Beijing holds purchases of american crops. Salvini pulled the plug. Italys deputy Prime Minister calls for early elections, saying the coalition no longer has majority. Rubber, burning money. Uber posts a loss of more than 5 billion. The stock falls more than 6 in late trading. Matt good morning. Im looking at the euro in pounds this morning as some for fair for repair for european vacations. We are almost at the highest level we have seen since the financial crisis. That this goes back to 1975, quite a long ways. This is 2008. This is the highest point on the chart and we are getting back up there is my point. Watch that closely. Looking red, but not as bad when you look at the green we saw yesterday. Klos across equity markets. The cac was at more than 2 . A loss,res pointing to but nothing compared to the gains yesterday. What do you see on the gmm . Anna volatility seems to be back. Overnight in the asian session, we see very risk on risk off signs as a result of that huawei news. The White House Holding back on approvals. That is leading to riskoff moves. In the asian equity session in general, higher on the asiapacific, so that is one reason to have oil prices remaining quite resilient. We have weaker iron ore prices. Weakness coming through. Aussie bonds rallying. We have a very mixed picture coming through of the asian equity session. I will show you that italian story. Italian yields are surging. You see the lack of demand for italian debt. We see Big Questions about when we are going to see another election in italy. Lets talk about whats going on in china. How did china show restraint with the yuan fixing today . Where the fixing is going to be, and will it be stronger or weaker than expectation . That will be the crucial thing. Good morning. Every morning we are focused on this like a laser. The recent pattern from china is a steady, moderate weakening. When the huawei news broke, everyone was thinking back to earlier in the month. President trump announcing his latest round of tariffs. Sident trump allowed President Trump labeled china a currency manipulator and through the World Markets into convulsion. People are speculating we are going to have another replay of that back and forth. The moderate to , it turned out to be a no drama event. Without the pboc around every oversee, the slow gradual would be, the yuan closer to 7. 2 than seven right now. Lets talk about jgbs. We see the yield coming down. You say this rally is coming to an end. Why . I guess i had been wrong. I saw the yield dropped bit more. Perhaps people thinking the boj is leaning more towards easing policy in some way or another, joining Central Banks around the world. I would look at this with caution. Today. Gdp the second gdp number was good. The First Quarter number was quite a bit higher. This will take pressure off the boj. Furthermore, the bank of japan comes to the market every day to buy bonds. Today it now says it is trimming the size of the purchases in the 10year area. The declineing to in yields we have seen. The bojs target for the yields, 20 basis points below zero, and i think that the 10 year yield will stay within that range. You touched on big themes of the week. Chinese fixing, the move into haven assets. Another one of the big themes has been Interest Rate cuts with global Central Banks. We heard today from the rba about a gentleg surgeon the economy. There was nothing gentle about the aussie dollar and the new zealand dollar. What did he mean by gentle . I think the governor really stood out. He said he gentle turned in the economy. He also said they are ready to ease further if needed. The other Central Banks, we are starting to get laundry lists. New zealand, india, thailand, the philippines, orleans this week. This week. He issued a more positive note. Himself. Entiated among Central Banks, he is probably the most influential central banker. , the note is always looking for trading patterns, something to think about is these rate cuts dont last forever. Have an effect on economic growth. Now. E in this frenzy the message from the rba, we can be on the lookout now for other central bankers to echo this turn,f looking for a looking for positive results of rate cuts. Matt thanks for joining us. Rest ofcheck out the on team by typing mliv your bloomberg terminal. Lets get the bloomberg first word news. The u. S. Is holding off on a decision about licenses for u. S. Companies to restart businesses with huawei after china said it was halting purchases of u. S. Farm goods. The licenses required after the u. S. Added the Telecom Giant to a blacklist. The Philippine Central Bank sees further easing this year. A quarterpoint cut could come as early as next month and policymakers may reduce the ratio of deposits banks much hold must hold in reserve. What we are contemplating is another rate cut of maybe 35 basis points as early as september or it could be the fourth quarter. We also cut another possible 100 basis points for requirement ratio cut. Japans economy grew more offsetted as slumping exports. Consumer spending was a key driver, rising the most in two years. Common sense. That is what Boris Johnson is urging as he tries to negotiate a new divorce deal with the eu. There are less than three months until the scheduled departure johnson says, but he believes there is plenty of time. Indias Prime Minister declaring a new era in cashmere. He claims he is ridding the region of entrenched corruption, but his pakistan counterpart is warning of violence. Global news, 24 hours a day on air and tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. Next on the program, italys deputy Prime Minister calls for elections. We will look at Political Risk in italy next. Matt welcome back to bloomberg markets. This is the european open. Matteo salvini is pulling the plug on italys Ruling Coalition. The deputy Prime Minister called for early elections thing the government has no longer gotta majority. That sent italian yields surging and the spread with bunds widening. Joining us as bloombergs editor in milan. How long does this government have . Start andthe process the count down to an election . The process is underway. A number of bureaucratic moves are necessary. There is a National Holiday on august 15. We are in the midst of summer vacations. Parliament is on recess technically. Them tois pushing for get back in their seats next week. It looks like he has sufficient votes to bring down this government. It is a matter of time. Anna what does the Prime Minister have to say about this . Salvini wants to do this now. He is certainly trying to cash in on his popularity. In his officeht was not happy at all with salvini trying to control the levers. He wants parliament to decide. He feels he has been betrayed by salvini. He wants to have his say. The chances of him winning a are good. Vote matt thank you. Ats take a look right now futures after some big rallies yesterday. Across the globe, we saw the cash trade jump. 2. 3 . C was up the dax was up 1. 7 . It is not unusual to see a drop in futures after such big gains. Dax futures and ftse futures are unchanged. Now lets get the Bloomberg Business flash. Risk as ubsd be at is considering an overhaul at its Investment Bank. Executives are keen to revamp the decision yielded volatile results. Uber has failed to assure investors of its potential or that it can turn a profit. Reported adjusted sales that fell short of estimates and posted a net loss of over 5. 2 billion, the largest ever for the business. Is u. S. Justice department googles Search Operations as officials step up antitrust efforts. Officials have been meeting with companies that could have grievances against google. Broadcom has agreed to buy a division less than a month after discussions for a full merger fell apart. That is your Bloomberg Business flash. Breaking news coming through on the french economy. Productionfacturing falling by 6 from a year ago. The industrial output numbers unchanged. Theindustrial outputs, month on month number down 2. 3 . The numbers do seem to be worse than anticipated. Number of to be a negative stories around the euro right now. Coveredian one we just and deterioration against expectations. Next, we will take a look at stocks we are watching at the ,pen, including novo nordisk fueled by a nextgeneration drug. The u. S. Is going to implement round four, the final 300 billion of tariffs. A lot of that is consumer related. A trade deal looks like its not going to happen for at least another six to nine months or even post the election. Baseline expectation is no deal. The first thing you are going to see playing out in the data is a pullback in capex. Executives are watching the situations. Data will be less. Services providing companies are less subject to tariffs on imports as well as retaliatory tariffs. Some of our guests giving their outlooks on how the trade war is likely to play out in the markets. Your stocks to watch right from around the newsroom, dani burger looking at italian banks. Paul jarvis covering on the beach, and Annmarie Hordern is focusing on novo nordisk. Lets start with the danish Pharmaceutical Company. The worlds biggest maker of insulin is exciting strong performance, raising their 2019 outlook saying sales are going to come in for percent to 6 , that is up from two to 5 . On thego to paul on beach. Not a business we talk about that often. This is likely to be the biggest in london this morning. Fullyear performance will be below Market Expectations because the weakness of sterling has affected their price competitiveness. This business does not hedge against currencies like its rivals. It is able to offer lower prices. Theyre pricing differentiation has become less and as a result, you can expect shares to be really weak. Matt lets talk about italian banks. Matteo salvini calling for early polls. We have been talking about this all morning. We are seeing ptp yields move higher. This should affect anything sensitive to btps, but especially italian banks. That includes unicredit. A lot of possibilities. Anna thanks very much. All the latest on the stock stories that move markets. First go is the function on your bloomberg or the mobile app. Some of the news around huawei has move markets, huawei calling a developer conference in china. While ways Consumer Business Group ceo currently speaking. He says the u. S. Ban kills huaweis chance to be the top smartphone maker, all on the day we have seen markets rocked once again by the latest on the white houses position. The white house has held off on granting licenses to american businesses to supply huawei. American businesses need a license if they want to supply this business because they added the Telecommunications Giant to a trade blacklist in may over National Security concerns. Back to the markets. Matt lets check whats going on in the bond market right now. Especially italian yields. Spreads are blowing out between yields. And german bund italian yields are rising to 1. 18 . Meanwhile, german yields are falling to 59 basis points. That spread increases as investor jitters grow over the amidstc health of italy political turmoil. Coming up, the market open. Futures are mixed with the exception of cac futures, which are really pointing down right now. After gain yesterday, the start of trading is next. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Anna a minute until the start of cash equities trading. Lets look at what has happened in asia and how that plays into markets. Fairly mixed. U. S. Futures pointing downwards and u. S. U. K. Futures. A mixed bag to deal with. Signs of risk aversion and tension in italian markets as yields flow out and yields spread against the blood flow out, bund blowout. This is the 10 year yield. Pickup in oil prices on the mac of the story suggesting the saudis are willing to do something about the fall in oil prices. Oil price, fairly range bound in the mornings session, which is not what you can say about iron ore as they drop. Keep that in mind at the start of the trading day. Looking at the london market and the mining stocks. London futures point higher, dax flat, cac down by. 4 . That be delivered as we open up the markets for the final trading day of the week . What will friday bring . The ftse 100 fairly flat, flat to negative. The spanish ibex, down. 6 . Will the italian story have read across in the periphery . The ibex is weaker. Little movement in the euro around the italian story. Plenty of movement in btp markets. The euro, fairly flat. The dollar itself, fairly flat overnight. At the start of the trading day, it is dominated by moves to the downside. Mary maybe there is a periphery story. Waiting for the italian market to open up or down. Waiting to see the impact on italian banks. This timeweaker yesterday as we saw a blowout in italian yields yesterday. Lets look at what is going on on the sector picture. Pretty mixed. Emphasis on the downside on the overall indexes. This is the sector perspective and weve got mix. It is staples and health care pushing any upside. Financials, an area of ofativity and the area bright red, i wonder if it has anything to do with the italian Banking Sector. Energy stocks are stronger and health care a stronger this morning. What do you see in individual movers . Financials are under pressure but we are seeing a mixed trade if you look at the breadth. 330 stocks down, 240 up. In terms of winners, novo nordisk raising its fullyear outlook helping that Pharmaceutical Company gained 2. 5 , adding that most of any company to the stoxx 600. You see some big oil companies, bp and Royal Dutch Shell putting up gains. If you look at the downside, it ed down byof banks, l e hsbc but you see the italian banks. You see banko santander, unicredit. Lloyds,p. Paribas, so you see an International List of banks on the downside this morning. Opening prettys mixed, but still with the red arrow on the stoxx 600. Asian shares were mixed, as well. U. S. Futures are retreating after the big gains yesterday. The positive sentiment from a strong session on wall street being offset by trade tensions. Joining us now, jane foley, head k. Fx strategy at raboban let me start with a question spurred by President Trump. He is complaining about the strength of the dollar so we are asking the question on mliv, what impact would a dollar intervention have across assets . What is your take on that . It depends on whether or not you are talking long or short term. Shortterm it would be a massive surprise. I think it is unlikely but with President Trump at the helm, it is hard to rule out totally. If we did see something, it would be a shock. They would have initial impact but im not convinced it would be lasting. Centralok at the times banks have intervened, it is fair to say that generally when weve seen the currency turnaround on the back of intervention, it is because in hindsight, the fundamentals were moving in that direction anyway and im not convinced the fundamentals right now are moving in favor of a weaker dollar. Shorttermve a reaction but i dont think it would have an impact because it is unlikely any other central bank would follow the intervention we might see from the u. S. Anna it is more difficult to intervene on your own, even if you are the size of the fed or the u. S. Treasury. What defines a fullblown fx more . As we look back at this weekend what we have seen around china and the allegations of fx will come up a lot, what defines that . How do we know when we are in one. Jane we will know when we see a lot of Central Banks cutting Interest Rates and with the result there is no real net impact for anyone. You could probably already say we have begun to have one and you could argue a few months ago, as well. The backdrop for a currency war has to be an environment with a lot of Central Banks wanting to see or in an environment of low inflation and weak growth. That is the backdrop we are in. You see Central Banks coming in and surprising the markets with some moves. Centralthe new zealand bank, they were the first to cut rates this year. Earlier this week, they went with 50 basis points and shocked the market. The market had anticipated 25 basis points. The news from the philippines today. Been extremely dovish with the intention probably of surprising the market and therefore getting ahead of other Central Banks. I think you could possibly say to some extent, we are in a currency war already but it hasnt hit the big banks yet. Matt is there any chance of a currency war winner . If you look back in history, do you see episodes, for example, weakening and as a result, selling a ton more cars and it doing good for the economy . Again, with a currency war one of the definitions is it is difficult to have a lot of gainers because a lot of Central Banks<