There is a workaround to the blacklisting. Malaysias president is not satisfied with goldmans offer to settle the 1mdb case. Goldman sells me a killing on this. The fed stays in the spotlight. Top officials talk to us about policy plans. 50 basis points would be overdone. Its too early to know whether we should use the tool at all. And what magnitude we should apply. Its all straight ahead on bloomberg best. Taylor hello and welcome. I am taylor riggs. This is bloomberg best, your weekly review of the most important Business News analysis and interviews from Bloomberg Television around the world. Lets start with the day by day look at the top headlines. President trump made it clear he was ready to impose additional economic sanctions on iran. On monday, he followed through on that pledge. President trump today imposing sanctions on the Supreme Leader of iran. Telling reporters at the white house, the action would deny ayatollah access to financial resources. Further sanctions aimed at the leaders themselves. This is more symbolism that actually hurting the economy or the leaders much themselves. The economy is already in so much pain. Thats right. I do not think the sanctions will hit the ayatollah in his pocketbook. This is to send a message to iran, every time you ratchet things up, we will come back with some kind of robust response. Sanctioning leaders of Foreign Countries is a big deal for the u. S. We dont do it very often. It does send a message to the rest of the world. Tehran says the path to a diplomatic solution with washington has closed. The u. S. Imposed sanctions against iran Supreme Leader and other top officials. How will these sanctions impact iran . Iran is already under heavy sanctions from the u. S. All the Major Industries and sectors, from banking sectors, automotive, aviation, shipping, oil exports, energy, all are already sanctions by the u. S. It does raise questions with the iranian authorities as to whether the end game is to promote diplomacy or start negotiations, or really is it by targeting the top officials, is it regime change . Fed chairman jay powell reiterating the case for somewhat lower Interest Rates. The crosscurrents every reemerged with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. He did make the point that its far too soon. They want to see how things play out. Clearly, the decision that they made last week was to predict that things are not going to play out well over the coming weeks and months on the trade front. Nothing has changed from that perspective in powells mind. The bells are ringing. It has been a significant down day. Nasdaq off 1. 5 . Equities down and yields. Ten year below 2 . We have that twoyear down below. Down at 7. 3. We have seen that flight to the haven assets. Its a very soggy session. We dont want to read into the shortterm section. 2 off of the record high for the s p. A lot of this is positioned trimming ahead of the g20. More terrible data. You had the comments from the fed. Which saw a spike in yields. Bloomberg sources say the u. S. Willing to suspend the next round of tariffs on an additional 300 billion of chinese goods as President Trump and president xi prepare to meet at the g20. This is positive news for the ongoing trade tensions between china and the u. S. But not necessarily progress. It is just keeping the status quo. What are we expecting . Absolutely. We know that trump and xi are set to meet on saturday, the final day of the summit in japan. Sources tell us the Trump Administration is seriously considering holding off on imposing tariffs on 300 billion of chinese goods ahead of this meeting. That was the promise that china wanted to even sit down at the table. U. S. Treasury secretary Steven Mnuchin speaking about progress towards a trade deal with china, telling cnbc, we were 90 of the way there. I think theres a path to complete this. President trump speaking to foxbusiness earlier this morning. He said that he is prepared to add additional tariffs against the chinese should that meeting at the g20 summit in osaka go afoul. Hes laying out two scenarios. One in which the tariffs, theres a ceasefire and no more additional tariffs. And then there is plan b, the next wave of tariffs on 300 billion of the remaining chinese imports that are not currently subject to them. I think what you are seeing is, donald trump reminding his chinese counterpart that these penalties are looming overhead if they cannot get on a path to a deal. All eyes are on osaka, japan. G20 leaders are gathering for their meeting. They will start tomorrow. Those meetings are somewhat overshadowed by the bilateral discussion President Trump and president xi will have on saturday to try to get trade negotiations back on track. What we have seen overnight from china is a statement from the Commerce Ministry saying, we are not moving very much. It has to be a mutual agreement or else we are not interested. A report in the wall street journal, im sure you saw, china is saying, unless you take huawei off of the table, we will not have a deal. It sounds like china is toughening their position. China is restating a position. All along it has been saying it wants to see all the tariffs go. It wants to see huawei let off the hook. We think a shortterm truce is being hammered out. That would see a pause for President Trumps tariffs in return for resumption of the talks. That grand bargain that President Trump has set out to get with president xi in which he gets a rebalancing of the economic relationship, he gets key concessions on intellectual Property Rights and theft out of the chinese, and that the chinese in return are able to show that they get something. Thats a much harder deal to get. Francine the worlds most powerful leaders are gathering in japan for key meetings that may set the direction for the global economy. The key thing to watch out for our efforts to stem rising tensions between the white house and iran and any sign of progress in the u. S. China trade talks. It was a very busy day for President Trump. He has nine bilateral meetings during his 24 hours or so in osaka. He had several this morning with shinzo abe and vladimir putin. It seems like with all of these countries, he had some sort of tension here. Whether it was trade related or geopolitically speaking. He said theres a good chance of doing something with china. He said when it came to pledging not to add more tariffs here if talks do not yield anything, he said no. I have not decided that yet. He has not promised to withhold new tariffs for now. That plan b could very much be plan a. President xi was pretty straightforward in his criticism, criticizing the United States, not in name, but in their adversaries in using bullying tactics. Also, restricting the Global Supply chain in technology. That is an indirect reference to the huawei situation. It will be interesting to hear in osaka. Taylor still ahead, the fed under pressure from inside and out. St. Louis fed president James Bullard explains exclusively why he voted for a rate cut this month. If you think the conditions are right today, go today. Taylor and hsbcs ceo says trade is just the first battleground in a Global Political struggle. And malaysias president wants more cash from Goldman Sachs to settle the 1mdb affair. Up next, more of this weeks top business headlines. Turkish president demanded a do over in a local election. The move clearly backfired. It is a significant point in a 16 year rule for the man, to have lost the city. Taylor this is bloomberg. Taylor this is bloomberg best. I am taylor riggs. Lets continue our global tour of the weeks top Business News with the u. S. Government putting more pressure on Chinese Technology companies. Last month, u. S. Firms were barred from doing business with tech giant huawei. This week, there were further developments in that ongoing story. The u. S. Has put five more chinese tech firms on a trade blacklist. Days ahead of a meeting between President Trump and xi jinping. What we know about this . These entities included four Chinese Companies as well as a Research Institution that the commerce says was involved in chinas supercomputing efforts. The statement the Commerce Department released said that this is of a National Security concern because they are involved in the Chinese Military or being developed in conjunction with military uses. The broader concern is that this is another example of the trade war moving closer into a broader economic conflict, cutting off Chinese Companies from u. S. Components, requiring u. S. Companies to move their supply chains out of china. American Tech Companies have found a huawei loophole. U. S. Chip suppliers including micron have resumed selling certain products to the Chinese TelecomCompany Despite a ban put in place for the Trump Administration. Explain to me how this would work for these companies. What appears to be happening is that these Tech Companies are coming to the conclusion that there is a workaround to the huawei blacklisting. Under Commerce Department rules, as long as 25 or less of the technology in a certain product doesnt come from the United States, it comes from someplace outside of the United States, those products can be shipped to huawei. Despite the blacklisting, even if you are an american company. Its important to note that for intel and micron, they have operations around the world. If they can move production or intellectual property to other areas, they can get below that 25 hurdle and resume shipping products to huawei. Huawei has has worked more closely with the Chinese Military than previously admitted. The Telecom Giant has collaborated with chinas armed forces on at least 10 Research Projects in the last decade. They include efforts to identify emotions in online video comments and analyze satellite images. How much is this a surprise . It should not come as a surprise. Why we think its remarkable or notable is for the very simple reason that huawei has gone to Great Lengths to distance itself from the Chinese Military. They have said, we have no substantial relationship there. What this shows is that there is a handful of employees who have done some research and have done in collaboration with the military. The lira has jumped after the turkish opposition candidate had a landslide victory in a rerun of mayoral elections in a istanbul. The original that had been overturned after the party narrowly lost. How weakened is president erdogan . Its a set of things right now. This is not the only city he lost. He lost almost all the major cities. It is a significant point in a 16 year rule for the man, to have lost the cities. Istanbul is a turkish commercial hub. There is a network of patrons that you would lose. It is too early to tell whether this would actually have a Significant Impact on the president s ability to stay in power until the next president ial election. Or beyond. The rally in gold shows no sign of stopping with prices now climbing to a six year high as global uncertainty fuels golds appeal. As a haven. Is this about where people think the dollar is going to go . I think so. Going back a few years ago, gold has been languishing below 1350. Even with all the problems in north korea. We have always had this thing about iran going back and forth. Even then, it never got off. It never surged above the 1350. What has changed now is the fed. People are talking about the prospect of lower Interest Rates. Given that goal doesnt offer that the gold doesnt offer any yields, the only way you are making money out of gold is when it goes up. If you have Interest Rates going down, that becomes more competitive for gold. Oil is extending its games as u. S. Crude stockpiles see their gains as u. S. Crude stockpiles see their biggest drop since 2016. Momentum in a market already rallying on the standoff between washington and tehran. Inventory numbers keep shocking the market. Oil is doing much better now. If you think about how the crude oil market has been for the last four weeks, we started to see the price decline. It has been a prolonged u. There was excitement over the export numbers. Exports at a record, products and oil. We are looking at the potential of having an entire month now in which the u. S. Has exported 12 Million Barrels per day of oil. That is insane. That is saudi numbers. No one 10 years ago wouldve thought you were serious talking about those levels. U. S. Prosecutors are investigating an International Network of traders suspected of infiltrating banks and companies to gain confidential information on megadeals. That is according to bloomberg sources. What are the prosecutors looking at . A couple of things. Its an interesting probe that the u. S. Is taking a lead on now in the Southern District of new york. Prosecutors in france and the u. K. Are also looking at some parallel tracks. They are looking at a global ring of traders who have a lot of funds, details that are interesting. They use burner phones and change their sim cards to gather information. What they are looking at is two things. One, how they get the information. Are they getting it from lawyers or people in banks . They are looking at their relationships with journalists and whether they are leaking information to get them to write stories about it. That might manipulate the stock price. Today was decision day at the Supreme Court. The next to the last of this term. The court today declined to undermine the courts traditional deference to regulatory agencies. The court was being asked to overrule a statute that courts should defer to agencies when they are interpreting their own regulations. Businesses did not like that. They thought it gave agencies too much power to shift their interpretations. The Supreme Court with the liberals being joined by roberts said, we will leave that intact. We will put limits on it. As a general matter courts need to look to the agencys own interpretation of the regulation. Its a big boost for the power of regulation and a setback for business. Bank stocks rallied after the close on thursday. Investors were impressed with the results of the fed stress test. The european banks surprise the most. They certainly did. Deutsche bank came in with a pass from the fed, that is not what everybody expected. They failed before a couple times and they passed because the fed saw that they made a lot of improvements on prior years in terms of controls and whatnot. Credit suisse has an issue. They have a conditional pass. They have things to do by october. The worries about the Global Financial crisis may be starting to move to the back burner. Every single bank passing. You also have a record amount of payouts at 172 billion. Analysts were expecting 150 billion. A good outcome for the banks. Reports out this morning that Deutsche Bank is prepared to cut as much as half its Global Workforce in Equities Trading as part of a broad restructuring to try to boost profitability at the bank. What about the equity business . We will focus on the businesses outside of europe. The whole plan is part of an overall strategy to focus Deutsche Bank more on europe. In the u. S. , there are indications they will keep intact, a skeleton operation to be able to Service European large clients if they have any Equity Capital markets needs there. Apart from that, it seems like pretty much everything is up for grabs. President trump continuing his attack on the Federal Reserve this morning, tweeting, despite a Federal Reserve does that that does not know what it is doing we are on course to , have one of the best months in june. In u. S. History. Think of what it couldve been if the fed had gotten it right. Now they stick like a stubborn child when we needs rates cut. At the fed, we are a strictly nonpolitical agency. We are human. We will make mistakes. I hope not frequently. We wont make mistakes of integrity or character. The president saying that jay powell doesnt know what hes doing. He thinks we wouldve been better off with mario draghi. Its outrageous that the white house is trying to neuter the fed and have the president dictating Monetary Policy. That is bonkers. President trump keeping the pressure on jay powell throughout the week, blasting him and tweets and interviews for declining to