Patients and optimism, we can get this done. And breaking the cycle hsbc speaks out on the unrest in hong kong. This comes as australias flag carrier said it is taking some capacity out of the region. We are going to do that over the next few months. Take 7 of capacity out. We anticipate this will continue for a few months. This is the manus thing that caught my site line this morning. This delusion. That the fed is making a midcycle adjustment to Monetary Policy. Are we midcycle or is there more . They gave us three reasons for that cut. They said it was an insurance cut. Can you fault those things . Absolutely. The market is baying for blood. They managed to crawl out of negative territory yesterday. Lets have a look at the board. Lets have a look at the chart. Members voted against the move. Are we really midcycle . The feds unity could be fraying. Deeper for longer. Have a look at the risk assets. Dollar yen, if you want to protect yourself against a recession, you want to belong on it. That aside you want to protect yourself. I missed you. I missed you as well. Yuan weakening for a fourth session. Heading for its longest losing strength and streak in three months. Oil making the tiniest of recoveries after dropping yesterday. U. S. Stocks paring gains at the treasury yield. He central bank is set to ease the fed said the cut was insurance against falling investment. Manus you have to consider, what changed . Has traders change their view on the fed . President trump reacted to the move in the markets, saying where is the fed. We are now awaiting jay powells speech tomorrow at jackson hole. Are you convinced, i started the show saying this is most of the committee sharing shaman pals powells dechairman lusion. Is that what you want from this next meeting . Not necessarily. If you look at the u. S. Economy, it is performing well. It is running at potential. Is driven byowth the consumer. Consumer confidence is at its best since 2001. Nejra does that mean you expect any kind of backup in the 10year rate . It has been heading lower and lower. It is a good point. We need to consider the Global Environment for interest rates. We are living in a world of low rates. 1. 57 at the moment. It is a little bit overdone in my view. I think it could go to 1. 75 by year end. Not much more than that. I dont expect a 10 year treasury to go up 2 because of the Global Environment. Manus hold that thought. Few expected trade deal to change the mood music, you are mistaken. If you want to come up with something optimistic, you could say there is a trade deal. But is it a deal . Is it a permanent deal . . R is the damage already done in many ways, that horse has bolted. I am surprised. Not necessarily. I agree with this comment. We always said that the tension is a balance. It is about politics and geopolitics. We may have some kind of agreement. At least a release in the current tension between the two countries. It will be a permanent issue between the two countries. Which will affect the rest of the world. Mainly through rebalancing the supply chain. Nejra based on your expectations for the fed for the rest of this year and next, how much exposure do you want to the riskier part of the u. S. Credit market . This is what we are doing at the moment. We are reducing our exposure to u. S. Treasuries. We are moving and switching to other Asset Classes in the fixed income spaces. Emerging markets is one of them. More interestingly, u. S. Yield. Widened during the summer. Without any specific reason apart from fear of recession. It. Ont see there might be a surprise in the second half of the year. That is what we are doing at the moment. The emerging markets are probably the best Asset Classes the fixed income space at the moment. Manus we saw this aggressive reach for duration. Have you adjusted any of the duration and the portfolio as you shift perhaps to em and highyield in the u. S. . The answer is no. Most investors at the beginning of the year were still positioned in a defensive way in the fixed income space. This flattening of the curve forced everybody to increase the duration. The long and, in my view, is still attractive. Reducing duration at this point, especially if you increase credit risk in your portfolio is a kind of hedge. I like to continue to have a longduration position at the moment. Despite our view that treasury will correct. Nejra interesting. Do you like cash . Not necessarily. It depends on in which market. Euro is very expensive. Alwayssh on the side is good to have, to take advantage of any particularly volatility in the market. I dont suggest more than five or 10 . A limited amount at the moment. Great to have you as our guest. Are our interview with the Kansas City Fed president. You can see it at 12 30 this afternoon london time. Manus todays question is which assets will outperform after jackson hole . What will happen to the dollar . Join us on tv on your bloomberg machine. Thats get your first word news. 30 days to find a solution on brexit as chancellor and go Angela Merkel challenges Boris Johnson. Both sides are talking tough. A no deal brexit is now the most likely scenario. Kong stocks are poised for their worst quarter since 2015. The city faces its worst earnings recession since the Global Financial crisis. Analysts are slashing their forecasts. Highstakes talks in rome. Italys president will meet with the main political leaders to combat a viable governing coalition. Talks collapsed earlier this week. The president has to decide if there is in the majority or if italy needs a new election. 1 trillion by fiscal 2020. That is what the Congressional Budget Office says the u. S. That will widened to, two years earlier than expected. The federal debt is unsustainable. It will be the first time it has exceeded the 1 trillion mark since 2012, when the u. S. Was recovering from the financial crisis. Deutsche banks timing the way it fills vacancies. Division heads now have to ask for approval from the chief executive. The memo, seen by bloomberg, says only critical roles should be submitted. It comes as the lender is going through its biggest restructuring and memory. This is bloomberg. Nejra thank you so much. Coming up, we are live from jackson hole. Dont miss our interview with a host of fed president s. When we look at that rundown, is the feds unity frank . Fraying . That is the biggest thing that comes to mind. What is the homogenate the of the fed . Tomorrow is another stellar lineup. The tv and radio team combined. Bloomberg. Nejra lets get a check in on the markets in asia. Muted here iny asia. We do have a little bit of weakness on the asiapacific index after we saw this fed minutes and a cautious tone i had of the jackson hole symposium. We have earnings in focus. Qantas is doing quite well. And iron or futures in singapore. A quick look at hsbc. Shares in hong kong down for a Third Session in a row. Hsbc coming through and publicly acknowledging the protest. Putting in a fullpage ad in a newspaper calling for a peaceful resolution. News is thatof they are considering an offer. Interesting that they have come through calling for a peaceful way. Manus thank you very much. A little bit of a scoop here at bloomberg. There is a takeover bid that wraps up on raises the pressure on bain capital. It is approved, shareholders will have to choose between the two competing offers. And a new carbon tax should be eu wide. That is according to live funds chief lufthansas executive. We need to reduce our impact on the environment. Nothis point, this tax is serving this purpose. That is what we discussed here today. Annabelle qantas is feeling the drag of weak demand and higher fuel costs. A 17 plunge in profit. A droplso preparing for in passenger numbers flying to hong kong. The ongoing unrest there continues to affect demand. We have this flexibility of moving to slightly smaller aircraft. Essentially the same product but with less seats. We will do that over the next two months to take 7 of capacity out and the anticipation that this will continue for a few months. Annabelle that is your Bloomberg Business flash. Nejra donald trump is talking tough on trade once again after recent signs of progress with china. He told reporters the u. S. Is winning the dispute. I am the chosen one. Somebody had to do it. I am taking on china on trade. And we are winning. Nejra the fed minutes cited uncertainty over tariffs is one of the main reasons for the july rate cut. The onshore yuan weakening for a sixday. Do you get a sense that investor pessimism is increasing around the trade war . Not necessarily. The adjustment on the currency side, it is more related to internal issues rather than market sentiment. China is expected to grow around 6 this year. They having gauged and a number of monetary and fiscal stimuli. The authorities in the government have all of the resources to keep the economy growing at the rate they need. Expect a further monetary easing going forward. It could make it very interesting in the fixedincome market, which is the only one where they did not participate. Manus that trade has already been ignited. We had a chart the other day. Bondswed government coming in at the lowest over treasuries in nearly a decade. That momentum is already started. Where on the curve would you be tempted to take on risk . I will go for the safest part of the curve. There are a number of technicalities. View, 10 year and twoyear. The very short end of the care of. And we can see on the chart a bit of steepening up their. There. You are interested in certain parts of the chinese curve. What is your take on how well can withstandy the trade war . It is an acceleration that the chinese economy has to take anyway. We all know that china has to move this Business Model from an export oriented country to internal consumption. This tension on the trade side is actually ancillary in this process. There are lots of companies that are moving their production abroad to avoid tariffs. If you look at the balance of payment between the u. S. And china since the beginning of this trade war, it has actually widened. The real effect on the balance of payment between the two countries has been negative. Manus a lot of people say hunker down for a much longer time. Thats a quick, snappy resolution is most unlikely. With that in mind, we saw some adjustment in the lending rates at the beginning of the week. What else is been penciled in from the pboc . The central bank and china is increasen trying to its mission of the Monetary System and the economy. That is the focus of the central bank. That is where we move going forward. And a decision like the last one they made last week is concentrated on this. Trying to transfer the decision of the Monetary Policy to their own economy. Manus lets see what they do next. Certainlyis shifting. This is a critically important point. What happens with the dollar . We go in slightly tense, slightly nervous. Nejra lowest since 2008. Manus we have a conversation to be had there. A rival takeover offer. Now it is time for shareholders to make the decision. We have the cfo joining us. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Manus let me guess what you want to talk about . The fed . [laughter] manus nejra absolutely. Those minutes were interesting. They laid out three bullet points for the rate cut. Manus did you read them all . Nejra did i read them on my time off . I do know they were talking about shorts and Risk Management and inflation. Can allion to you was, of those really be dealt with with a midcycle adjustment . Manus needs to regress the narrative. Powel shiftedl away from the believe that the fed is in a midcycle. Move it to a current set of movements. The data could be the biggest risk of all. That role could be a risk. Nejra absolutely. There is a distinction between what powell might say and what he will say. Lets check on the markets around the world. Great to have you with us. And the and equities are underperforming most of their peers this morning. You are looking at stocks far off their highs. What is driving these moves . Good morning. You are talking about the fed minutes. Look at that statistic. We have been talking about how indian stocks are declining. Proof, it is gone out of the window. You, just look at that list. Companies with a market capitalization of 100. A very small number. Over 60 of that list has given cuts of more than 50 . Almost 21 of the stocks. The kind of fall that is coming. Adding fuel to the fire. Manus thank you very much. Jackson hole, we have been beat prevaricating on it. What do you reckon . I think the market position is wait and see. We will not get any specific direction one way or the other until we hear jay powell speak. The markets shrugged off these minutes. In asia, we are markets edge lower across the board. Hong kong is down. A bit of a stronger u. S. Dollar against the singapore dollar. And sovereign bonds. Commodities are not showing on my screen. This will be a key asset going into tomorrows jackson hole meeting with jay powell speaking. France says a likely deal is a no deal scenario. The pound is spiking. That threemonth volatility includes the deadline for the u. K. Having a deal or crashing out of the european union. It also means a few Central Bank Meetings in september. Hsbc has broken its silence on the protests in hong kong, calling for a peaceful resolution. Local businesses and tycoons of speak and about the unrest. Hsbc is one of the first public banks to address the crisis. That a company rooted in hong kong, we are very concerned about the social events and strongly condemn any violence and actions that disrupt social orders. Manus qantas says demands for flights to the city have fallen as protests drag on for almost a months. Ceo. Oke to the groups he says it is planning to use different plans to serve hong kong. We have the flexibility to move to slightly smaller aircrafts. We will do that over the next few months to take 7 of capacity out. When the issue resolved itself there is usually a rapid rebound. Other places like manila and singapore are going strong. We can take advantage of that. It is a good way of managing this issue. You are aware of the controversy around cafe and the former ceo having to step down. Would you consider firing members of your on staff if they launched or were involved in antichina protests . Are you concerned about that kind of pressure . I know rupert talk very well. I think he is a very good guide. I wish them all the best. I think in relation to this, every company has its own code of conduct. It some believe in view of i wont go into hypotheticals of what could happen. We have a Good Relationship with china. It is a very important trading partner for australia. I dont think anything has changed in relation to that. We have seen protest not just have seen it and other places. If some of a policy your staff joins them . We want to understand how you would approach the issue. We have a code of conduct that determines what people can and cant to. There is a range of spectrums that people can get involved in. Nejra that was the ceo of qantas speaking in sydney earlier. August pmis adjusted due in a few hours for germany, france, and other countries in the eurozone. This month, economists expect that picture to darken. Industrial downturn is persisting. We see manufacturing pmis throughout the eurozone below 50, meaning they are contracting. That is because you see services above 50 have continued to expand. The risk here is the spillover from industry will hit services. That number will be watched very closely for Early Warning signs. Women look at the eurozone picture, the declining manufacturer is in germany. This highlights the severity of the manufacturing slump in the regions largest economy. The ecb will be looking at these numbers. These numbers we can significantly when we get them later today. Give the council another reason to introduce fresh stimulus. Into the take you charts because i want to show you the trend that has been going down. We look at the eurozone and below 50. Above on that means contraction. But also keep an eye on the u. S. It is trending downward. Teetering on the edge of contraction. Thank you very much. Filling in the data blanks for us. The two leaders both wanted to leave with a deal. In italy, they must decide whether a coalition can be formed or whether they will call a snap election. What a moment. I put it into the library. Was this a damocene moment for the bond markets . I love that word. I tend to agree. Peoplethe reasons why are buying a negative rates in the bond market is because of lack of alternatives. There is a need for some edging. Even if the bond provides the bond provides a negative yield, you can make a capital decision. Is true for the short end of the and the medium part of the curve and absolutely true for the 30 year. The difference is very small. The duration is quite long. I dont know who bought the bonds. I dont think the market was involved. Nejra i think the current strategy is what you are referring to you. I have been reading about that recently with all this negative yielding debt. I want to ask you about italy as well. The president entering some highspeed stakes. If you look at the chart, it is quite far off from where we have been. I believe you think a lot of the negative view is priced in. Is it really . Yes, for a number of reasons. The graph spread wide. This was kind of an experiment. The market did not like it. It did not like the program. I think the market is now much more relaxed. With a different program. A program that has gained growth. Manus you said there is a name in the game for the new Prime Minister who is it . Mario draghi. Manus do you think that is credible . Dont the he wants this particular job. Base case for barclays is a 50 rate cut. This curve inverted for the First Time Since 2008. Is there a deeper inversion to come . Probably, yes. We are going to have negatives coming out from the Political Economic front. Nejra we are seeing some of that. Thank you so much for joining us. Coming up, light at the end of the tunnel. A rival takeover offer. Now it is down to shareholders to the side. We will speak exclusively to the german lighting makers cfo. This is bloomberg. Nejra investors are awaiting shape house keynote address at jackson hole tomorrow. What keyword should investors be looking out for . These are the words that stood out in previous years. In 2002, the word was bubble. Alan greenspan said it 23 times. In 2007, ben said the word mortgage 23 times. Manus in 2010, it was securities. He was talking about central bank purchases. Draghi warned of an unemployment crisis. That is probably why he used the word 46 times in his speech. Last year, jay powell focused on inflation. He said the economy is strong. Inflation is near are 2 objective. Nejra things are heating up in the battle for osram. There has been a rival takeover bid. It wraps up the pressure on bane and carlisle. The 3. 8 billion offer from the u. S. Buyout was called to low. Great to have you with us. Thank you for joining us this morning. Has endorsed the main and carlisle offer. Do you have concerns about the offer from ams . Thank you for having me. In the board met decided to support the agreement and the offer. The funding we looked at looks viable. From that perspective, we decided to support the deal. I have to ask you, ams wanted the bit, then they pulled out, then they submitted again. It looks like there is a credibility gap with ams and that they dont really know whether they want to be in the steel. That does not a sent out a store for the future of a win. If you look at what they provided to us from a funding , and what has now been included in the agreement, i have to say this is a very sincere agreement, a very professional though agreement. We have had professional discussions with them. Rest assured that we looked at all stakeholders that we supported. We believe it is a very credible offer. Nejra how will you get the unions on board with this . And some product concerneds about the debt level at ams . I cannot speak to what the unions have said. In the agreement we signed with them, we made some conference of agreements as far as the labor force and Certain Company locations. That the agreement is at least as good as the one week concluded with pain carlisle. A perspective, we can say that supports employees. You cannot just look at the offer price. You have to look at the stakeholders in the employees. The credibility, there is no credibility gap. I think that is essentially what youre trying to communicate to us. This is about synergy. If you look at private equity, are they going to be able to stick to the premise of synergy . What conversation did you have are on that . Course with a strategic or industrial by, you have a different perspective. You are able to leverage synergy. We had some insight on synergies, although limited. We think that the cost synergies are feasible. The only question is how fast are you able to realize those . There are some revenue synergies contemplated. We had two little insight to be able to say something. I think for further details, you have to ask the board. What they put together is feasible. The question is the timing. Nejra do you have any sense of a number you could give us in terms of their synergies . Cannot. Personally i think that is for ams to make that statement. We can go and announced to the world that they were contemplating something. They mentioned the number of around 300 million euros. Manus do you think, given the backdrop, the state of the global economy, is hindering the valuation . No, i dont think so. Look a little bit different now than a year ago. But overall, what is in the forefront of these discussions, the longerterm strategy, is incorporated in the valuation. The strategy here is to create a global solution. To allow us to make a significant step for our Semi Conductor division. Perspective, industrially speaking, the strategy is quite compelling. In terms of longerterm strategy, are you planning to be part of that . Do you intend to keep working for osram after the deal, whatever it ends up being a after it is finished . I have a contract with the company right now. I have no intentions to change the contract. Ams would support the current management. Manus lets see who wins the race. You. S great to have coming up, it is all about jackson hole. I wonder when they will let us go . Nejra tamara it is a stellar lineup. You made a great point earlier when you were talking about the fed and whether there is any division coming through. We just got the minutes yesterday. They were very interesting to parse over. Three more cuts they reckon at each of the next meetings. The question is how homogenous is the fed . Cut, ae two against the couple of people for more than 50 basis points, lets see where they ago. We got three clear bullet points in terms of reasoning. Catch up on all the analysis. This is bloomberg. Nejra good morning. Manus i am live from dubai. These are your top stories. Watching the words. Citing a midcycle adjustment. Yield curve briefly inverts and donald term slams the fed. It is business as usual ahead of jackson hole. We speak to the Kansas City Fed president today. 30 day challenge. Chancellor and you Angela Merkel gives Boris Johnson a month to find a brexit solution. A no deal is most likely. The u. K. Premise or says there is still hope for a breakthrough. If we approach this with patients and optimism, we can get this done. Breaking the silence. Hsbc calls that speaks out on the restlessness in hong kong. We are going to do that in the the next few months. Take 7 of capacity out. In the anticipation that this will continue for a few months. Nejra the big question this morning is, are we talking about a midcycle adjustment or not . Will any of that language change when Jerome Powell speaks that jackson hole . Oped about is an what he should say and could say. Oped,very end of this he says the fed could be the biggest risk of all. I wonder whether or not he will use this is a moment to stick his stake in the ground on central bank independence. You certainly get a sense in the markets above bonds and equities are pushing a little bit more. We did close in the green. Ftse 100 futures in the red. Manus it is really about shifting the narratives in terms of what happened. The third was resetting inflation. Resetting the inflation as 2 target. That was the third point in the trifecta of bullet points. Short interest in the states is ratcheting higher. Production guidance remains unchanged. First half revenue, 2. 5 billion dollars. Certainly copper does not look like to be in a healthy state. I want to get to the bond market. You mentioned what is going on with jackson hole. Twoyear versus 10year managed to on invert yesterday. What will be said over the next few hours could set the tenor of breaking away from a midcycle adjustment. Do we need to do that . Our previous guests that there was no need. Bloomberg economics is three more cuts are to come. There is never a lack of the much an iv here. Im not even going to attempt to say that word. We are seeing a little bit of a muted session here. A cautious sign i had of jackson hole. The nikkei closing out fairly flat. Seng extending losses in the latter part of the day. We had an rebound in the iron ore futures here in singapore. Lets have a look at qantas. 4. 09. Many think that qantas is still a buy. We were speaking to the ceo, asking him about the hong kong impact onnd its qantas. Theyre looking to switch out to some smaller aircraft to service those roots. Manus thank you very much. Rounding up the markets in singapore. U. S. Stocks had some gains. Treasury yields briefly rose above the 10 year rate. Reinverting one of the key yield curves. That as the fed minutes of last months meeting set the central why is willing to ease calling the july cut a midcycle adjustment. The cut said it was against low inflation and stemming from the trade war. Nejra that has not changed. Raders views on using president reacted to the move in markets saying, where is the fed . For jayre now waiting powells speech tamara at the jackson hole symposium. It is great to have you with us. Are you convinced by the midcycle adjustment . Or do you think we will get more than that . He is in a precarious position. He is facing growing particular pressure from donald trump. The minutes yesterday were one thing. But they were backward looking. You will certainly see markets move off of that. Some think that he needs to walk back this phraseology or tone. He needs to change the narrative. He is cutting rates that because of what is going on in my backyard but because of all the hubris in your backyard. I think the outline their sound sensible. While the delta of growth is the cladding, it is still reasonably strong. Nejra what more do you need to see . What is reflected in the u. S. Equity markets . Valuation are clearly very high. That,think despite of there is huge amount of nervousness and markets. This has inflated valuations. Manus you say you want to buy higherquality industrial names. What caught my eye is you are reducing consumer staples. Are you worried about the consumer . The consumer has had a doubt much better than the manufacturing side of the economy. The challenge there is structural pressures. In europemer staples and globally spend too much time focusing on margin expansion. What youre saying at the moment is a potential margin reset. This all comes at a time when the sector has to perform very well. We are looking for other areas of the market that can provide you to similar exposures. Potentially without the valuation risk you see in the consumer specter. Is, the more defensive area. The Industrial Market is always seen as cyclical. If you look deep enough, you can find defense of companies that have high revenues. The cyclical nature might be overstated. S. A. P. , which is our largest position. That is the company that should be well protected in a downturn. Manus making the calls loud and clear. Lets set up the agenda for the rest of the week. Of the latestes ecb meeting, they are a little bit later today. Clues onn eye out for the size of the package. Boris johnson reaches his next stop and a european tour. He wont meet with french macron. T emmanuel what do we have in italy . Highstakes consultations between the countrys president and Party Leaders are set to end this afternoon. On friday, all eyes will be on the jackson hole symposium in wyoming. This weekend, we will see World Leaders gather in biarritz. The cloak growing threat of a no deal brexit will be on the table. This is bloomberg. Nejra we are 43 minutes away from the start of cash equity trading here in europe. Manus lets get a quick snapshot of the markets. Yuan is on a tear lower. To markets here are trying play catchup. The hang seng is lower. Some issues there with capacity. Yuan is one of the we havelosing streaks same. The dollar has a little bit of strength going into jackson hole. I think that is fair to say. The yuan has a little bit of pressure. Nejra definitely something to note. Generally we are seeing those safe havens. Bund yield is back up after a quite dismal 30 year auction. Can you imagine sitting in a chair for 20 hours . Qantas will run marathon flights from london to sydney. I thought could i actually do that or what i get cabin fever . That is why they are running these ghost flights between new york, london, and sydney to see how the human body holds up on this long of a flight. Mostly employees will be taking part in these. Medical doctors will be assessing them and seeing how their bodies feel getting on and off the plane. What theuestion for ceo qantas calls this flight is who is getting the gig . Visit airbus . Boeing . We asked him. There was a compelling offer put on the table from boeing. There will potentially be a delay. They have a transition proposal on the table. That looks very attractive we are analyzing that. This is still a very competitive race. The ceo of qantas speaking to us earlier. I still have not decided whether i would be able to do the 20 hour flight. I definitely would find sitting still for 20 hours a possible. Lets get the business flash. And a new carbon tax e according toid the chief executive of luftha nsa. There is no room for increases. But rather room to see how the money flows back into the industry to really reduce our impact on the environment. That is what we need, not more taxes. We need less impact on the environment. This tax is not serving the purpose. Pot will be productive in canada and in europe that much longer. When we look at places like germany and portugal, we could be profitable there in the next two quarters. We will continue to invest in new regions and the countries. But on an existing basis in terms of our existing footprint. We see profitability within the next year. Thank you very much. Lets focus in on the other main Stores Across europe. Angela merkel has sent Boris Johnson a challenge on the irish order backstop. The two leaders said they both wanted to see the u. K. Leave with a deal as they met in berlin. Over in italy, the countrys president will continue consultations with Party Leaders after the collapse of the populist government. He must decide whether an alternative coalition can be formed or call a snap election. In germany, the debt agency regrets the 30 year bond sale. Featuringn of notes zero income struggled to find buyers. Can we actually start with the bond auction . Our last guess, i asked him if this was a damocene moment. Is that a perversity . How does that influence your thinking if at all . Ios find this hard to understand, this negative yield. We have 17 trillion of negative yield debt globally. Theere talking about valuations of defensive areas of the equities market. The you compare that to valuation of many defensive other axa classes. It looks much more reasonable. Even as the next investor, you have to have a holistic view to see what a target happening. Manus nejra what is your holistic view of germany . We have had a lot of profit downgrades. We certainly have. We may see germany and to technical recession next quarter. There seems to be growing acceptance from the market and from germany that there are needs for additional fiscal stimulus. Germany has always been a manufacturing dependent economy. They are in the firing line when you see these global slowdowns. Which are being amplified by the trade dispute. We will see the pmi data later today. Challenge. 2 was a lets have a look at this. A place to your theme. At the bottom is banks, telecoms, and resources. With rate comes potentially coming, how does that change the construct for you . Do you scale into this toptier or where you go . I think for banks, unfortunately, it is more of the same. Many invested in the Banking Sector have been waiting to see profitability and the sector improve. One key part of that needs to be hiring higher interest rates. That certainly does not look like it is on the table in the short term. Exposed is we always like our tech. We are looking for idiosyncratic examples of Companies Whose earnings are much more protective than the wider economy. If we continue to be in this relentless downgrade cycle, theres probably more value in those names. You talk about this earnings season being a lowquality beat in europe. If we look to the u. K. As well, we had more potential out of the g7 in the weekend. What kind of stocks are you focused on in the u. K. . That thentinue to see virgins between a Large International exporters, which have done very well, and the more domestic names. Byy have clearly been hurt the cyclical pressures of brexit and slower growth. But i think we have reached an interesting inflection point. You have seen a number of overseas buyers coming in and snapping up cheaper domestic u. K. Businesses. That is probably not where we would play it. But we have seen a high quality domestic space. The earnings have stayed remarkably resilient. Those are the companies we would be looking to express increase exposure to. With 30 days to solve the irish border, recession is going to be some thing were going to talk about in the u. K. How high up the agenda is it for you . We have been in this situation for the last 2. 5 years now. Unfortunately, even though we are under a month away from the latest brexit deadline, there is still not a huge amount of parity on when it will materialize. I leave that for people far cleverer than myself to forecast what will happen. We are focusing on a few areas that we can control. Good Quality Companies with good Pricing Power with good visibility. You dont need to make that brexit call. Nejra great to have you with us. Thank you so much. Coming up, we are live from jackson hole. Miss ourch interviews with a host of fed president. It will be especially interesting after the fed minutes. Manus it will indeed. As we go towards the jackson hole meetings, we have the slightly less dollar. Will that hold . A are we being lulled into false sense of dollar security . Matt good morning. Welcome to Bloomberg Markets european open. I am matt miller in berlin. Today, the markets say ignore what the fed said. They are going to keep cutting. Investors disregard the latest meds from the central bank. European futures are pointing lower ahead of a data heavy morning. Cash trade is less than 30 minutes away. Backandforth