the headg words from of portfolio management at pimco germany.rally continues with the euro stocks set to enter a bull market. on one of the top analysts the gold market says the market has gone too far. we will speak with her next. this is bloomberg. ♪ anna: welcome back to the european open. for europeanion equity, up .5% on the stoxx 600. to some extent, catching up with the u.s. session yesterday. gold has rallied, reaching the highest level in six years. but a top analyst says markets have overshot. strategists a senior and has been named the top forecaster for precious metals in 2018. she joins us now. good to speak to you. what is your expectation for on gold? georgette: thank you for having me. in the near term, there could be some weakness on prices. the overall sentiment is extremely positive. you see it in the markets, people are very long on gold. this is against a background of expectations that the fed will be very dovish. also, the announcement of what trump is announcing of possible new members. as even moren seen dovish than the

gene frieda of pimco with us as well this morning. the bond market in a bit and the strategies. the strategy for paul sweeney in .daho, it is to gorgeous there an important discussion. this is bloomberg. ♪ ♪ berg "surveillance -- this is bloomberg "surveillance." let's get straight to the bloomberg first word news. viviana: the city of new orleans under the threat of floods on two fronts, a storm that could turn into a hurricane has flooded the city and could drench the region with a foot of rain. the mississippi river could be pushed to its hires that highest levels in -- here's. not be able toay avoid a prison term after pleading guilty to lying to the fbi. causew legal strategy deal.o reassess their flynn backed off earlier statements. when fork., a surprise jeremy hunt would probably cause the pound to rise but not for long. hunt is more likely to avoid a new deal brexit but will still have to renegotiate a deal the e.u. has refused to reopen. boris is the overwhelming favorite. andasy exit between china -- the fight stems from a

pimco says the dollar will roll over in a fed cutting cycle. what you said about going to zero, i am guessing you may be expecting that. that poll of juicy rates in the u.s. and you have that cutting cycle, what does it mean for the dollar, does it really roll over? >> on any day and week the fed gives a dovish meshes -- message, the dollar where we can. we need to look at u.s. market them a could weaken their currencies. in europe, we think it is possible for the city to continue cutting interest rates as negative as they are already possibly -60 or -80. they are likely to come to the table with more qe if they need to ease more. we are talking about a negative rate environment. that is not great for the euro. more policyld see exhaustion is in japan where the bank of japan have for years pushed the envelope in terms of monetary easing. it is hard to do more from here. we need to look at those other non-u.s. markets to see what the dollar is likely to do and real rates and a global context are high even if the cuts are priced in and delivered.

libby cantrill of pimco is here. that is next and this is bloomberg. ♪ david: this is "balance of power" on bloomberg television. i'm david westin. we turn to mark crumpton. mark: congress and the white house are closing in on a debt ceiling in budget deal but the house leaves this week for the summer break. the trump administration still wants $150 in long-term spending cuts as part of a permanent deal . in puerto rico, hundreds of thousands of people are taking to the streets to protest the governor. the governor is refusing to quit but says he will not seek reelection. he is under fire after the leak of an obscenity filled online chat he had with allies and on -- and federal construction charges have been leveled against his administration. the u.k. chancellor of the exchequer philip hammond says he will quit wednesday and forced becomes the next prime minister. johnson is favored to succeed theresa may. he has insisted members of his government support a no deal brexit with necessary. if necessary. hammond spoke

yacov from pimco stays with us.g up, it is jobs day. , don'tk to larry kudlow miss that conversation at 2:30 p.m. london time. up next, we discuss india's budget and investing in india. this is bloomberg. ♪ . nejra: deutsche bank slashing 20,000 drops worldwide and u.s. cuts will stretch far behind equity and race divisions. u.s. investors and global investors set for the jobs numbers, will be data provide fireworks for the fed to cut? trade trouble sees income pledge as samsung. this is bloomberg surveillance. i am a richard pitch in london. --nejra cehic in london. >> no weaken our shuttle soaring -- norwegian air shuttle suffering, aig apparently interested but they say it is not true but the market does not believe it and norwegian air back into my. 14%.on down nearly a measurement technology company out of sweden. , profit warning this morning citing trade tensions and what it means for development in china and cutting 700 jobs to meet financial targets. , one of theces biggest losing sectors on the stoxx 600 b

pimco has done a good job of structuring for a low rate environment. need to agree with bob michele, but if we sustain low rates and lower real rates forever, what does that do to our allocation? geraldine: at this juncture, we are not recommending to lower. zero interest rates is an amazing discount factor, and might attract a lot of people to equities. but you cannot lose the fact that earnings are coming into a recession. therefore, you have to weigh those two sides. typically equities haven't done so well in the earning sessions. fixed income still looks all right. and a lot more caution when it comes to credit and equities, staying in securitized, higher-quality credit. and when it comes to equity, overweight certain factors such as prefer larger cap, rather than going into value. tom: jp morgan are saying we could actually go below zero on the 10 year yield. and it could be triggered by what they called if a recession. nejra: is that something you foresee as a possibility -- a vanilla recession, and on what timeframe? bob: what you have seen is t

yacov arnopolin from pimco stays with us.ropean sovereign bond onlds hit record lows anticipation that today's ecb meeting will set the stage for september rate cuts. are they right? we discuss that next. this is bloomberg. ♪ francine: economics, finance, politics. this is ""bloomberg surveillance." the heat wave we saw yesterday, westminster is experiencing it today, it is the hottest day on record in london. try to stay cool out there. now to the central banks on the market. another central bank expected to cut is the fed, which decides next week. investors are expecting a quarter-point rate cut. what does that mean for emerging markets? that isus to discuss yacov arnopolin from pimco. we were talking about turkey. you said you like markets like ukraine and indonesia. is that through currencies or through something else? yacov: ukraine credit as well. some exposure, local market exposure. indonesia, it is on fx side. we talked about how central banks, no central banker wants to be left hind in this wave of cuts. we saw this

broaching pimco that. he was a nice friendly person but he was domineering. intensified investigation nothing in my life so anyway he finally got down to what you want to know how much money did you make a month telling. they were so happy for him even take him to god he said just one you know to take care of you promise me when you take a. quick look at the i remember a part of the golf course was almost in the village so we kids used to go there you know there was a barbed wire fence there but there was 30 centimeters between the wires so we could slip through. the media. and we told each other if the americans catch us they'll shave our heads and make us play the drums in the hot sun until we drop. not without. a doubt it was a whole different world for us back then there was a big gap between the backwardness in spain at that time in the american standard of living that was going on. but that's when we went on base it was like being in an american movie. because what we saw in the movies really wants their way of life you're seeing. regular people when th

with us, andrew bonds and worth worth of -- andrew bosom pimco.rim manufacturing data out of europe? andrew: i think president draghi's urgency does not change today, that there is useful data to the extent there is any doubt within members of the governing lightl, particularly in of the expectations the president generated at the bank should be operating. today's data has confirmed his more downbeat view he expressed. tom: the vector there is something -- this chart is extraordinary. this is generally fracturing, manufacturing,an obviously recession. as grim as anything in 20 years. a new lower year-over-year manufacturing decline. in germany and the netherlands and europe, can the service sector come to the right skew -- rescue? andrew: the domestic economy is holding up fairly well, so if we are going to see a recession that will be driven by the external sector. so long as that doesn't lead to a large wave of layoffs, there should be underlying resilience from domestic demand. we are seeing that in other pockets of the economy. what is more of

douglas hogg, the former pimco chief accused of using a teach his kids way to cheat into colleges.e made donations, not bribes. said the payments to brett singer were just like large donations he made over the years to support education. another victim of the trade war in china, napa wine. china's latest round of tariffs with the tax rate on an american bottle of wine and 93%. california whiners -- california viners rc their work undone -- are seeing their work undone by the trade dispute. a new study using u.s. census data say millennials want to live in cities with high wages and overall high cost of living. the top destinations include portland, seattle, and denver. i was in portland just this weekend. you can follow all the stories on the terminal, bloomberg on -- blumberg.com, and on twitter. caroline: taylor, you are so on track. a digital token crumbling after -- warrenreneur buffett fighting kidney stones is the issue. the question, was this the full truth? where their money laundering allegations. he has put out a video from san francisco, showing where he is. >> i really

pimco says they can't rule out a full-blown currency war. bloomberg news reporting that people familiar with a matter in the white house say this is being looked at but a deliberately weakening the dollar strategy will only work if the federal reserve is on board and that opens another can of worms. we have to get through the july meeting before we look at that. yvonne: kathleen hays, thank you. joining us now is jpmorgan asset management global multi-asset data just -- strategist. marking the 50th anniversary of the moon landing, we will tie it to the fed. what will happen at the end of the men -- month? a small step for a giant leap like 50 basis points? >> i like what you are doing. we are in the small step camp at this point. yvonne: how so? we heard the comments from clarida and williams, it sounded like they were willing to take a step further. >> one thing you have to realize are reassessing about how they think about their policy framework and that makes it for us in the market that much harder to predict what they are going to do th

-- pimco, they said that rates can go lower. talking, i know you talked to other reporters about the 13 trillion in negative yield and debt, he was saying he could see a scenario where even government that yields of the u.s. could go negative, which would be pretty mindbending. but definitely, yields can go lower. he said, of course, there is risk. there are a lot of things that say this is not ending now. next, getting to the core of apple's succession planning. the man the many think will be the next ceo. more of a tim cook than a c -- a steve jobs. carol: and psychedelics, where better to look at them burning man? jason: this is "bloomberg businessweek." ♪ jason: welcome back to "bloomberg businessweek." carol: i am carol massar. join us every day on the radio from 2 p.m. to 5 p.m.. you can also catch up on our daily show on itunes, soundcloud, and bloomberg.com. jason: and find is online. -- us online. apple's heir apparent, he is much more like the current ceo van steve jobs -- than steve jobs. he became the second most imp

all of this leading pimco to declare the heyday of central bank independence behind us.e on this story, we are joined by the head of fixed income capital markets at raymond james. kevin, this conversation of central bank independence, we keep hearing the conversation around it. having the conversation. what does that mean for the markets, the fact that we are constantly talking about this? kevin: the market would like to see this issue a little more settled than it is. it is not unprecedented that a and take would come in out a central bank had. that only gives fuel to the conversation that if the president in his own mind does not get what he wants out of the fed, he can make a change. that only gives fuel to the conversation thatthat is terribr the markets. we need to let this play out longer. it is a big week for the fed, from the standpoint of the the venture testify, and a whole host of speakers testifying about the economy and what may be the next move for the fomc at the end of the month. i would like to see more settled his vision between the administration and t

conversation with mark isola pimco, their chief executive -- mark husel of pimco, their chief executiveis bloomberg "surveillance." aramco as resuming preparations for a mega ipo. last year, the offering was put on hold but they have held talks with a group of investment banks to discuss potential roles. the crown prince insists it will take place in 2020 or 2021. weatherford firing for bankruptcy protection in houston, struggling with an eight billion dollar debt load while energy producers are looking for ways to cut costs. test filingalling is the largest since the 2014 downturn. francine: the european central bank, minutes ago we had a flash saying ecb policymakers see no reason to rush into the july rate cut and tom is saying that is pretty much cosmetic, and yet pointollar moves, one 1306. -- 1.1306. is still with us. , itne who could replace him could be a frenchman or a german , or maybe they need a female president. does it make a material difference to policy? becausein a way does the chairman of the ecb matters for leadership. it is a six people board with broad experience. p

we are joined by pimco portfolio manager and sovereign credit analyst. good afternoon. would you buy or sell the u.s. ten-year into the powell testimony? what does he have to do to move the needle? guest: we think powell will roughly compare market -- roughly confirm market pricing. the fed has sort of painted itself into a corner and shifted in a dovish direction, so if they do not cut, the market will be disappointed, financial conditions will tighten. the macro data is not really warranting a cut come about the same time, manufacturing is very weak in the fed knows that a hawkish mistake is much harder to reverse than a dovish mistake. so for risk management insurance region -- for risk management assurance reasons, we believe they will cut. lookede payroll number pretty solid on friday. generally the united states looks ok, so presumably they are cutting for the trade story. how do they communicate that without completely spooking the market or putting it to sleep? nicola: i think they've already communicated that this is an insurance cut, a preemptive cut to avoid

investment world will be expecting interest rates to stay low in japan and in europe, near zero for years pimcoighest level the european central bank will have the deposit rate is zero with an interest rate cut by september 12th and perhaps another one next year. so more deeply into negative territory. that reflects this view on inflation. >> where is the bigger wildcard here the european central bank is going to get new leadership. it probably will be christine lagarde. the fed is under jerome powell, and will be for a while. is it the fed or the ecb that you think has the bigger sway on what's happening globally? >> the power lies mostly in the federal reserve still because of the growth in the world is in china and in america in terms of the share of gdp the better balancing act -- and kre christine lagarde may help with this, we see the fed, the ecb and central banks are having an inability to spur growth in the way that governments may like. so you may see more of a push on the fiscal agents to act we saw that this week in america with legislation that will promote growth next year, more t

andline: pg&e led by pimco elliott management coming up with an alternative recovery plan for the company'sring plan, $27.5 billion, you remember, proposing to learn 85% to 90% of the company's shares. they offered more than $1 billion to execute. shares falling after hours. this is bloomberg. ♪ is bloomberg. ♪ caroline: it seems as though president trump is concerned about the contract that is going to be awarded to amazon on microsoft. after 10 years, trump is demanding more information on computingve cloud contract it is poised to reward. more from "what'd you miss?." taylor: this is bloomberg. ♪ -- this is bloomberg. ♪ "bloomberg technology -- taylor: "bloomberg technology" is up next. romaine: have a great evening. this is bloomberg. ♪ this is bloomberg. ♪ emily: i am emily chang in san francisco, and this is "bloomberg technology." coming up in our next hour, netflix losing subscribers in the u.s. for the first time since 2011. what it means as the competition terms of the volume. plus, facebook's crypto crisis, facing a second lawmaker interrogation over the company's

we had pimco's global economic advisor saying a full-blown currency war cannot be ruled out. you concerned about the risk of that? dan: yes, and other things with it. the way these things go, it is not just trade per se. trade is an aspect of things. thinks of doing some of the missile tests or some missile landings closer to taiwan? what if somebody puts it is troyer through this -- a destroyer through a zone that china does not want it to the. there are many aspects. the trade war is visible. it is part of a broader working out that hopefully will work out well and will get through it to the other side, which is good. but right now, it is rugged. shery: what about the aspect of the debt issue here in the u.s.? this chart on the bloomberg showing u.s. total debt. we have the debt limit. we have debt ceiling talks coming up. we could be running out of funding in october. not just that, but the fact you have an ever-growing overhead of u.s. and private, government debt. with that cancel out any of the positives you would get out of the economy like perhaps a fiscal stimulus? d

certainly for the folks at pimco, they want to continue to be mildly underweight equities.y they are more liquid credit. they are keeping cash on the sidelines ready to buy any dips that become available in market. a couple of other notable interesting news and fixed income overnight where the two-year italian yields which went 0% and now the cash trade in the u.k., that 10 year yield now below the official boe target. that is how mark carney particularly was flagging real vulnerabilities around global economic growth. this continued upon rally got another emphasis overnight and we will probably see the effects of that ricocheting to asian markets through the rest of today. shery: we have breaking news at the moment. we are now seeing president trump tweeting again saying he will nominate judy to be member of the fed board. he is now saying it is his intention to nominate judy shelton, phd, u.s. executive director of the european bank of rig instruction and develop it to be on the board of the federal reserve. she is a founding member of the board of directors of empower am

pimco has said it's a possibility they can't rule out. michael: yeah, i saw the comments.e was talking longer-term. from the rhetoric president trump, you can understand why everyone is nervous. the other part of it, fundamentals do play a part. the dollar is overvalued, certainly by our own metrics. we collect online prices and do this large pbp basket. it is the most overvalued in eight years. that's primarily against the euro and the yen. you can understand the rhetoric around currency wars. i think the concern is we're just a tweak away from president trump using the dollar as a policy tool. anna: especially if he's receiving your research. let me show you this chart, about low volatility in currency markets. g7 or any just in kind of global miss, but emerging market volatility. that should be coming down and down. maybe not good for those trying to make money out of fx. for a global economy, lack of volatility is a welcome constant. michael: i think the setup for the g7 minister meeting is obviously they like currencies not to be volatile. they also like them to be cl

as far as the markets, i still say the best thing i have read is that from pimco, you have probably coveredf days, have been and help -- heaven and hell. risk and risk assets are priced to perfection and their lies the issue. let's get to juliette saly in singapore with your markets. juliette: it has been a little bit more of a subdued session in asia. pretty much for those reasons you were alluding to. we are not going to see u.s. trade thursday. we can is coming through in china's market -- weakness coming through in china's market. money going into india stocks ahead of the budget tomorrow. australia closed higher as well, a fourth session of gains. you have seen a little bit of money going into korea and japan as well. the nikkei up by about 0.3% on the close. there was a big bond auction in japan. let's have a look at some of the other assets we are watching. in the last half-hour in singapore, there has been a big tumble in iron ore futures prices. that is one to watch for the european session in terms of potential moves coming through in those metals players. urge come through in the

manus: how want to get your opinion on the note released by pimco.paraphrased it earlier saying independence is toast. he said the heyday of central bank independence is over the constant frontal attack on chair powell and his colleagues and repeated calls for cuts and qe by the president and other members of the administration, does it leave the fed in a no-win situation? to what extent if at all do you agree with him? we cede globally, but of course, the biggest concern is for the fed. the market is very confident that the fed will do the right thing, but yes, the fed might feel pressured to cut interest rates due to the global environment. this might be interpreted as a step two, you know, like to give in to political pressure, which could in the long run be disastrous for the u.s. dollar. i'm in, there is still a lot of confidence in the fed, so we are not there yet, but it is a development we have seen globally. we have seen this disastrous step for the turkish lira from the turkish president. we also have comments from some german political lea

let's bring in stephen chang, pimco asia executive vp portfolio manager.t a report out very recently on china's integration. we will get to that in a moment. just your initial thoughts on these numbers. >> i think this set of numbers are pretty in line with what the expectation was showing. the retail sales will probably be, given what we are comparing with, and the friday data was more instructive to me. the loans data and credit data, it showed that loans were a little weaker than expectation. i would pull that in with some of the banks that happened june, and the and impact on to money markets in china, and whether that would have more of a ripple effect into how banks fund themselves in the credit that extended afterwards. >> i think back in february, you were expecting some type of -- i guess loan or credit release to decide the enterprises. have you seen more of the recovery in that regard? >> there was some degree of helping with the private enterprise and the transmission mechanism, but we have noticed that the property market has responded very qu

kathleen: one of the top guys at pimco in a note this weekend said that in fact if trump, for example, but the fed in a very difficult position, because they might feel that they cannot cut rates now, when they have to prove to everyone they are independent, in fact, he sees a new normal of dependent central banks, lower interest rates, and more quantitative easing than we would see other was, which is something investors are going to have to get used to. i do not think that is a really down conclusion yet with the federal reserve, jay powell of course maintains his independence. a couple of more years before donald trump has a chance to make another choice. but it is certainly something that people are talking about, and studies for years have shown that independent central banks show the best results for the economy and the market. paul: all right, our economics and policy editor, kathleen hays. so much for joining us. deutsche bank will undergo one of the most dramatic overhauls in its latest turnaround plan. it will cut 18,000 jobs, post a $3 billion loss, and cut equity sales and

pimco is saying everything is going to roll over now.e saying we think it is going to strengthen, mainly because other people are even worse than we are. maddi: we would be more in the letter. -- in the latter. at this point, economic growth is slowing around the world. you had a story about u.s. leadership a few years back. you are starting to see that again. if we see relative growth fundamentals pickup in the u.s. as we expect, we could see some upside to the dollar, but not meaningful. we believe that the equity markets are more driven by earnings expectations than they are the dollar at this point. alix: are we in a world structurally where inflation expectations are now embedded lower, and it is going to take a miracle to get them higher? michelle: i think that is a big challenge across the globe. inflation structurally has been low and expectations have been falling. that is a critical concern for the central bank community. alix: and europe is plummeting. michelle: yeah. that is a big concern because many start to change the ment

coming up next, pimco usd economist -- usd economist. economist.u.s.an: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, the final fed speak before this month's rate decision shaking up investor expectation. u.s. and chinese policymakers making a visual contact for the second time since the g20 trade truce. earnings season continues. microsoft plunging double-digit -- microsoft plunging double-digit sales gains. here is your friday morning price action. futures are positive, up eight points on the s&p 500. in the treasury market, yields grinding a little bit higher by two basis points to 2.05 and the theme and foreign-exchange, there is only one -- a stronger dollar. the euro weaker at 1.1225. let's begin with the big issue. 25 basis points for 50? >> it will probably happen. >> they will probably cut 25. >>

and how much is it priced into the markets joining us are ubs head of america's asset allocation and pimco morning both. libby, what are the chances we get some sort of deal here snrjts i think it's very important not to conflate the avoiding of an escalation with a deal because while, of course, this is a short-term positive from the market's perspective, the uncertainty still exists, and many of the naughtier issues that led to the breakdown of talks in may were not addressed in this summit in japan. so, you know, we think that again short-term positive, but from an uncertainty perspective, from a confidence perspective, this will continue to be we think a headwind from a market's perspective and potentially from an economic perspective as well. >> jason, we are light on all of the details here it almost feels like over the past year the expectations have been rethought, reworked for the market in terms of trade between the u.s. and china where the dow is now rallying triple digits just because more additional tariffs on more additional goods aren't being put in place. do y how do you th

be more so. ,ejra: on the theme of trade you've got more and more calls coming out for goldman and pimcoising risks of fx intervention to weaken the dollar. president trump has been quiet on this but is this something he would like to keep pushing? that hisis reporting economic advisers are stressing to donald trump it's not the fed that implements dollar policy, it's the treasury. beating the been bush within the administration on trying to weaken the dollar against the advice of his own economic advisers. publicly, i think he will stay just keep pushing that button but whether he actually horses any real action is questionable. -- actually forces any action is questionable. tom: you have studied the middle ground. if we begin with the fact that the republican party has no middle ground, will it matter anyway? is it going to matter 18 months forward? >> it's interesting the way the polling is going. i think the republican party is redefining itself. when you get 90% of people voting for donald trump, where did the moderates in the republican party go? the same is true with the democrats