Resident negotiators with no deal odds rising. There timing is a hint may be a willingness to talk. Another round of earnings reports sends signals about the Global Economy. Xiao me is facing headwinds on a number of Macro Economic fronts. We are seeing weakening. Rosalind Federal Reserve chairman jay powell speaks at jackson hole. We are at a sort of equilibrium right now and i would be happy to leave rates here. We have to be careful not to ease too much when we do not have significant problems. Lower rates will stimulate our economy somewhat. I dont see this as the end of a rate cutting cycle. I think we are where we need to be. Rosalind it is all straight best. N Bloomberg Rosalind hello and welcome. I am rosalind chin. This is bloomberg best. Your weekly review of the most news and Business Analysis around the world. Lets start with a day by day ns look at the top headlines. On monday, markets responded positively to news that seems to imply an easing of u. S. China trade tensions. The Commerce Department announcing the u. S. Will review the huawei waiver for 90 days so companies can continue to do business. They have 90 days for a limited art of their business. This extends a 90 day reprieve that applied to existing u. S. Customers of huawei, particularly those who run Rural Networks that depend on huawei equipment. Some suppliers of the headset business. We are looking at google and its android software. This allows google to keep updating huawei phones with security patches. This is a limited move. We need to be careful about over interpreting this. There is still very much a crack down happening on huawei. The department of commerce added 46 new huawei subsidiaries to its blacklist today, but at least a temporary retrieve for some u. S. Customers and limited suppliers. Matt germany could spend 50 billion euros in an economic crisis. That is according to the finance minister all off schultz, olaf schultz who has put a , number on the stimulus. Fears of a recession pushing berlin to consider suspending its balanced budget policy. That is what germany spent in the last crisis. We now have the firepower to use that money. We have been lowering our debt to below 60 . We heard from the bundesbank today that a recession is entirely feasible with a contraction in the Third Quarter is possible. We heard the government does have the money. It is running a surplus. To 6 ebt burden is down gdp and declining. If it does decide to spending is needed, the cash can be found. In italy, the Prime Minister announced he is going to resign. Salviniattacking matteo who was sitting next to him. Salvini calling the decision to spark a political crisis irresponsible motivated by , personal ambition. He is going to resign in a couple of hours. He is going to hand his resignation to the president. Tomorrow, likely tomorrow morning he will start with the party. What is next . We will have to see if there is a chance to form an alternative majority in the new government. If he does not see those chances, it will go to the next election. If he sees any progress possibility he will name a new , Prime Minister ask him to form , a government and talk in the parliament. The fivestar movement and the Democratic Party are holding talks over a possible coalition. What are the possibilities they Work Together . They do have some common ground. Is adea being floated limited program focusing on areas where interests do meet. Ecology, civil rights. There is the possibility for common ground. It is an open question whether they can bridge over there many differences. Fed unity appears to be fraying ahead of the annual gathering of policymakers in jackson hole. Policymakers viewed the 25 basis point cut and insurance move, but argued if it would lower rates and how much. That sent ripples through the bond market. What did you take away . Michael it appears to ratify what they did. If they want to do it again in september, the conditions they were talking about, uncertainty over trade issues, that sort of thing still remains. We dont know how they are going to react if we see the consumer side of the ledger come in strong. Jobs have been strong and so has retail spending. If that continues and if up a bit do they , want to pause and wait and see if something more is needed . That is a possibility. We will get a better idea friday after jay powell speaks. Alix china hits back at the u. S. With tariffs on 75 billion of imports. That will take place in two stages. One is september 1 and one is december 15, echoing the tariffs on chinese imported goods. Are the retaliatory tariffs spinning out of control or is this a measured response from china . It is a measured response. It is a sign of how things are escalating, continuing the theme of the summer. As we have seen today both sides , keep slapping tariffs on each other. The heat is rising. Vonnie we are counting down to those headlines from the Federal Reserve chair at jackson hole. About to give his speech behind closed the worst. Michael mckee has a copy of his remarks. Chair does notd go beyond his often repeated promise to act as appropriate to sustain the expansion even , though he says trade policy is a worrisome thing for the u. S. Economy. From his remarks, the most important effects are felt with uncertain lags of a year or more the committee must look through , what must be passing developments and focus on things that seem to affect the outlook over time or pose a risk of doing so. We will act as appropriate to sustain the expansion. Does this meet the test of being dovish enough . Vonnie two major stories hitting the economy and markets. Jackson hole and trade. First two trade President Trump , saying he will respond to china slapping another 75 billion in tariffs on u. S. Goods. This is threatening the stability of Financial Markets in the u. S. The only incumbent president s not getting reelected presided over recession. I think trump knows he has to rectify the situation. Things are weakening. He needs to do whatever he can to stimulate the economy. Kevin the president tweeting out my only question is who is enemy, chairman he hasor president xi . Made a calculation he is going to double down on attacks on attacks in Central Banks. I think the reaction back and forth has been instructive. You saw stocks fall after headlines china was going to retaliate and raise tariffs on u. S. Imports. After that, jay powells speech pledging to act as appropriate and hinting at more easing was enough to push stocks up. President trump came out and developmentstrade to digest. Now the facts are back down. Emily trump said he is going to respond and he has. He says china and many other countries have been taking advantage of the u. S. On trade, intellectual property theft and , much more. Our country has been losing hundreds of billions of dollars a year. Sadly past administrations have , allowed china to get so far ahead of trade it has become a , burden to the american taxpayer. I can no longer allow this to happen. We must balance this unfair trade relationship. China should not have put new tariffs on products, politically motivated. Starting october 1, the 250 billion of goods currently being taxed at 25 will be taxed at 30 . Additionally, the remaining 300 billion of goods being taxed at 10 will now be taxed at 15 . Rosalind still ahead, as we review the week, much more from a busy week of fed speak. The men and women who make Monetary Policy talk frankly about the path ahead. And earnings reports made headlines, with investors paying attention to the forward outlook. There was a flexible way we were able to use our cash. We were ready for whatever the world might throw at us. Rosalind this is bloomberg. Rosalind this is bloomberg best. Even as earnings season winds down, there is plenty to ponder. Lets begin with a round up of the key players in chinas tech sector. Starting with shao me. The prophet missed estimates as the Company Fights to maintain its position in a market. G smartphone can we blame this on the trade war . They are facing headwinds in a number of macroeconomic fronts. They are seeing pressure on their overall smartphone sales. They do get most of their revenue from the lower margin sales. They are trying to expand into businesses like selling ads. Online content like games and music, and also sells other connected devices. We have not seen sales take off enough to offset sales in other areas. Investors have not seen a lot of promise in new areas to induce growth. The connected device unit did grow with the sale of tvs. The biggest searched engine in china baidu beat rivals estimates there putting out. Where were the bright spots . Basically numbers offered investors some reassurance, at least for now. Its business grow in the face of a broader Macro Economic slowdown, but also send off essentially a challenge from upandcoming rivals. Also, existing incumbents like tencent. The worlds biggest miner warned growth in china and trade tensions are the key risks to raw material prices. Bulletinhis, the hp boosted their pay off to a record earning. With our strong balance sheet, the way we are able to use our cash, we are ready for whatever the world might throw at us. We can profit from a downturn but we can also throw off a lot more cash potentially being an upturn. Potentially in an upturn. Is the dividend sustainable . We dont have a progressive dividend. Early in my tenure we changed it , to a flexible dividend. Ratio ofed on a pare 50 underlying earnings. It will go up and down depending on how markets perform. It is one of the tools we have to sail through choppy waters in the future in the way you have described. That is why we are comfortable paying this dividend today. Australias biggest gold producer closed with its best profit in years. They reported fullyear earnings up 22 , 561 million. A record output from its mind. Mine. Our priority is to get the best shareholder returns. We focus on where we can add strength in m a. Looking at new projects. Also, keeping in mind returning shareholder funds to the shareholder. We increased our dividends by 19 . We are well placed now. Our methodology has stood up well over the last five years. We just intended to continue the focus we have had. We are talking steel, the company came out with earnings, giving the green light to a 700 million expansion of its northstar steel mel. Steel mill. That is in ohio. That will boost capacity 40 . The Company Posted underlying profits, 966 million australian dollars. There is growing concern about a potential global recession. What are the markets telling you . It is a mixed story. U. S. , the economy is still ok. Automobile construction remains strong. We have seen some price softening in recent times, but the chinese economy is strong. A lot being consumed internally. Here in australia, softening in residential activity. Just a moderate softening from High Historical levels. Generally the regions we operate in the markets are ok. Stores coals and t. J. Maxx reporting earnings. Missing estimates, sending shares down signaling there may , be more retail woes ahead. This quarter, inventories are building up and they are not selling as much merchandise. The real trouble spot was their home goods change jane. Greatlly, they had not merchandise selection. The good news is, because of the way that inventory model works, they turn it quickly. When they land on the wrong product, they are usually able to work through it quickly. s, a pretty grisly number, and a decline in sales. We do see some early promise from this new initiative. Accepting returns of amazon purchases. It shows the importance for stores thinking creatively to. Raw foot traffic kohls are something of a leader. Vonnie shares at target, a record. They have that old feeling back. Third quarter they have done exceptionally well. Comps up 3. 4 . Traffic higher. The ceo continuing to help. They have brought brands into the target stores, across different sections including kids, food apparel, furniture. , consumers liking that. The delivery strategy, really second, working to bring down margins and drive more traffic the store. The turnaround showing up in a big way. Lets have a look at qantas. Earnings were out and the company says the Leisure Travel market has weakened. Demand from corporate customers on the business side is also flat. Pessimistic comments as the Company Reported lower fullyear profit. Demandsay you have seen for flights to hong kong drop by 10 . Do you expect to see that continue . Do you see further weakness . How long will that continue . We expect this will continue over the next couple of months. We have the flexibility of moving to slightly smaller aircraft. Essentially the same aircraft, same product with less seats. We are going to do that over the next feline to take 7 capacity next few months to take 7 capacity out. Anticipations this will continue for the next few months. Rosalind welcome back to bloomberg best. The Federal Reserve was a focus of constant attention this week remarks atpowells the annual symposium. On monday, President Donald Trump urge the central bank to cut Interest Rates by at least 100 basis points, saying such a cut would aid the Global Economy as well as the u. S. The boston fed president Eric Rosengren was one of two members who voted against the cut in july. He explained his dissent in an exclusive interview with kathleen hays. Mr. Rosengren it was tied to the fact Economic Conditions are still pretty good. Inflation is a little bit low. The core measure is 1. 6 . If you take out some of the outliers using the dallas trim mean it is closer to 2 . ,my own view was we have to be careful not to ease too much when you do not have significant problems. The focus is not to do something that affects the Exchange Rate that necessarily takes care of the world economy. We are supposed to focus on unemployment and inflation in the United States and we are in a good place. There are costs to easing when we do not need to ease. What is the cost . Mr. Rosengren there are several costs. You cause people to buy houses and cars earlier than they otherwise would. You make a temporal substitution. You make an investment now because Interest Rates are temporarily low. When we lower Interest Rates you make expenditures you might not otherwise have made. When we lower Interest Rates, we make the cost of debt lower. Households and firms are more likely to be leveraged. We have to think about the Financial Stability characteristics. How much do we want households and firms to be leveraged whenever we have a significant downturn . As you look ahead to the september meeting, you are a Voting Member the question of , cutting rates again, it will be on the table. Are you watching the consumer closely as something that would tilt you not toward waiting to see but saying no, i am on , board . Mr. Rosengren i am watching a number of things. Consumer confidence is weaker. That is something i am paying attention to. The retail number was strong. That would indicate that if that continues we will have enough , consumption it is going to bolster gdp. Im going to Pay Attention to geopolitical concerns. Brexit coming up in october. There are clearly problems in hong kong that could spill over in a broader sense into international markets. Plenty of things to be worried about. I think we cannot be determining Monetary Policy too far in advance. Forecasters expect we will get reasonable growth over the second half of the year. Yes, bond rates are low but it is reflective of the Global Conditions, and Global Conditions are weak. Im not saying there are not circumstances where i would be willing to ease. I want evidence we are going into something that is more of a slowdown. If im growing at 2 , im not as worried. Rosalind coming up on bloomberg best, more conversations with top fed officials. Jackson hole was buzzing as pressure builds on the fomc to deliver further rate cuts. And members share perspectives on the policy debate. If we were ever data dependent before we have to be , uber datadependent now. Rosalind you are watching bloomberg best. This week, the Federal Reserve bank of kansas city hosted its symposiumnomic policy in phoenix, jackson hole, wyoming. It was challenges for Monetary Policy and bloomberg was there to discuss those very challenges with several of the fed president s, beginning with esther george, the head of the kansas city fed. as i look at where the economy is, it is not yet time. Im not ready to provide more accommodation to the economy without seeing an outlook that suggests the economy is getting weaker here. Michael you are an advocate of raising rates to get ahead of inflation. If you were not ready to cut rates, are you happy with where rates are, given that inflation is lower than anticipated . Would you be happy to leave them at this level for quite some time . Ms. George i think that is going to be a process of have the economy how the economy unfolds. Where rates are right now relative to the Unemployment Rate and inflation suggest we are at a sort of equilibrium and i would be happy to leave rates here, absence some weakness or absent some weakness or strengthening that would cause me to think rates should be somewhere else. Michael where would you put the neutral rate right now relative to where you are . Are you tight . Are you loose . Accommodative . How do you see it . Ms. Ge