Opec supply cuts will tighten the market. It is labor day in the United States and canada, the regular band is out for the holiday and ive taken over for the interim period. A little bit of visibility of what is open. What we know is currently offline are the cash, u. S. Equities and theres also no cash u. S. Treasuries. Many firming up by 1 5 of 1 . The folks at jp morgan and Goldman Sachs making an argument around the story. In terms of valuations those are looking stretched. International equities more attractive. The twoyear german bunds with the country selling 5. 5 billion euros of twoyear government bonds thats coming up at the beginning of this month. A weaker greenback and then brent crude hovering short of 99 a barrel. Lets set the scene with assets in china. China builder shares surging with the nation boosting property support. Shares advancing 8. 7 . Weve taken the real estate index after the country cut down payments for homebuyers and encouraged lenders to lower rates on existing mortgages. Firsttime homebuyers can renegotiate their mortgage Interest Rates with banks. They expect the recent measures to help restore homebuyers sentiment. To help us digest some of this, the bny market strategist. A good chunk of u. S. Markets offline theres plenty to get through around the china angle. How do you interpret the latest measures and is it going to make a meaningful tent at a time of anxiety amid structural reform over there . I think whats more significant than even the housing measures is actually finally the government targeting the household trying to help cash flow. There are announcing taxation so great tax deductibility on issues like childcare, elderly care. That coupled with the improvement on household cash flow really is a sign they recognize in the short to mediumterm the household needs to drive growth from very low levels. Yousef what does positioning look like around this narrative given your analysis . What do you recommend clients do in terms of actionable trading guidance. Geoffrey we still like emerging markets, we think clients are very underweight emergingmarket assets in general. We like emerging market bonds at this point especially on the hedge, fx has done quite a bit. If you look at latin america these are very liquid bond markets they could be able to capture a bit of the commodity from stronger chinese growth. So this is one sector which we are really closely looking at. Going across to the United States reflecting on Economic Data from last week. Also looking at the folks at black rock saying the twoyear treasuries which are very sensitive, those are screaming by. We have a chart on the terminal this is the 210 spread. Whether or not the steepening will find their is incredibly is an entirely different question. Do you subscribe to the broader economic view at play here . We subscribed to the view the fed will be higher for longer. Theres a big difference between labor Market Growth softening versus labor market weakening. Right now what we are seeing is wage growth starting to stabilize. That is very different from saying the unemployment issues with wage growth is contracting. If you look at it in an inflation context i think the fed can shift the narrative towards holding rates where they are but if youre looking good rate cuts or anything like that i think its way too early to even discuss. I kind of wonder what i need in the morning given everything thats happened last week. There was a time where bad news is good news and good news is bad news, which broader paradigm are we in today in the u. S. . I think good news is good news so youre seeing a slowing economy. You are seeing that towards a soft landing. Everyones going to welcome that. The broader risk allocation basis with a negative narrative so to speak in china starting to stabilize as well. Thats a conducive environment for risk. That has at least in recent weeks and months been outperforming the european narrative is much softer and lets say for the sake of it you are looking for negative news we probably focus more on it at this point. Yousef if the fed is pretty much done here were getting to peak rates does that mean we will get to peak greenback as well. Looking at a lot from Standard Charter and theyre saying we are getting close to a scenario where it makes a lot of sense to add dollar short on a tactical basis in particular. The only area where we would add dollar short, if we look at some currencies it from the china narrative improves thats where the dollar can struggle a bit. Being very careful against the sterling narrative. I dont think the same can be said for the likes of the ecb or boe were growth headwinds looking at a potential for Economic Contraction is much more pertinent. You can see the fed staying where it is. Talking about easing at an earlier horizon. But thats where the divergence is going to come into play. For dollar bears out there i think thats not where i would prefer to put that at this point. Point taken. In terms of some of the fed speakers we dont have any major Economic Data but we have plenty of verbiage to cut through including the new york fed president , of the boston fed president Susan Collins speaking in new york. How are they going to manage the message here if what theyve done over the last four to eight weeks could be considered successful. Geoffrey i still think it will be a case of data dependency and now its justifiably point to the data going to the data and saying the u. S. Economy and the labor market inflation risk is heading to where they want to see. No precommitments, no central bank will precommit. Even though Inflation Numbers are surprisingly to the upside. We need more data prints perhaps to confirm a trend from the feds point of view in terms of their communication and reinforce the previous message. The higher for longer narrative i think that will determine how the yield curve will behave ahead. Yousef also speaking this week will be Christine Lagarde. In many ways the european inflation story is a lot trickier than what the u. S. Has to deal with today. How do they bring this home and make sure that inflation and cost pressure stay under control within mainland europe . Geoffrey in her sintra speech she was clear about the divergence in various parts of the economy in terms of labor growth you low productivity sectors in the euro zone actually driving labor Market Growth as manufacturing is in the opposite direction. Where did she see the balance of risks up ahead. So steep based on the pmis up ahead. Best, drag down that overall demand as a whole. She actually has a much narrower path across compared to her colleagues over in the u. S. Lets see how that development is going there but she needs to expand on what she mentioned during her speech. I would love to leverage some of your Strategic Insights built from years and years of front lines of the industry. Looking at european stocks beginning to think whether those evaluations stack up. This is something j. P. Morgan drives home is the u. S. Index on a forward priced earnings ratio is high considering the rising bond yields. Pe multiple showing positive correlation with eps momentum. If anybody is looking at europe willing to add europe where will they add in europe. Geoffrey on a tactical level in the Manufacturing Sector we have looking at our flow indices seeing a bit of a pickup on a relative basis it could benefit from improved chinese demand especially on the infrastructure side. That correlation clearly as they are. Being wary of the notion of value in europe looking at the Banking Sector right now. Appointing decline and demand decline. What is the ecb trying to achieve here . Can you actually point up to a good valuations environment for european equities. Im not sure we are there yet. Stabilizing the euro zone before making that case. Euro is soft but in a weak export environment thats not exactly going to compensate for a decline in export volumes. Heading into the winter of Energy Prices go up again and just watch for margins as well. Going back earlier into the safest em bonds is what i like there. You read my mind because that was good to be my followup question. Brent crude up over the last five trading sessions. Back closer to highs we have not seen in about a year. In terms of brent, that brings back memories of global Central Banks panicking trying to bring down cost pressures. Is the second wave material wave of cost pressures priced incorrectly or would you say thats being disregarded at this point . I would say somewhere in between. We can see what supply changes do. We dont have that reopening demand impulse here that we saw last year. If anything we might get a bit of a china growth but its not to move the needle especially given the large culture driven at this point. They will need to incorporate it into their guidelines. It is not going to be the same situation, the demand dynamics are completely different. Yousef this has been a lot of fun. Great to catch up. Giving you a snapshot of what is still to come. The chinese president skips this weeks g20 meeting in india. More on his controversial decision next. This is bloomberg. At cdw, we get the importance of clear communication. And when your teams are spread out, thats not always easy. Our experts can help by implementing poly audio and Video Solutions to keep you connected. From headsets to collaboration tools, poly Solutions Offer simple setup and eliminate distracting background noise, so the people youre talking to only hear you. To collaborate with quality, trust poly and it orchestration by cdw. People who get it. sometimes, all the tenacity and grit in the world. Cant overcome the boundaries we face. so Morgan Stanley is partnering with the Womens Tennis Association to remove them. because this game is for everyone. yousef welcome back to Bloomberg Markets. Another trending story. Xi jinping wont be attending this weeks g20 summit in india. The first one hes skipping since taking power in 2012. Joining us with a look at whats behind the decision is our Bloomberg News director for emea. A lot of mystery around why chinese leaders decided to snub the g20. What are you hearing from sources . Thats the key question. Is it driven by the desire to snub his indian counterpart, hes hosting the summit. Weve seen an uptick in tensions between china and india of late in their longrunning border disputes. Does he need to stay focused in china on the turbulences economy is facing. Is that the priority or is he trying to shift again his focus towards alternate power, recently attending the summit in south africa and is looking to build out those as an alternate to what he sees as the western driven agenda. Is it a combination of all three, we may never know. The question is what is the repercussion of these actions on the summit including the china relationship but also for china on the global stage. Yousef lets flush that out in more detail in terms of a fraught china india relationship and to what extent that was a factor in the Decision Making in the upper echelons of the Chinese Government around the g20. What can you tell us in terms of that dynamic . Rosalind tensions have been longrunning. When they both came to power they had quite a good relationship. Pictures of them sitting on a swing together talking about normalizing ties and creating ties but its really been on a downward trajectory since then. In particular theres border disputes, tensions over technology, india has been slowly drawing further into the orbit of countries like the u. S. In some of those alternate power and certainly critical of china and its behavior and so youve seen that overhang relationship and perhaps xi jinping is saying i can use this as a moment to signify my displeasure by sending my deputy to a meeting hes attending every year since hes came to power. What that means is at the top levels of power in china and india are not communicating. There is no desire to let these border disputes spiral out of control. Yousef the message is carefully managed within china about anything related to the top levels of the government, how is this story being spun locally . Rosalind certainly the message is the premier is capable of going to a meeting like this and representing. Hes very attuned to matters at home. The chinese message will be its business as usual focused on the economy. All eyes will be on whether xi jinping travels to the u. S. Theres been a lot of talk he might finally have a proper sit down with the u. S. President joe biden. Thats really the most important relationship when it comes to china. They will probably focus on that conversation, the dialogue with the u. S. We seen a parade of officials in recent months trying to reset ties there. The focus within china is its business as usual, no big deal if he doesnt go in the focus is on the u. S. China relationship. This has been fantastic. We still have of course an important breaking line in the bloomberg kicking off the ipo roadshow this week. We will be looking at what is a busy september. The red headline hitting the terminal is about alibaba. The fundraiser weve all been looking forward to and that may draw telcos, of the understanding is were talking about 10 to 20 billion yuan around for the hong kong listing. So that gets about 1. 4 billion u. S. Dollars to 2. 8 billion at the upper end of the race. Thats according to people familiar with the matter planning to spin off the unit is by distributing a stock dividend within 12 months until the company had announced in continuing to monitor. Much more ahead this is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. Yousef welcome back to Bloomberg Markets. September shaping up to be a busy month for ipos. Alex weber Bloomberg Quicktake joins us now for more. Running through some of the superlatives and why its worth counting these. Theres been, weve been looking at a massive slow down in the market over the past two years partly to do with higher Interest Rates and so there is real anticipation that if this arm ipo does badly then it will there will be more caution for companies ongoing public from firms like birkenstock and instacart also eyeing ipos. If the arm ipo goes well its not a guarantee the others will go well. Its in a different space. Chipmakers are hot right now. If arm is able to convince investors its an ai lead stock similar to nvidia and others then it gets the juice evaluation. Its unclear if it can do that. What about the latest lines on the terminal within the last 10 minutes about alibabas cloud fund that could draw state backed. The nuance of the state backed telcos you deem significant. Why is that. At the moment the relationship to the cloud operators and telecoms firms around the world is sort of frenemys that the Telecoms Operators are Cloud Services from google cloud but at the same time the cloud operators getting closer and closer to the edge of the network. Theyre putting servers very close on telecoms towers. Some see it as a threat to the operators so it looks as though if they invest in Alibaba Cloud as its being reported by our colleagues then it could make a tighter relationship and less of a threat. Yousef this has been super helpful, thank you. Alex weber Bloomberg Quicktake. The iphone launched the next couple of days. Lets give your snapshot of whats coming up in the next few minutes. Fridays u. S. Jobs report. That supports a potential fed pause. The data showing the labor market undergoing a controlled cooling. Equity futures largely cooler on this labor day. This is bloomberg. Welcome back to Bloomberg Markets. Yes, it is labor day in the u. S. And canada so quite a bit of the regular volume is offline but we still have some indicators to work with. The rest of the world for the most part is online. Not going to be any cash stocks or treasuries trading on the u. S. To year, or the german to your. Germany announced they are going to sell 5. 5 billion euros of twoyear government bonds at a time when there is already a debate about supply. Currently we are up by 9 10 of 1 . The eurodollar is pretty much up 1 5 of 1 . Brent crude just short of 89 a barrel. The data gives a mixed picture of the labor market as job creation exceeded expectations, but the Unemployment Rate inched higher. Joining us now for more, sandra. You talk about something that the market could finally put its teeth in, but i also get the sense that there is a hint of stagflationary signs from this latest batch. Do you agree . Certainly i think we have to look at the big picture. The fed has been trying to achieve disinflation without too much pain. The latest data that weve had have been quite supportive and helpful. If youd asked the fed before the summer would you be happy with these sorts of numbers, i get the answer would have been yes. Softer job growth, some rise in unemployment, but not a really big downturn. Youre getting similar messages from the service which are pointing to a cooling economy, but no collapse. Obviously the quicker you get down in terms of inflation, the more pain that entails. The fed must be relatively pleased so far. Yousef in terms of what that means for the terminal rate, this is a