Not thethe process trigger. It says the protests are not the trigger. Tom more mixed messages on trade china says on trade. Trump says he wants to hold a phone call with president xi jinping soon. Signs of some positivity, at least when it comes to the earnings. Alibaba beating the street. David something to take advantage of. The data has been bad. Singapore and we have hong kong, worstcase scenario growth is at zero. Why yields are where they are and why the boj might need to step in. Yvonne a lot of movement in the last couple of hours when it comes to the bond market. You mentioned hong kong, final numbers come out today after the government slashed their forecast. They are announcing a whole wave of measures to boost the economy. We will see if they do enough to prevent hong kong from entering into a recession. Weare still looking weak could be on set for a fourth straight week of decline. U. S. Futures were positive. We have seen the reese deepening of that yield curve the steepening of that yield curve. We saw stronger retail sales in the u. S. Fixed income, fixed income, fixed income. The u. S. 30year yield dropping below 2 . The 10year yield dropping. We are touching those three year lows as we speak. Japanese dropping 24 basis points. Interesting to see what the boj is going to do to halt this plunge in yields. We will watch for that and bringing the latest. Are talking about dollaryen, we are back above one dollar six. Bid today. Ng a tom absolutely. Another escalation in the trade war rhetoric, looming u. S. Tariffs violate the courts reach. Beijing is bowing unspecified is vowing unspecified retaliation. The president says he will schedule a call with xi. Having goode are discussions with china. They very much want to make a deal. We had a deal and they decided not to make it. I think they would like to have that opportunity again. We have a call scheduled soon. We will be speaking to him very soon. Tom certainly, the lack of a trade deal. Our next guest is here to tell us, should you be chasing this rally . People are scrambling for safe assets. You can see this in bonds and gold. They should be negatively correlated but they are positively correlated at the moment. We still have money pouring into our organization. Money is still coming into swiss bonds. People are scrambling for yield and looking for safety. This tells you a slow down is happening. This tell you that earnings are starting to decrease across the u. S. Yvonne is it telling you a recession is coming . You have to see how the slow down transpires. Where the yields are heading right now are where they were in 2015 and 2016. Then, we had china come through and save the day. His china going to do that today is china going to do that today . They are sticking to their guns. They will not save the world this time around. Tom where do you want to be on the yield curve . Are you looking at tens or 30s . Are you interested in the credit space . The front part of the yield curve in the u. S. Feels like the safest place right now. If you want to take the other side of that, you will see less volatility. You will see further rate cuts coming through. We are thinking 50 base points at the next move. We are on a trajectory to zero here. You will start to see a steepening if they see an acceleration in rate cuts. Credit markets, the front part of highyield looks like a nice place to be. Credit spread is such is so valuable today. If Central Banks can get their act together, credit will become even more valuable. The standout asset for us, chinese bonds. They have not kept up with the u. S. Rally. They are around that 3 level while the u. S. Is down around 1. 5 . If we do happen to get to the slow down phase, we will have to play catchup. David we are at 3 on the 10year. Need you step out of the way . They can still participate. I think they are worried about the currency. What they would really love to do, they would love to appreciate the yen against their trading partners. That is quite tough right now due to the Political Tension around the world. The numbers are pretty good lately. We have a reasonable gdp and we had a big bounce and the machinery orders this week, which was a surprise big bounce in the machinery orders this week, which was a surprise. Taiwan, south korea all under pressure right now. Yvonne stay with us. Hayden will stay with us throughout the hour. Su keenan is a new york. , whichs start with china has lost its status as americas top foreign creditor. Japan became the leading holder of u. S. Treasury. Tokyo increased its of u. S. Bonds, bills, and notes by. Lmost 22 billion that is the highest level in 2. 5 years. That is a fraction ahead of beijings holdings back in june. Hero the euro fell to a twoweek low. Andcommon currency was down touch the lowest since august 2 against the dollar. Governing councilmember reportedly said significant easing is needed next month. He is said to have added that it is better to overshoot than undershooting. T. Undershoo the Iranian Oil Tanker in gibraltar has been released. The u. S. Is threatening sanctions to anyone who supports the vessel. It is called the grey swan. Tehranreleased after provided assurances that it will not fail. Person has been killed and dozens more have been hurt as a powerful storm lashes southern japan. The typhoon made landfall in western hiroshima with torrential winds and rain gushing to 150 kilometers per hour. Latrines bullet trains were suspended and domestic flights were also suspended. Forecasters suspect expect more than a meter of rain. 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. I am su keenan. This is bloomberg. Ahead, as hong kong braces for more protest, we will take a look at the growing fallout on the economy. Tom alibaba asks, what china slow down . The company is reporting steady earnings. This is bloomberg. Tom as expected, as we headed into the commercial break, the boj cutting the purchases by ¥30 billion. That is why they needed to buy a little bit less. Yvonne japanese bonds are now the highyield theres. Talk about the highyield ers. Watching the fix and some positive earnings. We can dig into this. As term in terms of alibaba as well, beating the street. Net income more than doubled. Risk ofed just as the recession spiked. Archrival has warned of a tough economic outlook. Joining us is mitchell green. He is an investor in alibaba and has 20 of 2 billion in assets. Thank you for joining us. Invest your top take on these earnings give us your top take on these earnings for alibaba and what it tells us about the company strategy. Mitchell the numbers speak for themselves. Alibaba continues to perform, continues to perform very well. Chinese consumers are spending money on the alibaba platform. They are spending some money on jd. All three of them beat their numbers nicely. I think there is a lot of worry in the western world that china has ground to a halt. Showings like alibaba gross merchandise value growing at 35 . They show that is not the case. Consumers and china are still spending money. Consumers in china are still spending money. David do you think they are expanding a little too quickly . Mitchell i did for a while but i think daniel, who is the ceo, is really focused. We have the core business, which will generate 30 billion and is growing at nearly 30 a year and they will use that to get into other growth sectors. Billiond business, 5 rate. It is going 66 a year. It could be profitable. I think that is smart. Digital media and entertainment is an area i am more skeptical of. They said last quarter, they would start to pare back losses there. I think he went from 50 to 35 this quarter. That is good to see. They believe new retail is a huge opportunity for them. I tend to believe it as well. I think there is an interesting offlineonline dynamic they can play. I think what they are doing in Southeast Asia and india is smart. It is one of the last untapped regions of the world. Greatk these guys are Capital Allocators and they have shown it over time, to be disciplined, and that will be reflected in the stock price. Unless donald trump sends a tweet. If you are a longterm investor, things will go very well. Tom we will bring our viewers the yuan fix. It is something we have been obsessed with the last two days. 12 against the dollar. Pretty much with the estimate. Yuan currently trading at 7. 05. Getting back to the alibaba story, are you adding your allocation in terms of alibaba stock . What is your stock currently trading . Target ise 12 month 219. Mitchell we bought stock yesterday before the quarter. If there were not if the trade war was not going on, this would be a 230240 dollars stock today right the stock can double over the next few years and i think there is no Better Company on the planet over the next decade in terms of riskadjusted return. This company literally prints cash, trades on a midteens earnings multiple. It grows 40 a year this Company Trades it grows 40 a year. All these Software Companies in the u. S. Trade 20 times revenues. Trades 15 times revenues and grows 40 . It is laughable. David why is only 20 of your fund in it . Mitchell we could allocate more. I own a huge percent of my own personal net worth in it, too. I do not run the alibaba fund. Have known these guys for a long time. Alibaba at 6. 75 a share a share in 2011. Yvonne how do you feel about the rest of chinese tech at the moment . Is there more opportunity on the mainland . Mitchell i think that is interesting. The great thing about china, they appear to actually like dominant monopolistic companies. Less people to have to interact with. There is a huge regulatory issue hanging over facebook. We are not investors and a lot of other companies in china. We are but investors we are investors in alibaba. There tends to be, people that love alibaba or the people that love tencent. There are two different camps of people. Tencent, the holding company, is a business i am not close to. It is growing superfast. I do not have i am not an expert on that. David kind of like the lakers and celtics, right . Alibaba lists in hong kong, would it have the same allure to you . Mitchell one hunter percent. 100 . They always wanted to list in hong kong and they could not because of the dual class structure. It is crazy that hong kong did not amend it for them. I like to say it the following way this is one thing alibaba , it drove management a little nuts. States and western investors, nobody uses the alibaba platform. It is equivalent of literally having amazon listed in china and no americans could buy amazon. Once hong kong get started for alibaba, i think it is going to be a great thing for the company when all of these retail ators in china can homegrown giant. I think it is a really good thing. You. E mitchell, thank joining us out of santa barbara. Thank you for your insight. The pboc telling us to look somewhere else now . The pboc needs to keep devaluing the currency. You will either do it through the currency or fiscal spending. It looks to us, seven was not the magic number. They will allow the currency to devalue because competitors are in the region. They are the people playing head to head with. We have a little bit of fiscal spending. If things get really bad, we will have a combination of rate cuts and rrr cuts coming through. I think they are sticking to their guns and the credit impulse, total social financing sitting at 10 is exactly what they posed at the start of the year. Gdp, around 9 . Until we get worse information, we will see that everybody is still sitting here. This is not coming to an end. Aonne hayden, hold on second. I want to show you live pictures happening outside of our building at the moment. Garnering a lot of attention here in the city. A hong kong and a chinese flag, two hands shaking hands. Climbingt sure who is there. Identified as the french firemen. We will bring you plenty more. This is bloomberg. Tom welcome back. You are watching Bloomberg Markets china open. Lets bring you a quick check of the latest business headlines. Thanks to the stock market rally and tax relief and a rise in new Business Value growth. First 14 billion in the few months of the year. Reliefsame time, tax halfnced in may, more than of the tax liability. Bolstered by expanding credit. A rise in 42 . Offsets the ability to make money from funds ever since the pboc became the custodian for the thirdparty payment platforms. David counting down to the open and get the final gdp numbers out of hong kong later. , ay are pretty much told us forecast of at least zero. It is probably going to be bad. We will leave you with these life pictures. Interesting times in hong kong. Yvonne interesting, the climber. Putting up this flag. This is bloomberg. Yvonne you are watching Bloomberg Markets china open. These are life pictures outside our building these are live pictures outside our building. Gathering a lot of attention on social media. People are taking pictures of a flag or a sign of china and hong kong, two hands shaking. Gauging the temperature and where things are, the mood in hong kong at the moment. We will see what happens on sunday where there is that plant march. Planned march. Tom we just got more mixed messages in the last 24 hours. We heard from President Trump saying he plans to have a call soon. Esident xi there is no evidence of any desperation. Up,erms of markets opening futures have been pointing to moderate gains. We had gains on wednesday and thursday and we will see if we get a third day. Shaky, theng pretty trade conversation is part of the mixed. Stepping inhe pboc with additional liquidity. We can turn on turn to the yuan, slightly weaker. Just marginally weaker than the estimates have been. We have seen a bit of a strength for the yuan. David have a look at the open in hong kong. We are coming off a fairly turbulent week and we are bracing for a big protest on sunday. We are flat at the open, which is pretty much what we are seeing anyway. Today, the due out final numbers are coming out. Lets have a look at your property stocks. 4 . D yields you understand why there is a little more value. Finance index in hong kong, flat as well. Here we go with the 10year yield, just above the 3 level. Thate coming from 3. 7 on yield in 2018. This looks to be a good trade, i guess. We can ask hayden that question, i guess. Pretty boldmade a call about a year and a half ago inclusion and 3nclusion trillion would plow into the chinese domestic bond market. Are you sticking to that call . Hayden the money is still pouring in, foreigners are still investing. Atu cannot get the anywhere else. Going into the index, announcements from the other index providers, the other Big Government bond index providers. There will be further inclusion and people will be scrambling for yield. David you had a previous estimate, 3 trillion, i believe, by 2020. Yvonne i just asked him about it. David is it a nobrainer . About theam worried supply of Government Bonds. The unusual thing about the chinese market, the huge policy bank piece. It is the same size as the Government Bond piece. That will make the market more viable. Foreigners are still mainly going into government today. For the first time ever, we are seeing Global Investors make a standalone chinese bond allocation. You have a massive problem today. Imagine going into a recession tomorrow, where will you hide out . If you believe in 200 basis points in european bonds and japanese bonds, you are ok. Otherwise, you have a problem. Chinese stands out that china stands out to somewhere you can put allocations today. You have somewhere where the bond market can rally. Cash. People say, go into cash costs you. U. S. Treasuries, chinese Government Bonds, and gold. Costsou said that hedging are relatively cheap. What about the currency risks . At what level in terms of depreciation for the yuan, which you forecast, at what point does not become so low that it does not make sense continuing investing in chinese sovereign . Hayden they will be hedging it here. If you are hedging most investors are still stuck in the old world. That cost you a lot of money. You can take that currency call out and fully hedge it and get the Interest Rate you are looking at and i think that is where people are missing out today. Exactly what you are talking about, worried about the currency. The is goingber, down faster youre paying the investors faster. European investors are buying unhedged. Money ishere the coming from. David final question. Where yields are, 100 in switzerland, whatever it is in germany. Bonds have been pricing for slow down for some time but they look further ahead as well. Steepening see a re in the curve . Hayden you asked the most crucial question. The yield curve steepen sub as soon as the Central Banks start cutting. That is the sign that you are going into a recession or a slump. If the fed is coming back, the teepens, that tells you you are getting close to the recession. Aggressive rate cutting could stevpens. Re yvonne hayden, thank you. Joining us here in hong kong. We will start with singapore, exports posted another doubledigit decline last month, a further sign the city is on the edge of an economic downturn. Domestic exports declined 11. 2 in july from the same time last year. Both categories fell on a year on year basis. Congressman are being pairedentry by israel the netanyahu government says they are being barred because of their support for a boycott of israel. Unprecedentedp s intervention anchored democrats and one anger democrats and one prominent republican. The Worlds Largest shipping line is adding a gloomy forecast for the Global Economy. A warning about trade and weakening demand for containers. Shares jumped as profit beat expectations but then fell as maersk continued to say that the escalating trade war could move up demand. Alibaba, the cofounder says he is moving to take control of the Brooklyn Nets and their home court. He is expecting to sign a deal valued at more than 700 million to buy the Berkeley Center while picking up the 51 of the nets he does not already own. 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. I am su keenan. This is bloomberg. Tom President Trump is suggesting chinese leader meets directly with protesters in hong kong, tweeting that it would lead