An agreement on trade. They will not be an agreement on huawei. The u. S. Is out to destroy by disconnecting it from other components because there is a National Security element. They will not be an agreement on trade or tax. Tensions will escalate. Rishaad what kind of lifeline is there . There is a long lifeline. This could happen any day. Cant use it. Ory will not use the huawei five g networks. Maybe a system does not work in terms of software or hardware. These rivals are much more serious about tech and globalization. With a Global Supply chain, it depends on the integration of the global economy. Once youve vulcanized, we will have a global session. Rishaad are we seeing signs already . Some of that is spreading into the service line of the economy. Trade is that, global also falling quite rapidly. How bad does it get before things improve . Do they improve . Trade in tech in the u. S. And china will get worse. With the u. S. And tehran escalate, there will be a spike. You have two major conflicts, geopolitical. This affects services, the tech sectors have slowed down. Option waiting. If you have any business or what you do is you stop doing investments. We have already seen this collapse. Once that is down, the production is down. You have the beginning of a global recession that started in tech. We are seeing it in the data. Rishaad when does it permeate into becoming something that you can see materially . Recession . A it isms to me that further than it is likely to be. Speaking, this is a slowdown in the global economy. This was a few months until this negotiation between the u. S. And china will fail. Both on the trade side and the tech side. These tensions will escalate anyway that will move to another supply. Inyou have to supply shocks the global economy. One coming from tech and one coming from all. Exhibit 3, 79, 99. We had a global recession. This will happen in 2020. You made your point about when that can happen and the reasons behind it. Is anything we can do . There anything we can do . We are limited. There is not much room. Even this third could go from 5 25 down to zero. Then what . They will go back to mac policy rates . The are already doing negative policy. This is more limited on the monetary side. This is a high visit. Politically, their ability to backstop corporations and houses like we did during the Global Financial crisis is limited for two reasons. Economy, nobody will want to fill this up. Markets for now our rallying because they are hoping there will be a trade deficit in china. Meanwhile, the fed will start copying rates. Those cuts are about the recession . No. The stock market fell. All of this using is going to a month of that recession. Full trade tech and cold war in china. There is no way, one of them is not enough to lead the global recession. In eighth ill be severe session. Behaad i was asking you to dr. Light here. Iminish. Me even more d we had no efficacy of fiscal policies. Then we have no efficacy for Monetary Policy. Where does that leave policy . Compared to the Global Financial crisis, Monetary Policy, fiscal policy, i missing there is no policy but it is limited. However constrained it is will present ae to recession. Is the fundamental problem that we will not be able to inflate our debts away . We have been trying to monetize those debts with the date of easing. 10 yearsty is that after the Global Financial crisis, around the world, overall, private and public debt is higher than before. Servicing ratios are low today because they have near zero policy rates. Those are emerging markets. Credit them and go higher. Then they have massive corporate debt. You could have massive increases in debt services. Even unsafe presses like government bonds and jersey. Economy has seen steady growth in the first half. In the proper range here as well. Do you believe them . There was a growth and then it in the monetary stimulus. From china,ata whether you look at trade, pmi, they are the beginning of another sharp slowdown. We have a fullscale trade war with the u. S. And china. These cuts are sharply down because there are massive amounts of policy uncertainty. China is going to have a massive slowdown. They are going to do another stimulus. It will increase the debt ratio. That is fine to kick the can down the road. If you have a shock to trade even theirge enough, own policy stimulus will not be able to prevent something of a harder landing in china. Rishaad you havent mentioned much about indebtedness. Qe and the ballooning , is thatssets worrisome . Decorations around the world, emergingnd public, markets, whether you look at the private sector, corporate, the publicsector, foreign debt, those are high. So far, that had been low. Qe, these rates were very low. ,n spite of everything will this is a spike grade for higher leverage and loans. Even with the lower government bond, youre going to spike investor ratios. Make the debt ratios that are now under control unsustainable. This was a recession, a very deep recession. How far are we in danger of going through a depression . We will go into that recession. Central banks are going to be even more unconventional. Rates,t beautiful policy not just negative policy rates, they will start doing a constant drop of money. That is what they said. We have to go to even more radical and unconventional marketing policy. That is what they are suggesting. I think that compared to the risk of going through the , the Great Depression eventually led to a geopolitical disaster. The severity of the shops, if u. S. Andion to the iran escalates, rishaad china will keep Economic Growth stable. They will not flood the economy with excess liquidity. Every time in the past, there has been a growth slowdown. They are trying to reduce overcapacity. There is monetary easing, fiscal easing. This backstop the economy. This growth rate is officially at 6 . When the shock occurs, they give up on financial stability. They do it in 2008, 2009, 2016, 2018. They have been doing it, talk is cheap. The chinese react by doing stuff. Then is to be more leverage in the economy. Rishaad lets look at this trade conflict. It is spreading out to india. We have had the eu for a while as well. How bad does that get . How does that become an aggregate. Rishaad trump was elected on a slogan of america first, make America Great again, like america, higher america. They were steel and aluminum and then other goods and services. Now he wants to get out of the wto. He is a protectionist. This is an services, capital, labor, technology, data, this is the beginning of big globalization and localization of the global economy. The world is going to be divided into trading blocs. One big on the u. S. And one in china. Want do more training investment with china. This is in europe, asia. The u. S. Is going to say youre with us or against us. It will negatively affect europe and asia and the rest of the world. People have to choose was side they are on. That will slow down and that will lead the recession. Rishaad can it be that binary . You use my 5g or the chinese 5g. You use my ai or the chinese ai. Robotic automation or the chinese. Even the smartphone, if it is a , 5g, i donthuawei want your toaster. It will be collapsing on the global economy. Can you allow the chinese to be controlling 5g . This will abide every good and every service once we have this decoupling. This is a complete radical change. A regime change. I, we had a. Ar where globalization what to do goat went to deglobalization. The soviet union was a declining power. Roads were collapsing. In the u. S. And china ands, china has the biggest economy in the world. This divorce is going to get ugly compared to the divorce with the u. S. And the soviet union. There was no trade between the u. S. And the soviet union. Rishaad is that why these we saw in the beginning of may that chinagotiations between and the u. S. Fell off. Cryptocurrencies rallied and have rallied ever since. That is why you are here, we are here to talk about blockchain as well. Gold went up 10 and down again. Currency, you have to have no goods or services pricing. The price of bitcoin has fallen by how much . 30 . It is not a means of payment. Not even the blockchain continents take it. With a visa system, you can do 25,000 transactions per second. Billions of people are doing digital money. It is been low and paypal in the united states. They had nothing to do with blockchain or trade talks. This is the future of digital money. It is a failure. Nobody is using it for any transactions. For atrading one coin nother coin. This is pumping and dumping, from running. It is a big scam and nothing else. Can this actually be adopted . Maybe you should give it some time. Why are you against it so much . It has been around for 10 years. 75 of these apps are casino games and ponzi games. Are exchanges35 that have no liquidity and nobody is using it. So much for the 10th so much for the centralization. This is not the beginning of the internet. Does the launch of the world wide web, you had one billion users and that it became 2 billion. There are a number of unofficial users. The real users is 23 million. Now that he is using crypto for this iss of services. Not of the website, of email. Comparing to the internet is a joke. It is just peddling and talking your book. It is utter nonsense. Rishaad you are talking the author. He was talking to us. We will see some of the questions that we asked him. These are the key comments you have been making about cryptocurrencies. Here is a question of your finances. He is a hater. Someone who doesnt have any bitcoin. He wants to press rocket. Harsh, dont is you think . Maybe but it is true. That is nonsense. Boasting because he said there was a whole million of degenerate gamblers and retaining bets for suckers. We will create something where they can leverage not 10 times, 50 times but 100 times. Cocainel give you crack for free to get you addicted and then they view broke. He is a drug dealer, that is what he does. Tohaad i would just like add that those are his views, they dont reflect the views of bloomberg. Peggy for joining us dr. Roubini. Have steve on the ground as well. Also, my coanchor. I am sorry we have not been him to get a look in through all this. We are watching it now, he just wrapped up. He covered a lot of ground. I am not saying he mentioned anything about the hong kong situation but i am reviewing some of the transcripts right now. He did talk a lot about globalization and protectionism. Andalked about opening up give some specific dates for opening up sectors of the economy. He talked about the challenges, both defensively and externally. Let me run through headlines. All have benefited from globalization. No country can benefit in isolation. Referring to the allegations from donald trump and company, we have to knowledge a problem has arisen. We cannot be made the scapegoat. Globalization must be balanced and inclusive. He says protectionism and uncertainty is rising. Trade and investment is slowing. He said china is going to keep its growth rate stable. China will not flood the economy with excess liquidity, Monetary Policy will find tune appropriately. Swallow the Mediumsized Enterprises to these difficulty. This is coming from some of these hard and fast deadlines. China will further open up access to the Manufacturing Sector. Benefitsp has shared with other nations. He also said china has paid a price for this integration. China has persevered. He says they will scrap ownership limits by 2020. We have already heard that they plan to scrap those ownership limits. We are getting more of a concrete date. 2020, next year. Scrap ownership for the insurance industry. They will also shorten the negative list and open up more. We heard that yesterday. This is the list of sectors china has to foreign competition. He said china supports foreign entry into the i. T. Space, into pharmaceuticals and into new material. They also plan to open up the bond market wider. Currency, the yuan, in this trade war, the yuan will be kept at an equilibrium level. China will not resort to competitive devaluation. That is a lot. Not much on hong kong. Nothing. Stephen engle, thank you so much. I just want to check markets as well as we go to the lunch break. We are seeing hong kong leader gains here. This was closed yesterday for the public holiday. The hang seng index is up by 1. 2 . This is coming through for most of the stocks. I am hearing myself. It is worth noting what we have been watching in the chinese session. Yesterday, very difficult to focus at the moment. Worth noting what we have been watching. These are coming through in that sense that we had a little bit of paring back of those gains. They are still under a little bit of pressure as we go into that lunch break. The hong kong dollar is up by 0. 7 . Technologies, up by about 9 . Elsewhere, some of those tech stocks you have been watching are falling in seoul. This is bloomberg. A. M. Here in11 30 singapore. That is life picture coming through of the World Economic forum. Theave been hearing from chinese president. We will keep you updated. Caps is to and ownership for companies by 2020. Lets get the first word headlines with Tom Mackenzie in beijing. The Trump Administration is turning up the heat on the eu. Threatening the measures. The trade office is proposing an extra list of headings with a value of about 4 billion. He says move is to enforce u. S. Rights in the wtos. The two sparring over eu subsidies. Is European Central bank dictating that more stimulus is on the way. Worry. Ntinued recent measures have been effective. More can be done if needed. The ecb will cut Interest Rates in the coming few weeks. The opinion European Union leaders have failed to agree on the makeup of the top jobs of the block. Concern about gridlock in brussels. These talks reduced no agreement this is the head of the eu commission. He is backed by angela merkel. To extend our production curbs. This is about the relentless rise of u. S. Shale. Ministers agreed to prolong descriptions to train the market and balance the market. Show opecxtensions challenged in the age of shale. This is at its lowest since 1991. The ninemonth extension is unequivocal. I have heard individual commitments. Rishaad global news, 24 hours a twitter,on tictoc on powered by more than 2700 journalists and analysts in more than 120 countries. I am Tom Mackenzie, this is bloomberg. Just getting you back here. We are talking about china earning this. Pressure to the economy there. They will take active measures to respond in the q a session there. Lets get some analysis and reaction here. This is the economist that lord of these analysts. These analysts. The reaction that we had, will they keep the chinese economy stable . With all these pressures coming from the global side of things, how . I think the interesting thing is the positive tone it struck. It was spouting the benefits of global trade and global benefits. Not just for china but the benefits of china taking a greater touch of the international stage. It was also interesting to see that there was such a focus on reform going forward. We had really seen through 2018 there was an important shift away from focusing on internal reforms at the expense of upping the stimulus antito better support domestic demand and trying to stabilize it in the context of a in addition to the impacts of the trade war. Rishaad dr. Roubini had said that would be more fiscal stimulus. More infrastructure spending. There are limits to that. Suggestingve people this amount, there is not a lot of little rome. Wiggle room. It was mentioned in a speech it would still be the peace now stimulus measure. There was a lot of airtime given to the fact that it will continue to support this small to mediumsized enterprise. It is not just about a blanket stimulus. It will really reinvigorate the economy. Shoring up those smaller players and increasing access to credit and also tax cuts. It will also support the smaller players in this very slope rebalancing of the chinese economy that is happening away from state owned enterprises and where the private sector. We are getting someones about those tax cuts you mentioned. Theyre working on tax cuts of 2 trillion yuan in 2019. They will deliver all of the tax cuts if there is one way of putting stimulus is. Local chinese governments are raising fiscal revenue difficulties. When you think about the smaller areas of government, how do they get a good boost amidst all this . That is a good point. It is such a difficult balance at the moment. It shows the extent of vulnerability and the chinese economy. One of the reasons they are not significantly upping the ante is because they dont really have the ability to do that. They have to keep reverting to these piecemeal measures without inflating the debt profile too much because it is not just a sustainable ability sustainability problem. It will be favored by investors as well if they up their debt to gdp ratios. Weakness also seeing on the factory floor. We had the pmis. I have a chart on my terminal showing manufacturers still ailing a man amid all this week demand. Do you think they are holding up a little bit better and somewhere then somewhere expecting on the factory floor . What is important to look at is the trends. It is one of weakness. The more forwardlooking this new series points to ongoing weakness in exports and also in manufacturing. There has been direct onsequences of the trade war the Manufacturing Sector and the export sector. Given the trade war is far from being resolved between the u. S. And china, there is no expectations that we would see a rebound in any of these sectors through 2019. We have manufacturing, we have global trade at the moment. Some of that manufacturing slowdown. We have asian populations, unfunded health care, unfunded pension liabilities as well. Things are not looking good. It is hard. China is experiencing a double whammy. They are in the midst of a statistical slowdown. Global demand has slowed. On the other hand, they are experiencing a structural decline. That comes back to the asian population you mentioned. It is very difficult waters that china is navigating through. The fact that they are still focusing on reform to live a more sustainable outcome in the future, that is a positive. The fact that they are focusing on the peace now stimulus to support this is important as well. We want to get her thoughts as well about what is going to happen with the rba. Traders are saying that there is a 77 chance of a continent. Our economist ismist