Considers a further delay on china tariffs. Shares and micron despite the ban. H2os liquidity problem. Woes deepen as more than 5. 6 billion euros of assets evaporate. The money manager says outflows have slowed since monday. Manus its daybreak europe. Welcome to the show. It is rocking higher, oil that is. A war of words from the white house to iran. You have inventories being squeezed aggressively. Up 10 in the past five trading sessions. The driving season is on. Theres a number of calls out there. City is saying if theres an escalation to conflict, adding another 10 to this price. Versus bank of america which is wrong, thet all goes chinese go to devalue the yuan, the chinese will buy oil from iran. You will see implosion in price. Down by 50 . Thats your risk. Lets look at the rest of the market. Bullard said the timing was right for an insurance cut. The market was essentially disappointed that powell did not go further in his rhetoric. He warned on the downside on the economy. Lets see what comes out of the g20. Roll down to the bottom of the screen. The kiwi. If you wanted a dovish message, they given you everything. Members agreed more monetary support is necessary. Rates are going to be at 1 by the end of the year. You are squeezing out a little gain as so much dovish and this was priced in. Good morning. Nejra good morning. The most dovish fomc official says that 50 bits in one go was to bungee. You see the reaction in rates. While the kiwi is the best performer against the dollar today, the yen is the worst. Dollaryen up in the First Time Since for three days. Indexoomberg dollar strengthening for a second day. The dollar bouncing back a little from recent weakness. We saw u. S. Equities drop yesterday for a third day. European equities as well. We see declines in Global Equities today. Concerns about trade playing into that story as well. S p futures flat at the moment. We got to a sixyear high with gold. We are pulling back a little bit today as this volatility is the highest since 2016 on the yellow metal. Juliette saly in singapore has more. Good to have you with us. A bit of a down day in asia following what we saw on wall street. Absolutely. All those concerns weighing on asian sentiment. The msci index lower for a second session. You mention that movement in the yen. You are seeing the nikkei under pressure as well. Stocks similarp to what you saw in the united states. The hang seng index is flat. Weakness coming from china. Goldman sachs has been busy with raising on markets here in asia. They are downgrading australias equity market to underweight, saying the 18 rally seen in the asx 200 is too far. The asx six 200 down. We are awaiting a Rate Decision coming through from the bank of thailand today. They are likely to follow and leave rates on hold. They have been giving back a little after achieving sixyear highs against the dollar. Lets look at stocks in detail. I mention that movement into tech players act after micron resumed shipments to while away huawei. Store isve department supposedly pulling out of china, according to the naked. It wants to close its shanghai store. Slowing Consumer Spending because of the u. S. China trade dispute. We are seeing weakness in some of these chinese auto players as well. City saying its time to get out. That rally has gone too far. Be a that seems to building consensus on a number of markets. Great round up. To our top story on the market this morning. They are a little bit mix. U. S. Stocks fell the most in three weeks. Jerome powell warned about rising threats to the economy. Speaking to the council on foreign relations, he said that the lack of progress in trade war and weak Economic Data are still stoking concerns. The cross currency reemerged with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. Markets have been pricing in a reduction of almost 50 basis points next months meeting. James bullard dump cold water on those expectations. Why he isoomberg calling for a smaller insurance cut instead. Inflation is running below target. That is surprising given that the economy has surprised to the upside over the last two years, growth has been higher than most people had expected. Labor markets have been very strong. Unemployment at a 50 year low. We are still looking at inflation running below target by a preferred measure. Inflation expectations deteriorating. Growth still ok looking backward. Looking forward, looks like a slowdown with some downside risk. You have an inverted yield curve. Seems like this is a good chance to make us make a insurance rate cut and try to reset our inflation and Inflation Expectations back at the 2 target. Immediate turn, people saying, you have the g20 meeting this weekend in oh soccer. Xisident trump and president will be talking. Couldnt you have just waited . What if there is a positive surprise . Would that have changed your view . Would it have been more prudent to wait . I think the idea of recent ring inflation and Inflation Expectations is not that dependent on what happens in osaka. Downplaying hi uncertainty about future trade arrangements. The two parties are disputing how the trade arrangements should be arranged over the longterm. Low andlation running Inflation Expectations running low, the economy is looking to slow down and possibly slow down more sharply than we thought. Seems like you better get and inflation back up to target while you can. Thats thought we should cut here. I loveot cutting my fellow committee members. By not cutting, we are putting high probability on the july meeting. I dont like that is a tactic. Say that we are not going to do something this time but dont worry, we will go next time. I dont like that is a tactic. If you think the are the conditions are right today, do it today. Do you like an element you are putting high probability on the next meeting. Not now, maybe next time. Its very unclear what kind of data the committee would be expecting to get during the intermeeting. That would leave the decision to go one way or another. I grant, a lot of people are waiting for g20. Are lot of people now talking about a 50 basis point cut. Are you on board with that . Today, iitting here think 50 basis points would be overdone. I dont think the situation calls for that. To do 25e willing today. I hate to prejudge meetings. Things can change by the time you get there. If i was going today, thats what i would do. Nejra that was kathleen hays. Hour isus now for the our guest. Great to have you with us. You forecast the fed is going to cut rates twice this year by a total of 50 basis point. But on two different occasions. Pointould be the point doing 50 paces points 20 fear . Would that lift fears . Its an insurance policy. There are two elements here that the fed is concerned about. Rates a fairifted bit this cycle so far. We are still at 2. 5. Thats not a lot to cut in case of a proper downturn. We do not yet fate face that issue. The second issue is about Market Expectations and the relationship is incestuous. If the fed cuts by a lot, that might panic the markets. The fed is worried that something is going wrong. I do not see that in the data. 25 basis point cut, suitably dovish guidance. As long as the economy doesnt get much worse from here, we would see another cut in october. Manus take a look at this. This is the fed rate cutting cycle. This is from one of my colleagues, Tracy Alloway in hong kong. If the fed cuts in july, a will be unusual. Financial conditions are already use loose. They are looser now than it intime of any first race cut rate cut. My question to you is this. With the july rate cut of 25 basis points be the unpacking of the policy error in december . That actually wouldnt be a bad way to look at it. Remember, when we think about how tight financial conditions are, i consider more the macroeconomic viewpoint. Real Interest Rates in the western world are lower than they were in the past. If we have fallen Inflation Expectations, that would point to tightening real Interest Rates. The fed probably needs to adjust rates downward. Did the fed get ahead of itself over the last year . Perhaps. The fiscal stimulus probably had a bigger than expected impact relative to u. S. Potential growth. From here on, its hard to see whats around the corner. The fed is also pretty concerned about what the yield curve is signaling. If you take the short end of the curve down a little, that probably takes the signal out of the bond market. Is, i dont see a good reason why the u. S. Should have a recession. It is mainly showing midcycle characteristics. Riskse lots of political which are now affecting the u. S. Economy in a way they were not two years ago because the fiscal stimulus which no longer exists was working as an insurance policy. Nejra beyond 2019, what is it going to look like for the fed . Do we started and easing cycle with more rate cuts the on 2019 . Is there tinkering around the Balance Sheet . How do you see that evolving be on this year beyond this year . Sitting here, we bring rates down 50 basis points. From there on, things are ok. That is what the fed is signaling. History would suggest, the fed starts to reduce rates to a much lower level. I make the case that what we face are political risks. Trade war issues. Lyrical risks in europe. China has the firepower to arrest a slowdown. Whynt see any good reason the u. S. Is ready for a downturn. There are no excesses. 50 basis points here might be enough. Lets see. The data has surprised me to the downside over the past 12 months. If that would continue, the fed would react to it. Manus how worried are you about the consumer,s desk confidence Consumer Confidence . 2017 on theince present situation. Jobs are getting harder to define. I get worried when i see Consumer Confidence just taking a knock. I completely agree with you in the sense that for the u. S. , or the u. K. , for Major Economies in europe, it is a 70 of gdp. For the last 12 months as Global Conditions have slowed, it is mainly an industrial sector issue. Export oriented firms. Whereas the consumer Domestic Services remain firm. We are seeing a knock on Consumer Confidence in a way that is prompting Central Banks to be dovish. That centralitions banks can affect. I will be watching the data over the next few months. You might find that the signal from the Central Banks may boost domestic financial conditions enough to arrest a major decline in Consumer Confidence. It might make you chuckle, i used to have a corporate treasurer at one Major Corporation in europe. She focused on flat back sales. Guest stays with us. News flashesrd ready. Overwhelming force. Thats a President Trump threatened iran with if it attacks the u. S. To flarecontinue between the two nations with the president even warning the Islamic Republic of obliteration. Last week, he canceled airstrikes against iran for shooting down a u. S. Navy drum. Oil could hit as low as 30 a barrel if china devalues the yuan. Thats according to the bank of america. It says deterioration in trade could be letting the currency weaken. That would shut demand growth. China may decide to ignore irans sanctions, resuming crude imports from the persian gulf. Opecs meeting next week will be key to the future of the groups production curve. They are set to expire with russia leading the calls for a leniency approach. Kazakhstans president about his countrys view on the opec plus agreement. We will be cooperating with opec. My point is, we want to be in full compliance with the opec plus agreement. Our commitment is very much strong. We are open to the international cooperation. Good cooperation with opec. Deborah global news 24 hours a day, powered by more than 2700 journalists in more than 120 countries. This is bloomberg. Nejra thank you. Coming up, putting the trade war on ice. Sources say they will delay the next round of china tariffs. All the latest from the trade negotiations, next. This is bloomberg. Manus is bloomberg daybreak europe. Seeing a decline for Global Equities. You are seeing that reflected in asia following what happened on wall street yesterday. Much,s in one go is too from james bullard. The new Zealand Dollar dropping. The Central Bank Held off easing rates. Oil higher, up 2 . It has been jumping on geopolitical risk. This is more the stockpile story. Falling u. S. Stop oils. Stockpiles. Manus you talk about the large comments. 50 would be a panic. 10 year yields dipped bit to death below the 2 . If you think we will have an implosion at the g20, you want to belong treasuries . S p futures, 29, 21. The biggest fall yesterday since the end of may. The markets are worried about this economic downside that powell flagged. You havent seen that on the mega wall for a while. Shes flying high, the highest since january. If all else fails, a bit of bitcoin. Thats the question to ask for yourself for the weekend. Debra mao has all of your Bloomberg Business flash news for you. H2o Asset Management is hemorrhaging money. They lost over 5. 5 billion euros in four days. Its biggest ever single day drop on monday. They says now net outflows have slowed since then. Its a remarkable reversal of fortune. Week, they had defied a slump in the industry and saw stellar returns. Fedex says 2020 will be a transition year. It season improving outlook for ecommerce. The company has already made progress with revenue per package up over 2 . That is tempered by concerns that trade tensions will worsen. China is considering adding the career to a list of socalled unreliable entities. Clearly, we have been very disappointed over the last few years with the assumptions that we made on the growth and international trade, particularly with the trump administration. Debra tesla could be about to set a delivery record. Elon musk says the electric carmaker will need to go all out but could it in an alltime high in quarterly deliveries. The companys previous best was over 90,000 vehicles in the last three months of 2018. Thats your Bloomberg Business flash. Manus thank you very much. Sources say that the u. S. Is willing to suspend the next round of tariffs on 300 billion of chinese imports as President Trump prepares to discuss trade at the g20 this weekend. That takes us to our mliv question. You can join us on your ib. Is it inevitable, the next currency war will begin at this weeks g20 . Join that debate. The mliv team is there. , weguest host this morning trumpl focused on the xi trade discussions. Inherent in that trade discussion is the fx dynamic. The chinese will try to hold the want stable into this meeting. Ofs is the foothills currency wars. Trump will drive the dollar to the center of the g20 debate. Do you think that that is a correct estimation . The yuan is on the agenda. Probably actually its overvalued. If you asked donald trump, he would say that the dollar is overvalued. Take that in the context of trade skirmishes. It looks very weird indeed. Probably that will happen on the sidelines. What we should be focusing on is whether or not the tariffs on china will be delayed. Id say this is for donald trump and markets, the moment of truth. He knows from his friends at are bad andthings markets. People are worried about the Economic Outlook. If donald trump wants to take a good economy into the 2020 election, now is the time to give up on trade to lift the risk out of things a little. If things go badly wrong, we could be panicking on monday. Nejra you say the yuan is a managed currency that needs to depreciate further. Will it . Probably not this weekend. It would be very difficult for me to imagine a situation where donald trump asks china to buy more u. S. Staff and simultaneously china devalues the currency thereafter. The point we make, chinas potential growth is slowing significantly. Currentll below reported rates of Economic Growth in china. That means that if the yuan at its current rate reflects the 6 target for growth in china, it is an overvalued currency. If you think that real potential growth is lower than that. The yuan is much lower than that. Manus briefly on that. Base case,at is your why are we not seeing more pboc speculation . It is not an independent central bank in the same way that the fed or the ecb is. It is part of the broader political infrastructure in china. Imagine a situation where the yuan were to significantly devalue and of trade negotiations with the u. S. That would be a pretty bad idea from the chinese. They do generally want to avoid a fullblown trade war with the u. S. They are treading very carefully. Nejra how much will it weaken over time . Our guest will stay with us. The race to be the next u. K. Prime minister intensifies. We will discuss. This is bloomberg. This is bloomberg daybreak europe. I am manus cranny in dubai. Gone 9 30 in the morning. Warm ortion is how panicked are the members sitting on the seats of the Federal Reserve . When you have the most dovish member saying that, it is no stronger you saw a dollar. A note through this morning. They dropped by 30 . Levels, global yields you saw in 2016. There is so much priced in in terms of expectations, isnt there . One question for me, if you get the fed moving 25 basis points, what exactly is that going to achieve . Going to make a difference to growth and inflation . Kelly saying the biggest concern is when you think about higher tariffs, he says that is not going to work. The one thing we havent heard enough about, maybe we should hear more about, Balance Sheet. The adjustments there. Those are the factors. Brexit next. We can never have enough of the fed. In mumbai. In london, Annmarie Hordern is standing by. It looks like or sounds like there are newsmakers in india and we are seeing the effects of those names on the broader market. Yet yes, i could get half of your question. Let me address how Indian Markets are looking. They started off well. Not much happening i was hearing you, they are talking about the centralbank action. The Indian Central Bank will be very dovish. Equity markets, flat. The start has been flat. Likely to continue. Always breathe life into these. What exactly are you focused on . We are seeing a lot of pressure across asian equities. Down. S nikkei we are seeing weakness as well. A lot of this having to do with june,s. Dollar, up since 2017. Commodities, i am looking at crude. Up nearly 2 . This adds more fuel to the rally and changes the direction for the market. Looking at the u. S. Dollar, looks like donald is targeting the dollar. Believes it is too strong. Point. May have a it is 2 below. The record in 2002. This is likely going to take center stage as well. Not just at the g20. You can see it become an issue stateside. . You know what the last couple of guests chastised me. You work on that. Set you up for our agenda. This is how it looks. Hisfrench president making first visit to japan. Brussels, you have the nato defense ministers holding their latest meeting. The increasing tensions right here in the persian gulf. Bank of England Governor Mark carney and his colleagues testified. They will discuss Monetary Policy and the inflation report. The German Cabinet discussing budgets. We are expecting cuts of around 3 billion euros. Of two democratic primary debates. We will hear from some of the contenders looking to take on President Trump in the race for the white house. No deal once again. Hiss johnson has toughened pledge. His rival says the strategy is flawed and could lead to a general election and defeat at the hands of jeremy corbyn. Listen to Boris Johnson theerday, he was saying brexit deal is dead. The implications being he thinks he is going to be able to renegotiate. What are the risks of that happening . In the brexit deal. It is pretty slim. In the major components. How much the u. K. Is due to pay. The future Prime Minister may be able to renegotiate. That is what the future relationship looks like. On the condition that terms are accepted. How much closer are we . Become pm, deal or no deal. How much closer are we, given the reluctance in europe to renegotiate . How much closer are we to a hard brexit . Have a 35 chance. Is thenotice conservatives are sliding badly in the polls. The brexit party absorbing almost all of that. The new leaders think it makes sense to take a hard line on brexit. Keeping in mind it is the default option. Jeremy corbyn is the glue that binds the conservative party together. If they dont think they can win an election, it is a big bet to say conservatives could threaten to bring them down the government. Forestt depends on which we get. Assuming he becomes Prime Minister. Is there anything markets can hang their hats on . To make bets on the pound, whatever. Boris johnson may be a positive force. He is not an ideologue. Own interest. His he would try to avoid an economic problem that could result. The eu would one the u. K. To past pots of the withdrawal agreement. Im not sure he has made his mind up yet. And brexiteerss pinning their hopes on Boris Johnson. He will try to avoid a hard brexit. He is a genuine hardliner. My bet would be he has the credentials to convince his party to pass the agreement on the basis he would see to it the u. K. Will not end up in the customs union. We had to guess the other day who said they feel the best way to play these markets is to step in steady. Jp morgan, 43 . Can step intoou sterling and this time . Sterling or cable . Brexit in my view is an issue for the longterm potential growth rate. Would put in above 2. 1 percent. There is a huge range. Undervalued if the u. K. Can avoid a hard brexit. They willconfident definitely avoid it . No. Those risks are rising. Stay with us. Much more to get through in terms of market risks. Texasg about risks, the sought the biggest drop in assets. Before the most recent crisis, the asset manager had defied a slump with stiller returns. Now there are concerns about holdings. With the timeline, dani burger. Have seen low Interest Rates and centralbank stimulus that have caused fixed income managers to feel the manage pressure, turning to get yields. Less liquid assets. Push is partially what was behind tim haywood and his demise. Hisrs said some of investments were done without due diligence. More recently, we have had investment empires brought to their knees. He had a heavy waiting and companies that were difficult to sell. We get to this most recent crisis. Fund heldorted the more than 1. 4 billion euros of bonds. Entrepreneurrman with a german entrepreneur with the history of troubled investments. After that, star suspended its reading in the allegra fund, citing concerns about the liquidity. By monday, we get this massive number. 6. 4 billion dollars in outflows. Leaving the fund. Plunged 14 . Shares one of the biggest funds under pressure, this is the estimated cumulative flows. You can see flows for most of the year. More than one point one billion euros polled. Recognized remains who count themselves among the hot fund managers. Ledthese managers had pul money out, it is not reflected in these numbers. I do want to point out who is sitting at this spot. More than 13 Million Euros invested. Wax thank you so much. Look at a situation like this. Is it something economists and central bankers should be concerned about . Beeconomists should concerned about liquidity and markets. Of a euphemism. What we are really talking about is our collective will to take assetsrisk equities and present. We are optimistic about the future. Interesting, we talk about liquidity in context of Global Equity markets. I dont see any irrational exuberance. I can relax as an economist. When the issue becomes a problem if 23 months down the line, markets start to worry about recession. That is why banks want to decide we want to be a backstop to this. Debt that is a legacy of the financial crisis. Centralcause banks can avoid that. We maynot there yet but get there eventually. Losing 2. 6of this, billion euros, do any of the moves, does any of this act as a warning flag to regulators, go back to 2008 . Bear stearns . Is any of this at the torch paper level of 2008 . Or standard isolation. Anythingt see specifically. In general, i dont see the systemic risks across the economy that would mean if one part of the economy were to fail badly, the rest would fall as a result. We had a kind of house of cards, a big jingo problem. A problem and corporate bonds, that is fine. I dont know why others should be affected. Bit of to have a little a positive sort. Staying in the hot seat, coming up. It is the midas touch. Gold rallies to a sixyear high. We will get into that conversation, that is next. This is bloomberg. This is bloomberg daybreak europe. A business flash. Debra mao is with us in hong kong. Set ala could be about to delivery record. Elon musk says the carmaker will need to go all out, but could hit an alltime high in deliveries. 90,000vious to best was vehicles in 2018. Will be a 2020 transition year. It sees improving outlook for ecommerce. The company has made progress with revenue per package over to percent up. That is tempered by concerns trade tensions will worsen. This as china is considered adding the carrier. Very have been disappointed with the growth in international trade. Particularly with the trump administration. Bloomberg your bit business flash. Gold taking a breather after soaring to lay sixyear high to a sixyear high. It is not necessarily bearish for boolean according to goldman sachs. An improvement in Economic Growth could lower fear driven demand. It will be offset by a positive effect. Joining us from copenhagen, great to have you. The goldfurther does rally have to go . In the context, we have been trading sideways for five years. Say the nexte to five is theis 1485 next technical level. That is the kind of territory we are into now. It is good to see you. One is about the fed, getting ready to cut. A lack of inflation. Outright fear in the market. Give me the proportions you which riveted to come a 100 . A look at what breakoutse have seen in both directions. Rates. That will continue to be the key. Addedllar weakness additional dimensions. We need to see the rates coming lower. The dollar is crucial for you. Technicallking about levels. You look at positioning, allocation levels have not reached extreme levels. Is that another case to be made . Is plenty of room for buyers to enter. I am worried they have seen these numbers in a short amount of time. We are seeing the results of that. To cometaking starting , the barrier for now. We saw the risk reversal and the option market. It is 4 . Indicates how bullish they have become. Lets look at the support before we move higher. Buying people are secondhand rolexes, it is time a host of reasons. Fore is an escalation geopolitical conflict. A plateau atcs at the moment . Is the price hitting a plateau . Manus, someoned, saying that is a risk. If the trade war escalates, there is a risk up to 100. If the military conflict escalates. It is quite violent to navigate at times. Has narrowed the last couple of days. To the stock levels, coming down. The second week in a row. The blowout of the refinery on the east coast. Poll is coming from wti. I think we have a plateau. To seent be surprised 70, only if there is a conflict. In that demand growth, the flip side, bank of america and Merrill Lynch saying oil could yuan. F china devalues the how much of a polkadot have in russia cannot control demand. Return, for demand to we need to see a price as low as possible to attract additional demand. See a price drop to that oil players will start to have some problems. We have to leave it there. Viennaee what the meeting brings to the table. Table. Round up at the the head of commodity strategy. Flying high. Brent crude trade, up 1. 7 we will talk more about the fed. Saying the Downside Risks to the economy have increased u. S. Stocks for the most in three weeks. We bring you our exclusive conversation. Good morning. Nem never a chair rich jra. Are the top stories. Curb. Asias stocks lower after jay powell sites Downside Risks. James bullard tells bloomberg exclusively. Downside risks. A count of 25 basis points is sufficient. The u. S. Considers further delay in china terrorists. Jumped as itron resumed some while way shipments despite the ban. And a liquid problem. Deepen as euros in assets evaporate. A. M. Is 7 00 data breaking in germany. The Consumer Confidence. German Consumer Confidence coming in weaker than expected. The euro not really reacting. Looking at european equities, it looks like a fourth day of declines. In the s p 500 seem to be driven by the fact that Jerome Powell did not go much further than the last meeting. Bits cut would be a little too punchy. Equity markets reacted to the downside. We are seeing a bit of a turnaround. We are plenty flat now. Europe playing catchup. It looks like we could have a down day. Ask,e question we have to did they try to pull back the steam train . The market has pushed and shoved . Bonds are lighter. Treasuries at 127. You are seeing a drop. The market is irked by that. I thought with bullards comments in terms of not being in a position, 50 basis points, trying to pull back what someone call irrational exuberance. Reducedamerica, they the yearend target. The yield is down. 4 . Down 16. Headline, the eu and italy. 2020 may condemn italy to sanctions. Those sanctions could be lofty in terms of repercussions. Wider markets in asia, Juliette Saly standing by. A second session of losses and asia. Wades down by what you saw on wall street, concerns about anything tangible between in osaka. Trump and xi the nikkei index closing out the session. Ship makers in both japan and south korea followed that trend higher. The australians share market closing lower, 0. 2 . Goldman cutting the outlook. Of a bright spot in india. Up about 0. 2 after a couple of sessions. Lets look at other asset classes. We have been watching the kiwi slowly. The best performing currency. It fell by about 0. 6 . Be anks like there could 80 chance of a rate cut in august. Excitement in the japanese 10 year bond futures. Looks like a large contract went through. Of that groundt now. Watching the thai baht. An interest Rate Decision. It has been holding at a sixyear high. Thank you very much. Juliette saly with the rest of the markets. To europe and u. S. Equity futures. Jerome powell warned about the rising threats. Council of the foreign relations, he said the week Economic Outlook was stoking concerns. Cross currents have reemerged with progress turning to uncertainty. Data raising concerns about the strength of the global economy. Pricing inhave been a reduction of 50 basis points. Waterbullard dumped cold on those expectations. Ask inflation is running below target, which is surprising given the economy has surprised on the upside over the past two years. Have been strong. In employment at a 50 year low. We are looking at inflation running below target. Expectations deteriorating. Growth still ok looking backward. Looking forward, at looks like a slow down. Yield curve. Seems like a good chance to make insurance rate cuts and recenter expectations back at the 2 target. Saying, of people are you have the g20 meeting this weekend in osaka. Could you have waited to see what happens there . What if there is a big positive surprise . Would it have been more prudent . Recenteringf expectations is not that dependent on what happens in osaka. The u. S. And china embroiled in trade disputes. Eventould not look to one is putting an end to this. I think it is going to be an ongoing uncertainty. About futurenty trade arrangements. The parties are disputing how they should be arranged over the longterm. With inflation running low and expectations running low, the economy is looking to slow down. Seems like you better get inflation back up to target while you can. Cutting, i love my fellow committee members. We are putting high probability in the july meeting. Generally speaking, i do not like that as a tactic. Say we are not going to do something but we will do it next time. If the conditions are right today, we should do it today. Kathleen hays, exclusive conversation with james. Joining us with catherine doyle, we saw a little bit yesterday and the equity market. Equity markets right now, pricing in anything more than one cut . The market is baying for rate cuts. A couple of cuts currently priced in. Become somewhat addicted to easy money. The fed is in a tricky position. We saw in december what happens when there were kind of fears the market would not get what it wanted. Spooked the fed. They changed to a much more dovish stance. Which has given additional fuel to markets. The rate cuts, more accommodative stance, will have the desired effect remains to be seen. Ising off the addiction always critical. Eventually, the music is going to stop. The music has certainly stopped in the earnings aside. Global earnings downgrade. To a certain extent, equity you share this doom and gloom earnings will drop . It is outpacing the most against upgrades since january . What we can say is, we speak to lowball management. Outlooks for these companies is cautious. That gives us cause for concern. We have been in the goldilocks scenario. That is going to feed through to weaker earnings. When we had gina adams, a lot of the runup we saw and equities has been a hunt for yield with bond yields as low as they are. How much further does the rally have to run . Rally has been driven by this kind of hope around the fed. Yes, there has been a hunt for yield. Been benefiting from strategies within our portfolio. Hope has been built into what the Central Banks will do. This is implicit from the Central Banks. There is a feeling this can carry on. It has been going on for a very long time. This sort of merrygoround of qe. Some of thathdraw stimulus. One could say we are living state ofetual irrational exuberance. Day, theusiness juxtaposition between tariffs and Central Banks. Take a listen. Think,oncern is people higher tariffs, the threat of higher tariffs can be offset by lower rates. But the day today tells us is this is not going to work. That is him telling the truth. Prospect ofve the higher tariffs. Central banks are not going to be able to undo everything that the done politically tariffs are somewhat been used as an excuse to justify lackluster growth. Is an easy sort of justification for disappointing data. We would contend that data has been deteriorating for some time. Europe where the growth has been sluggish and there has been a lack of inflation. Thank you very much. Stay with us. We have a little bit more to get to. News, debra mao standing by in hong kong. Overwhelming force. That is what President Trump threatened iran with if it attacks the u. S. Tensions continued to flare with the president morning the lives law make republic of obliteration. Islamic republic of obliteration. As 30 a hit as low barrel. That is according to Merrill Lynch. That would china may decide to ignore iran sanctions. Theming imports from persian gulf. Clean Energy Supplied more of americas electricity then coal every thats according to data or april. Solar panels and Wind Turbines generated almost 68. 5 megawatt hours of power. The most clean energy the u. S. Has ever made. Will beeeting next week key to the future of the groups production curve. They are set to expire with russia leaving the calls for a wait and see approach. We spoke exclusively to kazakhstans president for his views. I will be continuously cooperating. Compliancebe in full with the agreement. Our agreement is strong. We are open to the international cooperation. Cooperationave good with opec. Global news, 24 hours a day. Powered by more than 2700 journalists and analysts. This is bloomberg. Thank you very much. Fourweekmped to high. Are continuing to shrink according to a report. It is driving season, or is there Something Else constricting the inventories . It is definitely driving season. Fourth of july in the u. S. Right now, the market is focused on the report we had yesterday. The American Institute of 7. 5 millionying barrels less is what we saw. That would be the biggest the klein in three months. If we have this data confirmed. Is clearly shifting gears, focused on the supply side. That fueled the rally. Morning,mentioned this sitting out saying whale climbed by 10 a barrel. Given an escalation of what is going on in the gulf. Barrel in crude. On the flipside, bank of America Merrill lynch they say it is not crazy. On trade and the fact it could fall to 30 a barrel. They are thinking President Trump may decide to raise tariffs. Like what he hears out of the g20. That may mean chinese authorities may allow the yuan to weaken. That, will the chinese start importing crude from iran . They could see oil potentially at 30 a barrel. Interesting which report you want to look at. You have to look at it all, havent you . Coming up, putting the trade war on ice. Bloomberg sources say the u. S. Set to delay the next round of china tariffs. This is bloomberg. It is 7 21 a. M. In london. This is bloomberg daybreak europe. I am manus cranny and dubai. Bloomberg sources, we have been speaking to everybody. The u. S. Is it willing to suspend the next round of tariffs in the next round of tariffs. My question of the day is straightforward. A globalvitable currency war will begin. What is a modern currency war anyway . Doyle. Sk catherine trump likes to job own the dollar. It has had a magnificent run. What would a modernday currency catherineike to doyle . I think it could look pretty ugly. Banks, they want to have week currencies. There are tools that can be used. In our portfolio, we have gold as one of the reasons why, a real asset that cannot be. Anipulated by Central Banks that tells us something about how theyrencies and you areed as a still cautiously provisioned. Cautiousd change, that positioning, for you . Since the beginning of the year, when we have seen some weard momentum in markets, have had to adjust the portfolio tactically participate. Our view is very much, it is longterm. About the longterm Structural Forces coming to bear. The fact there is such a broad indebtedness. We have an aging population, which is going to have a dampening effect on growth. Fromre seeing disruption areas like technology. As well as a financial iced that view is not going to change overnight. These are longterm reviews. Because of the more dovish , we decided to tactically participate in little more. Gold has been part of our portfolio for some time. We will continue to monitor the level we hold. Through twoo get big topics. They love their hedge into the volatility. They love treasuries and a little bit of cash. Can you answer that before we talk briefly . Would you have a little bit of duration going into this time . Held treasuries in our time. Ourndirect hedge against risk assets. Absolutely yes. We have been trimming. Made good profits increasing our cash. During the Global Financial crisis, when things , cash is king. You need that liquidity to move quickly and take advantage of undervalued opportunities. It is the ultimate way to be nimble in a portfolio. There you go. Very says synced. Rich content. See you very soon. No returns. Off to load up in cash. What are you up to . You are coming to london soon, manus. Coming to buy you breakfast. The european open is up next. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Anna good morning. Welcome to Bloomberg Markets european open. We are live from our European Headquarters in the city of london. I am anna edwards alongside matt miller. Matt today the markets say curb your enthusiasm. Asian stocks mixed and european futures down. Cash trade less than 30 minutes away. Anna easy does it