Afternoon if you are watching from asia. These are your markets. We have quite a lot going through and extra data to check. You can see the stocks europe 600 down 2 because of the fair catch fresh tariff ramp imposed kind of came out of nowhere. People are wondering if it means we will not see a resolution. The one to watch, extending gains and treasuries heading higher. Crude at 54. 8. And if you break down some of the stocks and where we are seeing nervousness, you can see basic resources down 4 . And the u. S. 10 year yield at 1. 84. Coming up later on the program, we have a great exclusive for you. When youre on from taking the ,op job, we talk trade, china and luxury with chief executive. Dont miss that interview 30 minutes from them. From now. Now lets get first word news. The new Prime Minister has seen his parliamentary majority cut to just one after losing an wales. N and the liberal democrats won the special ballot. The tory mp for the area have been recalled after a conviction for faking expenses claims. The trade were between japan and south korea escalated. Japan remote south korea from the easy trade list and soul has ul has vowed to retaliate. Labeling donald trump the protests in hong kong as riots signaling the u. S. Could stay out of the issues, saying it is at between hong kong and china. Trumps handsoff approach could bolster executives. A blockade of venezuela, that is what President Trump is considering as it raises the pressure on nicolas maduro. They have thrown support between Opposition Leader juan guaido, recognized by 50 nations as the rightful leader. Saudi arabia will allow women to travel abroad without the permission of a male guardian. That is according to local media reports, ending a restriction that came under heavy criticism and let women to flee the country led women to flee the country. Genderntry has relaxed segregation and lifted a ban on women driving. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you so much, now lets talk trade. President trump says he will be imposing a 10 tariff on a further 300 billion in chinese imports. Until such time as there is a deal, we will be taxing the hell out of china. Thats all there is. Francine the new import taxes will come into effect september 1. Pompeo told bloomberg that the Administration Still wants a deal with china. The president is determined to achieve the outcome. What we are asking for is easy. Indeed, the chinese agreed to it and then walked away. We want fairness and even this, these are Core Concepts even this eveness, these are Core Concepts. Francine joining us for more is our chief asia correspondent. China has said they will respond, are we looking at retaliation . Pretty robust response, as you would expect, from the Foreign Ministry spokeswoman. , saying the trade talks have gone off the rails since the osaka truce. They have warned china will not be shoddy about responding shoddy about responding shy about responding. Clear that the ball is back in their court. And i think there is a real sense of surprise in this part of the world, given that the trade talks had only this week kicked off for the First Time Since may. They were described as constructive and more talks were planned for september. But now everything is up in the air and plenty of economists are asking where everything will go from here. Francine what does this mean for the chinese economy . Isa by all accounts, it negative. Chinas economy is slowing. There is plenty of downward pressure for domestic reasons. , of course, the tariffs have been hurting chinese goods. But the best way of putting it is that it will add pressure, but not necessarily tip it over the edge. As one economists said, it is unlikely beijing will panic. They have plenty of options up their sleeve. Remember, the have a growth ande between 6 6 6 6. 5 . Central Government Debt is still relatively low. There is plenty to do. Obviously, it is a negative, but now they can withstand the pain at least in the nearterm. Francine joining us for the hour is the investment director at Fidelity International and head of Investment Strategy at j. P. Morgan private bank. Lets kick off with you, david. We have 10 extra tariffs. A couple of hours with a stop talking and we were not sure what was happening. What does it tell us what is in the administrations mind . David the continued focus on a deal that works for them in their mind in terms of addressing issues they feel have been at the core of this important relationship. Ie that it is unbalanced and china is not playing by the rules. The comments we heard earlier about not rushing for a deal, this is obviously a very this is a focused a president focus on the reelection. It is not clear if this deal is better than a deal in the Second Quarter of next year. The chinese have shown a remarkable patience as well and a willingness to not withdraw some of the statements they have made. Especially when markets have done well we get more bellicose language and it will be with us for a while. Andrea we are seeing the markets take a step back, but it seems it will be translated into more fed action, if anything. Could say that this is part of what trump is trying to do. We have had a bit of a mixed press conference this week. Francine ill say. [laughter] andrea but given how things are developing, should we see this trade spat spillover into further manufacturing slowdown, slower global trade, slower and , then weternal factors expect more cuts coming up. Francine the market has to take about. Lets say there bet. Does the slowdown we see get reversed . David it is more of a question of sentiment. We have seen treasury yields fall by around 20 basis points just on the back of the announcement. , we woulds a deal expect that negativity to reverse somewhat. We have seen the stocks coming off and that will be a market that could benefit them obviously. Francine are we expecting more contraction . David absolutely. If there is no fix, you will see further pressure upwards on safe havens and a compression of valuations. A Solid Earnings season will help push the other way. But that is why we have not been recommending people sell core bonds. Bond, even before the surge, was up over 15 . That plays into the affect we always talk about, the negative correlation with risk assets. Absolutely, that has played an important role. And if there was a deal tomorrow, could fix all the damage that has been done could it fix all the damage that has been done . It affects the stability of the trade relations and what to capex. There is some damage in terms of efficiency. Bit, are winners a little the idea that you have a deal that is so comprehensive incredible it would turnaround Business Sentiment tomorrow is naive. Francine thank you both. David from j. P. Morgan and andrea from fidelity stay with us. Coming up, we speak to larry kudlow after todays jobs report. Dont miss that interview at 2 30 p. M. T basic yields in europe are down 4 . This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. We have a sea of red when it comes to the markets. Check out this great application on the terminal called the world map. It is realtime and you can see the ftse down, the cac down. If you break it down in terms of areors, basic resources down some 4 overall. This is because of the extra tariffs President Trump has put on china. China is pledging countermeasures as President Trump is escalating the trade war. Lets get straight to your business flash in new york city. 400 people cut from citigroups trading division. This week, the Company Dismissed dozens of employees. They join other banks including deutsche and socgen and cutting jobs in cutting jobs. Rbs plans to award a special dividend, paying a oneoff award. They are saying they are unlikely to meet some profitability targets amidst political and Economic Uncertainty. We are very sensitive to rate cuts and we have got some quite a detailed disclosures that have a big impact. In the first year, it would impact us by 144 million and grows about 300 million by the 30 year. As you can see, our structural hedge wont roll over on it. Allianz profits climb as the Asset Management business lips earnings. Lifts pimco attracted money lower investment money hit the business. Operating profits from nonlicense insurance fell from the year earlier. That is your Bloomberg Business flash. Francine first, the rate cut, then the data. First later today, we get an update on payrolls. A survey suggests the United States added 165,000 jobs, slowing from june space junes pace. The pace of hiring appears to be at 175,000 jobs per month based on trading averages. Todays data will shed light on the rate cut and jay powells decision to signal he is not embarking on an extended easing cycle. Still with us is andrea from fidelity and david from j. P. Morgan. Fed andly mentioned the the first conference that had a lot of traders confused. They are hiking, but it is not a trend. Was it a miscommunication . Would jay powell have woken up and said this is not the direction he wanted to go . Andrea it is a tricky one for jay powell. Slowing, butomy is not falling off a cliff just yet. Time, it was a mishap from his part. We have seen it in the price action and the ranges of twoyear yields going up and down. In this context, the job numbers will be very, very important, even though they are a sideshow. Given the focus that is still very much on the u. S. Consumer, that is the only engine of growth in the u. S. , whether jobs and average Hourly Earnings continue will be an important barometer. The most important question you could answer today is what we are discussing on our mliv blog. The question is do trumps policy or tariffs matter more do fed policy or trump tariffs matter more . David fed policy. It has been one of the dominant themes. Financial conditions take a while to adjust. It does not mean the trade is not important and we can have a lot of mess caused by trade as you can see, but fed policy is more important. And i am sympathetic to jay powell. He had to sound reasonably upbeat so he does not pile on negative sentiment while being dovish, that is a hard balance to get right. I am somewhat sympathetic. We always thought there would be at least two cuts. That is, for me, the baseline. Maybe we get another one trade continues to ramp up. Andrea we are aligned on that. To answer the question, Central Banks have been and provided the tide that lifted all bolts. Arguably today about the market is looking at Central Banks yet again to see if they will step today, the market is looking at Central Banks yet again to see if they will step in. Francine how much of a problem is a higher dollar . . It is something exclusively watched by the federal reserve. If it continues to depreciate as a result of a risk off environment, that will lead to tightening financial conditions which will then pushed even further. Push even further. We expect them to cut once more this year. Of how be a matter markets react and how the economy stabilizes or not. Francine are you expecting stronger dollar . David you could get it one of two ways. Either through growth remaining stronger or some of the asia risk off sentiment. Neither is particularly good for the World Economy right now. Risk sentiment would be awful as you are piling on a higher dollar and tightening conventions conditions. The whole investing world would like the dollar to start gradually decline. Gradual moves the market can deal with, fast ones is trouble. But the world is expecting more Interest Rate cuts and u. S. Growth to slow, so do we. If we do not get either of those things, the dollar remains strong. Francine thank you both. David from j. P. Morgan and andrea from fidelity, both stimulus. Commodities both stay with us. Commodities are roiled as trump wants gasoline on the inferno. This is bloomberg dumps gasoline on the inferno. This is bloomberg. Francine this is bloomberg surveillance. This is what we wanted to show you. This is a function you can have on the bloomberg terminal. Breaks down, sector by sector, the ones that are losing or gaining depending on the day. You can see discretionary is down and looking at materials, basic resources are down some 3 . Aftert for a weekly loss the steepest drop in more than four years. This is after President Trump abruptly escalated trade war with china. Is andrea from fidelity and david from j. P. Morgan. I dont know what you do with basic resources, it is such a direct play towards world growth, trade, and china. Markets,f you look at they have underperformed. It is expected that in a world where global trade slows, resources take a beating. Valuations are not superexpensive, arguably. They have been lagging most of the year. It is a matter of finding the right balance. If you look at the latest earnings season, look at the performance of the leverage companies, anything that is related or has got anything to or the external Manufacturing Sector or auto sector has come under pressure and underperformed. As long as the situation and tensions remain, this is likely to continue. Francine we will get back on this shortly. David from j. P. Morgan and andrea from fidelity stay with us. Up next, before taking the top job at ferragamo, we speak to the chief executive. Francine wrapping up the trade war, President Trump announces a new 10 tariff on 300 billion of chinese goods. Beijing vows to retaliate. European stocks tumble. Miners get it especially hit hard. Today is the jobs report, and the u. K. Prime ministers majority cut to just one after the antibrexit democrats win. You are watching from asia, this is bloomberg surveillance. I am Francine Lacqua from london. We are getting a little bit of data from construction pmi. This is significant. Anything below 50 means there is a contraction and it is a little bit below even the, i guess, bottom end of the estimate. Construction pmi for the u. K. Is at 45. 3. The forecast we had was 46. Pound at 1. 2126. I was at a press conference with mark carney. Governor carney was trying to say as little as possible about the possibility of a no deal brexit. Thats check out what is moving in the markets. The biggest movers today across the stoxx 600 are companies that are sensitive to auto and we have luxury. The chipmakers are down more than 11 . Faurecia auto parts maker is down 2. 85 . Which isresponding, gloomy for a luxury maker, especially impacting consumers. Traders worry that trump will go after french wine. Produces wine, champagne, and luxury goods. Francine . Francine lets get to first word news with viviana hurtado. Viviana we begin with the escalation in the u. S. China trade war. President trump with a 10 tariff on 300 billion of chinese goods. There is the potential that it will hit American Consumers more directly or the list of targeted toducts are respected think are expected to include smart phones, laptops, and childrens clothing. Taken decades china has advantage of trade versus the United States, and southeast asia, and it is time for that to stop. President trump has said we are going to fix it, and to fix it requires determination, and that is what you saw this morning. The president is determined to achieve this outcome. Viviana the u. S. Federal trade commission is looking at whether a Company Bought upstart for competition. This is part of the trump administrations esca living scrutiny of tech giants. Boeing redesigning escalating scrutiny of tech giants. We have learned that boeing is still aiming to present software to regulators by september. The timeline could slip after the changes of a Flight Control system will read input and max planem the plus computers. There is an order that appears to offer authorize a second round of sections on moscow come as punishment for the 2018 nerve agent attack on a former russia spy in the u. K. The order for this u. S. Bank loan 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, i am viviana hurtado. Francine lets get to an exclusive interview, it is one year this week since the Italian Luxury Company made headlines with the appointment of a new chief executive. They are known for making shoes for Audrey Hepburn but has struggled for a fresh look in recent years. Adding to challenges is the u. S. China trade war, and the whichtion in hong kong, affect sales. She brings in 20 years of experience with the gucci brand. Welcome to surveillance. Dropping by in london. Concerns t your about how these trade concerns impacting the u. S. And china are affecting your business. They wake up this morning has been looking around and seeing what is happening in the trade that wehow i believe have to stand and to stay consistent with our strategy. It is very difficult to make any kind of anticipation. What is more important, i believe, is to keep to stay consistent. Know, Salvatore Ferragamo is based in italy, and this is one of our we want to keep these andhe core of the company, this will not change with the impact of the trade war. We need to keep alive the use of beenand what we have deliverin. Much have sales in china been affected because of the trade war, and how much have they been affected in concord hg because of the protests . We have been announcing a few days ago, we did not perceive any major impact from the hong kong protesters. The protests are continuing, and it is hard to make any kind of prediction about when it will last and how it will last in a way, so