China. The private factory gauges rising for a second month to its highest reading since march. The united00 a. M. In emirates. Im yousef gamal eldin in dubai. David im david ingles in hong kong. , andyou look at markets really have a look at what we are looking at across the board, we have equities against the u. S. Dollar. Yields are backing up as well and we are getting a followthrough move. Tback to the here and now. Two pieces of data today, the services pmi out of china, the private gauge. We also had exports coming out of south korea. When you put everything together and you put that together with the move up and commodities we have seen over the last week, it tells you the underlying fundamentals have really improved, maybe going back about a month and a half. This is one the rba decision comes into play. We get the decision out of sydney in about 20 minutes or so for the we also get the mediumterm output. How do they balance an economy that is in much better shape than the last time they released that report . And when you look at the aussie dollar, trading above 80 cents. A very interesting dynamic we are seeing here, yousef. Yousef we are not imagining things. The bull run in stocks is getting stronger. Lets look at the other asset classes, especially the commodities front. Wti holding above the 50 a bareel mark. A brrearrel mark. Also, Goldman Sachs on the possible venezuelan impact. Futures, 1275, a six week high on u. S. Political drama. 13. 16llarrand trade, with the june surplus. You are very close to the opening of the emirates markets. Theyre looking at what looks to be another lovely, but steamy day. This is the large to midcap index. A probably negative picture on your bloomberg. Will it up on your bloomberg at imap. Passesere a few positive coming through from consumer staples. Industrials are under pressure. We did not the a lot of conviction here. The rebound in oil prices has not been enough to set off what has been a disappointing earnings season in this part of the world. Lets check in on the first word headlines around the world. Oforter a private change chinese factory activity showed politics record in july. The pmi reading was 51. 1 come up from 50. 4 in june for a second straight month of growth. That contrasts with mondays official factory data. However, signs of an expansion in steelmaking triggered a rally onore prices. Afterran yuan jumped shipments were up 19. 5 from one year ago, despite expectations of a gain of 16 . A trade surplus was left of 10. 6 billion. South korean inflation narrowly Beat Estimates for july with Consumer Prices rising 2. 2 from one year earlier. President Trumps Communications director has been fired just 10 days into the job. Has beencaramucci removed to give john kelly the ability to build his own teen. Last week scaramucci criticized Reince Priebus and steve bannon. Those close to the president say those comments did not helpful does thp. Filedtar ministry has complaints. Saudi arabia, bahrain, and the uae abbvie Led International trade rules. The three, along with egypt, accused qatar of supporting terrorism. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Ofid some lines here out hsbc. The buyback will be carried out, held a long way Credit Suisse. They are pointing Credit Suisse for the buyback, which starts today, august 1. Thats the story on hsbc. Lets go over to china and shanghai. The trading picks up litter today and ministers are there meeting under the shadow of rising spats and tension between the groups asian members. Tom mackenzie is in shanghai for us. Whats the mood like as these ministers meet . I will put that question to our next guest, the minister of trade from south africa, robert davies. David in the studio is asking what the mood is like at the summit. What are you hoping to gain from the next few days of talks here in china . Quite a lot ofen interaction with our officials in the context of international and trade issues, whether they have been developing the areas of cooperation we will be agreeing on as ministers of trade. There was previously a meeting of the ministers of industry i attended, and all this will feed into the summit, was will take place next month in september. I think there is a businesslike approach and there are a number of important issues on the agenda. Tom what degree do you think the trade tensions between the brics ministers are living this partnership between the brics less relevant than it once was, do you think . Well, i think brics remains incredibly relevant at the level of trade and economic relations. Its the most Significant Group of emerging economies in the world. But what we are facing now is thecommon challenge, industrial revolution. There is a huge change in technology with digitization. The question before all of us is, how will this bit into an inclusive growth process . In south africa, we have long seen that within the Global Division of labor. It is no longer a place we can afford to be and if we want to overcome the challenges of poverty, industrialization is a key issue for us, along with the rest of the african continent, but notice taking place in a different context. Become part tools of the landscape like Electronic Commerce, we need to make sure Electronic Commerce becomes a tool of exclusivity and not a tool with one of us having better access. I think it is for us as a group to find a winwin solution, so we are all equipped to address digitals like the divisiona divide. And we are developing our digital industrial policy, which will inform our trade policy strands. The question is, how do we move forward and produce stronger cooperation in these kind of areas. And the question of how south africa addresses of deficit in china. Is that something you have brought up with your colleagues here . And what steps can be taken to try to mitigate that . Yes, indeed. A number of years ago we first signed the Strategical Partnership agreement, and we talked about the deficit in our trade. Deficit needed us to increase the portion of our products. Now with the Commodity Prices having fallen that has translated into a very sizable actual deficit. They think we have conveyed that this morning. We have to Work Together to address that deficit and one of expo of imports next year. So, we are concentrating on that. We have to comprehensively address the deficit and increased trade. Tom china could do more. Is that your message . I think our messages we want to work with china to do more. I think there is good experience in south africa. Our manufacturing economy is capable of sustaining a group. Fied export we are looking to expand that and we have a number of projects we are developing and were looking to expand those relationships. Tom the Mining Sector is still crucial for the south african economy. Many economists expect output to decline at the end of the year. Is that a view you share . I think we have some challenges within the Mining Sector and those challenges are, to some extent, global. Usednt get the prices we to get, which says to us we need to move into more value added activities. We are producing powder. There are a number of projects out there that are on the go. But we have got to promote a high level of confidence among investors, who are also going to have to embrace the idea of creating exclusivity and a more diversified ownership within the Mining Sector. Wanted to get your views on what is happening within the high court. The reserve bank is pushing for this ruling that will change the mandate. They want to get that overruled. Presumably you side with the central bank on this. Do you . And how concerned should we be about the greater politicalization of south African Industries . Quitehink there has been a lot of rethinking about that. Thet was to happen, if mandate were to be changed, the constitution mandate were to be changed, i think there are some issues with the public instructing parliament to do that. And it would be a 2 3 majority in parliament for there to be a change. So, i have no doubt that the integrity of the reserve bank will remain intact. The constitutional independence welill remain. The goal of the reserve bank is in sitting consultation with the finance minister and it moved it while ago from narrow inflation target to a flexible inflation target. The last Interest Rate decision they made was also based on an assessment of the impact on employment and on the overall performance of the economy. Tom last question on the growth target. It has been cut to 0. 50 . We have Consumer Sentiment at some of the lowest levels ever. Do you expect 0. 50 . Is that a reasonable outlook for gdp growth . Have we bottomed out and the growth picture for south africa this year . There are a few things going on. On the plus side, we had a draft last year. Indeed, there are some very serious challenges and they do require that we make structural changes within our economy and i think everybody understands that. Those structural places will move us to different places. Tom thank you very much, robert davies, giving his views on some accomplishments hehe ha has to achieve. Yousef excellent conversation there. Tom mackenzie joining us live. Arabtech, one of the Larger Companies in dubai. Worth has won a contract 628 million dollars, which is a sizable contract. We did see that series of contracts coming through. Last month one came through around 289 million. The stock is down this year. It has been up 21 in the last month. Lets get you a bit of a preview of what is to come on the show. We will talk about what is happening with the rba. They are expected to leave rates unchanged today. We will break down the announcement in all of its minutia in 15 minutes. David the greenback, rather, got the white house blues. Flexibility is painting a bleak picture for the dollar. We discuss what that means for the asian economy, next. This is bloomberg. Business spirit is the highest and has ever been according to polls. It is the highest it has ever been in the history of these polls. We are doing very well. We have a tremendous group of support. The country is optimistic. I think the general would just add to it. Up whenup, business is you look at the markets. Chinese pmi was out this morning, along with south korean exports, both showing a pick up. We have seen a pick up in activity. Lets get more analysis on the state. Is here, thet chief asian economist at socgen. Thanks for coming in. We talked about pmi just now. The experts out of south korea, also fairly solid, 20 up. Basis,moved past the so how solid is this pickup . The chinese economy has continued to surprise on the hole of thishe w year. I would not get over exuberant by the pmi index. Odays number was good news because it showed a small pickup, where the initial number yesterday showed a smart reductions. There are a couple reasons for that. The two pmi services differ in their samples. Indexes more biased towards Stateowned Enterprises and large companies, where this is more biased to smaller sectors and smaller companies. A string of import set of korea, and other Companies Like taiwan. This has a lot to do with the tech cycle, which is very strong. And i think it will stay strong for quite a while, which is benefiting these sectors. What was also interesting was to see, if you compare the official shin index,e thai one showed a weakening within export demand and the second showed a strengthening of external demand. I think it is keeping everything rolling. What about the likes of korea and taiwan, for example . I dont think this is a major problem, really. U. S. Haves, does the the ability to dramatically pick up in the production of the kind of electronic parts which these countries excel at i dont really think so. It is very much a dollar story. The asian currencies and on strong against the euro. Not at all. I dont think this relative weakness of the u. S. Dollar is really that much of a concern, at this stage. Yousef lets widen that out, klaus. Stanley fischer will be giving a speech and we have taken a quote from the transcript. He talks about the impact of policy uncertainties, particularly the uncertainty on government policy and health care, and how that could delay projects until the policy environment clarifies. We have seen Political Drama at the white house. How much based do you have that we will see anything in terms of fiscal reform from this administration . I personally have extremely low faith in all of that. I think the failure of the Republican Party to push their health care reforms, something the Republican Party was supposedly firmly united on for the last seven years this is not a new topic the failure to push that through makes tax or form an extremely difficult task. Rm,n it comes to tax refo the differences in opinion are vast. With a white house that is quite clearly in turmoil with personnel being changed all the time, i dont think the chance of that is very high at all. In that sense, i find it remarkable how strong the u. S. Stock market has remained. After all, a good deal of the strengthen the stock market that came after President Trump was elected was because of Corporate Tax cuts. Dollar the weak support the external earnings. If you compare the u. S. Stock Market Development over the last couple years, it leaves Everything Else in the shade. I think that one looks a bit precarious. David we will talk about the fed later on. Klaus stays with us. This is bloomberg. Yousef lets shift our focus to other parts of the region with klaus baader. Thanks for sticking around. We have the nine asian manufacturing pmis. Of those 9, 7 are showing declines. Investors might have the gravitas to overlook that for now, but could this lead to a shift in the narrative . I dont think we are there yet. I see the Global Economy being pretty well underpinned. I dont think the tech cycle is going to end vrery soon. I dont think currencies are excessively strong. The fed, the kind of exports we have seen with exports today, is that likely to persist . No, of course not. That is going to moderate. Im actually not the biggest fan of pmis. David rba is coming up, but rbi is more exciting. Are they going to cut . Absolutely. That is our opinion and it is a consensus view. Inflation is down to 1. 5 . This means the real policy rate is approaching 5 , which is dramatically high. The economy has not been looking very strong. We still got know how long the demilitarization affect was. I expect them to cut today. And probably follow up with too distantnot future. David in the meantime, rba is coming out. Were not expecting anything from them, anyway. I dont know why we are making such a big deal out of it. If rba does anything, i will probably fall of my pedestal. We are not expecting a change in the rate. What can it do when you are looking at this political turmoil in washington pushing the dollar this low . He aussi dollar at 80. 19 we will have the rba decision coming up very shortly on bloomberg television. This is bloomberg. Yousef you are watching Bloomberg Markets middle east. Lets get over to juliette. Juliette we have seen the rba live in cash rate unchanged at 1. 5 . They were not expecting a change coming through from the rba, but we have seen some significant upturn coming through in the aussie dollar. No doubt, it will be trying to jawbone the dollar, but how much can they do when we have the political turmoil in washington keeping it low . We have seen the aussie dollar 18reaking below that cent level. We are still seeing the aussi hold on fairly stubbornly high around . 80. Not much momentum in terms of what the rba can do. The aussi dollar is moving. David is pointing at me, saying, thehere we go. Its going to be interesting to try and see what the minutes say sayuse we have heard them couple licks with oak, though they talked about this neutral policy rate, there does not seem to be much that the rba can do to keep rates from those levels when you have still got inflation at that 1. 9 rate. No change expected. It is worth noting we have seen the rba all the cash rate at 1. 5 since august of last year. There has been no change or over a year. When you look at the work function, not Much Movement coming through there either. There was the 11 chance that we could see an Interest Rate hike coming through in december. It has not moved at all. If we do see a move, it will be up. But there is no Significant Movement when we have inflation 3 target. 2 to the australian markets are Still Holding pretty strong 0. 8 . So, some significant moves coming through in asian equities, holding at those 10 year highs. David lets get the take on this decision. By ourjoined now colleague from socgen. Whats this predicament that the rba is in . The economy is in much better shape than it was. Now they are faced with a strong currency. How do they balance those two things . I actually dont think that the aussie dollar is all that central at the moment in the rbas considerations. The fact is, the aussi dollar has moved up, not just because the u. S. Dollar is weak, and it has moved up much less in trade weighted terms than ithe u. S. Dollar. Priceday, the ironore rose by over 7 . It is over 70 now. Coal, which is also important to australia, it has a strong relationship between Commodity Prices, the terms of trade, and the exchange rate. I think the rba is concerned about a different set of things. They want to keep Interest Rates low because they want to encourage this transition, or the completion of the transition to this post