In the terms of the two sides. Neither side wants to be the one that walks away from these talks. Reporter hong kong drops and unpopular law but unrest continues. You can see the level that has been built up. Reporter argentinas debt crisisreporter deepens. They have to do something to contain the flow of dollars out. Reporter the fed more food given more food for thought. A strong correlation with the session ahead. Not a great report, it is decent. We want to remove obstacles to Economic Growth. Reporter the top interviews on topics from trade to race. These give us reason to double down our efforts. Low Interest Rates have significant effects on turnover. We have the fundamentals right to deal with a slowing bubble economy. Reporter it is all straight ahead on bloomberg best. Hello and welcome. I am kailey leinz. This is bloomberg best, your most important analysis and interviews from Bloomberg Television and around the world. Lets start with a day by day look at the top headlines. The week again with the u. S. And china entering a new phase of the trade war with terrorists imposed by tariffs imposed by both sides kicking off sunday. On 110s. Tariffs billion on chinese imports are now in effect. China will retaliate. President trump trade talks in washington this month are still on. Mr. Trump we will see what happens but we cant expect china to rip us off anymore. We cant allow china to take 500 billion a year out of our country. Paul this is a sharp acceleration in terms of the titfortat tariffs. We saw the u. S. Side putting 15 tariffs on 110 billion of chinese imports including shoes and textiles and Technology Components like the apple watch as well. The next round of tariffs for the u. S. Side will be on december 15, targeting 160 billion worth of chinese imports and you have got all of chinas imports into the u. S. Market hit by terrorists. Like put tariffs on things soybeans, beef, chicken and they 15, impose them on december u. S. Autos as well. 65 billion worth of u. S. Imports in total in terms of september 1 and december 15. People are looking at negotiations trump says may still happen later in september in d. C. The u. S. And china struggling to agree on a schedule for plant trade talks. Tradepact planned talks. They delay the latest tariffs. They are having trouble getting to the table quite frankly. Furthermore there has not been moments to set the contours of the decision, what would be on the table, what might not. Not a break, but it is a pause, and ithave more contours turns out the difficulty is we are not sure what we will talk about. We are not sure when we will talk about it. Bonnie zillow 51. 4 this is in keeping with ism and pmi across the globe. The s p taking another leg lower after that. Truly awful report some of the purchasing Managers Index falls more than a point to 49. 1. Rom 51. 2 it is the first contraction since 2016, january. Even worse the underlying 47. 2,s, new orders unemployment 47. 4 , inventories rise to 49 . When you have inventories rising faster than new orders, there is a strong correlation with recession ahead. Britain could be going to the polls yet again. Boris johnson will try to trigger a snap election. If he loses a crunch about in parliament this evening. Mps will have to attempt to seize control of the government agenda, the order paper. Then there will be a vote sometime this evening on whether or not the first hurdle of that rubble bill will be allowed. What mr. Johnson said is if that happens, he loses that tonight, he will tomorrow table a motion to dissolve that parliament when they just got back and call the election for october 14. Country wantse this done. They will be by october 31 in all circumstances. There will be no further playlist delay. David well he was speaking, the arithmetic changed significantly. This morning he had a majority of one. N mpng his statement a walked to the other side of the house and joined the liberal democrats. Minus one. We have a minority government in the united kingdom. Ayes to the right, 328, the noes 201. Not a good start, boris. I dont want an election but if mps vote tomorrow to stop negotiations and to compel another pointless delay to brexit potentially for years, that would be the only way to resolve this. I can confirm we are tonight tabling a motion under the fixed term parliaments. Here he wants to table a motion for a general election. Fine. Get the bill through. First in order to take no deal off the table. Kongdramatic move in hong with chief executive carrie lam saying she would remove the exhibition law which triggered violent protests. It was long in coming according to the protesters. They have been demanding this from day one when she said she would not formally withdraw this controversial exhibition bill. She would suspend it and basically calling it dead. In her words, to fully allay the public concern, she is withdrawing this bill. But she addressed the other four main demands but did not acquiesce to any of those anands including setting up independent inquiry into what protesters say was Excessive Force by the police. That has led to a slew of criticism from the prodemocracy camp. You can see the level of distrust that has been built up by the protest community to the government. Boris johnsons bid to trigger an election has been blocked. He suffered a string of heavy defeats. Johnson was thwarted twice in the house of commons by the opposition parties and tory rebels to block the new deal brexit which came in second and third readings. He failed in an attempt to force a snap general election. For an election today is like an apple from snow white and the wicked queen. It is the poison of a no deal. Absolutelyit is unbelievable. It is slightly it is totally unfathomable about what is going to happen. There are some who believe there is a mock of alien master plan machiavellian master plan. It doesnt look like that now. China and the u. S. Are planning to have negotiations to end the tariff war in washington next month. It is not known if progress can be made. They have agreed to have facetoface negotiations. At the ministerial level which were scheduled to take place this month, september so we see a delay. Both sides trying to manage the markets, neither side wants to be the one that walks away from these talks. There is no harm in meeting. Brexit. Howdown over personal today. The Prime Ministers brother quit the government in apparent protest over the brexit strategy. Johnson is still arguing for a snap general election in an address today. Pm johnson i dont want an election but the only way to get this thing done and moving is to make that decision. What we are hearing is the government will ask mps once again monday to approve an early general election and they plan to do that because they expect a bill working through parliament to prevent a no deal brexit. It will be back at the comments i will receive royal assent. It will receive royal assent. Euphoric on the news [indiscernible] date,have any specific but who cares. The 50 day moving average. Bond bulls were given a tough wakeup call thursday on the enormous surge in yields on the Treasury Curve showing on trading is still a twoway street. This is the biggest bond rally in years. It was depending on which part of the curve you are looking at, shery, but no matter what part you were trading, you got hit hard if you were not expecting this to happen. This was something to see. Probably the biggest oneday move we have seen in 10 years. Vonnie Companies Creating a below forecast on slover Global Growth slower Global Growth. It is a decent report, it is decent. There was a big mess on job creation but higher wage growth, hours worked, decent. Shows you the labor market is holding in. Ow we want to remove obstacles to Economic Growth. An inverted yield curve and a premature hiking of Interest Rates last year, maybe the year before, generated an obstacle to Economic Growth. Lets remove that, and you will see this economy with low taxes, low regulations. Those are the factors that will lead to 3 , 4 Economic Growth and keep this job story as strong as possible. Jay powell make remarks in switzerland. It is his final comments before the blackout period. Powell we will continue to watch all of the geopolitical things that are happening and we will continue to act as appropriate to a sustained this. He made the point the u. S. Economy is in a good place, continues to perform well and you has used he has used the line [bell] we reviewill ahead as the week on bloomberg best, a fund sticking with you can investments no matter what happens with brexit. The e. U. Trade commissioner said the forecast is cloudy for a deal with britain when it finally leaves the bloc and more on the top headlines. Angela merkels coalition staves off a populist challenge. It means there was unrest which will quiet down for some time. Kailey this is bloomberg. Best. this is bloomberg i am kailey leinz. ,ets continue our global tour where the government in china responded to economic headwinds with moves to stimulus. Paul the council of china is signaling a reduction in the amount of funds a bank of reserve must hold is on the way, releasing cash into the slowing economy. What did the council say . The state council was asking for the targeted and brought use of ratio cuts in a timely manner, after a meeting held by the premier, and it is expected the pboc will follow the heave in germany january. They also called for the issuance of special bonds to be used by local government to boost infrastructure spending. Many are expecting this cut to come as early as this month. It doesnt come as a surprise given the pressures facing the economy. Many economists lowered their peru forecast to below 6 . There is a lot of headwinds facing the economy and we heard from the state council themselves the external pressure is placing enough downward pressure on the economy the reserve ratio is necessary. News,here is breaking china moves through the reserve the reserve ratio is important and some banks will see a full percentage point. Slowdown of the chinese economy, ongoing headwinds from the trade war with the u. S. , but the ongoing concerns the government has about what would happen if it let loose with stimulus, it could cut Interest Rates or fled the economy with liquidity. It is fragile and it risks bubbles so what happens this evening here when essentially limits that using step which could put a floor under the slowdown. Angela merkels Ruling Coalition [indiscernible] the eurosceptic alternative for germany didnt make a breakthrough in the local elections in the Eastern States of brandenburg and saxony. This quiz stave off a deeper political crisis in berlin. This could stave off a deeper political crisis in berlin. Do you think the key is whether they can carry through on this . You can say merkels party and the social democrats our partners, they are breathing a collective sigh of believe thats really which social democrats are partners, they are breathing a collective sigh of relief. They did come in second and had a strong showing, but the social democrats henan. What does it hung on. What does it mean for the coalition . It means there is unrest that will quiet down for some time. In a rare sunday intervention, argentinas president imposed capital controls in a blunt policy reversal and at containing the financialescalating crisis. The announcement came after 3 billion of foreign currency reserves friday and thursday. This is about containing argentinas economic crisis or about containings. About containing the president s political crisis. August 11, he had a stunning loss nobody saw coming and the money started flowing out of argentina. 3 billion in two days, it has been 12 billion since august 11, so they had to do something to contain the flow of dollars out of the country which will impact inflation and everything else. It is the president trying to make it to the end of his term but also trying to fix the Economic Situation in argentina which has become a massive crisis very quickly. Person has signaled a note of caution on restarting quantitative easing. He told a french magazine the central bank doesnt have to use all of its policy tools at once. He joins a rollcall of others making hawkish or not dovish noises over stimulus. How significant are these comments . They were pretty technical in nature. He remains potentially open to being convinced qe should be restarted. He labeled the main concerns, one is the two things the ecb is after changing is Inflation Expectations and shortterm market yields. The u. S. Placing additional sanctions on iran after rance tried to extend the economic lifeline by resorting restarting with 15 of free purchases. 15 entities were designated. Iran keeps rejecting our efforts to resolve our differences diplomatically. We will intensify our campaign of economic pressure. Simples a different decision to make. They can behave normally or watch their economy crumble. A month after being forced from power, the italian president finds himself at the head of the new government coalition. Hisstors rallying behind second term as premier. There is a history of bad blood. This government has a tall order because first of all it should undo group with previous undo part of what the previous government did. Much more leadership than honestly he displayed in the first government, but certainly he has matured. He has shown more leadership now climatee renewed good with the European Union would be a very poor component. Kailey you are watching bloomberg best. I am kailey leinz. The head of the Largest Sovereign Wealth Fund is looking past the medical turmoil and will invest in the u. K. No matter what. But the ceo does consider negative rates of significant concern. He spoke with our editor in chief, john mickelthwait. Investor a longterm in Great Britain no matter the outcome. Norway also as a country has lived being outside the e. U. But still within europe. Europe andclose to will be longterm. We have 2 of the u. K. Market substantially and we will continue to be that. I think also for countries we are invested in, it is good to know we are longterm committed to the countries and we are able to investor and stable investor. The fed is leading the Central Banks towards lower rates and you have negative yield and a variety of things. You are trying to receive 3 a year. Bonds are negative. Have you do that . 3 is what you have with people spending and backbone, we achieve that, that is challenging. The worries we have with regards to markets, one thing it on top of one thing on top of our purpose,ould be the lower Interest Rates will have significant effects on the return over time. John this relentless push towards ever lower Interest Rates all the way around the world . Yngve i think the market has been quite surprised so far this year. There has been a change from Interest Rates going up in the u. S. And turning and Interest Rates half world now actually is approaching that territory. Coming up on bloomberg best, more compelling stations. A top chinese Bank Executive explains how the pbocs plans to fix rates will foster growth. Australias trade minister and new zealand finance minister. Another official keeping an eye on brexit, the e. U. Trade commissioner who would like to make a deal with the u. K. , but the leadership is not making it easy. There is an agreement. Andbasis is if mr. Johnson the British Government want to change that, he has to come up with proposals. Kailey this is bloomberg. We call it the mother standard of care. Its something we take personally, and believe in passionately. Its the idea that if our mothers were diagnosed with cancer, how would we want them to be treated . Thats exactly how we care for you. With answers and actions. To hear your concerns, quiet your fears, lift your spirits. With teams of cancer experts and specialists, delivering advanced Treatment Options and compassionate support every step of the way. All here in one place, with one purpose. To fight your cancer, together. Thats the mother standard of care. This is how we inspire hope. This is how we heal. Cancer Treatment Centers of america. Appointments available now. Welcome back to bloomberg best. Month, the peoples bank of china unveiled a major reform to its a major reform to its system of benchmark Interest Rates. A low prime rate each month hopes to encourage investment and foster growth. The ceo told bloomberg exclusively why he thinks the new policy makes sense. Lpi, it is at the almost like the equivalent of primary loan, and when they announced that and forced everyone to apply for this rate, when you look at the first day of the fixing, it was down at 4. 2 . Medium lendinghe was priced at 3. 25 , in the equivalent of the best of the corporate client in china, if they were issuing the bond, the yield would be 3. 05 . You can see the gigantic parity between the two. When you consider the Chinese Market is about 80 of the lending market, you can see the need to drop the rate further and further to be much closer to the medium lending rate, and also the bond yield. When they do that, they will force the bank to diverge there lending into small and mediumsized positions, and this would be where the growth will be. The economy is not doing very well, so banks, i would imagine, would be attaching a larger risk premium to lending to small businesses. Talk to us about demand for credit. Yes, the risk would be higher, but then again, we are also starting a lot of the new trend in china. There is a new trend where a lot of the companies are diverting business into the third or fourth year markets and also the city, and we start seeing the report on q2, among many of the companies who start finding a new growth area. This pushes up the consumption and will push up the credit demand, all of which will be important for the banks to s