Workers. He said the democrats are still blaming america first. And washington and beijing hold talks on phase one trade deal with u. S. Saying both sides saw progress. This comes as chinas foreign minister arrives in europe today. 6 00 a. M. In london, 7 00 a. M. In paris, good morning to you. Have we reached the top . Have we hit the high . Were in a pecklative bubble. Morgan stanley said were hop hev top heavy, ann marie. And theyre worried about growth. Ann marie annmarie the sales force. Com entered that. His is a tech rally. John just hit the mat and said k is not ok. He said think of it like algator jaws, you could easily get bitten. Manus and the other side of the coin, do we get a woosh that turns into a v. Ill leave you with one of the quotes from the mar began stanley piece. I expect a growth. A growth scare. Followed by a rate scare in the next few weeks and month which is could give us the first tradeable correction in the major equity end cease. How are the end cease doing this morning . Its all about vaccine and tray. Well get into the convention in a moment. Ow are markets look, annmarie. Annmarie we have a fresh record set for wall street yesterday. Up. 5 this morning and continued to climb. Some f course we see strength in the offshore yuan. That was your morning price action. Now to the politics. The Republican Party formally nominated President Trump far second term. The president tied to paint a positive picture of his handling of the coronavirus pandemic. We saw a procession of speakers including members of his own combat o set out to with what the democrats said. Biden is so weak on biden that the Intelligence Community said the Chinese Communist party favors biden. They know hell weaken us economically and on a world stage. Annmarie donald trump speaking there. Joining us now is bloombergs Senior Editor who spent years in d. C. And is now at the singapore bureau. What were the highlights, would you say, of day one . There was a lot to digest. There was. A lot of day one was recasting the narrative. One mentioned a lot was on the virus about the handling of it. Several speakers said china had given the u. S. The virus and donald trump took early action. They faulted joe biden and democrats for not backing trumps travel restrictions quicker. And the at the same time something that struck me was the aim to try and rewrite the Republican Party on racial issues. After the death of george floyd and as there are ongoing clashes right now as we speak in kenosha, wisconsin, following the death not death but following the shooting of a black man by police there. Hes in the hospital right now. So you saw a parade of speakers, most notably tim scott the keynote, the only black republican in the senate, come out and say the Republican Party is the party of opportunity. Several speakers coming out and saying that democrats have failed cities and failed the people who are in the streets rotesting right now. Manus what can we expect the next few days . The nomination is official, his son speaking last night, what is the what does the roll call look like . Derek i think youll see a lot of donald trump. Youll see a lot of people he agrees. With you saw him on night one. I would expect to see a lot more of him culminating with this thursday speech. I am very struck by how much these speakers are the sorts of people who are very much in the trump orbit. Theres a lot of really big republican names who arent actually speaking at this at all in favor of some of those voices. So i think this is a convention that is really about the nominee to a degree that we havent seen a lot before. But youre going to try and see a lot of this redefinition, the idea of just not even just taking an argument and arguing the other side of it but changing the entire baseline on which you start to see things. So i think thats going to be one of the biggest things youll see threading through the entire reform n. C. This week. Manus ok. Lets see how the polls look as we go into the weekend and sunday shows. Derek wallbank keeping track of the Republican National convention. Weve got it coovered. Speakers include first lady melania trump. Secretary of states decision to speak at the decision while on a taxpayer funded trip abroad is raising questions about mixing politics with his role as mericas top diplomat. Great to have you with us. One of the things that goldmans postured for the whole market to reconsider is that the democrats not just take the white house but take both chambers and that could unseat the potentially the rate narrative. It would increase volatility. How would you see that risk . Im not sure it will raise volatility. The markets in suspension are waiting for the november elections. Youve got two events. The november elections, thats one. And the coronavirus. Those are two major risks. And the third major risks is the large disconnect we have between markets and real activetism real activity, unemployment, trade, you name it. Formal investment. Big gaps. So those are the major three risks. Need toi think what you think is what the repricing is going to be happening. I think were going to be in for some major repricing not necessarily because the democrats come in but simply because how long can you rely on Monetary Policy and Central Banks to keep the asset markets up. I think that is a major question. Thats the sort of thing that youre going to get persistently coming up. Not so much a democrat position necessarily or republican position but fundamentals driving the markets. Annmarie the real issue is bond prices, what are you expecting out of jay powell this week who will be speaking thursday morning . I think jay powell is going to say that the fed has done all it can in terms of rates. If you look at the feds Balance Sheet its now jumped up, its now over 35 of g. D. P. In a very, very short period of time. Youve injected a lot of liquidity. I think powell will say two thing. Number one, a great deal about uncertainty, recovery, and thats true, recovery is very choppy not just in the u. S. But across the globe. So he will say we will be steady. Dont expect to have any rate changes at the moment. Well continue with observing the markets, keeping them liquid as much as possible. So i dont expect any major hanges in powell cease speech. Manus Morgan Stanley say were in for a correction, a correction we could trade. They say youll get a growth shock that is the gives congress a push to deliver the fiscal, the fiscal narrative, the fiscal deal that we need. It could spur an increase in the rates given the federal reserves lack of willingness to employ control. It could be the alligator jaws that annmarie referred to followed by that could take us over the hill. Maybe a big fiscal shock we are maybe underestimating. It may well be. I tend to look on the other side saying that if anything were running a potential for a negative shock. That well find out that weve used many of the tools, fiscal and monetary tools, but its the coronavirus thats driving real activity and not much fiscal or Monetary Policy and therefore marks will be disappointed and it could go the other way round. Manus. Well talk about those alligator jaws. Thats where annmarie is focused, the jaws of the alligator. Headline this is morning, chancellor Angela Merkel demanding full transparency from e kremlin over alex sy navalny. A German Medical Team determined he was likely poisoned last week. The berlin hospital says hes in serious condition and may suffer longterm damage. The u. S. Food and Drug Administration is walking back its claims over an experimental plasma therapy. The idgetcys Commission Said it provided dramatic benefits and could save a huge number of lives. Last night they were forced to clarify its numbers. There are promising signs for the treatment but the benefits are yet fully are not yet fully known. Wisconsins governor has deployed the National Guard after police shot a black man in the city of kenosha. South of milwaukee. That was on sunday. Troops are being tasked with guarding infratruckture, protecting firefighters. The aclu criticized the move calling it militarized policing. Global news on air and powered by more than 2,700 journalists and analysts analysts. You like the alligator analogy dont you . Annmarie i do got to be careful out there, you could easily get bitten. But coming up, you did see some prodepress overnight. U. S. And chinese negotiators discuss the phase one trade deal. Washington says both sides are committed to its success. We discuss this next. Stay with us. This is bloomberg. They dont have the resource to fight covid. To reduce their current cash flow payment bus also looking at reducing the stock of their debt which would give life at the end of the tunnel. Anus this is bloomberg daybreak europe. Senior u. S. Chinese officials have held a routine court and say theyre satisfied with the progress under the phase 1 trade deal. They say they addressed steps china had take ton ensure protection of intellectual property, intellectual Property Rights and remove barriers to u. S. Companies in finance and agriculture. The two sides say theyre committed to the success of the deal. To give you an idea, sal hi has been tracking that. Between the banking and trade narrative. The trade narrative is so much more asia centric for you isnt it . It certainly is. We got this news about an hour before marks started trading in china and hong kong. They were already trading on optimism the ones that were open on this vaccine optimism. This is an important step but the timing is interesting as we saw with the start of the Republican National convention. These talks were supposed to occur a couple of weeks ago. Where we saw most of the move as you can see in the chart was in the offshore yuan. It strengthened about. 1 . It does seem to be having some resistance. You could see it march to 6. 85 on the back of stimulus and the fact that yields are high in this low rate environment. When it comes to market moves themselves we did see an uptick or are see an uptick for a third session. Thats been positive momentum riding on the back of that you are seeing weak nbs hang shy and hong kong. Remember the hong kong index yesterday hit a fivemonth high and had reinfection coming through in hong kong too. Chinas 10year bond futures have dropped to their lowest level since january. To get an implication of what this latest or talks i should say is going to mean we see that when we get the third batch of trade data coming throughout of july and particularly looking at whats happening with corn prices, hovering near fiveyear highs. Corn is being used to plug this shortage. Beijing moves to quicken the pace of purchases to meet obligations under the phase 1 talks. Ann marie . Annmarie thanks for joining us. With us is the founder and chief onomist at nasr sadidi and associates. Its clear theyre buy bug in the enough to keep up with the pace agreed on in january. I think they have to buy another 130 billion in the second half of the year. Its a little suspect when the u. S. Trade respective said theyre satisfied with this progress. With this type of pace is it just me does this just mean phase two is off the table for now . I think two things. Obviously when the forecast was made how much china would import we were in a different world, this was precovid. Expectations on greth in the u. S. And china were much higher than what we actually got. Its not surprising that youre not going to be able to meet all the expectations. What is surprising is that china has kept its commitments quite well particularly on the agricultural side. I think the timing of this new thing is again related to the november elections. Were seeing more moves by the u. S. Administration to show that weve had some successes, particularly on china, and this is one of them. I think showcasing it at the beginning of the Republican National convention. I think this is what youre seeing now. A lot of politics happening at the same time as the as that coming up. I think china will continue buying. I think goes two will be a question mark. Particularly because china would look at it in the widest context of the beginning of potentially a cold war or a Technology War with huawei. China tends to look in a wider complex although it will always be up on trade. Manus we wake up certain mornings and get perhaps overexcited, a little too much sugar montana playpen, between vaccine narratives and trade deal progress which is nowhere near what was agreed. But the yuan has rallied. weakness but this yuan rallied but nowhere near as well as perhaps other e. M. Currencies. If theres a substantive breakthrough on trade and an abatement on tech, does the yuan rerate significantly higher . I think its a strong application of the yuan, china will resist that china doesnt want to see a strong appreciation of the yuan. If you have some strong surprises on policy as a betting man i would go for much stronger yuan than what were seeing. Theres also the other side of that, that what youre seeing is dollar weakness. Remember something that we dont talk about is the large buildup of debt by the u. S. And europe whereas china has not built up as much debt. I think the market is going to start, has to start. This large increase in budget deficits and debt on the horizon. We have now over100 in the United States in terms of debt to g. D. P. China is not there. So china has a lot of fiscal space it can use u. S. And europe dont. Annmarie toiment ask about chinas domestic market and weve seen the idea of china and china exceptionalism coming out they have covid crisis and their economy rebounding. The other day i saw in a search for serious yield china dollar bonds above 18 billion are yielding above 15 . Do you find this only place for yields in china is this something youd look into in the chinese domestic market . I think what youre seeing in china is very interesting. Previously you had on export and potentially export recovery is now being changed into chinese in the chinese narrative itself in terms of domestic, looking at domestic demand as the main source of growth and for recovery. I think were getting into very different territory and on that basis, yes, i think those types of yields i think are very attractive and should be looked at. Particularly when thy china is opening up markets. Were seeing bad news fall. I for one would get into the hinese market. Manus question is will american universities and schools be allowed to join. They may have to find other options. Oming up on the show, its Tropical Storm menacing the crude market in the gulf of mexico. Theres your map. This is bloomberg. Annmarie good morning. This is bloomberg daybreak europe. As one g around Tropical Storm was downgraded while the other gathered strength. I know youre looking at the two strongs. Manus Tropical Storm marco dropped by laura is set to become a hurricane. Before making landfall on thursday. 82 of the oil in the gulf has been halted as operators brace for the weather system to hit. Weve had a rapid recovery in oil prices. Is the risk that shutting this comes back in at this 42, 45, 42, 45 area . Yes, i think thats been the typical thing, i think youre spot on. Shale will come back p on. Quite quickly. We have a range of 40 to 45. Where the wells are started again. You get delivery. I dont think the hurricanes themselves will do anything more than accelerate the return of shale in force on the u. S. Market and potentially for export. Annmarie quickly manus now annmarie i was going to say quickly do you have a year to date year end price for brent . I think that will dependent on what sort of depend on what sort of recovery we get in third and fourth quarter. We are bound within that range, in the range of 38 to about 45. Per barrel. I dont think its going to go north of that manus its good to commit to a price were being told by the producer. I shouldnt have halted. Stay with us. Dont hang up the phone. Commit. Commit to daybreak europe. Coming up on the show, the german demands answers after doctors say a prominent putin critic was likely poisoned. We bring you details. This is bloomberg. Annmarie good morning from bloombergs European Headquarters in london, im annmarie, with manus live. Heres todays top stories. Stocks trade higher after the nasdaq closes at another record. Optimism boosted by hopes of a coronavirus treatment even as the head of the f. D. A. Walks back claims on plasma therapy. President trumps response on day one of the Republican National convention. Nikki haley says the democrats are still blaming america first. And washington and beijing hold talk in the phase one deal saying both sides saw progress. This as chinas foreign minister arrives in europe today. Manus, good morning. A lot to disquest this morning, especially out of d. C. We had trade talk overnight which many are saying is it politically the timing, is politically the timing helpful given the r. N. C. Kicking off . And we have fresh records out of wall street, he says think of the recovery like alligator jaws, you could easily get bitten. Everyone is talking about the idea of a k recovery. He said k is not ok. K is not ok. I think to a certain extent thats what people are worried about, you see this gargantuan leap in things like apple and tesla and they go it scoops up all the emotion. Well hear from him shortly. I love cooperman. Apple does a stock split and the call option volume triples to 2. 1 trillion. Doesnt make much sense. Lets rip through these markets. S pmbing, the yuan is stronger this morning. What would happen if lets say for example trump wasnt returned . Goldman talking about that in the bond market. Lets say the democrats took both the houses youd reprice the bond market. My last guest said. Weve got corn in there i was torn between corn and soybeans. Still got an awful lot of product to buy to make up for phase one trade deals. 350. Is that a bushel of corn. What is a bushel of corn . Do you know the size of a bushel of corn . Thats your job for the next 30 minutes. A bushel of corn. No. Ok. Well come back to that in a moment. All the commodity marks are rallying on the pack of this on a phase one trade deal being appraised