this of course switzerland has already copy of this smaller nations can do this with huge savings pools like switzerland like japan and they're buying stocks now remember during the last global great to deflation which was in the 1930 s. you know 1st mover advantage to go to some countries like the u.k. who pulled themselves off the gold standard and whoever devalued their money whoever devalue their currency against gold. basically got out of their depression earlier than the others at the cost of the others so this is all.

of japan now the bank of tokyo the b.o.j. and secondly it's becoming state owned so this the taxpayers owning these companies this is also we're in a situation of global deflation japan has led the way it's been in deflation for at least a decade or 2 longer than everywhere else that has resulted in them being the 1st mover and terms of crazy economic crazy monetary policies to fix so-called fix the markets and fix the economy you can look forward to the u.s. and european nations getting into.

we've had an exciting week within the central bank community with almost all of them turning dovish here the bank of japan easing bias, the fed yesterday. ecb turning more accommodative with the language. with two exceptions, norges hiked and we have the bank of england. what's interesting from the messaging, so far they've been sticking to their hawkish stance we heard from a couple of members in the last couple of weeks. the chief economist wrote a message in the sun saying that a small rise in interest rates may well be needed relatively soon to ensure against the need for bigger rises in the future this echoes some commentary we heard from more hawkish members like michael saunders who also said the market may be underpricing the risk of future rate hikes the market does not quite believe the hawkish commentary if you look at what is priced into the curve, seven basis points of cuts are priced in for august 2020. two things are going on. the bank of england will be overlooking some of the short-term volatility we've had in the data. most eventually the tracking data has started turning negative the mo

will the bank of japan actually restart a race to the bottom to government bond yields? day rather, not a question from the viewer. >> well, mr. kuroda mentioned of the regional banks. consolidation is just starting there. so much effects are stronger right now in the economy. enoughks are not earning and households don't get any income on their lifetime the economy seems to be bottoming out right now. so he will be on the cautious side and something really strong the yen dropping or getting than the dollar, would-be would be such a signal. and then a lot of signaling at thet would come into market. >> martin, thank you, as always. insights andur -- coming up,m f we're talking alibaba here. share listing in hong kong. we'll look at the developing plans for a secondary listing much it might actually be able to raise. bloomberg. ♪ bloomberg. ♪ >> welcome back. you're watching bloomberg markets. quick check of your latest headlines. have a look at australia. the company has offered to buy a a cash deal valuing the network operator more than $2 billion us dollars. a deal woul

thehe yen had sword against dollar, there would be more pressure on the governor to signal the bank of japan to move in and easing direction. more thaned not doing the market expected, he has a bit of a free hand. my expectation is he is going to telegraph. the bank of japan will act as needed. rates at low levels, negative on the policy rate. they will continue to be data-dependent at this point. >> all right, bloomberg news asia. us.k you for joining we are looking ahead to central-bank decisions today. not just japan, indonesia. all expected to hold. opinions of cuts in the philippines. let's start off with indonesia. we have been talking about indonesian cuts for a while but it has not happened. written --e a unwritten mandate for what they call stability. seniortime you speak to officials, it seems like you are a lecture on stability. are worried about is if interest rates cut and cut significantly, that will weaken the currency. you are correct, we have been talking about a cut for some time. it keeps never happening. ck in the facade. we will see what happens. i would be surprised if

of japan. yes of course our president donald trump was over there recently but i want to look at this headline about what the bank of japan is doing and this is a tweet from daniel a colony says the bank of japan now owns 73 percent of all of the country's e.t.f. market if you think buying bonds stocks and e.t.f. supports growth and jobs you may also believe that dancing in circles attracts rain so you know this the black section there is the bank of japan and the red section is the rest of the market participants are crazy you know thing about capitalism is just false to create companies they compete they make products some of them fail some of them succeed there's a central bank there and.

of japan. yes of course our president donald trump was over there recently but i want to look at this headline about what the bank of japan is doing and this is a tweet from daniel a colony says the bank of japan now owns 73 percent of all of the country's e.t.f. market if you think buying bonds stocks and e.t.f. supports growth and jobs you may also believe that dancing in circles attracts rain so you know this the black section there is the bank of japan and the red section is the rest of the market participants are crazy no thing about capitalism is just post to create companies they compete they make products some of them fail some of them succeed there's a central bank there in case the banks go under as the lender of last resort and that's the way it was designed simply but now or in a situation where the central banks become the buyer of 1st order their constituency or the people who own these companies and whenever they want to go. options portfolio to take more cash out in not in a capitalist way but in a neo futile as we've talked about neal feudalism the banks central bank is there to blood so now the

we will get reaction and thoughts on how those numbers might affect the bank of japan's thinking. ing you that story as well as a check of the markets of the day'sther big news. this trillion open an hour away. this is bloomberg. ♪ paul: good morning. i am paul allen in sydney. we are under an hour away from the australian market open. >> m good evening. i am kathleen hays. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday, asian stocks look set for a muted start despite wall street hitting a new high. gold surges while the dollar falls the most since january. oil rose the most this year.

and, the bank of japan says it has the tools to deliver more stimulus as necessary, but admits policymakers must be aware of the side effects to the financial system. governor kuroda said he would put further easing if 2% inflation is lost. he emphasized the bank does not need to act now because of the general health of japan's economy. we haveis moment, carefully monitor the situation. our control.e our -- or expand strengthen the easing. jessica: the race to become the next u.k. prime minister has formally open. a record 10 british conservatives fighting for the chance to leave their party and the country. over the next two weeks, 300 tory politicians will narrow down the field to two. 160,000 party members will vote for the next leader. boris johnson is leading the pack with a pledge to push through brexit with or without a deal. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. shery: thank you. president trump is ramping up the heat on china, threatening to raise tariffs again if xi ji

we have the bank of england, bank of japan. also in this neck of the philippines, indonesia, and taiwan as well. think we will start with that because they are saying they are doe likely to ease than anything else in the forthcoming few months. ofuppose that is it for all these central banks right now. where is the pressure coming from right now? >> global activity indicators, growth and real economy, really had a rolled over collectively in the past couple of months. we saw a nice rebound after the downturn in 2018 and the first quarter of this year, but all are allcators we have rolling over, and i think that suggests they need a prophylactic move on the part of central banks to underpin growth. paul: i am going to leave things here because we will get it set up from kathleen hays. of course, the fed, will they change the narrative? will the verbiage alter? thatwill be the key thing people are looking for, i am guessing. are primed forts it. clearly, it is the logical thing for the fed to do because reducing tilts to the downs

one of them from the bank of japan governor, kuroda. go ine japanese will search of inflation. on. this is bloomberg. ♪ >> this is bloomberg surveillance. let's get to bloomberg business flash. shares are sowing. the british travel agency confirms it is in talks with china about buying its tour operating business. it is thomas cook's largest shareholder. it is a conglomerate the deals in a rethink from pharmaceuticals to insurance. renault's 20 year marriage with nissan may be in trouble. renault's merger with fiat chrysler falling apart and nissan's reluctance to endorse the deal is said to be partly responsible for its failure. in response, renault is threatening to block nissan's plan to overhaul its governance structure. we know has a 40% take in nissan. nissan is renault's second-largest shareholder it marks off says its next-generation xbox naming console will be four times more powerful. the device will be released in time for christmas of 2020 is a new version of halo. that is the company's popular shooter game. mike soft announced the upcoming debut of its streaming pl

but the fed, of course, the bank of japan, the bank of japan all expected to be meeting. plenty to go on from a macro perspective. interesting to see a mixed picture coming through in the equity markets. for of the thing -- referencing back to friday, the data big up from retail sales, that raised many questions about how much the fed is going to have to do or not in the months ahead. let's get to the conversation with mark cudmore, our market live managing editor in singapore. good to have you with us. let me start there with fed rate expectations. we sell retail sales number on front that changed the dialogue to get. the market maybe had gotten too carried away, expecting too many rate cuts. what are you expecting? mark: i think the data point did remove the slim chance they might cut this week. it's a minority view, but it removes that. there has been a global thing that despite the fact manufacturing and trade get it everywhere has been lapsing, they are going up well -- collapsing, they are going up relatively -- holding up relatively well. i think that's going to le

the bank of japan and the bank of england are set to update us on policies this week and in australia, india, chile, guess what, central banks have all recently lowered rates while australia has hinted of more rates to come. it triggered us president donald trump to say the move would wea ken donald trump to say the move would weaken the euro against the dollar, u nfa i rly weaken the euro against the dollar, unfairly helping european firms. the bbc looks at the issues the us central bank will be taking into consideration. at the beginning of 2019, the people who set interest rates at the us federal reserve were talking about raising rates by as many as three times this year. back then, the us economy was growing fast and the concern was how many rate hikes they would have to incorporate. well, us interest rates have been stuck at 2.5% since then and now everybody is talking about when they need to be cut. what changed? when they need to be cut. what changed 7 growth when they need to be cut. what changed? growth is one thing. the economy still seems in robust shape but plenty of data

bank. it will tell us later today if it plans to cut the cost of borrowing to shelter its economy from the fallout. this week the us federal reserve, bank of japan and bank of england all tell us the direction of rates. while the european central bank, which met on tuesday, said it's willing to cut rates or launch more stimulus if needed. as tensions rattle the global economy, central banks around the world are moving toward looser policy to keep their economic engines chugging along. in australia, russia, india and chile, central bank bosses recently lowered the cost of borrowing. and the us president has hit out at the ecb boss mario draghi, who stressed he's ready to boost the flagging eurozone. trump said it would weaken the euro against the dollar, unfairly helping european firms. the bbc‘s samira hussain looks at the issues the us central bank will be taking into consideration. at the beginning of 2019, the people who sat interest rates at the us federal reserve were talking about raising rates by as many as three times this year. well, back then, the us economy was growing fast and the us economy was growing fast and the concern was how m

the bank of england, there is truly nothing they can do until the brexit situation is resolved and that is not going to be soon. similarly, in the bank of japant sure what they can do to allay any concerns about the deflation that is taking hold. even in the case of japan, you see a lapsing of inflation expectations where no one expected that much inflation in the first place. even after years of of a nymex that hasn't taken shape. the fed is plainly the most important show in town. for this week, i would suspect it is close to the only one. caroline: only game in town. thank you. up next, we are going to be talking boeing's focus at this year's paris air show. efforts to regain customers. we hear from the ceo next. this is bloomberg. ♪ caroline: time for a look at what stories are trending. ubs still feeling the aftershocks of the ceo using the phrase "chinese pig." the ubs economists -- bloomberg.com has a story on more than 700 companies being targeted in a campaign advocating for clear transparency when it comes to environmental impact. companies including amazon, exxon, and volvo have failed to report carbon emissions for years. it is re

david: the bank of japan will respond. will it have any affect? most of the central banks are out of ammunition. the japanese have thrown everything into the next. it is not clear what else they can do other than buy more stuff. the bank of england is waiting to see what happens with brexit and the european central bank is considering whether to restart qe or whether to consider cutting interest rates again. if they do, that hurts their banks. the federal reserve's the only one with ammunition to cut. they are not convinced that would do anything. maybe put a psychological floor under the markets, but it does not seem to be that interest rates is the problem for the economy. you covered central banks for some years. to they have a problem to a steady course. whether it is the fed of the bank of japan where the ecb of the bank of england, when you have clinical actions, for example, mexican tariffs on all, china tariffs, on off. michael: that is why they are refraining from this debate about whether they should cut rates. they do not know they shoul

the bank of japan has cut monetary policy on hold. of economists now think the central banks next move be to increase stimulus. that could come as early as next month. to holdld a hold -- due his conference at 7:30 a.m. london time. he has pledged to take action if momentum towards the boj's 2% inflation target is threatened. the trump administration is reportedly telling lawmakers that iran has links with al qaeda. dating back to after the 9/11 attacks. the new york times reports there was concern on capitol hill that the white house may use the war authorization from 2001 as legal cover to take action against tehran. that legislation allows the use of force against those behind september 11. the u.k. conservative party will pick the final short-lived of two candidates to succeed theresa may. boris johnson's place in the final two looks assured. the battle for the other position will be between jeremy joe.and michael whoever wins will have to break the impasse over brexit. today marks the chinese president's first state visit to nort

at the start of the week, which is not just going to be defined by the federal reserve but bank of japanuch in play with their meeting this week as well. it does speak to a sense with global investors, having used the bond rally to really get in to a little bit more safe haven kind of exposure that if central banks don't come out with a dovish feel as much as some people are expecting you could see some fairly pronounced moves in bonds. shery: in the u.s. it is interesting to see strategists cutting the forecast for profits despite not lowering the prediction on crisis. why is this and what does this tell us about the recent rally? adam: it is interesting because you would expect amongst the turmoil and trade tensions going on and the worries about the u.s. economy that you might expect strategists to be bringing down expectations for sittinguities might be this time of the year or next year. it really speaks to more of the idea between what the relative valuation is with equities and bonds given how much bonds have rallied and given how much stocks have rallied. there is the fact of the

of trade talks and u.s.-china relations. kathleen: and jim bianco gives us his worldwide outlook next. this is bloomberg. ♪ asia,from the fed to central bank divisions from japano the middle east and indonesia, plus the bank of england also set to release policy decisions later in the day. let's bring back jim bianco. i want to return to a point made a little bit earlier. when it comes to cutting rates, they're kind of is a law of thereshing returns -- kind of is a law of diminishing returns. >> let's ask the ecb. they are at -40 points and mario draghi opened the door to going deeper. it's a question. how low can you go? i would have thought -40, -10 was already beyond the limit, but a cap -- apparently we can go deeper than that. doubt it will be very effective and it could be very detrimental to the banking sector, but it looks like negative rates are going to be the order of the date and even japan andive than europe. paul: negative bond yields as well. take a look at this chart on the bloomberg terminal. a number of countries, you pay them. what is this telling us? is this even rational? >> it's hard to understand negative yields, i will agree with you. i

china, thee bank of bank of japan press conference. risks.ve flagged china a little bit oversold. even if things reside above here, they are going to come up to that summit. ourselves testing after breaking below it. it is your go. about the market that offers yield protection amid a low interest rate environment. investors hunting for yield should take a look at the taiwan market. in 2014, the dividend yield was about equal when comparing two regional and global. -- global peers. yield crushes all others by a mile. shares dropped the most in five months. after the china and the u.s. agreed to resume talks. ahead, the high dividend yield story will remain a reason why foreign investors are keen investors and will continue to's for the market. >> it is a difficult -- to support the market. >> it is a difficult one. let's get it over to ivanka. >> all right. ihave to give it to cindy, think. given the fact we have so many central-bank decisions today. speaking of central banks, let's look at we just learned from the boj. no change when it comes to interest rates. it is going to be a

from the world's largest economies met in japan this week in advance of the g20 summit taking place later this month. among the most distinguished attendees, the bankjapan governor who sat down for an exclusive discussion with kathleen hays. he says japan's economy is in good shape, despite the pressure of negative interest rates on the banking sector. and he insists he still has policy tools to deploy in the event of a downturn. >> at this moment, the situation is quite stable, but we have to carefully monitor the situation if we continue or even if we expand or strengthen further. kathleen: in a sense you are saying you are willing to take on this risk of the rising cost of the stimulus debt if you need to stimulate the economy. >> yes, but at the same time, in order to avoid as much as possible that side effect, we may combine various monetary tools to reduce that sort of dangerous side effect. >> sounds like a very, very interesting recipe you will have to have. big picture, do you still have the capacity to show all those people who say the boj cannot do anything that you can do something big, even something new? >> yeah, i think so. >> what w

my big question is that right now the bank of japan balance sheet deemphasizes the japanese economy. we're looking at a country that doesn't have that much more room to stimulate. yes, they are thinking of dropping deposit rates to negative 0.3%. japanese banks, which have been the set by a whole host of problems, is a question about what more this will do to them. i really do question at what point, given the stimulation of the economy, how much more room they have. he said that they have plenty of room. i a lot of people would beg to differ. david: central banks are using the weapons they have, monetary policy, but does it match up against the trade problem? do not sure if that works, exactly. and it's very an clear where the fed's stands on all of this uncertainty. they have said that global issues like trade will impact their decision-making. now that mexico is off the table, it's back to china again and i think we really have to see what happens with those china negotiations to make an accurate prediction on what the fed is going to do. is mexico off the table? i actually don't k

banks, they are following the market. they are not leading the market. that is not an indication of them cutting an interest rates will pick up. all we have to do is look at the bank of japan has been 30 years since they embarked and inflation. there are major structural issues in the world economy that are leading towards deflation. and, you cannot take 60 years of policy that reverse it and expect to get the same outcome. shery: we are seeing symptoms of that potential slowdown in the economy with the latest economic data out of the u.s. the chart showing u.s. manufacturing pmi falling to 50.5. that would be the toughest month in nearly 10 years. on that chart, you can see the euro area entering contraction. the u.k. entering contraction in three years. is it time now to look at the global consumer story once again? peter: yes. the u.s. has been basically an island. it has been outperforming on the equity side. it has been outperforming on the consumer side. it appears to be catching up a little bit. the leading indicators we look at for the strength of the consumer, visa and mastercard. you have that number this morning the u.s. and they had a particularly weak base. re

odd billion pounds, it is more than the bank of england has done and its whole time of quantitative easing. so the bank of quantitative easing. so the bank of japanapan is flattered. the bank of england today, studious inactivity is what we would call, no change, three quarters of a percent. what will be interesting is the vote, one ought to members have talked about a rate rise as a surprise, no action for the last few months, let's see how the vote splits between coaches, hikers and studious watches. studious inactivity, it sounds like my son's school report. that is what is going on in the background with this issue of brexit and we will find out who the two contenders are for the leadership of the tory party who will be moving into number ten downing street. there is so much going on. that is what is weighing on sterling, that is why it has gone down against the us dollar, that is not helping at all. people are waiting to see who wins, what their policies are and can they get their policies are and can they get their policies through westminster? and then can they get them through brussels? we could be back to the same impasse, we just brusse

the bank of japan is in a dilemma as of this moment. withdraw from their easing policy. aboutis a lot of concern the monetary easing. the bank of japan is really in a dilemma as of this moment. pualaul: thank you. get a roundup of the stories you need to know to get your day going. customize your setup so you only get news on the industries you care about. this is bloomberg. ♪ ♪ let's get a check of the business flash headlines. the full-year profit forecast for this company will be cut. fees.es-benz faces extra it earned higher earnings this but its profit is now forecast to be similar to last year. is planningompany to raise wages by early next year. this is to encourage top workers. raised will pay will be pay than $180,000 -- annual will be raised more than one hundred $80,000 for workers in the u.s. and japan. founder wantsbank to relist armholdings in five years. it was the uk's largest tech company at the time. he has not says decided where the new public offering will be held. the malaysian prime minister talks to bloomberg abou

we will keep an eye on what is going on at the ministry of finance and the bank of japan. wanted to ask you the mliv question of the day. or get the feedback that you are receiving from clients. well the boj restart a race to the bottom for yields? , as it were bottom since the boj is already negative. news,this is breaking very close to the mliv question of the day. it is more of a citibank story than the jgb market itself. we are seeing certain participants love the market still somehow and my colleagues seem to be excited. i find it hard to be too excited because it never seems to go anywhere. i am not convinced boj will be ahead of the curve. even if they are ahead of the fed, it is not that much of it game changer. i am a little more cynical but we are seeing a reaction from market participants and so they are excited the boj might suddenly surprise. given where their expectations were six months ago, every year we come into it with many people believing this is the year the boj will taper and it is amazing how much the expectation is shifting the other way for all cen

yielding i invest yours the central bank is the investor in this case the investor of your central bank is paying. the government to borrow. on top of that you know when japan was out competing america in the eighty's in the seventy's eighty's we ended up with the plaza accord well and that's government collusion and central bank collusion to basically give you know like in golf how you get a handicap if somebody is not as good as tiger woods how you would compete with tiger woods is you have a handicap of like 31. so you would be able to fairly compete with him at the plaza of course in the eighty's that allowed america basically to devalue its currency against the so that was what happened then right now we have a situation where china is the rising power and whether or not china will come to the table and give you know america a leg up and helps compete with china is very doubtful so we're going into a situation where as there isn't going to be as much coordination perhaps but nevertheless negative interest rates spread to mortgage bonds so again nobody could have predicted this nobody thought this was even possible i guess you could imagine it but never

they are buying stocks like the bank of japan. the day-to-day angle is a bit much you go to 140, you don't go like this you pull back. >> it's interesting. i think back to the time it was trading above 130. we had crude collapsing. we had safe haven assets the dollar index was big i would say this could be a messy summer if we don't have any resolution to all of these trade things going on. you will continue to see crowding in u.s. treasuries or the dollar. >> the difference would be in the timing directionally longer term. >> that was a stock. >> you might agree with these guys >> listen. >> we were planning for a breakout we would harvest that or roll that out >> here's good news about mike's trade. his break even was 128 three sessions ago options are cheap enough if you get that move you will have an opportunity to do something, spread those, that sort of thing and harvest, like you said, or lock in some of the gains moving forward. >> last word. >> on these types of trades, on a bullish bet or bearish one, you have to look at

such a huge part of it wall street has usurped main street and got a very just thing that and the bank of japan now on equity no assets on their books that are greater than their entire g.d.p. a country of japan. so that's where this is setting fair point is that there is no underlying economy there is only money printing and the speculation now since 2008 the financial crisis the labor share of the economy has continued to shrink significantly while capital share has increased with quantitative easing i think it matters that consumers are earning an ever smaller share michael of course that's where miller the middle class the road to perdition for the middle class is very small and very well you know i heard steve moore today max on c n b sheet and student moore was actually he's about to be a guy who knows what he's talking about he was interval part of trump's. tax cut package and he was the n.b.c. telling viewers the families are should be lowering rates by even more than $25.00 basis points maybe even a 100 basis points one percent right away and his dry action now who wasn't the economy's

one cut and bank of japan 10 basis points. r.b.a., all the heroes to the rescue of the equity market. six days in a row, the longest winning streak in three months. equity markets will not be barred by the rhetoric from trump and will wait for the action at the g-20. roll it over and have a look at the rest of the markets. you are seeing a couple of individual moves. you got two offers and two bids in the oil market. on the offer side, trump's warning about escalating tariffs on china and years of global growth and baker hughes data a drop in rigs and opec extension of the opec plus deal looks like a shoo-in. oil is stronger this morning. now, when it comes to dollars, swiss, this is the currency up 2.2% in the past month. j.p. morgan says this is the currency that will rally the most in a new fed cutting cycle. and 1981, 1989, 2001, seven. 1995 -- 95 is the new target. welcome back. good to have you back in the seat. nejra: thanks, manus. great to be back. the trade war uncertainty continues. the fed rate cut pricing gets more

a lot of central banks, but that the bank of japan, will big tools to have that they need to provide more stimulus? limitedssibilities are and now, a lot of focus on the meeting and just so our audience understands, the two big meetings out of all the meetings once a year the central bankers and finance ministers. the will try to hammer out finance minister, something that the leaders could perhaps agree to. two very important meetings and again, this could lay the groundwork for president xi and president trump when they meet. we will see what comes out of this and what kind of reports we get over the weekend. you, kathleen. chicago.s from out of tokyo,inue as you can see. nice to see you. let's talk central banks and what the fed does. summers, he thinks 50 basis points of cuts is warranted this summer. is that a good day -- a good idea or visits and the bad signal to the market? ? cuts, it isd because of concern. certainly, they will watch and be there and supported, but if they need to move, it will probably be multiple cuts. 50 basis points will be within that. >> is that someth

the bank of japan's cutting rates, less of an effect. >> how do you square now with a few minutes earlier? >> it is a little more i want to wait and see. the powell camp. moeller made it clear in the meeting that he wanted to cut rates. they're are all kind of in the same area. but he has less influence than jay powell, driving the committee. if he will sign on, we will find out soon enough. >> thanks. that is bloomberg's mike mckee. now onto mark crumpton for first word. the russian foreign secretary says current tensions over iran are reminiscent of the buildup to the iraq war in 2003. speaking at a news conference in moscow with his counterpart, he said the current prices in iran reminds him of how the u.s. announced victory of democracy in iraq in may of 2003 after sanctions against saddam hussein. he added you can draw your own conclusions on how democracy has fared over the past 16 years until now. a saudi military spokesperson says military forces have captured the leader of the islamic state branch in yemen in corporation with yemen forces, troops raided a house that has been unde