We dont see the clear offering offramp in terms of how either party is going to get to a point of having successful discussions to resolve it. Nejra and following dorian. The deadly hurricane continues to strike the bahamas, but the winds weaken. Its movements we are tracking its movements. Matt good morning from the german capital of berlin. All eyes are focused on westminster today. You are down there on the green with the cast of important actors in the brexit drama that is set to unfold over the next 58 days. Yeah, absolutely. What drama it is. This is a critical week that could see the u. K. Had for its third election in 4 u. K. Head for its third election in four years. Many members of Boris Johnsons own party are putting a bill forward to try to delay the, deadline to extend the brexit deadline to avoid a no deal brexit. If Boris Johnson does not manage to agree a deal with the eu, the Parliament Approves or does not manage to get no deal approved by parliament, then that extension will move to january 31. Boris johnson said if these rebel mps get this bill through, then im calling an election for october 14. Thats what we are waiting for today. What happens with that bill and Boris Johnsons response. Matt absolutely going to be following that very closely throughout todays program. Stay tuned to bloomberg for all the developments in brexit. I want to give you a quick check of whats going on in markets. Its the first day back after a threeday weekend for u. S. Equity indexes. You can see s p futures slumping, down about 0. 5 right now. You do have again in the bloomberg dollar index, and it is up to a very firm, relatively, 1221 right now. A lot of safe haven flows going into the u. S. Dollar, regardless of fed cup expectations. You can see it strengthening of fed cut expectations. You can see it strengthening. The indian currency is slumping as gdp growth falls to a sixmonth low. Sixyear low. Yeah, matt, dose safe haven flows are not quite reflected in u. S. Treasuries those safe haven flows are not quite reflected in u. S. Treasuries. We are seeing the 10year yield tick up a bit. 1. 52 handle, up three basis points. Following losses of 0. 8 yesterday, almost a month low. A fourth day of gains for the u. K. Equities. Perhaps fueled partly by the weaker pound we have seen in the past few days. Twomonth volatility, which captures that october deadline, has been rising for the pound. Sticking with brexit, outside westminster, britain could face its third general election in just over four years. Prime minister Boris Johnsons government is expected to table a motion to hold a snap poll on october 14. Tory rebels are joining forces with labour to bring a bill designed to stop the u. K. From leaving the eu without an agreement. It would force the Prime Minister to request a delay to german way 31st, to january 31, 2020. I want everybody to know there are no circumstances in which i will ask brussels to delay. We are leaving on october 31, no ifs or buds ifs or buts. Nejra joining me now is bloombergs Senior Executive editor. We also have the chief Investment Officer from let me start with david in terms of what we can expect in the next few days. Are we definitely headed for a general election . We may know by the end of today. We will have a momentous sequence of events. Mps are back from their long summer recess. They might not be back for long. Mps will attempt to seize control of the government agenda, what they call the order paper. We know thats up to the speaker, john burkle, whether he will allow that or not. We heard from him when the announcement was made. He announced that was a constitutional outrage, so you can expect him to back the rebels, grabbing the order paper agenda. Then there will be about at some point tonight. There will be a vote on whether or not the first hurdle of that rebel bill will be allowed. To what mr. Johnson said last night was, if that happens, if he loses that vote tonight, tomorrow he will table a motion to dissolve at parliament when theyve just gotten back and call that election for october 14. Matt how important is it to you that u. K. Parliament stop a hard brexit . I think whats very interesting, if you look over the last two weeks, the pound has been appreciating at zero, which could imply that the hard brexit is going lower. Basically, the parliament has two options. I did a back mr. Johnson and that gives mr. Johnson were barking either they back mr. Johnson and that gives mr. Johnson more Bargaining Power, or we go to a general election. The odds are good that he could win the election, which means he could have more Bargaining Power and ideal as possible. If he loses, the brexit might be postponed forever, which will be positive for the pound. Its true that the different options remain. The hard brexit is still very volatile. On the other hand, it looks like there is some sort of expectations for the pound to strengthen in the short term. Nejra yeah. It sounds from what youre saying that you think overall in every scenario that hard brexit is less likely, but a lot of your argument depends on the fact that the eu would be more willing to negotiate with Boris Johnson, the way he is saying they would be able to. Do you think thats a likely prospect, that the eu would actually agree to the deal he is proposing . Weekendve seen over the Michel Barnier hinting they would be no negotiation. The u. K. Is 14 of the eu exports. It is very important for islands to avoid ireland to avoid a hard brexit. As it is very often the case with the eu, a lastminute deal could happen. Its not the core scenario, but the likelihood of some kind of deal lastminute for the eu is still possible and is slightly increasing. This explains the slight appreciation of the you the pound against the euro last week. Matt david, what do you think a johnsoneu deal would look like . Im assuming he insists on dropping the backstop. How does the eu make that happen . Thats right. Mr. Johnson calls it the backstop he wants to take that out. The union has been clear thats not going to happen. Mrs. Merkel recently said, give me 30 days, i would like you to come back with an offer. Whilst mr. Johnson said, we are getting progress towards a deal, thats not what you hear from the european side. They are saying we havent had any proper proposals. What alternative do you have to keep the irish border open . Im afraid, as always in this process, both sides seem to be talking over each other somewhat. We still dont have an idea of what some sort of alternative would be to enable the eu to have reached a deal. To go back to the previous guest, the eu are pretty good at saying no, then at the final hurdle, when it is crunch time, in this case the European Council meeting in october, some sort of deal emerging. At the moment, the two sides still look very far apart. Nejra to go back to what wasles was charleshenry saying, in the event of a general election, who is likely to win and what happens to brexit then . Its an incredibly difficult election to call. Weve had some holes the last couple days saying we are some polls the last couple days saying we are headed for a hung parliament. Thats not enough to secure a majority in this place. Labour party are harboring hovering around 2 . There all three big parties are within the margin where any of them could in fact become the biggest party. We saw in the 2017 election that mrs. May called how enormous swings in the polls labour started out 20 points behind and ended up nearly tipping the government. Its very difficult to tell under the process. Mr. Johnson has to believe he has the momentum behind him. Almost 52 of the public who voted for pub for brexit will come back and power him to some sort of majority. Let me justshenry, ask you what your u. K. Equities play looks like. With or without brexit, a lot of people have been saying it is still a very international the ftse 100 is still an incredibly a nationally internationally focused index. Does it make a huge difference to you . Indeed, brexit and the direction of the pound. We have seen over the last two years, the trade has been benefiting from weaker pound and to avoid the domestic plays. Here if we get some sort of compromise with the eu, and the soft brexit, then the trade might totally reverse. The goal would then be to go with domestic plays, with banks, stocks. Short theeight or exporters. Thats the play on the u. K. Equity side. Matt charles, henry charleshenry. He will stay with us. David, our executive Senior Executive editor for bloomberg, is going to make a lot of appearances on your Television Screen throughout this important day in the brexit saga from the green. Right now, i want to get the first word news. Naomi . Chief executive carrie lam says she never asked for beijings permission to quit. I have never i have never tendered her resignation to the central peoples government. I have not even contemplated to discuss a resignation with the central peoples government. The choice of not resigning is my own choice. Denounced a leak of audio from her meeting with business leaders. Earlier, reuters reported on the recording, saying lam discussed quitting, but she said she is committed to hong kong. Hurricane dorian is continuing to bash the bahamas, but its winds are we getting as the storm widens out. Forecasters are looking for it are weakening as the storm widens out. It has killed five in the bahamas, ripping off roofs, overturning cars, and tearing down power lines. Opecs crude production rose last month, the first increase since a new round of output cuts at the start of the year. Nigeria and saudi arabia led the way with the bloc collectively increasing output by 200,000 barrels per day. They have struggled against a deteriorating outlook for Global Growth and demand. Australias central bank has left its key rate unchanged. It is waiting to see how the combination of prior rate cuts and tax relief impact the economy. Keeping the cash rate at 1 was widely expected. They are looking to see if they are entering into the plan as predicted last month. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra . Nejra naomi, thank you so much. Coming up on bloomberg, we will speak to howard davis, chairman of rbs, as the prospect of an election in the u. K. Surges. We will get his thoughts on that and more. Dont miss that interview at 11 00 a. M. London time. Matt definitely one to tune in for. Up next, struggling to meet. The u. S. And china cant seem to set up a date as trumps tariffs trample over trust. Is a resolution inside in sight . Plus, if you are on your way into work, tune into Bloomberg Radio. Youre anywhere else in the world, just try bloomberg rate bloombergradio. Com on your browser. This is bloomberg. Is bloomberg daybreak europe. Matt im matt miller in berlin. Lets check in on the markets now in asia. For that we go to singapore with juliette saly. Juieliette its a mixed session. Cautious trade in asia. News that china and the u. S. Are struggling to find a plan date sitet planned date to down for the next round of talks. A little upside in japanese stocks in late trade. Hong kong under pressure for a second session. Pboc setting the yuan rate stronger for a 10th day in a row , but still weakness in the onshore currency. Australian stocks are being hurt by a bit of weakness in energy players. Lets turn to the rba. They left the official cash rate on hold. The governor and the board are signaling they are taking this wait and see approach to see whether or not the tax relief spurs through to the economy and these already low Interest Rates will have an impact. Weve seen an uptick in house prices in the key market of sydney. The question is whether or not the lenders will pass on the already low rates. The standard housing rate at 5. 2 , well above the rbas cash rate of 1 . The pressure now on the bank of korea, if we can have a look at that. We saw zero inflation in august for the first time ever, and this is putting pressure on the bank of korea to cut their official cash rate, which they left on hold last week. Also seeing gdp growth slowing to 2 year on year in the month of august. Pretty dismal read. Won is asias worst currency today. Nejra lets get the Bloomberg Business flash with naomi. Naomi xiaomi shares are climbing after the chinese smartphone maker announced 1. 5 billion buyback. To company is fighting maintain its position in a shrinking market as it attempts to grow highermargin businesses. The buyback could mark show mes biggest stock xiaomis biggest stock repurchase since its ipo. The high street retailer will be relegated to the midcap ftse 250 as part of the quarterly rebalancing. The changes will be confirmed after the market close tomorrow. Facebook is considering a test to stop showing the number of in an effortgets, to reduce the social the Competitive Pressure on social media. Facebook confirmed the idea after it was reported by a security researcher. Thats your Bloomberg Business flash. Matt . Matt thanks very much. Naomi in london with your business flash. Chinese and u. S. Officials are struggling to agree on when to meet this month to continue trade talks. Thats after washington rejected beijings request to delay the tariffs that took effect on sunday. Bloomberg has learned while President Trump attempts to soothe Financial Markets by trying to portray that talks are making progress, beijing is planning to file a complaint to the World Trade Organization against the u. S. Tariffs, under the dispute settlement process. The trade impasse seems to be worsening, which is worrying for economies around the world. Australian trade minister Simon Birmingham echoed this sentiment in an exclusive interview with bloomberg. That thereconcern seems to be an impasse that has worsened in terms of the escalation of tariffs and measures applied against one another, and yet we dont see the clear offramp in terms of how either party is going to get to a point of having successful discussions to resolve it. Matt still with us is charleshenry. He joins us from the dubai studios. What are your expectations for the trade war, i guess i will call it a fullblown trade war . These titfortat tariffs continued to be thrown back and forth, and it doesnt look like a meeting can be set for september. I think a Key Development over the summer has been the strategy of china. It looks like china is taking the trade war as a given. They are ready to let the economy slow. They are ready to let the currency adjust. At the end of the day, they want to stick to their position. A truce on trade war with the u. S. Seems less likely than before. Inevitably bewill affected. The key for investors to balance this with the militant the thetary stimulus, but again strong trade deal between the u. S. And china strong trade deal between the u. S. And china is getting lower. What the you follow bond markets are telling you and the gloom that is portrayed there, or rather what equity markets are telling you, as we did have again in the final week of august . Veryeshenry we have is interesting dichotomy between watching equity prices and bond yields. The bond market is getting too pessimistic. We believe that Global Growth is not but stay decent, definitely we are not in the camp of a recession. We believe that equity markets remain attractive from a relative valuation perspective. Bond markets are getting too pessimistic in regards to growth. There isg said, disappointment with the upcoming fomc meetings. That could create a reset in terms of pricing on the bonds and equity sides matt . Matt so, and equity sides. Matt so, buy the dips no longer works for investors, and sell the spikes in bond markets you wouldnt want to do that either. Its too dangerous. Buying the dips on the equity side, provided we get a correction in the coming weeks, yes, i would do. Take advantage of a correction to add on equity risk, but definitely we are heading toward some kind of the medium term outlook remains positive. Investors need to take advanta ge. Charleshenry, how critical is a september facetoface meeting between the u. S. And china on trade for you in terms of wanting to increase risk in the portfolio . Charleshenry i think ti its one of the trade war is definitely one of the risks. September has a very heavy agenda. I will more look at the fomc meeting as a risk. Investors are ready to balance the risk of trade war as long as military monetary stimulus is there. If there are any disappointments coming from the fomc, then the focus will shift back to trade and that could create a correction. Matt we have a great story on the poundal that says is likely to we can more against the yen than it is against the dollar, because it is still the safe haven currency play. Do you agree . Charleshenry yes, it is, especially given the fact that the bank of japan is more looking at the yield curve strategy than quantitative easing. That provides a potentially more yields on the Government Bond side for japanese bonds. This makes the yen stronger. Definitely if you look at some of the global asset allocators, yen is among the best options together with gold. Charleshenry is staying with us. We will talk more about asset allocation. Following dorian. The deadly hurricane continues to strike the bahamas, but the winds weaken. We will discuss next. This is bloomberg. Matt this is bloomberg daybreak europe. I am matt miller in berlin. Nejra i am nejra change pitch nejra cehic. Is johnsons mps defeated by joined by david outside westminster. This election that Boris Johnson threatened to trigger is based on the fact that if this bill gets through parliament to oppose his no deal brexit, the prospect of a no deal brexit. Talk us through the bill and how likely it is to pass. David the speaker will have to give the Rebel Alliance the parliamentary times their first day back after summer recess. He will have to give them time to propose this bill. Then there will be a boat vote. It will take multiple days to get that deal into law. If there is no deal, the government is mand