Or no deal. If there is going to be a deal it has to be the first couple of days parliament returns. Sorting threadbare roger of income reports. Left wants to see profitabilitys. The law of large numbers is catching up. We call it the star wars symbol stumble. Experts on how they are reading at jumble. China and the u. S. Aligned economically. I do not think the feds job is to make sure theres not a recession. All straight ahead on bloomberg best. Hello and welcome. This is bloomberg best the weekly review of the most important business and analysis. Rom bloomberg around the world after trump announced large terrace last week, sent shockwaves through global markets. Keeping stocks in the red this morning on fears that the us china trade wars s plating, asian stocks heading for the biggest selloff this year after keya you and fell past the seven per dollar level. Due to the tariffs on chinese goods. China has ordered state owned enterprises to suspend imports of american agricultural products. What is china trying to signal today. As though they are trying to send a message back that they will up the ante when it comes to a trade war. They made it clear that what they can do on the currency side of things per and we had news that theyre not willing to buy u. S. Agricultural products either. A blow to one of President Trump scored a mans. Morningresident this his response to issues in the currency market, china, dropped the price of their currency to almost a historic low, it is called currency manipulation are you listening, federal reserve, this is a major violation that will greatly weekend china over time . Would not use foreignexchange as a tool the trade dispute and saying in a statement, im fully confident that the yuan will remain a strong currency the product despite a brief fluctuation mid external uncertainties. Is it fair to say the markets did not see the chinese s plating in this way. Escalating this way. Currency is seen as a weapon of last resort. We heard repeatedly from china they were not going to use that you and it was knocking to be used as a weapon in the trade war we saw not going to be used as a weapon the trade war. We sought finally china hitting back this way. We areecently as friday hearing from Administration Officials that if the chinese will go ahead and deliver big buys of soybeans and other big products, goods that maybe tariffs can be avoided. Signaling happily today that it is not going to go down that route. It is kind of lost hope for a. Eal dow off at one point by more than 900 points. Today the dow moved 735 points. Trump of administration formally labeled china currency manipulator after that pboc allowed the yuan to fall in retaliation to new u. S. Terrace. In response, china has taken steps to slow the yuan dissent at two below at seven per dollar. This has profound significance does it not . The civil is him is significant in terms of what it says about the rapid deterioration of relations between the u. S. And china. In terms of the actual impact on china, it is very limited. Because what they have limited what this does is triggers a set of negotiations and negotiations between the u. S. And imf about what china is doing from the u. S. Perspective. Then of course airports pencil there are potential penalties the u. S. Can impose on china. But china already faces significant u. S. Tariffs. We are seeing a message from the pboc cooldown folks. The yuan has suddenly not become a one way that. We have seen a shot across the bow to people who became overexcited yesterday. The stock market bounce back today on the feeling that maybe this is recoverable after all. Howit is really hard to see that happened, when people get done again. It becomes a really personal competition between xi jinping and donald trump neither man wants to back down and lees face. Trade should not be personalized. And lose face. Trade should not be personalized. Central banks taking center stage the r. B. I. Cut rate by 35 basis points print in new zealand the kiwi has tanked after the rbn z announced a larger than expected rate cut. 15 basis points. The messages Central Banks are willing to glow go big. It is a global track. We had James Bullard fed president saying theres no reason to pile on rate cuts. But markets do not seem to be buying that. Traders are pricing in 100 base cut 100 basis points of rate cuts from the fed of the next year. That will be on top of the reduction we got in july. Again, i think the messages that Central Banks are very willing to go and to go big. Everybody is looking at the two elephants who are wrestling the middle of the Global Economy. That worried about what might trying to steal a little bit of a first mover advantage. They are not going to say it. But theyre trying to weaken their currency so they have cushion for their exports going into whatever happens. The problem is that if everybody goes in that direction, you have a currency war that leads everybody into recession. Im looking at the u. S. Threemonth can your turf curve and you can see that this bond surge has gone much more into negative territory that it was. We are still down 34 basis points below zero. If that is not an inverted curve, i do not know what is. It is the biggest fiveday drop since the debt ceiling debacle and 2011 for the 10 year. That move is nothing that speaks to how entrenched the lower forever stance with regard to policy rates are. If that is the global backdrop, then it is just a matter of time until that continues to weigh on the u. S. The data we are getting are simply telling us that, hey not only are we having this trade war but the Global Economy is in an even worse position going into it than we have thought. You a 30 year yield closing into their lowest level ever. Negative yields in the u. S. , what would it take for that to happen . Probably not around the corner. What would take is a serious downturn in the economy. A recession in which the fed will take the rates all the way down to zero, will restart qe. At that stage we may well see negative in the u. S. As we are seeing them in other parts of the world. The wan rose after China Central bank set its daily strong than expected. It is the first time in over a decade that the pboc set the reference rate weaker than seven per dollar. Peoples bank of china. Does this mean that we are seeing stabilization in the yuan . Why is the market taking it that way when this is the first time we have seen. The key takeaway is there still somewhat stronger than american anticipated. Sure, theyre willing to allow it to go on a certain direction, to allow the market to push lower. But it seems they want to keep some thing about flow as well. That is important from the pboc. Because they have been preaching eight want to keep it somewhat stable and do not want to let a perception run away from themselves in terms of a oneway bet on the yuan. Thats probably what the market is taken from the level today. Extending gains. Up to percent. Every group in the s p 500 are higher. Can you believe that it was just monday when we saw the big selloff . No. Chinas Producer Prices contracted for the first time in nearly three years. Outlook for factory profits in the trade war with the u. S. Key takeaways . As you say Producer Prices, those factory prices dropping minas, 0. 3 for the month of. 2 for the month of july below the forecast. What this suggests is that profits for some of these Industrial Companies will be squeezed. Then there is this divergence between the factory prices and Consumer Prices. Because he saw Consumer Prices taking up 2. 8 , above forecast. Toecast had been increased 2. 7 . That is in a conundrum for policymakers in terms of stimulus additional stimulus they punch pump into the system. The trade picture looks complex and Growth Continues to slow in china. The white house is holding off on a decision about licenses for u. S. Companies to restart business with paul way. This comes after beijing with huawei that was after beijing said it was halting business with u. S. Farming goods. Does it show willingness on the part of the u. S. To find a way to negotiate with tiny echo with china . It is another sign that things are falling apart. We had two olive branches out of the g20. On the u. S. Side was going to be limited resumption of business with huawei and on the chinese it was going to be resumption of agricultural purchases. In the past week we have seen both of those be taken away. That is not a good sign. We have talks in september that are scheduled. Big questions over whether they will go ahead. Still had, as we review the week on bloomberg best, legendary investor howard marks shares his thoughts during a wild week for global markets. Plus, former u. S. Treasury secretary Larry Summers weighs in on the risks of currency wars. Up next, more the weeks top business headlines with business reports. With the debt they have with the stock price where it is, it will be to go to do another dear bill another d. L. This is bloomberg. Haslinda this is bloomberg best. Lets continue our global tour of the weeks top business stories with a deep dive into a flood of earnings reports. Among several european banks releasing results. They surprised with an executive shakeup. Down ason is stepping chief executive of hsbc. The bank announced secondquarter earnings and a Share Buyback of up to 1 billion. A lot of people were taken by surprise. Wed heard possible differences. How much of the focus will be on someone who can shape up the u. S. And asian franchise . According to our reporting, they may potentially look outside as well for the first time for hsbc. A big see it coming from change for the bank. Its a hot topic for the banks. Returns are not being positive. They had extra liquidity they would like to use. The business is not very competitive compared to big u. S. Banks. There are a few decisions that need to be taken. Haslinda Congress Bank commerzbank says its higher profit this year. A fourth straight quarter of falling revenue. Operating profit fell. How hard is it to do business in this negative rate environment . It is getting harder, especially if you believe forecasts like this. On the other hand, its a reflection of what we have seen over the last year. The question is not how hard it is. What you have on offer to counter the issues . To a certain extent, its been a very successful way of dealing with it through the last year and corridors. Abn amro has been and estimates on the bottom line. At the is wellplaced end of the second year. 693 million euros. That lowerid mourn Interest Rates are having an impact on margins. Please tell me you can see a glimpse of light on the revenue story at abm. Good morning. All results are good this quarter. Our revenue is good on the Net Interest Income side. , interestw rates income was up quarter on quarter. There are a few one offs in the area. Pretty stable. Over time, quarter on quarter, you will see the effect of low rates impacting deposit margins. Thats why weve called that out this morning. Operating income for the First Quarter that be the highest estimate. This comes as the banks vision fund expanded its Financial Technology portfolio. Honda did to the Auto Industry in the 70s, top bank is doing for the entire Venture Capital community. Its the most disruptive Japanese Organization we have seen since japanese autos disrupted the u. S. Auto market. This is what happens on the ground. You are a hot company and you. Re raising 50 million softbank says, we will give you 150. We are investing 100. If you dont say yes within 48 hours, we will go to the Second Player and giving them 100 million. They are being elbowed out of the way by softbank. It is a direct disruptor in the space. Uber out was secondquarter results including a 5. 2 billion loss. Shares down to the lowest levels since may. What are your biggest takeaways . The bookings group looked good. It was a revenue miss. Part of that was related to the use of subsidies in their ridesharing business as well as food delivery. That is where they have been using subsidies for a while. They have been seeing pricing pressure. Food delivery is a fragmented market. On the core ridesharing side, they are doing fine. The law of large numbers is catching up. It looks fine. Shares of left are higher after the Company Reported a secondquarter loss and sales better than what analysts expected. The overall numbers are good. See movingt to towards the path of profitability. The adjusted loss numbers are better than expected. What is really key here is that lift is saying, we think our annual numbers are going to be hundreds of millions of dollars better than we expected. They are improving their forecast. They beat analyst expectations. Thats why we are seeing this reaction. Jayz shares plummeting in late trading. Earnings screen by falling themepark attendance, spending on new streaming services, and a flop of a movie inherited in the acquisition of fox. Disney opened the most anticipated themepark attraction ever, star wars. Attendance dropped . Yeah. The star wars stumble. Weve written about this. Social media posts saying, theres nobody on main street. Theres no way for these wait for these rights. There were a lot of explanations given. Bob eisner was apprised. He said, we tried to hard to limit attendance because we thought the crowds were going to be so big. They had a reservation system for the attraction. People just data way. The same thing at walt disney world. People were staying away because they are waiting for that galaxies edged open later this month. As a group is weighing offers to sell some of its businesses with the ceo saying units with no clear future cant keep earning money. This comes amid an economic slowdown in germany which is added to concerns for the industrial conglomerate. Its market cap has been cut in half. Theres a possibility the group could lose its place in the dow. It will present ahead with plans to lift its elevator music business. Are all these moves that youve announced today going to be enough to turn the company around . I clearly think so. If you take a look behind the current figures, you see some Strong Development as well. The overall numbers are clearly distorted by the weak Automotive Industry and the problems in steel. You see that we improved marvin margin in one quarter. We are clearly looking ahead. We can for filler guidance for the full year. We have seen a turnaround in the margin. Kraft heinz is feeling the heat from wall street. , nearly 16 plunging to a record low after reporting earnings for the First Time Since february. The results were disappointing. Its a rough welcome for the new ceo who said, the level of decline we experienced in the first half of the year is nothing we should find acceptable moving forward. Problemsare definitely here. One of the Biggest Challenges is that they are in a tough position as far as making a major acquisition. That was always the goal here. They tried to buy unilever. They couldve gone back to cutting costs which is what they do best. With the debt and stock price they have, it will be very difficult to do another deal. That leaves the new ceo to try to get these brands growing. Theres a lot of stuff there that is out of step with where the consumer is these days. Global markets took a onetwo punch this week from escalating trade tensions and steepening Central Bank Rate cuts. Thursday, Oaktree Capital howard marks told bloomberg how he thinks things will play out. Usually, we stimulate the economy when its doing poorly and we want to wake it up from the doctrines. We generally dont stimulate the economy after 10 good years. We usually accept that there will be an ebb and flow to the acle and that there might be justified recession. We have the lowest Unemployment Rate in 50 years. You usually dont stimulate at that time. The point is, the fed can stimulate. So, is it the feds job properly i get the feeling, no. Job is think the feds to make sure theres never a recession. Say,the fed chair tends to jay powell said it last month, i have a quote in there from september 2007 where they said, we will do what it takes to keep the expansion going. Is it the feds job to keep the expansion going for forever . I dont than so. If i ran the fed, im not applying for the job, when the economy is roaring, i would try to cool it off so theres not too much inflation. When its really we can not creating jobs, i would stimulate it. In between, i would leave it alone. If the fed keeps cutting rates, what does that mean for investors . The 10 year is at 175. Bonds are paying 3 . High yield is in six. That savers and moneys and people with are going to have trouble getting good returns. Emanate from the base rate which is what the fed says. Below are it is, the lower the perspective return on everything is. The process of lowering the rates causes assets to inflate. There will be more wealth piled up by the people who have assets. Harder for people who have a little bit of savings to get a return. Best,ing up on bloomberg more of the weeks top stories in business and finance. Conflict continues on the streets of hong kong. A bloomberg scoop explains why Asset Managers are on the break of crisis. More compelling conversations. Malaysias foreign minister says his Company Country will become Collateral Damage in the trade war with china. Its very unfair. You are being a big bully. 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