We saw was escalation of the trade war with the latest move being china fixing above seven last night. That is trading at 7. 10 now usdcnh. For adding to the downside, it is the internet and Home Entertainment index in the s p 500, the worst performing group right now. Electronic arts, take two interactive, and Activision Blizzard after the president talked about reframing violence in society, specifically encz and video games as part of the problem specifically mentioning videogames as part of the problem that led to the mass shooting over the weekend. He also condemned white super messy for the first time. The tenured you White Supremacy for the first time. At 1. 77. Ar yield guy lets get back to the china story. China letting its currency go through seven to the u. S. Dollar. Thats a big line in the sand. Has been for a long time. The chinese have never really gone there, not since 2008, and certainly not in the duration of this trade war. However, that has now happened. Spring in hans redeker from Morgan Stanley, global head of foreignexchange. Good afternoon. Have the chinese now officially weaponized their currency . You can look also at the trade index of the renminbi. It doesnt look as dramatic as dollarrenminbi terms. It is an event which has the impact on the market. You are absolutely right. In the past, the renminbi tried to contain volatility, and that now, the result is that you create a dollar of two worlds. You have the dollar which is very weak against the japanese yen, a dollar which starts weakening against the euro, and then you have the dollar which is getting strong against emergingmarket currencies generally, and in the past few days especially against highyielding currencies. Been using the yen and the euro, and may be other low you currencies, for funding purposes in highyield suppositions. The reduced starting point if that was set by the escalation of trade. The starting point was set at the ring and be at the renminbi. Guy is this no longer a trade war . Is it now a currency war . In some weird way, is that easier to fix . You look at the plaza accord, the appreciation of the dollar. If with think about it from the currency perspective, could this actually be resolvable . Hans we need a weaker u. S. Dollar to relate to the u. S. Economy. You just need to look at g7 inflation rates and how they moved along with the u. S. Dollar, so not just the u. S. Inflation rate. You will see that the weaker u. S. Dollar is killing inflation everywhere else. The reason why that is happening is that the u. S. Dollar is dominant Global Funding currency. What we have seen in the past couple of years is that the global trend of corporate profitability, especially within the emerging markets, you have dollar funded entities. This profitability was declining. At the same time, the fed kept on hiking rates. I think the fed made a policy mistake. It provided us with a two strong u. S. Dollar. You could argue that this was promoted by fiscal policy in a procyclical way. That has created an environment where the u. S. Dollar is too strong to deal with for many, and we need to get that dollar lower. That is going to be helpful. I hear that people are saying, what about eurodollar and the trading situation . One thing to bear in mind is that 80 of the bank funding provided for global trade, 80 of that is in dollars. So the dollar goes up. That means that trade is going to suffer. Now 80 of trade is in manufacturing. That means when the dollar goes up, you basically reduce manufacturing demand. Others by it in germany, and holland, in other parts of europe. That is where we are seeing those economies most weakening. Have a muchneed to lower Euro Exchange rate, you are right in index terms, but completely wrong when you suggest that you want to have a stronger dollar on the back of stronger dollar on the back of that. A stronger u. S. Dollar is actually poison for the Global Economy. Vonnie hans, at what point does this selloff become disorderly . At what point does it cause a real headache for the likes of the Federal Reserve . Hans i think we are far away from disorderly Market Conditions. We have to also consider we have been in an environment a very low volatility. The Federal Reserve is looking at data as they come into the United States, but at one point it will have to acknowledge, as our economists do, that the data which produce outside the United States have a sort of boomerang effect. They are hitting the United States in the back. You can see that capex in america is in decline. People are adjusting their expectations on capital expenditures. They are promoting their cash flows. That is typical for an economy which is moving from good performance into by far less good performance. When you look at commercial banks in america, they are increasing their Bond Holdings at a significant pace. Why would you do that at a commercial bank when you think the economy is good . When these banks are adding to their bond exposures, it cannot mean that this economy is good. Vonnie if and when there is a slowdown, hans, where will we see eight in the economy . Does it come isough the jobs channel, or it Corporate America with declining earnings, eventually leading to layoffs . Hans it is a supply driven decline. You see all of the supply rated indications that the u. S. Economy are in heavy retreat. The last thing is on the consumer side and in the asset market, but when the economies are slowed, labor Market Conditions can change very rapidly. So far we havent seen that come about what we do see is that capex is in a sharp decline see is thatat we do capex is in a sharp decline. Maybe you go back to 1999, an economic slowdown which was coming from the supply side of the u. S. Economy. Guy can the fed engineer a soft landing for the u. S. Economy . Hans if they would have cut for steve basis points have cut 50 basis points at the guild level, they would have a Significant Impact on Inflation Expectations. The longer you wait, the more you allow bond yields to decline further, the more you have a problem with Inflation Expectations. I think if the fed does wait too long, they could run into a japanese problem. Guy how many rate cuts between now and this Time Next Year . Hans i think we have to also think about what is currently priced in, what the market wants to see. I think at the moment, it looks like what the market wanted to see is a bold right. What happens if the fed does not deliver according to the market . We have seen that last wednesday. We have seen that financial conditions are tightening. You see that the currency is going into flatter territory. When you look in the United States, you should not do the mistake and say, this is reflecting Capital Imports into the United States, and therefore you can dismiss it. When you create a yield curve for the developed world, the curve isveloped yield flat and inverted. That actually tells you that within dm, there are significant changes taking place in the market supply of capital. What you have is that demand for capital goes down, and supply is falling, and the curve goes into inversion. That is a big signal. I think that the equity market so far has been ignoring the signal. Theres a reason why Morgan Stanley has been bearish on the equity market. They basically said that when youre looking at earnings, when youre looking at beating a very low bar for the Second Quarter, you need to look into what do the same comedies which are beating in the Second Quarter the same companies which are beating in the second, what do they tell us on outlook for me . Nings in a full year ti it is typical for a supply activityme in economic supply driven decline in economic activity. When you are getting hit from the supply side, then the labor market stands in between, and the consumer does weaken, too. And i think that is going to come. Guy we were making some very interesting points on that data just a few days ago. Hans redeker is going to stick with us. Vonnie 30 stocks in the dow are lower right now. The index is down more than 2 , just about 2 . Stoxx 600 also lower. We have a selloff across all of the major indices here and in europe. The nasdaq the worst performer down 2. 6 . the 10 year yield at 1. 77. This is bloomberg. Guy from london, im guy johnson. Vonnie in new york, i am vonnie quinn. This is the european close on bloomberg markets. Lets check now on markets. Emma chandra has the check. Emma we are deep into selloff territory. U. S. Majors close to the lows of the session. The s p 500 down around 2 . Bigger losses for the nasdaq. Tech stocks are heavily exposed to china, and trade fears that are gripping the market today not just in the u. S. , but also in europe. This is the stoxx 600, head into its worst today loss in around three years its worst two day loss in around three years. On this function, you can see every sector in the red today, led by tech and communications. That includes the likes of facebook and google. Also, the financials and consumer stocks are deeply in the red. Even the defensive come of the likes of utilities, down around 1 10 of 1 . The s p 500 is headed to a sixth consecutive decline, the longest losing streak for the s p 500 since october of last year. When we look at the big laggards, apple a big weight on the u. S. Majors, taking about 60 points off the close to 600 point loss for the dow jones today. Also, looking at macys falling around 6 today, trading at a november 2017 low. Its market cap now close to billion. A new round of tariffs set to go into effect in september. Sixday losing streak. Finally, i wanted to take a look at the pound. The focus on the trade hasnt taken focus away from the fears of a no deal brexit. We are looking at it over the course of this year against the dollar, down more than 6 today. Standard chartered saying that in the event of a no deal brexit, we could see the pound fall to on. 15 against the dollar 21. 15 against the dollar. 1. 15thank you to against the dollar. Guy thank you. Hans redeker of Morgan Stanley is still with us. Are we going to get a different and greater policy reaction . If they go in on december 1, what do i get from the fed . The reaction function is changing, basically. Hans theres also recognition that global trade is important. I described that earlier. On the other circumstances, the fed is going to have a very good debate internally what to do with that information. The likelihood that they are going ahead with another rate cut is superhigh, but again, the market is already ahead of the fed. If you go by 25, you would have another disappointment. Im not going to say the fed should always follow what the market is going to say, but we are in an environment where you need to consider that Inflation Expectations are normally low. Of course, a lot of this decline, even inflation expertise and have been imported Inflation Expectations have imported. You have to take that into consideration and think about, what does it do to my headline inflation . Understanding that in the long run, what drives core inflation is actually headline inflation staying long enough at a low level that you have core inflation rating. In 2013, the ecb was saying inflation expert patients are well anchored. That was the headline when inflation was falling rapidly. A year later, they had to acknowledge that Inflation Expectations were no more anchored. When we will see a similar situation in the United States, you will have to think what to do. The fiscal policy seems to be exhausted. That means there is Monetary Policy required. If you are generating a weaker u. S. Dollar, it is going to be helpful, especially for those that have dollar liabilities. We have seen the numbers today out of ubs talking about interbank dollar liabilities of 11. 8 trillion u. S. Guy are use adjusting the ecb should do nothing . That the ecb should target a stronger currency . Hans the ecb is all about messaging. But when you ask me what is the result of that policy, cutting Interest Rates, going into additional qe, what really matters is demand. When you think you want to become more competitive, when youre competing more competitive but there is no demand for your products because nobody is buying any manufacturing goods, then you are not reaching very far. That is what i am saying. We have to think about how we are going to support global demand. So what can we do here . I think the best way to do that is to put the emergingmarket environment on better footing. That is, for which we require a weaker u. S. Dollar. Weaker is something in the region of 6 to 7 . Then i think you have a reflate andomy, a steepening curve, you can think about higher asset prices. But in between, you are not seeing that. You will have more deflationary pressures. Just look around in china. At what rate in our currency terms do you currently see china factory prices declining . They are not rising. They are actually declining. Of course, you would say they are not delivering into the United States, but what are the chinese doing . They are delivering it to somewhere else. That means it is going to plumb up it is going to come up as global deflationary pressure. Vonnie what are your favorite pairs . Has that changed in the last couple of sessions . Hans dollaryen is very well, doing ok. In the next couple of days, there will be a little bit of correction. I would consider still that trade. The next thing is when you consider a lot of these carry trades have been funded out of euro, if you wanted to have a d itioninging a depos trade, that takes the euro up above everything. The british pound is actually not trading that weak against the u. S. Dollar. The weakness we really see is eurosterling going massively up. The reason why is that sterling is a political problematic currency, while on the euro side, you have seen a lot of funding going through that currency. Now there is no reason to sition on two depo the euro side. Vonnie the pound could trade up 1. 10. 1 and what is the likelihood of that . Hans that is actually the worst case scenario. You have to also consider that if we are getting into a an understanding on european destabilization, then it is going to do better. But we have too many uncertainties. You have an account deficit in the u. K. If you take recent gold it,sactions and distill that actually means that you need to bring in capital on a daily basis. Guy hans is going to stick around. Hans redeker, Morgan Stanley global head of fx strategy. Vonnie remember the function on the bloomberg to moversu emergingmarket go on then emm < bloomberg to show you emergingmarket movers. This is bloomberg. Major indices are lower. The Dow Jones Industrial average down 2 , as is the s p 500. The nasdaq down 2. 7 percent. Just one stock higher in the dow today, verizon communications. Is almost at 22. I would point to dollaryen as 1. 0612. Trading at the offshore yuan treading now at 7. 0 915. Guy european markets trading on bigger volume today. We are seeing the ftse underperforming. The pound relatively stable, but gilt yields going lower. Feelsy, which normally the pain a little bit more, is not today. Ae dax is outperforming with 1. 5 moved to the downside. The cac down as well. Mh, very china exposed, are under pressure. The european closes next close is 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. 30 seconds to go until the end of regular trading in europe. What youre looking at is a sea of bright red. Equity markets downandout hard that is on big volume. The last few sessions have delivered decent volume. Ftse 100 is the underperforming. Mining sectors under pressure. A Global Economy story. On a day you would normally expect the dax to be under more pressure, it isnt. Down 1. 65 and had a tough session, nevertheless, it is europe that has suffered the particularrmany in that has suffered from the trade war. Take a look at the euro. That could be a reason why we are seeing strength. The cac 40 down 2. 05 . The names have exposure to the china story. ,vmh has been trading strongly but it does have a significant portion of its revenue stream coming from that part of the world and use the problems that have affected it. That is one of the major tracks on the stoxx 600 and the cac 40. Lets look at how the sectors breakdown and how investors are rotating. Product managers do not have a single sector to choose from in positive territory. You find it interesting combination in terms of the sectors doing well. Chemicals cyclical, utilities, that is a proxy. Bond prices doing well. Heres interesting. Auto parts down 1. 63 . There are plenty of other more negative sectors. Thanks trading down 2 . Hsbc is the story. Oil and gas trading lower. Lets the bottom end of the market, where we are seeing most of the weakness. It is an personal household goods, basic resources. That is how it is breaking down. That is affecting london and that is why london is underperforming. A few individual names to give you an idea of what is going on. I want to mention hsbc. Losing is ceo. Radical change looks like it is coming. The stock is down 2. 65 . Lvmh is trading down 4 . Oil stocks under pressure as well. Bp trading down 2. 47 . That is a look at a wild ride for European Equity markets. Vonnie it started last night trading chinese yuan at 7914. Quite a spread between onshore and offshore. That is guiding markets today. A selloff of the top of the session and that will only continue to deteriorate. The s p 500 down 2. 1 . One stock higher, verizon. The 10 year lower. 106. 11. At lets move to the next board. The mexican peso, another one of the currencies currencies across the board moving today. I thought iay would point to the Home Entertainment index off of the stocks that President Trump was talking earlier when he was talking about gun violence in america following the weekend atrocities. The gold index up 2. 5 . Guy joining us for more insights on the market is Kristine Aquino, editor for europe and still what this is hans redeker, Morgan Stanley head of Global Exchange strategy. Is it fair to see the markets did not see escalation in this way . Kristine no. The currency is seen as a weapon of last resort. We heard time and time again from china that they were not yuponize that you on the an, but time and time again that was based by a response of china being a currency manipulator. We saw china hit back in a way that is impactful and is catching a lot of peoples attention. It brings this impasse to another level. Guy is the other level we are now in a currency war rather than a trade war . Kristine it seems that way. I would argue a currency war is part and parcel with a trade war. They are two sides of the same coin. A big reason for the trade war in the first place was the opinion from the u. S. That the chinese currency based on its currency cap measures and its trade surplus with the u. S. It has been brought to the forefront because of what china has done overnight. Vonnie hans, where you see the yuan depreciating to . Hans what you have to differentiate between is the currency level and the management of volatility. Thathappened in china is since the escalation from the american side, they will have to change how is economy is going to be growing in the future. That means that the scale back from investment. They have to bring in more consumption. That is important, because when you look into our investment, you need to have funding. In the past the funding was generated by the investing Banking Sector and the Banking Sector under the management of 273 of gdp. If you continue to think about investment in a positive way, then you need to have Capital Imports. For Capital Imports you need to have low volatility and have an Exchange Rate which is more predictable. Now with this new environment, you may have to reconsider the way china is going to grow. That means scale back from investment, therefore you do not need that Capital Imports anymore to that extent. Therefore you allow the currency to depreciate at a faster pace. This adjustment between the Exchange Rate in the view of how you want to see the economy, mainly the difference between investment and consumption, that is crucial for the outlook. I think there is a possibility we go up to 730, but i do not , we go backher feel to levels we see in the 1990s up to 2005. Vonnie and in the spread between onshore and offshore. Does that widen and does it really matter . Hans it did not matter in the past in respect of measuring where the flow was coming from internally, externally. It was assumed in the past that when you have next journal he generally did low and externally generated flow is much more difficult to measure. Do you think we should now start pricing 50 basis points in september from the fed . Kristine that seems like the way markets are going. The conclusion is it will boil down to the fed again. We have seen this action from china, the reaction mechanism is usually President Trump saying something about rate cuts being needed. He has already expressed dismay from what we saw from the fed a couple of weeks ago in terms of the amount of rate cuts they did. All that boils down to expectations of moist easing from the fed. Whether the fed response is another question, but market prices are heading that way. The hans, when it comes to dollar, and i asked that question deliberately, i wonder what it takes . Would a 50 basis point cut from the fed weaken the dollar . And if that does not, what would . Are we heading to a point where global Central Banks and local governments need to get onto the same page. Hans you may remember in 2017 when the fed was accelerating the pace at which it was hiking Interest Rates, the dollar continued to weaken. There was a point people tend to ignore and believe we are in the old playbook. It was the u. S. Dollar used for funding purposes. That was the change starting from february and march. When you get 50 basis points, you are jumping ahead of the curve and that will have meaningful implications. When you have an economy which is still reasonably ok. Yes, it is weakening from the supply side, but the demand side is ok. You have a central bank that is going to implement easier monetary conditions. At that point, you are regaining control on the real yield levels in the United States of america. What you do under those circumstances, you are creating an environment such that we did see in sweden. In sweden you are easy central bank Monetary Policy. At the same time you have slightly higher in nation slightly higher inflation. The result was the the swedish becauses depreciating it was undermined by real yield levels. That is what is happening in the u. S. , and it would be helpful, it would be part of the recipe we have to understand a weaker u. S. Dollar will be helpful for many. Vonnie just a quick word on hong kong and whether the hong kong holds. Ive seen worse than this. To speculate against the hong kong dollar is not my business. I would not encourage that. Guy we will leave it there. Hans, thank you for spending so much time. Hans redeker from Morgan Stanley and Kristine Aquino from bloomberg. Lets carry on with the hong kong story. Vonnie thousands of protesters have moved to shut down the Asian Financial hub, leaving traffic stalls, and more than 100 flights canceled. Carrie lam is warning demonstrations and demonstrators are a very serious situation. She says the protest seriously undermine law and order. Lets bring in stephan engles from hong kong. How bad is the situation . Does it escalate or deescalate from here . An you mentioned the trade war between china and the United States has gone to a new level. I could say this protest is gone to a new level as well. The protesters are adapting new flash mob tactics, guerrilla warfare if you want to call it that and today it culminated in a number of different ways, including several different protests all around the territory, on Hong Kong Island, the main Central Business district behind me, including the Central Government offices and the office of embattled chief executive carrie lam behind me. Earlier this afternoon all of these grounds were teeming with protesters. Those flash mob tactics have moved them to other places. After the police confronted some more hardline protesters on the main treat just on the other side of the government offices here, there was tear gas fired, there were arrests made, but then the protesters moved to another area of Hong Kong Island to the east. A number of different places. More tear gas. We are even hearing rubber bullets were fired. Now they have moved other places , including where there was a fire reportedly set outside a police station. Now we are hearing they have in another spot. The guerrilla tactics have moved around. When the police come into crackdown, the protesters are on the move. On the flipside, they have done a coordinated general strike call. Theyve called first right at work, strike at school, strike at commerce. Commerce being the heart blood of this Asian Financial capital and they want to cripple it. Chief executive carrie lam spoke for the first time in a couple of weeks in saying these protesters want to ruin hong kong. Many of the protesters we have spoken to say we have heard the same thing over and over from this divine chief executive. There is no solution. The Financial Community in the towers behind me say what is the end game . We dont know. Guy is it a surprise to those people you talked to in hong kong that carrie lam is still in her role . There have been some business groups as well as chambers of commerce not necessarily calling for her to step down, but calling for some sort of action plan. Some have been calling for carrie lam to step down. She was asked that again this morning and she skirted the issue for the most part, but basically said she still needs to fulfill her responsibility to the people of hong kong, even though many of the protesters, that is one of their key five demands, not only to have this bill completely withdrawn and have an independent Commission Look into allegations of Police Excessive brutality, but again for carrie lam to step down. She has not done so and by all accounts, nine weeks into these protests, she is standing firm. Guy thank you ray much indeed for your extensive thank you very much indeed for your coverage in hong kong. Lets check for European Equity markets have settled. A little bit of the movement during the auction process for the ftse 100, but it is trading down. A big down day for the ftse 100. You are seeing some of the mining stocks not doing well. Hsbc a big factor in the market. Some of the gold miners having a much more positive day. The only stock on the ftse 100 finishing in positive territory. If you want to carry in the market coverage but you are leaving the office and getting in the car, you can do so. Jonathan ferro is in new york, i will be joining him in london. The cable show is taking to the air at the top of the hour. You can find is on dab Digital Radio in the london area and all of your bloomberg devices. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is the european close on bloomberg markets. Nvidia is one of the worst performers in the s p 500, plunging 6. 5 . Semiconductors fall under a new trade concerns. Kailey leinz is euros more. Kailey another bad day for nvidia, another bad day for semis. Semiconductor stocks are exposed wrongly to china. Broadly to china. For nvidia, china made up about 20 of the companys revenue. The other huge chunk of their revenue comes from the broader asiapacific and taiwan. These concerns represents about three quarters of nvidias revenue. That is why that stock is under pressure. If you look at semiconductors, the stocks index down for the fifth straight day. Index,ember of the sock including individual names like micron, all down 5 or more. In addition to these esoteric trade concerns about what ongoing tariffs could mean, we did get data from the Industry Association showing Semiconductor Sales were down 17. 7 . Those sales declines are accelerating and continuing our headlines that semiconductors were facing. When you overlay these trade concerns, it does not look like a good picture. Guy what else is being affected . Which other sectors are under pressure . Kailey several sectors are under pressure. As we see this rush out of stocks into bonds, deals are going lower. Also Industrial Companies like caterpillar and boeing, which are heavy exporters. You also think about caterpillar china follows through on purchases of agricultural imports. That could weigh on demand for caterpillar machinery. You see demand for semis all in the red today. Vonnie more on markets, next. This is bloomberg. 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. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is the european close on bloomberg markets. Bitcoin approaching 12,000 per coin. Lets bring in Bloomberg Intelligences mike mcglone. Luke kawa has an interesting take on this article. Mike becoming digital gold. It is differentiating itself from the other cryptos light gold is from the other commodities. The environment is positive technically and fundamentally. You see the fundamentals, there are low Interest Rates. 14 billion in negative healing debt. Up, idigital, it is going think we are seeing more institutional, signs of that for futures and manage money and things like that. Vonnie referenced what luke kawa said earlier on. He said chinese currency goes through seven, the chinese worry about capital flight, the chinese authorities have closed down vehicles for that currency flight. One that is less is Digital Currencies like bitcoin. This is being driven by the fear of capital flight in china and bitcoin is the most logical transmission mechanism of that. Does that work in your book as well . In hong kong last year right after the typhoon, and i was shocked at the mainland animosity for the banning of crypto. But wes capital control, are doing everything we can to have our Financial Freedom and bitcoin is one of the main ways to do that. Every time i see violence in hong kong, i see bitcoin and i think luke nailed it. Vonnie bitcoin is not anymore a safe asset now than it was the last time this happened in 2016. There are similarities. Why now . Why is bitcoin suddenly more desirable now . Mike mainstream. Futures interest is going from the lower left to the upper right. All of the interest i have seen is more interest in bitcoin and it is becoming more mature, more adult. Your average investor is getting involved. My sense is in countries like ours, we have capital controls and can do what we want with our money. The average investors as maybe i should put 1 into that. The significance is both bitcoin and gold are doing nothing new, they are just retracing bear markets. That is the key mission. I get excited if they make new highs. Guy bitcoin is more of a transmission mechanism, global currencies moving around the world, is it different to gold . Increasingly we lump them together. Is that the correct way of approaching it . The mike ook at if you look at the moving data between bitcoin and gold, it is the highest ever. Giving the fundamental backdrop, you see what is happening with the stock market and Interest Rates and bond yields, it makes a lot of sense. I look at it as they are closely linked. Bitcoin to me is digital gold, just the newer version. Vonnie what about correlations with Something Like the yen . As theres something is there a correlation there . Mike no. No correlation. That is part of the attraction for investors. It goes up with your correlation , what will that do for my portfolio . Vonnie Bloomberg Intelligence mike mcglone on bitcoin, digital gold and gold. But wrapping things up, coming up balance of power with david westin. He will be talking with Bernie Sanders senior economic adviser. That should be an interesting conversation. We will continue with the market coverage. As we respond to chinas decision to let its currency go through seven. An escalation into a trade war, and evolution in the currency war. Some of the semi stocks have been feeling the full force of this story. In europe we trade on significant volume. European markets are trading lower. From vonnie and me, have an interesting afternoon. Keep an eye on this market. This is bloomberg. David from bloomberg World Headquarters in new york, im david westin. Welcome to balance of power, where the world of politics meets the world of business. On the brief today, from hong kong, Stephen Engle on continuing disruption over there and scott lemon on the escalating trade war. Stephen, thank you for sticking around. What has happened since we talked last in hong kong . Stephen these flash mob protests have been moving all around this former british colony. Earlier this afternoon it was fairly peaceful in front of the Central Government offices and the offices of the embattled chief executive carrie lam. Battlese there were between protesters and police that involved the firing of tear gas and now we have seen the protesters move their flash mob protest to different parts of the city to keep the police off guard. Right now we have the local television