Machines and infrastructure back online. Juliette the u. S. Announces a trade deal with japan. For the president , it was important to get a win. The boe stays cautious as the brexit outlook remains uncertain. If you look at the details and negotiations, there is still such a long way to go. Juliette plus, a special bloomberg series highlights Climate Change with expert analysis from every angle. The average global temperature is going to go up a lot. We have to fight Global Warming and have intelligent Climate Change policy. Policy shifts being made are creating new markets. Juliette it is all straight ahead on bloomberg best. Juliette hello and welcome. Am Juliette Saly this is bloomberg best, your weekly review of the most Important News and analysis from around the world. Lets start with a look at the headlines. The week began with a geopolitical shock that jolted oil markets while raising tensions across the middle east and beyond. Saudi Aramco Oil Facilities hit by an airstrike. Strikes have cut saudi arabias Oil Production in half. It hit the worlds biggest will in theduction facility kingdom. Rebels in yemen claimed credit for the attack. The u. S. Is blaming iran directly. What we are hearing from saudi aramco so far is supplies are continuing. They are meeting customer commitments and are able to do that from oil in storage. No one expects saudi arabia to respond with a military attack against iran. President trump said they are locked and loaded based on who actually did that. Saudis come out today and , they have not blamed anyone yet if they blame iran, that is basically the end of it. The press agency, speaking of iranian weapons being used. What is notable is what they did not say, direct blame on the Islamic Republic for instigating the attack. The Trump Administration wants to put the blame on iran and Marshall International support to present a unified front. The international immunity, even u. S. Allies, not willing to go that far. Oil surging the most in a decade after an attack highlighted concerns about instability in the worlds most important crude producing region. I dont think that was a very severe reaction in the market. There are a lot of stocks out there, inventory, Strategic Petroleum reserves. The administration wisely mentioned the Strategic Petroleum reserve early, which is a message to traders and so forth. It is what comes over the next few days. One, is it iran fingered by the and clearly by the u. S. . The other is how long does it take to bring me supplies back in . Arabias plan has restarted and is processing about half the output lost. Damagedlity was according to aramcos chief executive. The kingdom expects it may take until november to restore full production capacity. By the end of september, it the Production Facility will be at capacity. You were able to meet shipments to International Customers . We are able to meet shipments to International Customers. The overall message is one of reassurance by saudi aramco. The goal was to get across to the market, yes, we have suffered. Yes, there is some damage. As for customers, we will deliver what was promised. That is one of the things we took away from the ministers press conference. We are going to deliver the full contracted amount. We may not get it from the fields affected, the Oil Processing facility that was affected. We are going to get it from some of the stockpiles we have on hand, but we are going to make the customers whole. I think the market was not too freaked out but there are larger risks. Money markets have been ravaged by funding shortages, causing lending rates to soar and forcing policymakers to step in for the first time in a decade. Fed injected 53 billion into markets and said it would conduct another repo operation wednesday. What is this telling us about the fed and its control of shortterm rates . Well, if you ask a lot of people in the markets they are telling you the fed is losing control. If you look through a lot of their communications, minutes, statements, everything is about controlling shortterm Interest Rates and they are slipping. People are getting nervous. Because when the fed loses control of Interest Rates in the short term, that is the ballgame. That becomes a credibility issue. N issue. It is going to test the efficacy of their policies. Whether people believe it is going to work. Market affected, 25 basis points. Also paying attention to future easing. The fed cuts its benchmark rates a quarter percentage point cut and appears to go on hold. Three voters to dissent. Cut,rd wanted a half point others want to know at all. The dot plot shows no cuts. , no reductions through the end of 2020. However, seven of the 17 members still think another cut is needed this year, while think no five cuts should have been made at all. And if the economy does turn down, then a more extensive sequence of rate cuts could be appropriate. I am disappointed by what the fed has come out with. Why . Well, because the market is price for substantially more action. A recovery made in the last hour of trading. Now it feels as though the market is not quite so worried about what can be deemed a hawkish cut. Intensifying trade conflicts have growth momentum tumbling towards lows. Governments not doing enough to prevent longterm damage. That is according to the latest outlook, coming from the global the Global Growth forecast. Are we heading slowly towards a recession . What we are seeing we are heading toward Slower Growth. Beyond that number you have quoted, it is a very low level of growth. Our message is to hold this uncertainty. Low,ates remain visibly lift the world out of this low growth danger. A third day in a row. What is there to learn about the repo market . 1, 2, 3, is this now a permanence to the new york fed . The new york fed will eventually have to implement a full allotment repo facility. A daily liquidity buffer they will have instead of these oneoff operations which are of a set size, but it worked the way one would expect. We have some balance street constraints. The fed is the only Balance Sheet elastic enough to fund the entire Dealer Community and this time of a little bit of stress, and it has worked, quite frankly. Chancellor Angela Merkel coalition polls and allnighter in negotiations to secure landmark multibillion euro package to get Climate Policies back on track. She says we need to do more on climate. She said we are potentially looking at some green bonds. Lets see how it plays out. And lets see if this the first of several physical things germany is going to do to stimulate the economy. As it stands now, the German Economy has had a rough couple of quarters. And the risk of recession is real. So lets see whether this fiscal package is something that will be able to stimulate the economy. Oil prices had a wild ride. The hunt for fuel is on. There are reports saudi arabia looking to buy super light oil condensate. Iran is continuing to deny involvement in the attacks. We are speaking to officials on the ground, and they have made it very clear they are working around the clock to try and get these machines and the infrastructure back online. We have just sanctioned the Iranian National bank. That is their central Banking System. And it is going to be at the highest level of sanctions. The president himself said he feels like he has a range of options with iran. The actions to date suggest they are looking for a diplomatic way out of this. The new york fed will continue to conduct a series of overnight and repurchase agreements amid signs of investor apprehension about funding levels. Can we trust they have figured out the right level . Or are we still in a danger zone here . Today was an important today. Because not only are they going to continue going over the 75 billion they are doing daily, they are going to do some 14 day long repo, which will put more three and it will be overlapping allotments, so a titl total of 90 billion at various points of new money coming into the market. It is quite a step up from where they have been until now. Juliette still ahead as we review the week on bloomberg conversations from a week long focus on Climate Change including thoughts from bill gates. Plus, blackstones tony james ways and in the feds repo operations. And an exclusive conversation with malaysias Prime Minister and waiting. He said investors should not worry. He will take over as promised. There is clear definite decisions being made. Juliette up next, more of the top business headlines. The election leaves israel more unsettled than before. We could see a National Unity government. There is even a chance we go to a third round of elections. Juliette this is bloomberg. Juliette this is bloomberg best. I am Juliette Saly. Lets continue our global tour of the weeks top business stories. While the u. S. And china prepare for their next round of negotiations, the most recent data from beijing continues to show the trade dispute is taking its toll. The data from china shows more weakness in the economy. Industrial output on the way up. 4. 4 last month from a year ago, way below estimates of 5. 2 gain. Etail sales also missing, and expansion of 7. 5 . It was quite a weak across the board. Industrial output, the worst reading since 2002. Confirming a lot of it is due to a slump in the car market, there is a feeling consumers are starting to crack, that is a key pillar of chinas economy. We saw the private sector, lagging government spending. It sets up the economy for a slow into the year and puts pressure on the government. President trump says the u. S. And japan have reached an initial trade accord which will be finalized in the coming weeks. The president also told congress the government will be entering an executive agreement with tokyo on digital trade. Trump made no mention of the threatened duties on Japanese Cars and he is set to meet Prime Minister abe next week. It appears this is headed to the done stage. This is removing quite a fair bit of uncertainty that was hanging over the relationship. For the president , it was important to try and get a win. It looks like he is going to sell something and say he has negotiated a trade pact. Apple told an eu court it was unfairly painted as a tax dodger. In luxembourg, and apple lawyers said the company is the worlds top taxpayer. Apple is urging the Eu General Court to overturn a ruling they pay or teamhat it billion dollars in back taxes to ireland. Says they pay the most tax in the world. They claim the decision lacked logic or sense. They believe the numbers were tweaked in a way that presented apple in a bad light. Essentially the goal was to portray the company as paying no taxes. They will tell you they still believe they are right. They say it is obviously that apple has set out to pay the least amount possible. They do believe if the arguments are validated and vindicated by the court, they can continue to get tough on american tech companies. Boris johnson meeting with european officials in luxembourg. The Prime Minister ended up withing a press conference luxembourgs leader, as you can see. Protesters were nearby. Wanted toapparently have it inside. What you have is an empty podium for the united kingdom. By himself, taking questions, venting against the u. K. , saying, this is your mess. We should not be held responsible for this. The European Commission president Jeanclaude Juncker thanks a brexit deal could be reached by october 31. The irish Prime Minister wanda brings a deal isnt close. Who should we believe . I would trust the Irish Foreign minister, to be honest. He is not saying very much. Wants a deal andonce a dea a deal is possible. When you look at the nittygritty, meeting the chief negotiator, if you look at the details and negotiations, there is still such a long way to go. In israel, Prime Minister netanyahus gamble to hold a second election this year backfired with deadlocked results. There is uncertainty about whos israels next leader will be. Netanyahu did not get the results he hoped for. To a secondcountry hoping tohis year, openin strengthen his hand. The best he can hope for is returned to office. That means now we turn to political gamesmanship as parties work to build a coalition and secure the president s nod to lead the next government. We could see a National Unity government. There is even a chance we could go to a third round of elections. Making a Rate Decision this month. They held, as many were anticipating. Governor kuroda saying his team he and his team are paying even closer attention to inflation. Could we argue the change in guidance, particularly along long longawaited acknowledgment their Movement Toward the inflation target, is all but a mirage . There is no doubt the impact of the trade war has been heavy on japan. Exports down nine months in a row. This is an exportdependent country. The labor market is still strong. Yetis still growing, and there is still a loss of momentum. Now they are talking about reexamining the economy and prices, what is happening, to be ready for the next policy meeting. Norways central bank moving further away from the pack. In a decision many were expecting, they raised the benchmark rate. It is the highest level in almost five years. This is really going against the wave of what everyone else in the world is doing. Is there a reason the economy is immune to the Global Economic downturn . It is not immune to a downturn. Overall, that is the background for the decision of increasing policy rates further, is that economy,rowth in the unemployment is very low. Inflation is at the target or slightly below. So there is time to make one further step towards a more normal policy rate. The boe is on hold. But, if brexit uncertainty persists, inflation likely weaker. Here were no dissenters one had been a dissenter in the past. That did not happen. Any surprise for you . They talked about rates potentially going up. If you have a smooth brexit, this is an economy close to potential, if not past that point. Were not seeing wage growth. We are not seeing productivity growth the back that up. We are expecting to see that coming through. Before that, we are focused on this brexit date. They reiterated that if you had a no deal scenario, rates could could go either way in that case. Of course no one in the market thinks that. They wouldnt mind the rise in , every one assumes that in the end, they would cut rates to support the economy. Juliette you are watching bloomberg best. I am Juliette Saly. Malaysias Prime Minister took office last year after forming a Political Coalition with a onetime opponent. The Peoples Justice Party leader. The 94yearold said he would eventually step down and give him the top job, but the timing of the transition was not set in stone. He spoke exclusively with Haslinda Amin this we can call a this week in kuala lumpur and said the plan for him to become p. M. Is still on track. I dont think i should be to petty. There is an understanding he we will resign at the appropriate time. Investors need to know, they are waiting to invest in malaysia, but without any clarity, is it difficult to make longterm decisions . Now let me be more assertive on this. Firstly for the investors, the fundamentals are strong. A clear economic direction and such initial turbulence. The issue of transition is also quite clear. I have met many asking whether it will happen. I said there is no reason to think otherwise. So there is clear, definite decisions made in i think we should move on. A new not talking about government. We are talking about the transition to a new leader, observing the same policies, but more assertive on certain issues. Can you categorically say you will be Prime Minister 100 . There have been names floating deputy, also his son. Can you categorically say you will be in power . As far as the leadership , the decision of leaders, the consensus reached by the coalition, they are settled. There is no sign of any party introducing or promoting or lobbying for other reasons. It does not stop individuals , with their own designs. This to me is irrelevant. Juliette coming up on bloomberg best, more compelling conversations. Ard marks says it is getting harder to find opportunities. Plus, the repo rate problems can be solved. And many guests discussing Climate Change. Solar and wind is helpful, but the sun does not shine 24 hours a day. Juliette this is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Juliette welcome back to bloomberg best. Time now to revisit some of the weeks most interesting interviews on bloomberg television