i am kathleen hays.here is a very interesting backdrop for the asian open as the g20 met, just as donald trump was tweeting out china and they you are manipulative -- the e.u. are met -- are manipulating currencies. they say trade tensions are a threat to the global economy. tell us something we didn't know because that is the theme for the markets and investors around the world. haidi: these comments from president trump about the alleged currently -- currency manipulation follows on the back of his remarks on how he thinks the dollar is too strong, the fed tightening, not a fan of that. really wreaking havoc. andleen: it certainly is, let's take a look at the u.s. close. indexes i think were pretty much unchanged. you can see the red across the board. s&p 500 ended the week a half-point higher, the nasdaq fell from a record high. netflix, a disappointment on subscriber growth area there are big questions over the other faang stocks, google, amazon and facebook when they report. let's move on to asia no

kathleen: i am kathleen hays in new york. pushed the u.s. has been around for too long. china rejects the president's claims of currency manipulation. beijing says it change rates will be determined by the markets. so many things going on in the world today. president trump was the least of it today. definitely his tweet about amazon. so many people looking at the global bond market. it all started in asia and tokyo. speculation on the meeting next week. governor kuroda will signal some kind of tweak to yield curve control, may be buying fewer bonds, not changing stimulus. just taking some steps that would take some of the pressure ,ff japan's regional banks having a little more trouble dealing with their portfolios, to do, asthey have long as the boj is buying up so many bonds. yvonne: it really forced the boj to step up and fixed rate operations. calm marketem and nerves at the moment. we have seen it come full circle. kathleen: we sure did. as a matter of fact, travel into treasuries. at u.s.take a look equities because de

in new kathleen hays york.have the strong earnings report out of off the alphabet.of is this sustainable? analyst hereech now. does this give us an indication on the strength of the report that the investor pessimism on the company was overdone? doesthink it kind of because the mobile advertising has been growing and there is plenty of growth, despite the smartphone market slowing. the use continues to increase and the usage of advertising is growing and this clearly says to me that we are seeing google taking advantage of the mobile growth and there is plenty of room for them to grow the mobile advertising. >> it isn't surprising that you are continuing to see revenue growth strong. what about the spending and the for the investors looking for payments? >> they have a lot of that and they have the capital expenditures that are high, but they are making bets in important areas, cloud, ai science, and th they have placed big and important bets. we know this will not generate revenue for a long time in the is a +

kathleen hays is here with a look at those two words bringing andhe words of economists investors forwhy does that matter? kathleen: pretty quickly, that foot everybody was looking at. the fed sees more rate hikes. let's listen to exactly what jay powell said as prepared testimony earlier today. job market,rong inflation close to our objective, and the risks to the believe thatce, we for now, the best way forward is to keep gradually raising the federal funds rate. kathleen: why is that a big deal? more and more people are dignified on autopilot. let's take a look at the dots dot plot. rise interest rates regardless. looking for the four rate hikes. jay powell made people think i guess it is not a done deal. on the plus side, talking about the economy, he had four drivers he mentioned in the past. financial conditions are favorable. banks are more stable. there is lots of credit. tax cuts, spending, increasing in the united states. overseas growth continues to be strong. when it comes to trade, he did theit difficult to predict impact and timing of trade tensions and tax cuts. th

kathleen: i'm kathleen hays. president trump saying earlier that the u.s.ards. we shall see. yvonne: let's get to the first word news with jenna degen heart. >> president trump confirmed the u.s. it will impose tariffs on chinese imports as the clock ticks past midnight on the east coast. duties will be imposed on about $34 billion worth of product. a next her $60 billion of tariffs will come in to it -- six -- an extra $16 billion of tariffs will come into play in the next two weeks. saudi arabia has cut pricing for most of its oil grades it. also raise production to ensure there is sufficient supply. oil extended losses after aramco lowered prices for most crude in asia and europe, and cut them in all of the u.s. it came after president trump renewed his attack on opec, saying the cartel is keeping oil prices high and, demanding immediate action. yvonne is trolling the president saying his oil tweets have backfired. 10% of the barrel, and it will continue if he keeps tweeting. the u.s. navy says it will protect oil shipments after it was blocked. the revo

kathleen hays is here with the recap. for now, the two words so much importance here. thleen: it was not expected. let's get right to what jay powell said in his prepared testimony, which underscores that this is something he meant to say and these two words apparently were there for a reason. let's listen. >> it may well be -- we do not see it in the numbers yet -- but we have heard a rising chorus of concern which speaks of actual plans being put on ice. kathleen: that was a very interesting exchange he had. how he was talking about the economy looks, jobs are strong, inflation near target, and he said the appropriate path of policy, for now, is more gradual rate hikes. this is not something he said in the past. why would people put important on that? because some people thought he was on autopilot. why? look at this gtv chart. dots . it shows you the consensus for for rate hikes this year. rate hikes. you'll curve is flat, but they are shrugging it off. they must be deciding they will go ahead no matter what, so that now" was-- the "for very important. jobs are s

hays in: i'm kathleen new york. we have had stifling heat and humidity.re watching daybreak australia. let's get right to first word news with jenna. tona: the fed intends maintain gradual rate hikes based on its own u.s. economy according to the latest minutes. the committee sees low unemployment eventually pushing wages higher with inflation near the 2% target in the medium-term. the escalating trade risks and emerging-market volatility have potential threats to growth. has confirmedp the u.s. will impose tariffs on chinese imports as the clock ticks past midnight on the east coast. -- duties be imposed will be imposed and more will come in two weeks. the deal that chinese goods threaten u.s. national security "cold warington's mindset." saudi arabia has cut grading for most of the oil grades. and showing customers there is a dish and supply. oil extended losses after lowering august prices for crude in asia and europe. it came after president trump renewed attacks on opec saying the cartel is keeping oil prices higher and demanding immediate action. th

ramy: kathleen hays, thank you so much.the bloomberg terminal -- unexpectedly earlier out of china nonmanufacturing pmi has come out at 54.0. the survey expecting 54.9. the prior was 55. nonmanufacturing pmi coming out of china at 55.4. that is a miss. the expected time is one and a half hours out. early dataprise coming at us right there. don't forget our interactive tv function which is tv where you can watch us live and catch and divet interviews into any securities or the bloomberg functions that we talk about. you can become part of the conversation by sending us instant messages during the show. this is for bloomberg subscribers only. check it out on bloomberg tv go. this is bloomberg. ♪ ramy: this is "daybreak: asia" and i am ramy inocencio in your. of the a quick check latest headlines. cathay pacific may cut jobs at its overseas operations in its latest attempt to get back to profits. they are discussing the consolidation of overseas sales, marketing, and freight operations. it has more than seven at a 50,000

kathleen hays is in tokyo this week for the bank of japan meeting. there has been speculation governor kuroda may tweak policy. what is the likelihood? kathleen: speculation is red-hot. at the very least if the governor of the bank of japan is not ready to fully announce a step towards a small but powerful, potentially important change in how yield curve control policy is conducted, it will be a surprise because whatever he announces officially he will be just smothered with questions at the press conference from just about every reporter who is there. speculation started a week ago, reports in the press from reuters, bloomberg and others, saying there is something in the works, a small change in yield curve control to let it not be just the 10 year -- not firmly cemented to zero, but something higher, maybe 0.1%. not a big deal on the outside, but if you are a bond trader or investor or the bank of japan who needs steepness in the yield curve, it is important. take a look at the chart. one of the gtv charts, you can see something everyone is watching

kathleen hays is here with the key points. s what he has already said, that the economy is in a good place. kathleen: it is no surprise. everything he said, more rate hikes are coming, gradual albeit. let's look at one of the key points in the whole report released friday ahead of the testimony. the gradual approach increasing the target range will be consistent with sustained expansion of economic activity, strong labor market conditions and the 2% objective over the medium term. why is he so upbeat? he sees stronger consumer spending, business investment, strong labor market, tax cuts an important part of this. he touches on trade risk but doesn't dwell on them. in spite of what we have seen in europe and questions about growth, he had a pretty positive view of global growth against aiding the u.s. economy. i want to look at important -- an important terminal. we go over here, 2018. here is the consensus view of four rate hikes, one in september, december, and a key part of the questions he gets asked in congress. tuesday is

kathleen hays there.ust before we get more analysis on central-bank action, were getting these breaking lines over bloomberg from the hp, entering a pack to sell assets for $10.8 billion. -- the entire , were just getting a few more details there as they come through. certainly as part of a broader theme and we had the sale of the u.s. on sore -- i'm sure's shale assets. -- onshore shale assets. certainly one to watch in that energy space today. in the meantime, let's get back to central banks, the ecb with mario draghi pretty much staying on message, overnight, were looking ahead to the boj. constances bring in hunter, good to have you back here. talk about the ecb, it was no secret, we knew this was going to happen. constance: i think kathleen highlighted that mario draghi pointed out that growth was a little bit stronger. in addition to the clip we just about are you talked stronger capacity utilization, one of the other things he said was that lending was continuing to grow and lending demand is conti

kathleen hays, thank you.rump tries to move oil prices lower with some twitter diplomacy. david the next joins us with a look at that. this is bloomberg. ♪ loomberg. ♪ welcome back. i am ramy inocencio. haidi: i am haidi lun. you are watching daybreak australia. we are watching oil prices would trading resumes after president trump's weekend tweets, suggesting the king had agreed to pump in addition to million barrels a day, but they have -- noied they will not specific target was set. crossing -- causing quite a bit of reaction. david, great to have you. what trump tweets and says and is pressuring opec to do a side, still upside for the market. david: there is no doubt about it we have seen oil prices reacting to a positive outlook what is happening now. would put pressure to the downside, but we have clarified what was said in the meeting. it was no agreement to pump additional. a couple weeks ago, opec said we are not going to pop -- we are going to pump about one million extra anyway, so it seems to be wh

bloomberg global economics policy editor kathleen hays is here. outlook is for no great hike until at least may 2019. kathleen: let's start by looking at where the bank of australia is now. 1.5%.ellow line is at it has been there since september 2016, expected to stay there probably until at least the middle of next year. down fromunemployment over 6% of couple of years ago to five .6%, wages, as you can see that white line, plateaued at 2.6%. these turquoise bars running at to%, just below the rba's 2% 3% target. at the same time, we see another thing that has been happening the last tuneup or three months. funding costs are surging. rate hikes boosting dollar funding costs. this hit australian banks pretty hard. the white line is the local funding cost index. you can see how it has surged. costs meanrowing bigger costs for businesses to borrow. just one more reason the reserve bank of us trail you takes a look out over the domestic horizon and says no need to hike rates now even the gp has picked up, and in fact, time to be cautious and hold stea

kathleen hays's hair with the --est -- kathleen kate kathleen hays is here with the latest. 24 hours that theresa may was doomed. can chief survive the year -- can she survive the year? -- last week on friday she got the deal for a soft rights it plan. brexit plan. then we heard that david davis was stepping down. then the foreign minister of london stepped down. theoday was supposed to be big lap in parliament. presenting the plan and saying, i have done it. and it has turned into a defense of a plan with a lot of pushback in parliament. let's listen. will take back a troll of our borders, our moneys, and our laws. -- take back control of our borders, money, and laws. the hard brexiteers don't like it. this has been one of the biggest preventing the, u.k. from even presenting something to the eu. ontish producers will follow rules. the u.k. will have different arrangements for services. that means banks will lose eu passporting rights, which is a big issue for british bankers. meanwhile, when you look at the reaction, boris johnson put out his resignation issue early, ahead of two r

policy editor kathleen hays is here. is the fed breathing a sigh of relief? od stuff and bad stuff. kathleen: good and less than good third let's start with what is good because we did see jobs jumping a bit more than forecast. inroll were up some 213,000 june. july was revised to 244,000. we know unemployment jumped to 4.0 from 3.8. let's take a look at this chart. it shows how payrolls are kind of a very sweet spot, above 200,000, but unemployment going from 3.8 to 4%. this happened as more people were coming into the labor force. participation rising in the u.s. last month which is something everyone wants to see because so many people have been sitting on the sidelines. when we look at the next point, with this tighter u.s. labor market, still very tight, what you see is a situation where wages are not yet rising. here is another view of that unemployment rate up to 4%. average hourly earnings, 2.7% for two months in a row, they cannot break out of this range they have been in for months and months, which is surprising. if the labor market is tighter, why

bloomberg's global economic and policy editor kathleen hays is a look at what is expected from bank negaracting a dovish stance. why? sec. tillerson: a number of reasons -- kathleen: a number of reasons. they have a new central bank chief, a woman. she was the deputy governor of the malaysian central bank. the story from the bloomberg team in malaysia is she has an easier road than a lot of her peers. in the emerging markets selloff, we have seen indonesia and the philippines boost rates to support currency. but the malaysian ringgit has been better. high oil prices are boosting inflows into malaysia, helping the current account surplus get stronger. they are getting rid of a consumption tax, which will also hold down inflation. everybody saying they don't need to hike rates. let's jump into the bloomberg library to look at this chart. 3.25. they raised a 25 basis points, first increase since 2014, in january. inflation has come back down. back to 1.8% year-over-year, but the target is 3% to 4%. so they can sit back and relax. a bloomberg survey of 19 economists, all 19 said they would kee

ramy: thank you very much, we will leave it there dino kos and kathleen hays in tokyo.rant thornton and the black rock chief income strategist, that's at 2:00 p.m. in new york. this is bloomberg. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ markets open in just about 90 minutes in sydney. futures looking positive, 0.3% higher in the sydney opener. u.s. stocks rallying, tech lightg a comeback, a shining through. haidi: definitely -- some relieftely there. you are watching daybreak australia. let's get the first word news. forecast sales that would top estimates. continuing demand for iphones and wearable devices. it expects fourth-quarter revenue to be as much as $62 billion. analysts h

kathleen hays is here in the studio with me. g background with the trade concerned, but retail are positive. they have not to go to consumers, the concerns. kathleen: apparently not. one thing about the semiannual testimony -- this will be jay powell's second time he's done this. you are facing a fairly politicized atmosphere. republicans on one side, democrats on the other. each tends to want to get the fed chair to say what they think about trade wars, what they think about tax cuts, etc. another issue for jay powell that makes it difficult, he has already given us an upbeat view of the economy. it is getting worse. thee is concern about how fed is going to navigate all of this. at the same time, it's interesting. the imf saying the trade war is going to imperil growth at a time when they are also saying that it is not happening yet, basically. let's jump into one of the charts from the bloomberg library. the though they said -- u.s. could be hit hard by a trade war. they left their global growth forecast for 2018 at 3.9%. they

i am kathleen hays in new york.with all the talk of trade wars, fundamentals as you say, tech earnings going to be front and center, industrials and airlines, energy is a big week. we have the ecb meeting as well. let's get you caught up to date with first word news. g20 finance chiefs are warning trade tensions threaten global growth and the engines of leading economies fall out of sync. they wrapped up a summit in buenos aires, risks have increased. they say global growth remains robust in many market economies. the g20 statement did not mention trade tensions. one of japan's most senior policymakers says the government will continue to resist american efforts to negotiate a bilateral free trade agreement. japan will not do anything to harm the national interest. he said japan will continue to returning to the transpacific partnership is in the best interest of both countries. a heat wave in japan has killed at least 30 people and sent 10,000 to a hospital. blistering temperatures continue throughout the week. the

and policy editor kathleen hays is here. he decided he was not the person to criticize that. thleen: i think first of all the fed chair said many times, at the fed we stay in our lane. he was asked so many questions about trade. -- democrats wanted him to talk about how terrible trade was. he prefaced it by saying, if toiffs are used as a tool force other countries to open up their markets, this could be good for the u.s. economy, and in fact, workers around the world. isis positive there, but quick to add there are definite risks and the risks are growing. let's hear what he said earlier to the house financial committee. >> you are just beginning to see the retaliatory tariffs come in place. they are only just beginning. hear a few reports here and there about this company and that company. agriculture is seriously affected, but it is just beginning. you want to be careful to walk on this path, because it may not be so easy to get off it. kathleen: sophie: let's go -- kathleen: let's go to the release of the fed's beige book. this is a survey of anecdotal evidence from each o

the book economics and policy editor kathleen hays is in tokyo ahead of tuesday's boj decision.hese retail sales numbers fitting in for the central bank? leen: like any central bank, the boj is watching every number to get a sense of the health of the economy. yene really think mrs. would go to the store and say, i am worried about that trade war and not by something? we note -- buy something. ? we know -- buy something? japanese consumers, 1.7%, that is a good sign. retail sales, these figures are volatile. at your number. we see this steady, not exactly surge, 1.7% year-over-year in may and 1.8% in june. one pillar of the economy continues to grow modestly. the biggest question for japan is export growth, manufacturing, we get more numbers on those. right now, for the boj, the sense is the economy is doing well enough. it is other questions about their entire mandate. thatool they are using they are looking at for this meeting. this whole question about 10 bonds, how they are buying and how they will operate yield curve control. yield: you mentioned curve control. we have talk

kathleen hays joins us live from tokyo. good to see you and thank you for joining us. it seems like tweeting around the margins but what were the important tweets to pay attention to? think thewell, i vanity tweets around the margins, but the fact that the bank of japan has make any kind of change in the policy that has been in place since the governor came in and put that in place is significant. i don't think we should downplay that. the flexibility in bond markets oneations, was the big going in. including think bloomberg news. the 10 yearllow yield to go maybe above 0.1% because of the negative side effects this was having on the that came through even though there was a big debate. that is why they had the debate one hour longer than usual because they have to come to a decision and had to communicate it. topicsuld rate the because of distortions. is whatvery important they were looking for, something do with markets, not so much keepbility -- they will this depending on the economy but extremely low rates for an extended amount of time. that is the forward guidan

this is kathleen hays outside of the central bank there. would governor kuroda want to make any change now? saying that here might want to do this because he wants to make sure that aggressive monetary stimulus can be sustained. the problem is it has some distortion. this is totally negative, under 0%. where the situation regional banks are having their importance discussed. prime minister abe is facing the big lep collections. maybe there is a limit pressure on the boj to do something about a policy. also, inflation is running and 0.8% year-over-year. the boj target is 2%. it got to 1% year-over-year. you have to ensure that this aggressive stainless policy is just sustainable. it seems pretty clear after .eports coming out of the boj it eventually may be up to 0.2. today, they'll make an official announcement that they're making a technical change to that policy. he said they will not change their policy. the may be a range for trade. you have to extend the range on both sides. we don't know if it is appropriate yet. thing is such a simpl

kathleen hays is here. two words, what were they? >> for now.me start by saying this written testimony. two words still fall into a key statement by accident. let's hear what jerome powell said on the economy and policy. market,a strong job inflation close to objective, ,nd the risks roughly balanced the fomc believes for now the best way forward is to keep gradually raising the federal funds rate. >> yes, for now is seen as a signal that as some people were getting concerned that the fed and jerome powell are not on autopilot. they will not just blindly, automatically make two more rate hikes this year as so many have been fearing they might, particularly when the consensus is four by the end of the year. they would have to do two more soon. he did acknowledge the impact of trade. he says it is difficult to predict the impact and timing of trade tensions. he said the same is true of tax cuts. yourade, he was asked if see signs in the economy now. here's what he said about wages and trade tension. >> it may well be. we don't see it in the number

i would also like to thank kathleen hays. it turns out with june home price numbers, nico long will join us. we will also hear from the imf's world economic outlook. we have a member of the global bank of australia joining us to ago. coming up the eu-japan summit. martin schulz is looking at all of that. that and more on the way. netflix showing subscriber shares have plunged. is this a sign that viewers have peaked, or was it just a slump? president trump at a summit with putin, people calling it a tragic mistake. more on that backlash. rishaad: this is bloomberg markets in hong kong. president trump sparking a republican backlash after appearing to give equal weight to the kremlin and u.s. intelligence. pres. trump: all i can do is ask the question. my people came to me, dan coats came to me and some other said i think it is russia. putin, he justt said it is not russia. i will say this, i don't see any reason why it would be. rishaad: are senior editor is with me. this has really shaken the hornets nest in d.c.. >> it has.

ramy: let's go over to kathleen hays.e looking at what is happening in terms of the two big central-bank meetings being done. one more to go. there is a common thread. how are policy it decisions affected by the intensifying trade war? kathleen hays is here with three caps. malaysia's bank holding the key rate steady as forecast. negara, one of the big stories is they have a strong currency, unlike the philippines and indonesia. other central banks have had a boost rain -- rate. ringgit sidestep the interstate selloff. let's go to the bloomberg library of charts. to january rate hike, up 3.25 for the last six or seven months. look how they were hiking. 1.8% versus the 3% to 4% target. 5%. see growth above inflation is flat and sometimes negative. that will give them room to ease. their gdp drivers are good. but there is fear of trade wars. they are standing back and saying they are good for now. ramy: the bank of canada did not mention anything about trade concerns, but they raised rates. kathleen: strong growth despite t

our economics and policy editor kathleen hays is here with key points. en: this is a very important testimony. under law twice a year the chairman is required to go to congress, the american people and report on the health of the economy, monetary policy, what is expected. having said all that, jay powell will deliver an upbeat report. we know because the fed released the report friday. we get a sense and in fact he is doing this, so congress is prepared to ask smart questions and have it absorbed by time they get there. andeconomy is set to grow accelerate from the 2% in the first quarter. stronger business investment, more jobs, tax cuts, an important part of this. he touches on the impact of the trade war and is clear he and the fed are watching this closely, but it is not taking the economy yet. he presents a global economy growth aiding in recovery. let's look at the key phrase which suggests more rate hikes are coming. the gradual approach for the target rate will be consistent with sustained expansion of economic activity, strong labor market condi

kathleen hays is here now to take a look. t got her in earlier this hour, and those did not come out quite well. kathleen: a bit of a surprise. this is important to the bank of korea because they are trying to ponder what their next move is. inflation pretty much held steady. cpi on --ld begin korean cpi down. it was supposed to rise by 1/10. health care costs and others eased. this left the korean cpi at one point unchanged. , 1.2%re cpi year-over-year. into one of those bloomberg terminal charts you were just talking about, and what you are looking at is the red line. bank of korea's 2% target, 1.5% with the year-over-year rate. two months in a row. not moving up towards the target. this iscan see that something that they are going to be watching in korea very closely. in fact, last month, they had a juneh tilt on policy, but 19, a couple weeks ago, the head of the bank of korea said we are closer to meeting our targets on inflation and growth and maybe we will move away from that. not yet. looks like they are stuck with a -

kathleen hays is here with more. i think it's pretty resilient with the trade tensions. ly we see no pressure on the central bank of malaysia to raise its key rate as it did in january. shielding it from the forces on central banks and indonesia to racer key rates to support the currency. meanwhile, higher oil prices are boosting inflows into the country and boosting the current surplus. they are scrapping a consumption tax that will help curb inflation. that's not really a problem in malaysia right now. in fact is one more reason for them not to repeat that january rate hike. let's jump into the bloomberg library and what you can see is the key rate of in january by 25 basis points, the first rate hike since 2014. of to 3.25%. look at inflation, it got as low as 1.2%, it's back up to 1.8%, but the central-bank target is up here and they have a long way to go. one of the big reasons why every time a survey said they will keep the key rate at 3.25%. no reason to hike or no reason to think about cutting at this point. ramy: what is the biggest challenge for the new central

the central bank of turkey views.s investors worst kathleen hays is here with what the cert didn't dohy not yielding to the pressure to raise rates? >> that is certainly the fear. we talk about the shocking return of air going on next. that is an interesting way of putting on it. they hold the key rate at 17.75%. they were expected to rise by another 100 basis points because they have inflation continuing to climb. this is what is dogging the economy. let's look at this chart. wow,an see that turkey -- that's way above 2%. look what happened. 8% upn april, a jump from to 60.5%, then another move up to 17.75. another 100 basis point move was expected. it did not happen. power, that it came to sweeping victory, giving himself all kinds of new powers. this included making his son-in-law the new economies are. somebody was going to support his father-in-law's view that high rates don't stop inflation, they cause it. something that any other economist certainly has not said. beenis something that has used to justify an opposition to further rate hikes. lira,as been hurting the all kinds of

let's get over to global reporter kathleen hays for more. at is the message from jay powell and patrick harker and is it backed by the inflation data? kathleen: let's start with jerome powell. he did in interview on npr public radio, asked about growth, inflation, trade. he does see the economy in "a good place" and is concerned with trade policy. he said this is a new process and its "difficult to predict how it turns out." michael mckee sat down with patrick harker today and he told bloomberg he's comfortable with inflation as high as 2.5%. that would be considerably above the 2% target. nonetheless, he's in no hurry to hike faster. let's hear what he told michael mckee. >> at the beginning of the year, i put in three for this year, three for next year. i have not moved off of that. let's look at the consumer price index. month on month, 0.1%, weaker than forecasts, something to do with energy prices. the core of 0.2%. year-over-year rate we watch closely. let's jump into the bloomberg library. what you can see is that the cpi actually hit

rishaad: that was kathleen hays joining us from new york.tting more on china, these trade numbers. china's exports to the united states are up 5.7%. imports from the u.s. up 4%. again in yuan terms. what is reaction to that? >> i think those numbers are likely to stay negative. at the end of the day, the u.s. is an important trade partner for china. trade flows between the two countries and has been going quite well. they have both been contributed to the overall trade on either side. reverberations that i will be most concerned about. rishaad: spillover investment decisions postponed but not taken. exactly. potentially, derailing end up setting demand from europe for chinese goods or demand from canada for chinese goods. willnk global trade flows impact not just china's exports, but also investments. rishaad: more coming out as well, in dollar terms, trade with of the u.s.. rising 13.1%. that is overall trade on the year in dollar terms. stay with us. more reaction to all that. let's see what else is there. imports from north korea in june,

rishaad: kathleen hays in new york, there. markets head of the us.with buffett says, when the tide goes out, you find out who has been swimming naked. >> this is very interesting for the asian market. we are close to the white for the past four or five years. at the same time, there are plenty of risks on the horizo n. the rising yields have been talked about. china hasppening in been leading to a lot of volatility in our markets. now is the time to differentiate . valuation output has become stronger, but you do not get involved with everything and anything. so liquidity concerns are lower. that is what we mean when we say the tide is going out. rishaad: defaults are taking place in china. does that worry you? manjesh: what is happened in the past few days, there are concerns around increasing defaults. issue start to go down a bit. in terms of the kind of fiscal and monetary package that has been announced in the past few that will make some difference for the accessibility of fines -- funds. we were not expecting the easing to be coming up so quic

kathleen hays is here. is the fed breathing a sigh of relief? kathleen: i expect.n though the trade war has not officially that in june when they met, there were concerns people would be stepping back and wondering with the would be doing about hiring workers. employment rose steadily even the wages stayed flat. let's look at the bloomberg library. you see the turquoise line, back from the bottom, 3.8% up to 4%. 4% is really low. jobs are growing but unemployment is rising. more people are coming back to the labor force. the participation rate rose. market, but more people coming back in. what does it mean for the fed? portugal heaid in was concerned about trade spirit, pulling back on investment and hiring fewer workers. one look at a chart looks at how difficult it might be for the fed to hit the inflation goal it wants to meet with the average hourly earnings. that is wages. the bottom line, the turquoise line, running at 1.8% in the latest month. average hourly earnings stalled at 2.7%. it is a relief because now they do not have to worry about speeding up the

rishaad: thank you for that, kathleen hays.g is expected to be more of the same, but there could be some tweaks and that's what people are getting excited about. cliff, tell us about it. cliff: we have a kind of boring according toh is her economist, but i think the wen emphasis here is that think the my policy board has not come to a consensus yet on what to do next. the market is perhaps a little bit ahead of itself right now. i would say the 10 year jgb may not sustain at these levels. rishaad: how did they get inflation with zero yield effectively? i think inflation is a function in japan of a number of factors. one is caution on the demand side. it's hard for me to over emphasize the amount of caution that older japanese feel as they head into retirement. rishaad: and it is an aging population, of course. cliff: a lot of people might live to 100. when you are 100, your kids are 75. it's not logical to expect a lot of supporting care from them, so that is part of the caution. haidi: i want to bring up this chart illustratin

let's get to our global economics and policy editor, kathleen hays. she is here with more. tell us the message. is it back by the latest inflation data? kathleen: this is all very important as the week closes out. growth, inflation, trade, the federal reserve told npr on its marketplace program he sees the economy and a good place. low unemployment, growth is good. he is more concerned on trade policy. it is difficult to predict how it turns out. he could see a detrimental impact on the economy or maybe good. switch gears and get to patrick harker. our own michael mckee sat down with him. he says in regards to inflation, he is comfortable. even at as high as 2.5%. that would be well above the 2% target. let's hear what he said earlier. >> i had put in three for this year and next year. i have not moved off of that although i am open to an increase this year if we start to see inflation accelerated. kathleen: he is not rushing to raise rates even more this year the consumer price index report is closed to watch today. bloomberg into the now, because what is important to most

our editor kathleen hays has been running through the scenarios with our bloomberg economics team. e are four scenarios. are any of them good? kathleen: none of them are good, but some could be not so bad. none will push the world over a cliff. bloomberg economics looked at the impact of tariffs through their shock on import costs, and also the shock on equity markets. we will run through all four of them. first would be $50 billion. that is all that happens. china retaliates. markets shudder a little bit, but bullsights hold their fire. 0.2%se gdp could be cut by in 2019. even if there was a broadening to $250 billion of tariffs, only i had of 0.5%. now let's get to scenario two -- now stocks really get hit. financial conditions tighten. fearing even worse, both sides say, let's stop. 0.4%se gdp would be cut by in 2019. they consider the chinese economy insulated from stock gyrations. this third scenario is one u.s. puts tariffs on everyone's imports. the whole world retaliates. u.s. gdp could be cut by 0.4%. chinese gdp, still not a vaca buttill not a bit g hit, 0.4% by 2020. the

we will see how things go, kathleen hays, thank you.a $24 billion bid unless china make a last-minute move to approve the deal. telling bloomberg does not think beijing will give the blessing which isthe deadline just now four hours away. let's go to the senior international editor and all, saying look, the silence from beijing, we will be a dead deal? >> the ceo doesn't see any region -- reason to change the timing. forces beyond their control were at work here. it was 20 months and negotiation and they will have to pay a big bankruptcy is well that they would by $30 billion of stocks. it is costly but it looks like it will be ending. this deal, these companies have religious become a pond in this u.s. china spat? >> the timing is interesting right? and so the ceo statement is telling that he thinks that there are other forces at work here. the companies had been 20 months in the making and mxp wanted to not that it could -- do have to show that it could be a standalone company and not have a future. for qualcomm this would have been a

but skied kathleen hays in new york with more on this. mario draghi upbeat on eurozone growth.e wrapped up the meeting 20 minutes earlier than usual. he considered back and relax because they are not going to move for a wild. that is one thing we can say for sure. we see rate hikes but they are way out in the distance. let's listen to something he said during the press conference earlier today. >> domestic pressures are strengthening and running. capacity andels of tightening labor markets. >> he also said he sees the euro area economies table lysing at the june meeting, he's dead -- he mentioned pockets. every onee, he says is on track to end bond purchases and october and hiking rates in september 2019. they are in no rush. as for trade, the report notes the possibility that trade tensions continue to cause uncertainty. very interesting though. mario draghi was constructive. he sees hope from that meeting yesterday. this meetingte of and one can say something general, it is a good sign. it's a good sign because in a sense, it shows that there is a willingness to discuss trade

we go to tokyo, bloomberg economics and policy editor kathleen hays is standing by a very special guestd koo is chief economist at nomura research institute here in tokyo. a man who came up with the -- his book speaks directly to the kind of issues that central banks are trying to solve, and tells us whether or not succeeded. richard, welcome to the show. >> thank you. kathleen: we are actually showing you a picture of the book right now, it is a fascinating book. let us start with the boj, what they did yesterday, and what it means. then we can go into your basic thesis of why it not going to work. add someried to flexibility to its policies, this massive quantitative easing, negative interest rates. from theve been saying very beginning, before the boj even started this policy, that it has no reason to work. it has no reason to work because , for the kind of monetary policy to work, there have to be borrowers. and there are no borrowers, you bring rates down, nothing happens. but all the economics we have learned in universities, we assume that borrowers are always there. would always

kathleen hays looking dieter -- looking deeper into the data. the studio. great to have you. it seems like things are in big trouble, but what you make of these contractions, whether it is south korean exports, export orders in china -- is it volatility are are we seeing fading global demand? the escalation of the trade were between china and the u.s., we are going to see more recent signals from asia, the close all this global supply chain story is. economies like japan, south korea, they are on the same global supply chain. a higher risk of a trade war with the u.s., and other countries are going to get affected, and export orders have to climbed from china's pmi index. that trade warty risk will start to affect china and other asian economies. this is going to continue for quite a while because it's so far, we have the signal that china and the u.s., they are going to not going to find a way to solve the trade war. yvonne: especially when we are the first round of cap to go through, it doesn't seem like they have found time to negotiate befor

kathleen hays has seen it and has the key points. eleased on friday as part of jay powell's attempt to make sure the members of congress, the public as well, are well in advance apprised of what his thinking, the fed's thinking is. it is also twice yearly. the federal reserve has to go before congress and the american people to talk about the economy, the direction of monetary policy, and that's what jay powell will be doing this week. an upbeat report is as expected. in the report released on friday, he outlines stronger consumer spending, more investment, both of them aided by the fact that the job market is stronger, and don't forget about those tax cuts. as for the trade war, he touches on the risks, as he has in many speeches and interviews lately, and not really definitive, just saying it is being watched. also presenting a positive view of global growth. it looks like a key phrase from the monetary policy report, here we go, the committee -- the girl expects -- committee the federal open market committee, that is, expected to b

kathleen hays, in tokyo. bank analysisur continues.n india and the u.k. that's next. plus, beijing has a tight grip on investors. they need to pay more attention to natural service that number crunching. this is bloomberg. ♪ ♪ >> you are back with "bloomberg markets." i'm rishaad salamat. >> i'm haslinda amin. the fed and boj are not the only banks in action this week. we are also awaiting rate decisions from brazil and india, and the bank of england on thursday, making it a very busy week before a usually quiet august. let's bring in our guest from singapore. good to have you with us. the boj is in focus, and people expect some kind of indication. the thing is that change -- it seems that the boj has already had it. >> we will really see some impact to there. the question is whether or not governor kuroda will announce any tweak. in terms of action, they have already looked at the long end, so the big question is whether there will be further movement in the sense that they will allow more flexibility around 0% over 10 years, and you