Inflation object target. It has put a rock under the kiwi dollar, sending it down 48 pips. Im looking at the crosses. 64. 7, 64. 8 u. S. Cents. We were looking for 25 basis points. The wiggle room being created by the Federal Reserve and despite comments from wellknown and of Jimmy Bullard who had suggested they take into account the , he turned aors bit hawkish. David they announced the inflation reaching 2 in the fourth quarter, Second Quarter of 2021. Fourth quarter of that year. They are pushing a goal back. They said this larger initial stimulus, frontloading it. They not only cut, they delivered a larger cut, taking the cash rate to 1 , which should be the lowest on record. Kiwi dollar, headed down. Give or take 1 . Rishaad lets look at the overall markets because that should give a semblance of the Way Investors are looking at all this. Shanghai, up a little bit, it is green. Hang seng down and extending losses we havent seen since 1984. This is a position we have. U. S. Shares did bounce. On u. S. Equities, dropping back at the moment and that is perhaps responsible for the share indices in japan and hong kong moving to the downside. That is the position. Lets take you to the risk radar and look at gold, 1500 an ounce on the futures contract, coming off the high. Brent crude had gone into official bear market terrain with a 20 fall from its peak. U. S. 10 year yields breaching 1. 7, two basis point move to the downside and that is the position. The big story of the moment is the new Zealand Central Bank cutting Interest Rates more than anticipated. David that is the set up of markets. Lots to talk about. Keenan in newo su york with an update of your first word news. Australia has issued a warning for travelers to hong exercisemending they a high degree of caution, as unrest in the city escalates. They were more cautious tuesday night as police fired tear gas at protesters who route surrounded a Police Station to demand the release of a student arrested for possessing laser pointers which can be used as weapons. Re are more term tests protests planned for later. I want to warn all those criminals, dont misjudge the situation or take restraint has a sign of weakness. Dont underestimate hong societys powerful force for justice and rule of law and security. Su north korea says it testfired a new type of guided missile on tuesday, and it says the test is a warning to seoul and washington as they carry out military exercises. North korean state media says kim jongun oversaw the launch. Pyongyang is frustrated the u. S. Has not eased up on sanctions and accuses President Trump of breaking his pledge to suspend military drills. Being accused of hacking into both traditional and hightech Financial Systems. The final cash into its Nuclear Weapons program. The u. N. Report says pyongyang has amassed about 2 billion from Financial Institutions and crypto exchanges. Haspanel says kim jongun about 30 agents working overseas controlling Bank Accounts and money transfers. To facebook now. Media giant is suing to Asian Developers for allegedly planting malware on android apps to inflate revenue, through click injection fraud, one at generated more than 40 million ad impressions at the end of last year. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. David lets talk big picture. The white house says trade talks in washington next month are still on despite trade salvos. We are planning for the chinese to come here next month, and if there is a good deal or good progress, he might reconsider some things but similarly, he has also said if there is no good deal, no progress, he might reconsider some things on the other side. Rishaad the Trump Administration labeling china a currency manipulator. Beijing gave risk asset some relief, stabilizing the yuan. Richard harris us with us. We will get onto that but the big story, although it is a small country, the reserve bank of a new england making a 50 basis point moved to 1 . What was your reaction to that . Richard small country, big cut. Course, they are talking about developing the economy, putting support underneath it, worried about inflation and inflation targets although i find that difficult to figure out why they should be following inflation. New zealand is a small country and i guess they are afraid of being outside the fence when everybody else is cutting. Is certainly begs the question how do lower late rates help . Rishaad we keep talking about the efficacy and with limited ammunition banks have. Always shining the spotlight on the wrong thing. What is the value of money now . Rishaad that is a deep question, richard. 15 trillion worth of bonds last night in negative territory. It is extraordinary and you have gilts, u. S. Ether treasuries, bonds will follow. If inflation isnt related to it, we really dont know what is going on on the other side of the Balance Sheet is debt, weve seen a huge creation of money so money isnt actually worth very much and in. Reducing Interest Rates makes it worse. 15 trillion negative yielding bonds, 20 of outstanding Investment Grade is negative. Where do you put your money now . Thatrd im still buying in currencies that have positive Interest Rates. Youve got a big move since september, 6 trillion, 7 trillion to double. That is an enormous rise. There is something major happening in the markets. And youve got a country like spain, which had a very high Interest Rates not long ago, all of its maturities are negative. I dont think policymakers really understand what is going on. Rishaad isnt the danger that we are storing up problems for the down the line . Youve got governments who can borrow so cheaply, it can kick the can down the road, making spending decisions, racking up debt, they can effectively become Zombie Companies if rates go up. Or does that lead us down the road . Richard the policymakers are still fighting the last war. They are looking at inflation as a target but we dont know why, but inflation isnt the right target now because inflation is low everywhere even though there is lots of money around. We shouldnt have negative Interest Rates. Somewhere out there is someone who will win the nobel prize for winning at how figuring this out. Sadly, i dont think it will be me. David they are this incentivizing people leaving money in the banks. Does it still go to the wrong places, i. E. Financial markets and not capex . I would imagine the trade war has something to do with that. Richard this is the conundrum china has. Every time they try to stimulate the market, those who have the owners,nerally capital stick it into the property market. It isnt trickling it down. Sortsinese have tried all of measures of infrastructure and the money still doesnt trickle down to people. Policymakers need to think seriously about how they stimulate economies and will prevent it going into financial assets. Richard newcomer when you look at the eurozone and she negative Interest Rates, negative yields, quite a lot of Interest Rate cuts are not being passed on to the consumer. The individual consumer which could engender inflation is not incentivized because they dont. Should there be a mechanism where those rates are passed on to give the policy efficacy . Richard you would have thought that would be a good idea. Who will pay for it . At the end of the day, big depositors, big banks. Of weakening the Financial System in terms of passing those on . Money is a commodity, just like any other commodity and to have money free, giving it away, it doesnt seem to be right or the right way of doing it. David a store of wealth, we talked about gold as a defensive play. Thehat starting to become great in negative his bling back . Richard i think so. In six months, youve seen people uninterested in gold very interested in gold. They are trading at high multiples and will go higher. Gold at this stage of the cycle is the right thing. If we are going to look at things, gold is nice but it is a store of value temporarily. You cant eat it, you cant earn anything from it. Basically, we are going back to sea shells and coins and tulips in terms of that. Thes not a healthy sign for global economy. More of the barter system. We are living in very turbulent help whenit doesnt you have a trade war which could be made worse by what is going on with the yuan and its depreciation, it turns into a currency war. That means a lot further ripples would be underestimating. Richard there is a lot of frothing of the mout about currency wars. It is a distraction. The u. S. As a way of pressing another of chinas buttons. There is no way they are a currency manipulator at the moment and if the yuan was traded on the market, it would probably be 7. 50. I think the issue of a currency war is a distraction. Here are really no penalties rishaad richard, more to come from you. This is the new zealand 10 year bond, yields have gon through the floore. We are yielding up 1. 14 . Big move to the downside, and commentary coming through. David that is a record low. They are pushing back the inflation target. We have more on this. We are talking more Central Banks after this short break. This is bloomberg. In hong kong, we have seen an impact from the protests. Obviously, they are significant in nature and while the impact is not reflected in the results we just announced, you can expect we will feel it in the quarter we are in and we will see how long the protest go on but there has definitely been disruption that has impacted our visitation. Wehas demonstrations began, didnt see Material Impact in hong kong but we have seen a bit of a slowdown overall in meetings and events and business in hong kong. That disruption and uncertainty will have an impact Going Forward on business in hong kong. The impact on exports has been more than we expected and with the potential for higher tariffs on more goods between china and the u. S. , i think the trend will continue. Not at that point where the economy is beginning to level off and things are improving. A further will see hit from the trade war before things get better. Guest some earlier commenting on the Business Impact of the unrest in hong kong. Rishaad Richard Harris is still with us from port shelter. Youve got fairly strong views, why dont you share them . We have to put the whole thing into context. We are hearing about protest and riot, australians saying australia should we care filling hong kong. We know from living here it is not like that. There are maybe 500 radicals waging guerrilla protests in hong kong. The 2 million who took to the streets is the worrying thing for the government. Is it is perspective not a fight between hong kong and china. We are all used to hong kong being a part of sovereign china. It is a fight between hong kong and the hong kong government. Government wont budge, china has to support the government. We were expecting a lot worse from china coming out and telling a rebel colony you must behave. In fact, they came out and supported the government, but those are fairly mild moves to what they could have done and what they used to do. David compare the Business Impact, in fact to sentiment, compared to what we saw in 2014 with similar protest. Richard 20142015 were localized. This time, it has gone territory wide. Weve got protest all over. The police cant keep up and the police are used to major riots. They have been training for 1967 style riots when there were communist rights in the streets by many people. They are fighting the last war. We now have a series of protesters who are savvy on the internet. They know they can be traced, they know what they are going to fight. They come with gas masks and are running rings around the police. These are basically localized. There are still mass meetings, people just looking to peacefully have their say. Rishaad ive been asking many people visiting this one i question, how did the administration lose the heart and mind of the populace . Rbnrichard by being totally arrogant. This didnt happen overnight. The government has seen themselves as mandarin. Dictateted what happens. They had seen themselves as the epitome, the mother of the city. They are really just mayors of the big city, and that has finally got the goat of the people in hong kong who are, themselves, going through severe economic problems especially with the disparity between rich and poor. Rishaad richard, thank you. Chief executive Richard Harris. David coming up, oil in bear markets with lingering trade war concerns denting the outlook for global demand. That is a symptom of Everything Else going on. We will drill deeper next. This is bloomberg. David crude oil extending losses for a third day. Brent crude has lost 5 over two sessions. We entered a bear market on tuesday and are joined by aaron clark. Rishaad the trade war and can use to escalate, and how much is this impacting oil . The u. S. China trade is overshadowing everything in Energy Markets. Wti has fallen the last three days. Barrel. D around 54 a brent crude, the Global Benchmark fell into a bear market yesterday and that is over concerns the u. S. China trade war is escalating and that will impact mobile growth, which impacts demand for fuel and oil. It is overshadowing everything, even bullish fact is in the market factors in the market this week. There was an Industry Report from the u. S. Saying Oil Inventories contracted for an eight straight week in the u. S. , suggesting fuel demand is rising there. Weve got tensions in the strait of hormuz. I ran has threatened additional actions. That is important because one third of all seaborne crude goes through that point. Shrugged offs those factors and is concentrating on the trade war because there is concern that will cut Global Growth and fuel demand. David not that we like to speculate, but why not . Is there additional retaliation beijing could take that would impact these Energy Markets . Aaron there are a few things analyst are looking at and one thing there has been a lot of speculation about is if the u. S. Implements these additional tariffs that President Trump threatened on china that would start september 1, china may put tariffs on u. S. Oil imports. This is one commodity it hasnt touched so far in the trade war. It has put levies on u. S. Lng imports and u. S. Soybeans shipments but it hasnt touched oil so far. Clearly if they did this, it Impact Energy flows globally. The u. S. Is the largest oil producer, china is the largest oil buyer and another fact that is important in this is china gets a lot of low sulfur oil from the u. S. , which is important to make cleaner fuels. There will be a lot more cleaner fuel standards next year so that is one thing Global Markets will be looking at closely. If china puts tariffs on u. S. Oil imports Going Forward. Rishaad thanks, aaron clark into you. In tokyo. Now back to levels last seen in the uptick from the Asian Financial crisis. Look at the bloomberg chart. 67. 41 was her flash crash low, we are trading at 57. 30. We have breached that. Rishaad lowest since 2009. Just checking in with stocks making waves. Markets headed generally south. The kiwi dollar, we will talk about that. We are headed into the japanese lunch break. This is bloomberg. Su 10 29 a. M. In hong kong. Im su keenan with first word headlines. The fed, st. Louis fed president s policy makers have taken steps to account for trade war uncertainty and hes only expecting one more rate cut this year. He told the National Economics club in washington it is important to watch that that ahead of the fed next meeting, but little has changed june when he forecasted. 5 cut. The nature of titfortat trade war is there are threats occurring all the time. Some of these might be implemented. Some might not ever get implemented but the nature of the wars you have titfortat going on all the time. It is not reasonable for Monetary Policy to respond to these threats and counter threats. Su to japan, a key measure of the japanese economy has fallen to a level not seen the wake of the financial crisis. This adds to concerns about growth ahead of the sales hike in october. The leading coincident index dropped to 93. 3 engine, the lowest february 2010. It draws on nine measures including industrial output and shipments of consumer goods. Andlators in singapore india have approved a stock trading link amid a yearlong dispute that left investors with no easy way to hedge risks. The proposed connect between the two exchanges as expect to earn official approval and be operational by the end of the year. The two sides traded barks last year after singapore announced plans for single stock futures on some of indias companies. Indias former foreign has died of a heart attack in a hospital in new delhi. She was 67 years old and a leader of the hindu nationalist bjp. She served in Prime Minister modis cabinet for five years. Said her death was a personal loss and she worked tirelessly at indias Foreign Affairs ministry. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. One hour and 50 minutes from th