Pound nowing the euro the highs of the session. The cable rate coming in a little bit weaker. Joining me now, Stephanie Flanders here on set with me, and from london, guy johnson. Usst blush for you, walk through some of the results. Guy this is pretty much exactly as expected. The pound is barely budging on the news. The market is pricing and very little action from the boe going forward. It is very hard to call exactly what the outcome of brexit is going to be. I think weve got 10 basis points priced in on the downside by next march. Just 17 by the end of 2020. The market doesnt know which way to call this one. The bank of england is indicating that the risk of a no deal brexit has declined. When a new deal brexit happens, the risk to the economy will be lester medic than having been be lessd for, but dramatic than having been perceived before. The market finds it hard to find credibility. Alix particularly if they go the way of norway. You have to wonder how that works. Talking about positioning for a quick second for the cable rate talk to me about positioning for a quick second for the cable rate. Guy positioning is reasonably neutral. The market has been quite short. Some of that has come back. We are trading at a two month high at this point. We are trading, as i say, at a two month high. Weve seen any volatility contract come in, which is going to capture the eu summit coming up. Volatility has picked up a little bit around that. What i hear is that a lot of people are saying you get to 1. 30 and i will believe the move has legs, but until then, it is hard to trade the pound and get direction with it. Most people trade with volatility, and that is the trend that continues. Alix good point. Stephanie, it is as expected. Inflation will likely be weaker if inflation persists. Inflation will likely be weaker if this persists. Any surprises for you . Stephanie no, this is an economy that is very close to this potential, if not past that point. We are not seeing productivity growth. Pressures are rising, and we are expecting to see that come through, at least, the bank of england is expected to see that come through. Before that, we are all focused on this brexit date. Theyve reiterated that if you did have a no deal scenario, rates could go either way in that case. Of course, no one in the markets thinks that. Theyone thinks in the end, would still cut rates to support the economy. Alix before we get to that part of it, i want to focus on jobs and wages. Wages and bonuses at the highest since 2008. Is that still a good thing . At what point does it become a bad thing, as in a rate hike might not be beneficial . Stephanie we have a small version of the u. K. Of some of the pressures we are seeing around the world. You have economies that had quite a long recovery, quite close to potential, but facing uncertainties around trade. The u. K. Has kind of ed clere to trade war on itself, which is slightly different from everyone else. Kind of declared a trade war on itself, which is slightly different from everyone else. Wouldpe would be that it be going down that path of investment and things to improve efficiency and get product to growth. Im not worried about the wage growth, but it does make the bank a billing the bank of englands job a little harder. Alix more interesting for me, the oecd talking down the global the Global Economy. Talking about if they hard brexit happens, talking about a decline in eu exports to the u. K. Is there real fear on the ground there of this . Guy absolutely. Nobody knows executive what is going to happen. The longer this has carried on, the u. K. Economy is suffering. The u. K. At the moment has a high degree of uncertainty, which means the companies are not investing. Consumers are beginning to cut back a little bit as well. You can see that today in the retail sales numbers. You can also see that in the numbers that have been delivered by one of the u. K. s big retailers. It talked about a slow start to the autumn period. We dont know what is going to happen with brexit. If there is a hard brexit, again, that is very difficult to call. That is iniff shock some ways easy to model, but hard to predict. But at the moment, you can just see this thing dragging on and on. If we get a decision, at least that would provide some clarity. Even if we dont, it could still have a negative economic impact. Stephanie i find it interesting in that oecd comment, it reminds us that as far as economists are concerned, the longterm outcome of brexit, a relatively orderly brexit, is quite clear. We know the economy is going to become less open, and historically that has always meant a little less investment and lower productivity growth. That in a sense is what the oecd is talking about. What economists have often got wrong and what we are all uncertain about is the shortterm. What happens to the economy trying to reach that state where it has got slightly less trade, but probably more stability . Guy how long do you think that would last for . Would that be a year, two years . Stephanie the interesting thing is i think the erosion in openness and the slowdown in productivity growth that comes from that, that is kind of permanent. We know that is one of the big advantages of trade and openness , and whatever happens after brexit, the economy will be less open with regards to the eu, its Major Trading partner. Thats one of the things that has not been a dispute. It is Everything Else that is up in the air. Alix all right, thanks a lot. Stephanie flanders will be sticking with me. We also want to highlight earnings. On theike it is down stocks, which will weigh on us and be futures, down by 0. 2 . I did want to highlight dollaryen. Apparently the boj is going to be rethink Monetary Policy at the next meeting. Their result of that is a higher currency. A little bit in the bond market, but hardly anything to write home about. Crude getting a jump. Some geopolitical risks there. Potentially waiting for some sanctions on iran. That is your post fed look. Lets take a look at darden, posting sales for the first fiscal quarter that missed sale that missed estimates. It did announce a 5 billion Share Buyback, but nonetheless, that stock is down by over 1. 5 . Coming up, more on your trade analysis in the markets. This is bloomberg. Alix time never bloomberg first take. Joining me from time now for bloomberg first take. Joining me from bloomberg economicss Stephanie Flanders, and vinces nejra and vincent cignarella, and Lauren Goodwin, new york Life Insurance economist and portfolio strategist. Heres what the fed was talking about yesterday. Chair powell if the economy does turn down, a more extensive sequence of rate cuts could be appropriate. We dont see that. It is not what we expect. But we would certainly follow that path if it became appropriate. Alix vincent, what is the big take away for traders . Vincent the big take away from traders is the confusion as he tried to explain the organic growth of the Balance Sheet, which the market took alix going right to repo . Vincent well, thats what it really was. The algos took it as potentially qelite. We are seeing a little pullback this morning. We realize this is, as was explained to me smarter people than i explained to me by smarter people than i, they need to add reserves to keep that balance. It has absolutely nothing to do with quantitative easing. As we heard the chairman say, we dont see that as a likely outcome. That was just a kneejerk reaction that pulled the dow from down 200 to positive as we closed. Going forward, as markets see this is not qe at all, this is simply Balance Sheet management and reserve management, we will see that the fed he didnt see yet he didnt say it, but he wanted to, this is a midcycle adjustment. Alix it is interesting the markets took it negatively when they upgraded growth. You would think the market would be happy about a fed that wasnt panicked about the economy. It gave a little insurance cut. To me that is weird. Stephanie we are back to the world where bad news is good news. I think it is because the situation is so unclear, because we are lacking global momentum, particularly in manufacturing, there is a great focus on what potential stimulus you can get coming directly from the fed and nothing else. You dont see a big upturn. You dont see china coming to rescue the Global Economy. You dont see the u. S. In itself running to rescue the Global Economy. But somehow it is supposed to deliver the extra growth. What hes trying to say is there is not necessarily any extra growth to be had. We are 10 years into a recovery, and it is looking ok. The markets are thinking we dont want ok. We want the kind of growth donald trump has been talking about. Buten i completely agree, theres also this uncertainty now about what the fed is going to do next. , all of couple of weeks our Monetary Policy decisions look as expected, maybe even a little better. The path forward is a little bit more uncertain, especially because chair powell doesnt necessarily have consensus for the next move. To your point, unless we have Global Growth, and u. S. Growth in particular, continue to slow, it is not absolutely certain we get that extra cut. That leaves room for market this appointment. Vincent i think the one certainty we have with the fred is the fractured nature, as you is the with the fed fractured nature, as you said. Whether we are up or down in the next segment, if it is not clear that the data is really good or bad, we probably have the fed doing nothing, which actually isnt a bad thing, for a change. I think theyve been tweaking things much too many times. The point we have bill dudley famously raised in the column he wrote for bloomberg, the former new york fed governor, the risks to the putis seeming to always support for, underwriting trade war. It does not want to be in that position. So i bit of ambiguity about how much it can do, how divided it is. Not such a bad thing. Alix another thing happened overnight. To me, it was a huge red flag that people are not talking about. The boj added a statement, a paragraph to their statement, saying, it is becoming necessary to pay closer attention to the possibility that momentum towards achieving a priced ability target will be lost, taking into account the bank will reevaluate at the next meeting. When i read this, what i felt was capitulation but the boj copy and like, we cant do anything about inflation. Now we are going to try to think of other stuff to do. Did you make anything of this . Vincent it sounds like the boj is acting like a corporation. When we have no idea what to do next, lets form a committee and talk about it. Alix lets buyback stocks. [laughter] vincent inflation in japan has fallen from 0. 9 to 0. 5 over the past year. Clearly, everyone knows that negative rates and what the boj has done is not working. I think they are lost as to what to do next because it isnt a bank of japan statement. What you have coming up on fiscal policy is something closer to tightening than loosening with the sales tax hike. If you look at that over time, the immediate quarter that follows is a downturn in japan. So things coming up are going to look real ugly. If i was still on the boards, i wouldnt be buying in at the moment. Lauren think about what that means for other global Central Banks. As we look to japan for guidance on where we go from here, the idea that negative rates have these consequences, something the bank of japan is really concerned about. They dont want to do more unless they absolutely have to. Other Central Banks are paying attention. I think the European Central bank in the fed are looking at what their tool mix might look like. If japan isnt the number one example, more uncertainty for the market. Alix to that point, mr. Kuroda seems to think they might have more tools. Heres what he had to say at the press conference. Risks have been rising from slowing overseas growth. It is right to say we are more inclined to additional easing then at the last meeting. We will continue to carefully modern the economic and price movements. Really . [indiscernible] stephanie to your point, they have been out there. Withhad to be the leader, everybody following whether they like it or not. They look to making this guaranties in the long end. Alix they seem to be losing so much control. Stephanie thats why you may get into them buying more etfs. They have opened their toolkit about as far as any central bank could, much further than either the euro zone or the fed. I would give them a bit of credit. They cant meet that inflation target. Thats been true for a long time. It shows that you cant just create inflation by having a target, which is what they tried to do. He tried to change expectations. I think they have got an economy is not looking too bad. It is the Global Situation that is worse. Actually, if we had not had the reduction in global momentum, we would have said the japanese economy going into this october 1 tax increase was looking quite good, and that the boj wouldnt necessarily have to act. Alix the whole trade war with south korea, where exports are down, is not helpful. Stephanie that is another case of a country declaring a trade war on itself. Alix lets talk about the Global Economy for a second. The oecd had their outlook out this morning. Heres the head of the oecd talking about this problem. Are heading slowly towards lower growth, and the biggest risk we see to this projection is largely due to the uncertainty thats been creating by the trade conflicts of the world that is affecting not only investment, but also consumer. Alix which leads us to that chart, the lowest growth weve seen since the crisis. I have to wonder, selfinflicted . Is this all new news . Vincent to an extent, when you talk about trade and slower Global Growth, they go handinhand. Central banks have absolutely no choice. No one wants to revisit the 1930s, when you see tightening Monetary Policy and the trade war at the same time. Theres really nothing else left to do. I wonder why they dont lower the inflation target because if you cant hit 2 , why not just say it is 1 . Then they can just keep easing and keep the ball rolling. Lauren well, they dont do that because it is all about expectations. Monetary policy, if you say the expectation is now 1 , you might undershooting that, and then what do you do . Vincent but mario draghi basically said that in his last statement, that the target is here to stay. Alix fiscal is the new monetary. Stephanie flanders and vincent cignarella, think you very much. Lauren goodwin of new york life investment is staying with me. You can find all of the charts we are going to use by going to gtv at your terminal. Coming up, sinking optimism. Recession concerns arise among cfos in. The u. S. More on that next in the u. S. More on that next. This is bloomberg. Chair powell the thing i worry about next is that everyone gets obsessed about when the next recession is going to occur, and we talk ourselves into it. Viviana you are watching bloomberg daybreak. Chinese consumers arent spending oversees the way they use to. Tiffany plans on opening more stores in mainland china. The upscale jewelry chain also wants to make a chain deshmukh to make its Shanghai Flagship store the most important location after his new york store. Microsoft unveiling a multibilliondollar Share Buyback, boosting its dividend by more than 10 . The Company Stock is up more than 10 . Microsoft market value remains at more than 1 trillion. The ceo of Delta Airlines says for now, a recession is all a matter of attitude. Bloomberg businessweek. The thing i worry most about is that everyone gets obsessed on burying when the next recession is going to occur, and we talk ourselves into one. It is all about consumer confidence. The consumers are doing well. Unemployment is at record low levels. I think people are seeing a lot of opportunity in the marketplace. If we get a new economy, youve got winners and losers being created at a faster pace than ever before. Told an he also Industry Forum delta is getting closer to offering free wifi on its flights. That is your bloomer business flash. Alix thanks so much. The oecd cut its Global Growth forecast. It sees world growth at a mere 2. 9 this year. Lauren goodwin of new york life investment is still with me. Do you think we are talking ourselves into a recession . Lauren we are not worried about recession in the next 12 months, but the quote we just heard from correct. N is you are not going to have recession until you see that consumer start to weaken. When we have these doubts put into consumers minds, it can contribute. We are not seeing that yet. Retail sales are still robust, and Savings Rates are pretty high, so consumers have a little bit of a buffer. Alix true. Is do think is it with interesting is duke had their survey out of cfos, and one of their big concerns was uncertain economy. That beat labor issues and hiring issues. That us the consumer psychology from a topdown perspective. How do you think about that . Lauren that is interesting because that is the first time weve seen that in quite some time. We are figured out the dynamic between businesses and the consumer. With think about it a little bit like dominoes. We seen the manufacturing businesses topple over a little bit. Does that really infect the nonmanufacturing sector and impact consumers view of the economy . Profit margins are starting to deteriorate. We talked about this a little before, but when Profit Margins are healthy, companies can withstand risks. So they dont have to cut workers hours, for example. They can keep things going on pace. What we see now is a little bit of movement there to the downside. I think that starts to impact Consumer Behavior because they are the ones getting their hours reduced. Again, not yet seeing it in new unemployment claims or consumer indicators, but that domino looks like it could topple. Alix Lauren Goodwin of new york life investment will be sticking with me. Coming up, it is th