The 10 year yield has just cracked 50. Twostens spread come as you might imagine, 4 basis points. Altria morris and looking at a merger. Phillip morris owners less pleased. London is andrew sheets, chief cross asset strategist at morgan stanley. Andrew, thanks for joining. Since we last spoke to you, weve had many more headlines, but how have we actually moved the needle on trade talks or any kind of agreement . Andrew im not sure that we have, vonnie. I think we are still unfortunately in the place that we were a week and a month ago where there is still quite a bit of uncertainty. You still have this impending deadline on september 1, with more tariffs that are going to go in, and still conflicting signs over what the path will be. I think the most likely path still being escalation. Directlyts of tariffs on growth and uncertainty, Holding Back Business investment, unfortunately are still there. Vonnie andrew, we just cracked 1. 50 on the 10 year yield. Im curious whether we see some disorderly break lower for yields. What i think is most important watching the yield market is the signal that not just the level of yields is ascending is sending, but also the Market Pricing and more and more centralbank accommodation, both from the fed, but also the European Central bank, and pricing in a lower and lower level of longterm yields and longterm inflation. Effectively, that Central Banks are going to ease policy more aggressively, but it is not going to result in better longterm growth. I think that is a pretty concerning sign for equity and credit markets. As long as that is still in place, it is not about a single indicator, just the yield or just the yield curve. You have a number of different things, from the yield and yield curve to the commodity prices, the performance of smaller caps, all suggesting the outlook is pretty challenging and concerning. Vonnie what did you make of the new york former fed president s oped today, where he suggests the fed should absolutely not make up for anything President Trump does with Monetary Policy . Andrew i wont get into the specifics of the article, but you have trade policy that is at some level inherently uncertain. I think youve seen even the headlines over the weekend that the u. S. Administrations policy has appeared to move back and forth. It is less clear if it actually has. This is a difficult thing for the fed to navigate around because the fed setting Monetary Policy over a longer horizon, Monetary Policy acts with a significant leg. Any easing might not be felt for 9, 12 months into the future. They have other considerations as well. Core cpi is at 1. 1 or 1. 2 in the u. S. I wont comment directly on what dudley was saying, but i think the bigger picture, it is very difficult for the fed to be expected to step in and plug whatever gap is created by trade policy or trade uncertainty. I think that is a very hard role for any central bank to fill. Vonnie the question dudley asks, and i know you dont want to comment on a specific opinion piece, but what is the fed accommodation encourages the president to escalate the trade war further . Is that something fomc officials should consider . Andrew well, i think theres actually a bigger issue, which is the effect on financial conditions. I think this is a part that other members of the committee have made. Do you risk creating a market mentality that whatever happens to the s p 500, the fed will ride to the rescue and support the market . That potentially over cells the fed or any Central Banks ability to do that do you create more potentially oversells the fed or any Central Banks ability to do that. I think that is another challenge that the fed faces. Theyve indicated that they are going to ease policy. The markets already priced in easing policy aggressively further. How does the fed manage those expectations . In my view, i think the market expects too much of the feds ability to be able to get rid of any volatility and support the market at any level. Vonnie what were your takeaways , and everybody around you at Morgan Stanleys who hasnt disappeared for august, from jackson hole . Theres definitely something that would have made for a longer new cycle if it wouldnt have been for the trade war blowing up in our faces again later that day. Andrew i dont think we saw any major announcements out of jackson hole. I think an article that is getting a lot of attention frome speak to is this one written by Professor Larry summers at stanbury talking about the limits of Monetary Policy effectiveness. That debate, the question of, if at some level, rate cuts and negative rates become self defeating. Do they inadvertently tightened Monetary Policy even as you are ease . Ding to i think that is really important, especially as the market is priced for further and rates negative in europe, and theres no telling what will happen in japan. Vonnie yet, you have the bundesbank coming out and saying it is not a good idea to do any stimulus. It is not necessary. Square that circle for us. Is the bundesbank correct in its stance . Andrew this is a risk facing the european bond market, that youre priced for a very aggressive level not just further rate cuts, but of qe. I think it is an open question of what will the effect of this of a largescale the effectiveness of a largescale Bond Buying Program be when bunds are at 68 basis points. Theres always that risk that if markets raise the expectation too high, even if the ecb does something which, by any standard, would be very aggressive and kind of unheard of, would be seen as disappointing or only meeting those expectations. Thats the reason why our european Interest Rate strategists dislike the front end of the european curve. They think those markets are priced in too much. I think it is also important to remember that august is seasonally a very strong month for government bonds, the strong this month. Theres very little supply. That seasonal support disappears as you move into september, if we think back in history. Fore are variety of reasons bonds to be rally in, but we should be careful given that seasonal factors are about to change. Vonnie that said, with germany practically in recession, if not already, why would the bundesbank not want fiscal stimulus, given what you just said about the ecbs, knowledge . About the ecb is Common Knowledge . Given that we are not sure that anything the ecb might come up with will help . Andrew one of the points brought up in the summers paper is that if you ease policy to aggressively, if you ease too heavily on the Monetary Policy angle, did you take the impetus governments to make reforms and use fiscal policy . The challenge facing the debate more broadly is asking fiscal policy to be preemptive. I think there is a discussion they are fiscal policy might happen after it is clear the economy is in a recession or after certain thresholds are met, but is very difficult for that to be timely enough. I think certainly the way the market has been reacting is the single most bullish headline that i think myself or a lot of my colleagues can think of for europe, a move towards easier fiscal policy in europe. Unfortunately, we are not terribly optimistic we get that in the near term. Vonnie andrew sheetz, chief process at management chief cross Asset Management at morgan stanley, stays with us. In the u. S. , we are erasing gains. The dow up just eight points, up s p up 1 10, the nasdaq 1 10. This is bloomberg. Vonnie live from new york, i am vonnie quinn. This is the european close on bloomberg markets. Lets get the first word news. Heres Riddick A Kuchta heres riddick a group to gupta. Ritika president Hassan Rouhani made it clear there is a condition to any future negotiations. Key to changing the relationship is in washingtons hands. Ritika President Trump said he is willing to meet with rouhani to discuss their standoff over the nuclear agreement. And germany, the economy is on the break of recession. Blame a second court a slump in exports, which fell by the most in more than six years. That led to german gdp shrinking by 1 10 of 1 , the second contraction in the past year. Japan wants to end the auto terrorist threat as part of a trade deal the auto tariff threat as part of a trade deal with the u. S. They announced a tentative agreement over the weekend. President trump says he is not considering tariffs on Japanese Cars at this time, but left the door open to imposing them later. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Vonnie thank you. Lets get a check now on Global Markets with taylor riggs. Taylor it is very interesting. We were up about one half of 1 earlier, and since the market opened, it has been a slow climb all the way down. Im going to call this mostly flat, perhaps on trade tensions and concerns of global growth. Higherng that is definitively is crude, up about 1 . The 54 handle is something that gets our attention, but i would note that in all summer months, we are hovering between 50 and 60 a barrel, so mainly going nowhere. Crude is helping some of the oil services providers. You are seeing this spinoff in technice in mc in pfmc. Come into my terminal here at gtv. I mentioned flat for the day. We are also flat as it comes to all of the stocks in the dow. Reading of zero, which means no stock within the dow has a reading above 70 or below 30. On the rsi, that means you are overbought or oversold. This is the perfect goldilocks scenario, if we can use that term. As we take a look at some of the mergers going on today, you will see here Phillip Morris down about 9 , altria up almost 6 . They are looking at a 5248 split. Johnson johnson is a stock weve been looking at, up 3 . Million settlement much less than the 17 billion the state of oklahoma was looking for. Still, analysts are citing more risks ahead, saying this could open the door to other suits to follow. Taylor riggs with that Global Market check, thank you. Lets get an update on the political tensions in italy. Talks between the fivestar movement and the democratic already could be collapsing. That would throw the Government Back on the road to elections. Open book starting to look good for the Prime Minister of the italian starting to look good for the Prime Minister of conte. Iuseppe represented italy powerfully at the g7. Loves his country greatly and works well with the usa. If very talented man i hope will remain Prime Minister, President Trump says. Here is more is our correspondent in rome. Reporter they say that talks are going ahead. There is agreement that conte should be Prime Minister. The fivestar and democrats are close to agreement on that. There are other conditions, including the role for the fivestar leader luigi dimaio, who, according to the democrats, once to be both beady premier and interior minister, and that is too much. Both deputy premier and interior minister, and that is too much. Moving. Btps are is this because something might get resolved, or they actually like what is taking shape . John we think it is because there is momentum going forward. Of course, theres a deadline concentrating the mines on both side, the deadline imposed by president mattarella, whose Holding Meetings with key Party Leaders today and tomorrow. Tomorrow afternoon he will meet the democrats and fivestar, and hes made it clear to people close to him that he once a definite answer, either success or failure. If it is failure, very likely we will head for snap elections. Vonnie all right, john. Thank you. More tweets from the president , no doubt, as well. That is john follain coming to us from italy. Lets get more insight on how markets are being affected by develop its in europe. Back with us, andrew sheetz, chief cross asset strategist at morgan stanley. Is this just the old playbook we see periodically . Andrew i think it is a really important story to follow. Its happening at kind of an odd time of the year. A lot of the initial attention around this was as a negative story of the prior Government Coalition coming apart. I think you have the potential here for a different government that wouldnt have the same populist elements that existed previously. I think theres an open question, and i think thats what markets are possibly trying to price in, of what that government have an easier time getting along with the rest of the European Union . The marketsrly, have responded positively to it. I think it remains an open, ongoing question, as your prior story just alluded to. If we step back at this and think about Regional Equity performance, we actually prefer europe to emergingmarket equities or u. S. Equities. There are a variety of reasons for that. I think in part, sentiment toward the region is pretty negative. That leaves a lower bar for hop over. Vonnie in the past few days, several people have mentioned hong kong is more of a threat then may be previously acknowledged. How great a threat is hong kong to an investment portfolio right now, nevermind the human aspect of it . Andrew i wouldnt necessarily focus on on that. I think the right thing to focus on is the broader u. S. china relationship. I think trade talks are going to be the main axis on which the market prices upcoming risk. You have this deadline hurtling 1. Ards us on september there have been conflicting signs over new progress made, things actually escalating. I think this really matters because new Investment Decisions for Companies Need to be made, but also, usually the pattern is that companies, after taking a quieter summer, come back in september and attend a host of industry conferences to give updates on their businesses, and at those updates, analysts often update the numbers. Those updates are often weaker than expected. It is one reason why september tends to be weaker than average for markets. Youve thrown in a lot more uncertainty with this trade escalation with china and the u. S. I think that has the potential to make those updates potentially worse than expected. We are below consensus on global earnings, and we think that remains an open question as we come back in september. I think the ongoing trade tensions are part of that. Calls willrew, what be changed, or what are the best calls going into the fall . Andrew overall, we remain cautious. We downgraded equities to underweight. We still think it makes sense to be cautiously, defensively put distance defensively positioned. Theres a variety of overlapping tensions. Theres thee, japanese yen that is pretty well supported here is a currency. We think the euro could do a little better than people expect. We think its been used quite a bit to fund other more risky positions, and it should benefit of things get a little bit worse. I think on a cross regional basis, we like europe and japan more than the u. S. And emerging markets. To be honest, there arent a lot of great Investment Opportunities at these levels. We are advising investors to hold over weitzen cash. We hope they will get to hold overweights in cash. We hope they will get changes to deploy that, but we see it as prevolatile. Vonnie thank you. That is andrew sheetz, chief cross at stratasys andrew sheets, chief cross asset strategist at morgan stanley. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is the european close on bloomberg markets. Its time for a look at some of the biggest business stories in the news right now. Revlon will start to approach potential bidders next month, exploring a sale of the whole company or its major brands. They are trying to find a buyer who will help turn around the company and keep it public. Struggling pizza chain papa johns has named a fast food executive as its new ceo. Arbys president rob lynch will replace Steve Ritchie in the biggest shakeup at papa johns shareholderst starboard set its sights on the chain. The dow is down 1 10, as is the s p 500. The nasdaq is down 2 10 of 1 . Some of the stocks lower, philip. Orris international europe, we still have some green on the screen. Not in london, where markets reopened today. 2 10,se mib is down about but the cac 40 is up. This is bloomberg. Vonnie a correction on the breaking news that crossed the bloomberg earlier to do with the Phillip Morris all trio deal. Altria. Is expected to be 52 42 58 42 . That is a correction from what crossed the bloomberg earlier according to a person familiar with the matter. Phillip morris is down almost 6 . Altria is up almost 2 . Stocks finishing up the day in european trading meanwhile. We have london reopen after a holiday yesterday. Down. 2 . 1. 4 asthe ftse mib up talks continue with the fivestar and democratic parties. Italys 10 year yield is lower. Bonds at higher yield, 1. 14 on the 10 year as bonds are getting sold off. A little bit of momentum in these talks. That is helping things out. The euro trading at 1. 1093. Lets get to the different movers. As you can see, it has been a great day for stocks across the board in europe. The stoxx 600 up more than. 5 . Real estate and utilities being the out performers. In terms of the underperformers, there is just one, banks and insurance stocks. Banks have erased all of their games. A little bit of weightiness to chemicals as well. All of the major groups are higher in europe today. As for the united states, we have had quite the turnaround. The s p 500 is flat. That mergerord of with Phillip Morris, up 1. 5 . Phillip morris down 5. 6 . The deal is being looked at as better for altria than Phillip Morris. Arelip morris and altria looking at a 58 42 split in that deal. Johnson johnson had a favorable outcome in court and its stock is up. Less than 600 million according a court on an opioid case. There might be more to follow but for the moment that is where things stand. The 10 year yield continues to decline in the u. S. Anddollar index above 98 crude at 53. 83 a barrel. Lets turn to emerging markets. Joining us in london is barrington pit miller. Just back from a Research Trip to india. The government has implement and measures to try to spur economic growth. Very problematic and many new measures being introduced by modi not going over so well with the market and the community. Thanks for joining us. Give us your take away from your Research Trip. India is certainly going through a growth soft patch and the market after the modi election was euphoric, and that was in contrast the two the underlying to the underlying dynamics, which was a slowdown. What was driving that . I believe a lot of this is a mated india problem. The Modi Government introduced the demonetization measures in 2016. In 2017 we have the sales tax and real estate regulation act. Both of these measures, while sound and logical, they challenge what is an informal economy. Gst, if you are a Small Business person and in the informal economy, it is possible your profit margin is a tax albatross. Not paying tax. Actreal estate regulation took an informal real estate sector and turned a highly formalized one. The final nail in the coffin came about a year ago when we saw a problem in the mutual fund market, which we have seen illiquidity in the financing of nonbank financial corporations. That has compounded the Consumer Group story, some of which depends on the flow of credit. Vonnie how is this slope indias development . Does it slope efforts to modernize things to quickly and does itis the case, fall back many years or is this a roadblock . Barrington i would like to say it is more of a speedbump. Process iszation something governments can wish for, but it takes a long time for an economy to change the way it does business. I think this is going to cause a period of slow growth. The animal spirit is also important. During the first 100 days of the modi 2. 0 government we have not heard about the economy. We have heard about matters that may be viewed as appeals to nationalist, but we have not heard the government talking to the weakness in the economy. That is something the market was looking for. Corporate leaders were looking for the government to come out with measures. On friday, we got that, both in terms of measures around the , we have also seen measures to provide funding and liquidity to the nonbank financial corporate and announcing privatization measures, which means theyre willing to address the fiscal position and not be frivolous with the balance sheet. All of that is encouraging. So a positive reaction from that friday through monday. Vonnie we know indias economy is worrying Monetary Policy in india. What can they do . Barrington there has been a longstanding position of this government that the real rates in india are far too high. There is obviously pressure on the central bank. Not the only central bank to put pressure on them to lower rates. I think they do have room. Inflation is not a big threat right now. The strong dollar is a concern. That is a challenge for any emerging Market Central Bank to be cutting rates into the face of a strong dollar. For now, i think the r. B. I. Is rates. Able if cut there is a question about a demand issue rather than a supply issue. Liquiditylower rates, throwing into the strong nonbank financial corporate, and it is only a small part of that sector that has been severely impaired by the liquidity crisis. Stronger, are getting and that is true of the private bank sector. State banks, the strong state banks i think liquidity and credit will flow. Vonnie do you have favorites . You may not be up and running on india yet, but from what you have seen so far are there insights you can give us as to which particular banks and other real estate plays that might look attractive . To, theon as i alluded strong are getting stronger. The strong banks with strong liability franchises are enjoying Strong Deposit growth, market share gains, and attractive prices. That is a powerful dynamic for the immediate to longterm growth story. The same is true of the strongest nonbank financials. Those who have Market Access with strong parentage and strong Balance Sheets are getting strong Market Access. The strong are getting stronger. The real estate sector you alluded to, this is a very unusual situation, this is a once in a generation event where an entire industry moves from the informal to the formal. As we discussed, it will take time. We are seeing in all likelihood three out of 10 of the real estate players will survive this and the letter asked and the rest will go to the wall. That gives you a strong market strongn if you are a real estate player over the medium term. These are the spaces we are looking at and we see compelling opportunity and what is a medium to longterm powerful growth story. Vonnie we cannot have you on and not ask you about the general anxiety in your right now. In europe right the biggest banks are all trying to be wealth managers. None of them seem to be there yet. Then germany. What is the outstanding problem in europe in the Banking Sector . Barrington it is a lack of revenue growth, and it is only getting worse. The decline in the yield curve will weigh on the replication and reinvestment portfolios of the largest banks. There is actually nothing they can do about it because they have taken the deposit pricing to close to zero and there are a few, obviously the swiss, who are able to go to negative rates for their clients. In the mainstream banks, it is hard to do that. They are being squeezed on the top line, they are being squeezed on the b line. Competitive threats from Technology Companies is placing pressure. Marketed at to be levels are muted. Further pressures you will see. That they challenge we have had is that the banks in 2018 recover their profitability as compared to precrisis. That was only driven by Cost Reduction and cost of risk. That is a hard thing to continue to replicate from here. Vonnie are you emptying your portfolios of everything european . Barrington we certainly are cautious and the european names we hold. Typically more cautious of those who are dependent on that profit margin. That intermediation model does not work when yields are negative. We tend to be more exposed to some of the insurers and diversified financials whose Business Models remain intact. Vonnie barrington, always such theeasure, particularly primer on india and where it stands. Our thanks to barrington pitt miller, Janice Henderson portfolio manager. Now lets get back to the prospect of a trade deal between u. S. And china. John authors writes that President Trump has added an element of randomness. He joins us on the phone. Only now is President Trump adding randomness . N in terms of the way the market is following tweets by tweets, i would argue this is a new development that starts on august 1, when he surprises everyone by announcing he said there will be a new round of tariffs starting at the beginning of next month. Before that, bear in mind, we had an alltime high in the s p only last month, despite quite a lot of global concern and despite more than a year of trade war. Rhetoric. E war there has been an assumption, arguably a complacent assumption that this is something that can safely be ignored, that he is just posturing, and that assumption was disproved at the beginning of this month at we have moved into a different phase where the markets have a different attitude toward donald trump. Famed ande of the Great Investors was in earlier on and he was saying literally what he does in the morning is what is down 100 and what is up 100 and how can you trade like that on a daily basis . You also write that trump is livestreaming his own meltdown. Does that provide any solace to markets . John no. Exactly the opposite. As a market commentator i try to avoid commenting on politics if i can because everyone is entitled to their own opinion and it should not drive markets. Plainly what is different in the last week or two, you can talk about personality failings, which we all have at which donald trump tends to demonstrate rather publicly. He looks to a psychiatric lehman of evidence a psychiatric l ayman that he might not be fit for the job. It is not just me saying that. I see that in chatter around markets in many different forms. Reasonsone of the markets are paying more attention to donald trump. They are more scared of him as a person because there is, rightly or wrongly, a question mark in peoples minds about whether he is losing his fitness to do the job. Vonnie every time there is a positive tweet about china, equity markets go up. Traders are still willing to give the president the benefit of the doubt that he will accomplish something, no . John you could call it the benefit of the doubt. It isy i would put clients do not know what to think. I am prepared to admit that i might be with them on that. If you see something more positive, it is dangerous not to respond to that. There is another element which makes things tricky, which is that we know donald trump scares cares about the stock market a lot. When the market has gone down, you do become aware he is more likely to Say Something that might push the market upwards, and this feeds into the remarkably feeds into the remarkable trading range we have had in the last month. Many of those ranges, the tops and bottoms of the ranges for stocks and bonds overlapping with president ial tweets. One final point i should make. One of the reasons people are growing more concerned and why perhaps they are also more relieved when they do see a more positive tweet from mr. Trump is simply that there is some evidence that he is concerned enough about his conflict with china that he is prepared to sacrifice something. He is prepared to take pain in the form of lower stocks. That changes the equation for investors and it does mean when he seems to be more likely to capitulate or take a deal, that stocks will go up. Thank you for joining us by phone. That is john authors for bloomberg news. Lets check where european stocks have settled. The dax in germany and the cac 40 up about. 6 apiece. In italy made the going easy. It was up 1. 5 and finished their. And finished there. This is bloomberg. Vonnie live from new york, i am vonnie quinn. This is the european close on bloomberg markets. Our stock of the hour is seeing shares soar. Papa johns is bringing in fast food veteran rob lynch in order to bring the chain around. Here with the look is taylor riggs. Taylor this is an interesting story and is all about personnel and topoftheline command. The papa johns, it was founder and chairman up until january of 2018. He had a series of controversies. He made a racial slur on a Conference Call and was involved in the anthem kneeling during the nfl. He has been out. For the last 18 months or so you had his protege involved. Now the second largest investor has come out and say we will bring in rob lynch. He is from arbys. We will bring him over. He has done very well at arbys. One analyst was noting that arbys rob lynch was able to put in 16 consecutive quarters of improving sales. They are hoping he can turn around papa johns. They have been struggling for the last two years. The stock has been declining. Sales have been slumping. There has been a lot of competition. Of thend at least some investors are thinking this could be what turns them around. Vonnie some people get fast food and some dont. The exact same thing happened to chipotle. What are analysts saying . Taylor it is interesting you bring up the past because they talk about rob lynchs ability to execute. When he was at arbys, he is done very well. He has also been at taco bell, heinz, procter gamble. For of his campaign ads was williams and creating a social media you go on the flip side, at his time at proctor and gamble, his ability to work with brands, analysts are very positive. You have analyst saying we expect the market there were a lot of investor concerns about reenacting some of that sales growth. Those seem to be pressed aside. You can see the stock was up earlier this morning, 6 to 7 . Buys, three neutrals, no cells. A price target well above where it is right now. Analysts are excited about the prospect. Vonnie taylor riggs, thank you. Stop of the hour. Coming up, our global battle of the charts. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its 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 a new samsung note. Click, call or visit a store today. Vonnie it is time for our global battle of the charts. You can see this charts on the bloomberg, just run gtv. Kicking things off in new york is bloombergs john hyland. John as recession fears mount you see one indicator that a downturn could come as soon as a year. At downturn indicator is now 30 , a level not seen since the financial crisis. When this indicator has gone above 25 , it has proceeded a recession on all occasions, one in 1967, the other in 1998. This is a worrying side for the stock market near those highs it clenched in july. It has been sideways in 100 point range in august. Investors are looking for some type of certainty, but theyre not getting that as u. S. Treasury spreads flirts with inversion. The treasury is inverted at 47 basis points. A worrying side in the market. You can continue to march this you can continue to watch this and save it by running gtv. Vonnie an absolutely phenomenal presentation. Thank you. Justina lee, what do you have for us . Justina one winning trade inequities and that is betting on the winning trade inequities. I am talking about the momentum strategy, which took quantitative investors means you by the past years winners and to the losers. If you look at this white line, you can see it has been going through the roof, because in the past years in the past years who has been the winners, the defensive proxies. That has been going up with the blue line, which is the treasury bond etf. That has a lot of quantitative strategist worried. Momentum haswarned never been this expensive. With no and insight in the u. S. China trade war it is becoming hard to time any turning point in momentum or the turning point in bond rallies. It is hard to see where this can end. Phenomenalt also was , something ive not seen before either. To admit whenough im not able to do something and im not able to pick a winner. I think both of those charts are equally amazing, both of the presentations were equally amazing. Im going to ask the control room for help. Control room . John hyland wins battle of the charts this tuesday. Justina, you will be back, i have no doubt. Power. P balance of trade and the 2020 president ial race is up next. Markets are mixed right now. This is bloomberg. Kevin from bloombergs bureau in downtown washington, i am kevin cirilli. Shery and from bloomberg World Headquarters in your, i am shery ahn. Welcome to balance of power or the world of politics meets the world of business. We look at the path forward for the fed. Former new york president bill dudley calls President Trumps trade china manufactured disaster in the making in a Bloomberg Opinion piece, saying what if the feds accommodation encourages the fed to increase the trade war further. Officials could state specifically the federal will with us is bloombergs International Economic policy correspondent michael mckee. We understand where the former fed president is coming from, because the fed is facing a dilemma. One at this put the fed close to the realm of politics . Michael