anna: welcome to "bloomberg markets the european open." i'm anna edwards alongside matt miller. matt: today the markets say, this is not over. asian stocks fall along with u.s. equity futures. the cash trade is less than 30 minutes away. anna: no second thoughts. the white house says president

trump's only regret is not raising tariffs higher. amid calls for calm escalation. pricing in more pain. stocks take a hit across the world. 10 year treasury yields fall to the lowest since 2016. in violent weekend in hong kong seeing equities on a slide the most this year. watch for luxury stocks at the european open. matt: thank goodness you are back. so good to see you, even if it is via satellite. pictureing at a 30 day of treasury yields. you can see starting on friday when the trade war was escalating, the chinese put tariffs on 75 billion dollars worth of goods and donald trump came back with more. we saw investors run to treasuries, buying the paper and pushing the yield down. far away from the one

spot 31 eight, which is the all-time low. take a look at futures. you are not trading in great britain. you have a bank holiday for no reason at all. just a bank holiday. you do see everywhere else, futures down. cac futures down. what do you see on the gmm? anna: a pleasure to be back. risk assets not finding much pleasure in these markets. this is the picture we see across the asian equity session. the hong kong market down 2.9%. week. taking the edge off performance. tit for tat on trade we saw on friday followed by president trump's tweet calling for u.s. businesses to exit china, it seems almost unbelievable. certainly worth exploring.

we will do that with our guest. interesting to see the chinese currency sliding on the renminbi despite fixing by the pboc my colleagues said would be dying to take the fire out of these markets, to calm things a little bit. we have heard calming words from the trade representative. you talked about treasuries. we are seeing yields down as low as they were in 2016. that's well reflected. we are selling out of risk assets, still buying into the bond market, buying into government debt. u.s. yields, as you can see on the side, down by 8.9 basis points. we are seeing crossing into the commodity space. iron ore, cotton, and other commodities down. let's get bloomberg's first word news update. >> china firmly opposes washington's escalation of the

trade war according to beijing's top negotiator. in follows president trump's remarks at the g7 summit he has second thoughts on escalating the trade war with china. the white house would later clarify he meant he regretted not raising tariffs even more. central banks cannot save the world economy alone. that is the warning from australia's uncial bank governor. -- central bank governor. philip lowe says political shocks are turning into economic shocks. he says the public cannot count on central banks to bail them out if politicians keep turning up the heat. a trade deal between the u.s. and japan in principle. president trump and japan's prime minister shinzo abe announced the pact at the g7 summit. sh japanese tariffs on u.s. farm products and japanese auto exports to the u.s..

global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thanks very much. your global headlines. we do have more for you here. a totally new capital for indonesia. two citiesicked apparently very close together. moving out of jakarta as that city continues to sink. also clogged with traffic and onto borneo for the new capital of indonesia. ans not often you get this, entirely new capital for a well-established country. let's get out to biarritz in france, where maria tadeo is joined by the secretary-general general of the oecd.

>> i am now joined indeed by the head of the oecd. thank you for being with us. given all the headlines we have seen over the weekend, are we going to see escalation in the trade war? do we take a breather now? >> you need more than a crucible. see a all hoping we de-escalation, that we see a deal, and that we reduce these tensions that have been costing the world economy so dearly. of course, could get worse in terms of the impact, the reduction of the speed of growth, the reduction of gdp, but also trade and inflation. the problem is, why would you invest to produce if you do not tariff you are going

to sell or whether you have access or not to a particular country? then you hold back. the world economy is slowing down. view, does the u.s. economy go into a recession? >> the question of the big r as we call it may be an extreme scenario. i think it should be avoided. countries are going to avoid it because we know the consequence. we just suffered them a few years ago. off 10 years of an economic crisis we have not seen since the 30's. we know the consequences of continuing down this path. therefore, we should do

everything we can change the direction, bring down the tensions, strike a deal. >> the americans will say we are not going to move until china moves. what does china need to do? these tensions, these negotiations, you typically have he said he said, whatever. look at the fundamentals. the fundamentals are that almost -- i mean, wen were forecasting for percent growth year ago. we are seeing 3.2%. gdp -- an the world and norma's amount of resources, money and jobs and exports. know,lly, given that we we should avoid at all costs.

and then strike a deal get a better move, i think. is there a question of messaging, question of signaling ? the moment is tense. everybody is waiting. it can go any which way. it can escalate. it can also de-escalate, because as i said, we now know more then we used to. do you worry about europe and in particular germany? it does seem they are headed for a perfect storm. >> frankly, we see deceleration. in germany, but also italy, the u.k.. the china-u.s. is having a spillover into europe. there is also the question of

taxes on the cars, not only of europe, but of japan. that is also very important. signalsem to be some about the u.s. and japan, some sort of understanding. that we are in a very fragile situation. then look at the debt situation. years, 6 trillion to 13 trillion. debt, not corporate debt, and half of that is just one notch above investment grade. therefore, it could migrate below investment rate with any systemic shock. we are talking about systemic shock here. >> would you say the german economic model is flawed? >> everybody would like to be

germany. to have theuld like same type of employment levels germany has had. the apprenticeship system, the very sophisticated manufacturing system. germany does not export cars. it exports computers with wheels. it is not about flood systems. -- flawed systems. cars, there is a slowdown in demand. a slowdown in the world economy in general. second, there is tariff pressure on the car industry. therefore, the more successful country in the car industry like germany is probably having a greater impact. >> thank you very much. oecd.as the head of the he has made it very clear the world needs to de-escalate trade

tensions or we could see severe slowdown. >> thanks very much. will get the latest on the market reactions to trade tensions. people inat many london will be on today, given that this is a bank holiday. markets elsewhere focused on trade tensions. more on the market reaction to trade tensions next. ♪

>> other countries thinking about reevaluating their own trade relationships. this could easily get out of control. >> what i saw businesses do is become more cautious. a business leaders expressed fair amount of uncertainty and concern about knowing where export markets are going and what their opportunities are going to be. >> we have to keep monitoring whether firms are going to react the way they have and with caution, whether it will spill over their hiring planes that hiring plans as well as spending plans. officials speaking to bloomberg at jackson hole.

since those conversations, president trump's tweets storm has investors worried about yields tumbling once again. cranfield joins us now. great to have your insight. we see asian markets reeling from tit-for-tat on trade that we saw, the escalation of trade tensions from friday. followed by president trump calling on u.s. businesses to quit china, threatening to invoke 1970's legislation to do just that. what do you think is spooking markets the most here? >> good morning. it has been a pretty ugly day so far in asia. a place like hong kong, which would have been hit pretty badly just by the tariff issues, you throw in people being arrested and a bit more violence over the weekend, it is not surprising hong kong has been the worst

performer in asia today. that stock market has been down as much as 3% in trading today. it is symptomatic of what we are seeing across west asia. there is not too much to get excited about. everywhere you look, it is a particularlycture, for a while last week, some markets were starting to look better. people were thinking there was a rebound going on. then what happened between really it camea, completely out of the blue in some respects. people are reacting very negatively. a few soothing words from china's main negotiator on trade. it has not had much of an impact on markets. people want to be very defensive. as you are saying and headlines, people are going back into bonds and treasury yields, especially in asia today. matt: bonds, treasuries, maybe

your question to the -- answer to the question of the day. i don't think i would buy any dips. the question of the day on the blog, which dips look attractive as the trade war heats up? the strategy has been a strategy that worked so well for risk assets area what are you hearing as an answer to the question? >> people are being very cautious. energy markets have come off quite a bit. there is not too much sign people want to get involved. gold and bonds are really driving the returns today. that's where people are putting their money. take japan, for example. approached almost 0.3%, the limited where we have seen in the past moves three years ago. and yet japanese bond yields doing extremely well.

there seems to be appetite for bonds. really no change from that point of view. even though u.k. markets will be closed, further moves in german bunds today. .old as well, exceptional trading at very high levels on very decent volumes. again, a symbol that people are pretty nervous. they see lower yields coming. jackson hole saying they don't take monetary policy can do much. investors are just ignoring that. what do we make of where the chinese fixed their currency overnight? i know some commentators are talking about how it was a fixing that was designed to calming the market. yet we see quite a substantial

move in the renminbi. down by 0.7%. >> absolutely. the moves from the pboc, very steady, little movements. for the moment, the market wants to ignore that. the officer yuan in particular has more freedom to move around -- offshore yuan in particular has more freedom to move around. the place we are trading, about 7.16, a long way from where the fixing was earlier today. traders are being, not taking too much reassurance from the pboc. afteruce the volatility the pboc fixing. signals pboc is sending , traders are ignoring it. they are looking for more weakness. we are beginning to move into territory where some of these

estimates people had, 7.30, it may happen before that. we could be looking at that in the next few weeks. quite a serious situation developing. thanks very much. mark cranfield, bloomberg mliv strategist. you can join the debate if you are at work. which dips look attractive as the trade war heats up? reach out to us and the mliv team area we are minutes away from the open. next, a look at your stocks to watch. credit suisse, at the bank announces investments in its home market in the triple digit millions. this is bloomberg. ♪

matt: just over five minutes to go until cash trade starts across europe. not in the u.k. because today is a bank holiday. still a lot going on, obviously. let's get your stocks to watch. looking at trade sensitive luxury stocks. dani burger is focusing on credit suisse. let's start with you. what is the impact of hong kong on luxury? >> keep an eye on luxury stocks like lvmh, look the parent of

gucci, those might all be under pressure because there are signs we are entering an open-ended trade war. china is obviously a key market. we might be entering a perfect storm. hong kong has been a problem for these companies. now with the chinese-u.s. trade war reaching a chapter that might further push down luxury stocks. , we are also getting live pictures of president trump at the g7. on the the headline nokia? cap by theed rental city of berlin could hurt its revenue by 25 million euros. the proposal to limit how much landlords are able to charge buildings isder rentalng shares of

companies. properties,nt city down in premarket. matt: it is an amazing story. we are going to get back to dani after the break.

[inaudible]

president trump: they only like to write about the bad things. and there aren't too many of them. there aren't too many of them. much.ank you very [talking over each other] president trump speaking at the g7 ahead of the meeting with the president of egypt. key line coming from president trump, saying china called, wants to restart trade talks. as we look at what's been going on on markets as a result before an uptick in u.s. futures, all turning positive on the one line

from president trump. offer to give a little more detail to that. s&p 500 futures raises after trump's comments on this china call, speaking at the g7. the asia session has been of negativity. particularly in hong kong, you add in trade tensions, to get isinvestinesses to d from china, threatening some action on that front, taking its toll on risk assets and asian assets over the night's sessions. trump says the u.s. has received two calls from china. this is more of the detail we've been listening for to see if there's more trump can tell us about what his conversations with china has been. this coming after friday, where we saw the tit for tat on trade.

president trump does still seem to be speaking at that q&a at the g7. we'll keep tracking the headlines for that. what is on the movers for the market? matt: this is truly incredible. the amount of whiplash traders had to be feeling from these headlines, from these moves. saidow earlier that china he firmly opposes the escalation of a trade war, and right now the most read story on the bloomberg is a top negotiator calling for calm as tensions grow. now we're hearing from president trump that he has received calls from china, at least two calls from china, and they want to restart talks. so maybe his brasilia tory tone, if you can -- conciliatory tone, if you can call it that, is what is turning markets completely around 180 degrees. s&p futures were down 1%, and

they are now gaining. we have the yen down. it is now up, in terms of strength. that means the dollar is weaker against the dollar. people are putting risk on bets in the market. we have treasury yields still son, but they're 1.446, still away from their lows. and in terms of the traits this morning on the stoxx 600, for example, we're not going to have all 600 stocks because it's a bank holiday in the u.k. down,see 100 up and 350 but that's turning around as sentiment changes due to these lines from this press conference you're watching now from the gtf and -- the g7. anna: nasdaq futures went up more than 1%. as you point out, just minutes before we got the start of the european trading day, equity futures were pointing downward. u.s. futures pointing downward.

european stocks are still in negative territory, down 3/10 of 1%, depleted because of the u.k. holiday. but these words will keep bringing them to you as we keep moving. so, to make a deal according to president trump. we'll see what kind of detail he offers to back that up. let's get market analysis now. good to speak to you this morning. i was all set to sq, is the market worried -- set to ask you, is the market worried? and then we heard from president trump, he said china called and wants to make a deal. we don't know the details behind that call. what are your thoughts when you look at the escalation we saw on friday in these trade tensions? we are now, so really in the eye of the storm in terms of volatility and lack of clarity.

need to avoidtors the temptation of overreacting to short-term news and bear in mind where we are, economically, separate from political uncertainty. and what we see their is the is then -- see there slowdown has been narrow and hasn't spilled over to the broader consumer. and that provides a pretty good stance to start off from. and we should see more clarity come through on the trade side in the next few weeks. do you think about safe haven traits now? -- trades now? are they overbought when you look at treasuries, 1.44? is that overbought? when you look at gold, is that overbought? guest: i think the potential for yields to continue to grind lower, given the lack of clarity right now, and there is real

potential for overshoot there. but we think the risk reward for investors to get involved in safe havens now is fairly -- anna: let's listen into a few more words from president trump this morning. president trump: we're going to talk about timing, the length of the agreement, which expires in a short period of time. paid $150 billion for a short-term agreement. have $150 billion for short-term. plus, $1.8 billion in cash. where's the finance minister? which one? explain to him. $1.8 billion in cash. would you take it? egypt will take it. step with the next iran? president trump: we'll see what

happens. they're new. they're under a lot of financial stress. the secretary-treasurer is here right now, an expert at what he does. he's done an effective job. look, we are the largest economy, by far, in the world. when i became president, we were heading to become the second-largest. china was going to overtake us. that's not going to happen. not anytime i'm here. inpicked up $20 trillion worth. $20china has lost trillion-$30 trillion in worth. we have doubled the size of our economy. if i hadn't won, our economy would be overtaken by china. and all these clans on television, running this government for many years, taken to the cleaners by china, they're saying i don't think the president is negotiating properly. they don't know what they're

talking about. i have great respect for the fact china called and wants to make a deal. i have great respect for president xi. i think we're going to have a deal because now we're dealing on proper terms. they understand and we understand. but that's a great thing that happened. and they want to get something done. maybe it won't get done. but this is the first time i've seen they really want to make a deal. i think that's a positive step. as far as iran is concerned, that was with great respect. and i spoke to the president yesterday, and i know everything he was doing. and i approved whatever he was doing and i thought it was fine. i think it's too soon to meet. i don't want to meet. i said i don't want to meet right now. but it's going to be a great thing for iran, great potential. iran has great potential. you know who else has great potential? north korea. kim jong-un.

and under his leadership, north korea has great potential. and i don't think north korea wants to blow it. because if they blow it, it won't be good. >> [inaudible] you sent a message to him on iran? president trump: [inaudible] >> [inaudible] president trump: it depends on the deal we work out on the digital tax. we're negotiating right now. >> [inaudible] president trump: i'm not going to tell you what i'm willing to do. but iran has a chance to really build themselves up to be a great nation, greater than before. but they have to stop terrorism. that is your number one nation of terror. not in the last year and a half, two years, because they can't spend like they used to spend. they took president obama's $150 billion and dolled it out to

terrorists. i think they're going to change. i do. i hope that's true. >> can you speak about a trade deal with japan? many are saying -- can you ensure [inaudible] you have toump: understand he's a friend of mine. in this world, is one of my closest friends. they trade us millions and millions of cars. they have for many years. they're essentially not taxed. so, they send them in from japan. they're essentially not taxed. the first thing i said to japan, you have to move car companies into the united states. and they did. many car companies are now operating plants in the united states and building plans in the united states because we have an enormous trade deficit. but we have a lot of cars in japan. number one is my relationship

with prime minister abe. but they send us millions and millions of cars, essentially 2.5%, but there's ways of getting around it, essentially nontariff free. if there were tariffs on these cars, there would be so much money coming into this country your head will spin. i feel certain about that. that's what i do. that the thing people didn't understand. he knew this a long time ago. we have the cards. we have the big piggy bank that everybody's been robbing for 35 years. we have all the cards. but we never play them because we never had a president that understood this. and we never had an administration or trade negotiators that understood. >> [inaudible] trump: nobody has ever asked me that question but you. why would i do that?

why? thank you very much. [talking over each other] alright, president trump there at the g7 meeting, talking a lot about iran, striking some really conciliatory tones there, saying he knew macron had invited iran's foreign minister to biarritz and he told macron he could go ahead and send out the invitation, which is pretty surprising. also talking a lot about trade with china, talking a lot about trade with japan, covering a lot of different subjects there, refusing to comment about possible tariffs on french wine. with that in mind, let's go back to biarritz, where the g7 is being held. france is the host. maria tadeo is live covering the summit for a number of days now.

what strikes you there from that press conference, maria? it's so interesting to see so many non-g7 members at a g7 meeting. it is that's right, matt, interesting that the president just confirmed the french account that he was told about that quik-trip from iran's foreign minister. he said he wasn't ready to meet yet, but he didn't want to stop macron from eating him. but perhaps the big headline is the president said china called him twice. he thinks now they're serious about this trade deal and maybe he's ready to look at this with french as. this is coming -- franchise -- fresh eyes. the what has clarified and said he was not having second thoughts about tariffs. if anything, he should've imposed more. it comes to days after a new

round of tariffs were imposed on china. it was interesting to see he has gone for de-escalation of both iran and china. of course, you have to see this in a context where the president has been commenting on market reaction. there has been concerns about recession in the united states. we did see that escalation. and the delegation has been tracking market developments. they always keep an eye on the markets and they knew the markets were jumpy and concerned about escalation. what we're hearing is the opposite, de-escalation. anna: that's the big headline story coming out of that press conference, the way u.s. futures have been with sword by that, now pointing higher. interesting to look ahead to what comes next. president trump is going to meet with president macron later on. there will be a lot for them to talk about, it's clear. one of the things, the tension

between them, has been taxes, digital taxes. and the france and u.s. finance cheap have -- finance chief have reached a pact, and that could be something that gets referenced between the two later. and emmanuely, macron and president trump will do a joint press conference, which is already a new format. normally, this would be a one person press conference. someps that is hinting to kind of announcement that will be made. we knew that mnuchin and the french finance minister met yesterday, working on a plan. perhaps that is another big event announced. but what is interesting here is that trump and macron actually appear to be working together. the french were concerned he would upstage the president and perhaps trump would throw out the script and come out with his

own talking points. but for the time being, and if you look at these headlines, it does seem the two men are trying to say something when they do this press conference in about five hours. maria, thanks for that coverage. maria tadeo is going to stay on the ground, very busy indeed, covering these surprises left and right coming out of the g7 summit. let's listen in again quickly to a little bit of what president trump had to say. president trump: china called last night, our top trade people, and said let's get back to the table. so we'll be getting back to the table. they understand this is the right thing to do. i have great respect for it. i have great respect for it. this is a very positive development for the world. matt: alright, so president

trump saying this is the first time he's actually seeing china really wants to do a deal. as a result, we had futures turnaround. keep in mind, massive losses in the cash trade on friday. we saw the nasdaq down 3%. the s&p wasn't far from that. we had a drop in features this morning, as well. now we've seen that turnaround, s&p futures gaining two thirds of 1%. a portfolio manager is still with us. we're hearing more from president trump. not going into too much deal, saying is the first time he's seen china really want to make a deal. what do you take from this optimistic complement -- these optimistic comments? guest: the worst case scenario on the trade side is the prolonged period of slow burn uncertainty and drag. so if you see intensification of

the negotiations, it does create short-term pain. but it could actually resolve things more quickly. it means you should be focused on more the destination rather than this noisy, bumpy road we're on. and the window is being tighter, narrower. if president trump's intent on trying to win the election in 2020, he's running out of time to escalate things. thisware not to fall for sort of intensification to the downside risk and focus more on where we're going. trying to: and we're get clues on where that is. now 'were hearing from the chinese foreign ministry giving a different take, saying the u.s. tariffs violate the accord, saying the u.s. maximum pressure tactic won't work and china will take actions to safeguard rights if the u.s. persists. seems to be a different path to

the conversation then we're hearing from president trump. let me ask you something that trump talked about on twitter, the international emergency economic powers act, 1997 legislation, that he could use to get u.s. businesses to pull out of china. it seems so dramatic as to make it not probable that this would actually happen. are we really realistically talking about that extreme level of movement? hani: this is a negotiation, so both sides are pulling out bigger and bigger guns and hoping not to use them. a short mutual destruction, so to speak. you have to be careful of not reading too much what he says and focused on what he does. if you look at the tweets friday, he didn't pull back the exemptions for huawei. so we didn't get maximum outcome in terms of negatives. you need to be careful about extrapolating what is actually done versus what is being said

right now. matt: we're going to keep you with us. hani, our guest cohost for the hour. up next, as risks increase on the geopolitical front, how will central bankers react? we -- we'll talk about whether there's enough dry powder in the barrel. this is bloomberg. ♪ ♪

matt: welcome back to bloomberg markets. this is the european open on an incredibly volatile day. european equities haven't moved much. if you look at u.s. futures, you will see red arrows turning green. after donald trump said at the g7 press conference he's gotten calls from china, at least two calls from china, and they want to make a deal. he said this is the first time he has seen them want to make a deal. now, contradicting that to some official,one chinese saying he is not aware of a u.s. china weekend calls. however, we know the senior trade negotiator has come out and said he doesn't want to escalate the china trade war. rank in this take

instance. traders are going to decide that, but we see u.s. futures gaining right now, so at looks like the markets are giving ofsident trump a little bit optimism in terms of those comments. hani redha is still with us. and we wanted to seg here to the central banks. hole, jayrom jackson powell complaining to some extent about the trade war, as most central bankers have. does he have enough dry powder to turn around or save the u.s. economy from recession due to it? that's oneink so and key thing to compare the u.s. and other central bankers. to us, the effectiveness of monetary policy is going to have much more traction and impact of growth in the u.s. compared to

europe or japan, which are much more stuck in the liquidity trap that marconi highlighted at jackson hole. so we think the u.s. is going to be able to rebound. with this typical lag into next year. but the positive impact on growth, we think, is still there. anna: so the fed has more traditional room for policy maneuver? banks, the fed, central take on a deep globalizing shock? that seems to be what we're dealing with here. hani: right, so we think what they'll be doing is preventing the downside. that's not the same as really boosting growth to the upside. it's really just a shock absorber against this negative impulse coming from trade. we have at, though,

manufacturing cycle that is laying out. we're actually coming to the end of that cycle, not the beginning. so that's what would lead growth to improving next year. matt: what if president trump orders u.s. businesses to stop investing in china? hani: well, that is a pretty tale risk scenario right now. i think that would come with a lot of exceptions and caveats that would give firms a lot of time and room to make adjustments where necessary. but yes, that would be a very disruptive situation, so that is a tale risk to watch out for. anna: thank you for your time. joining us this morning as markets are whipsawed by comments on trade and china. asian equities sold off, but u.s. futures point higher, up

two tens and half a percent. back to the negotiating table, president trump says china wants to restart trade talks. we get the latest next. this is bloomberg. ♪

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matt: 30 minutes into the trading day, let's get your top headlines. china calling. trump says beijing asked to restart -- restart trade talks. futures go red to green as traders by the news. and a violent weaken in hong kong sees them slide the most in years. watch luxury stocks in the european trade, as well, also taking a beating. welcome to bloomberg markets. this is the european open. i'm matt miller in berlin alongside anna edwards in london. so great to have you back. anna: pleasure to be back. lots of talk about, even though

today is a market holiday in the u.k. 30 minutes into the trading day, and this is what we see. 38 to the upside. of course, many unchanged because of market closure in the u.k. certainly, there is movement to the downside. the selling we saw in the latter part of the u.s. we see u.s. futures pointing higher this morning, whipsawed by those more positive comments by president trump at the g7, talking about how china wants to do a deal. as such, we might see some of the trade sensitive stocks confused about where to go. follow the u.s. futures up for today. this is where we are gripped right now. luxury eyewear up 1.4%. deutsche lufthansa surrounding what management they are targeting, catching attention. stock up over 1%.

let's move to the downside and have a look at what's moving there. rockwall is one of the stocks on the slide, down more than 4%. they are rethinking targets. than sensitive down more -- really, it's a big picture story that matters. equity markets following the u.s. lower friday. keep an eye on u.s. features. perhaps that dictates where we go. let's get a bloomberg first word news update with annabelle droulers in hong kong. anna.lle: thanks, well, a trade deal with u.s. and japan in principle. president trump announced it would slice tokyo's tariffs on american beef, pork, and other farm products, and delay levies on auto exports to the u.s. tensions flared in hong kong again this weekend.

the decision to fire his gun was the best option. they say the officer firing a warning shot in the sky was necessary as protesters were charging them. 65 people were arrested over the weekend. there could be a solution in sight to italy's political crisis. local media reports the democratic party is willing to back the house speaker to become the next prime minister. it could help seal the deal between the two parties. they have until tomorrow to work out an agreement that would spare the country a new election. a nwew. that's what the bank of england governor called for in jackson hole, wyoming. it would be a radical overhaul of the financial system. it could replace the dollar as the world's reserve currency. spendedit suisse plans to 100 million francs on a swiss

unit. they plan to make a domestic investment bank activity a different business to better serve ultrarich clients and institutions. clientso plan to create advisory petitions by 2021. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. anna, matt? anna: annabelle droulers in hong kong. the latest on trade, president trump says china wants to restart -- restart trade talks. this follows comments from china's top trade negotiator, who said it should result in major dialogue. nation opposesis escalation in the trade war. this is after president trump raised tariffs on chinese goods. they also urged u.s. companies to move out of china. here are the president's

comments moments ago. president trump: said let's get back to the table, so we'll be getting back to the table. understand this is the right thing to do. i have great respect for it. this is a very positive development for the world. alright, we have listened to president trump. we'll hear from him later. he's holding a joint president -- joint press conference with emmanuel macron. our reporter maria tadeo is there. she's been covering this event from the get-go. macron justresident waving to onlookers there. thought maybe he recognize someone. who knows who is going to show up at this g7? we had a surprise visit from the iran foreign minister. and we just heard moments ago

from president trump he was told about it, and it was ok with him that president macron wanted to invite the foreign minister of iran. let's bring in maria tadeo live right now. also our chief asia correspondent. enda curran. we heard president trump say china called and wants to make a deal. he said the first time he has seen them really want to make a deal. what have you heard from the chinese side so far from the vice premier? some soft, we've had sounding messages from china today. we had the foreign minister speaking and he said he wasn't aware of any weekend phone calls. await for further clarity. we had to wait for the vice premier, which seemed to de-escalate tensions and a signal china was willing to talk. the chinese media it remains

firmly on the adamant side they will not be forced to the negotiating table. but the big take away was the vice premier's comments that they are willing to come to the table to talk through these issues. anna: interesting comments. and maria on the ground, let's come to you. listening to president trump, as matt was pointing out, sending quite consolatory on china, suggesting there's still talking to be done, and said he'd have this call with the chinese. also consolatory on iran, saying he didn't mind they were there at the g7. what did you make of the tone of the trump prince conference earlier? -- press conference earlier? maria: what a difference 24 hours can make. the white house told us he regretted he didn't impose more tariffs on china, after he asked american companies to move away from china.

also reminder that he tweeted chairman xi was an enemy to the american people, worse than jay powell. today, he says he has respect xi.president he said china called them twice and he serious about the trade deal and they will be back on the negotiating table. this is a complete different story, complete different tone, and it seems the prospect, at least to the u.s. side, have increased. the u.s. delegation was keeping an eye on markets. they wanted to talk up the trump economy. they wanted to talk up the markets. there were concerned about market reaction monday. that could explain the comments we had from president trump, who also said he did not feel disrespected by emmanuel macron based on that trip from the iran foreign minister. he also hinted there could be more good news to come. it's interesting, that line, because he is about to meet with angela merkel. matt: it is also interesting.

look, i think the white house clarified that the trump tweet on asking the question who's the worst enemy of the u.s., jerome powell or president xi, was meant in jest. and there are people who would understand it as such. that interesting, though, he said today how much -- so respectes, how much he had for president xi. he had been worried about the currency. i was looking at the offshore yuan earlier, and it was trading well weaker than 7.1. what are you seeing in the yuan news in the fixing, and china's approach to that? matt.exactly, china's currency is at the center of this, and that's why there's focus on whether or not china would allow the currency to weaken a bit.

it was weaker offshore, but in the daily fix by beijing, it was stronger than anticipated against the dollar. that seems to be backing up a signal coming from china that they're looking for stability. it backs of the view china isn't going to rush into market news currency as a weapon in the trade war. and when you take it against the backdrop of the vice premier and the fact it seems to be some indication on the u.s. side they're going to get trade talks going again, perhaps it's a gesture they are willing to play parts to atone in the markets right now. anna: thanks very much to enda curran, chief asia correspondent in hong kong. in maria tadeo, who is in biarritz and france. thanks to you both. up next, we bring you the stocks on the move. a lot to talk about in regards to german right and the property

market -- rent and the property market. this is bloomberg. ♪

matt: welcome back to bloomberg markets. this is the european open, 44 minutes into the trading day, still losses across european

stocks, which is interesting because we saw u.s. futures turn around after president trump struck a far more optimistic tone than previously seen on china talks. the ftse mid turning around, but the dax down 2/10 of 1%. remember it is a bank holiday in the u.k., so there are no u.k. stocks trading. the stoxx 600 and the other 500 stocks that trade are still down. afterears earlier gains trump said china wants to restart trade talks. that follows significant strides as investors flock to the haven amid tensions between the world two biggest economies. u.s. is among firms staying long, at least until today, as the fight escalates. joining us now is the executive director at goldcorp, marco byron. what you makeoff of the more optimistic tone for president trump. is this a reason to say gold has

may be topped out? yes, probably some profit-taking in the very short term, obviously. g7,n the development at the i think gold should be up 1% or 2% given the degree of uncertainty in the world created by what's happened at the g7 and trump's tweets in terms of powell and the presidency. and also, just the trade war seems to be escalating, unfortunately, not de-escalating. i hope the g7 people will come together and talk and start coming up with some solutions that the more protectionist direction we're heading in. unfortunately, it's not that at all. in terms of the eu and what's happening in the rain forest, it's all been joined together. some of the environmental concerns are being conflated

with the trade war's. so it's very uncertain. in the short-term i think you're right,. we could see more profit-taking. it's 8% in august along. i'll just jump into say president trump is arriving at the g7. we've seen him taking part in that press conference earlier on today. he was talking with the egyptian president. today, we see him arriving from that press conference, please pictures coming to us live from biarritz. he said a lot already this morning. the redhead line across the bloomberg moved gold prices, risk assets, as well. so you're saying perhaps we topped out in the short-term. what about gold volatility? i have a chart which shows the extent of the surge we've seen in gold volatility the past few months.

is that something you expect to see continue, mark?? mark: it is, yeah. the more uncertain the world is, the more gold likes it. it is a barometer risk. as risk increases in the world and as the trade wars appear to be escalating and economy slows down, more demand comes into gold market and you see more volatility. we just need to look at it in terms of the overall volatility portfolio. gold is actually ahead. it attempts to gain when stocks come off. we've seen that last 12 months year to date. so, it actually decreases volatility of the overall portfolio. it actually increases the return of the portfolio in the medium-long-term. that's the case there. it may be time to consider for investors that they should potentially consider reducing allocations if they're overweight. they need to take proper advice.

but if they are overweight stocks and bonds, it might be time to reduce allocations and turn to gold. matt: one of the things, for a long time, investors would rather get a return on, for example, treasuries. but as the interest rate drops, gold becomes more attractive. you do still have to pay a cost, a management fee for a fund, or cost to hold the gold. what is the best way to invest in gold? mark: i suppose it depends on your motivation. if you're buying purely for return and performance, and you have a short-term timeframe and you're looking for exposure to the price, etf's are not a bad way to go for short-term exposure because they are a low-cost. investors looking to hedge the risks we're seeing in the world today, systemic risks and monetary risks, i think the net result of these trade war's is

going to feed into the currency wars. so, that speaks to figures a gold gold -- to physical gold. and what we're seeing, retail investors are not settling buying gold. it is very much the smart money. people who bought money before the gold prices are buying gold again because they're nervous about the outlook. we're seeing repeat business. it's notize the etf's, the safest way in the world in terms of the party risk in the ets. -- etf's. anna: he mentioned the tensions that push people into gold in dublin and london. there's an extra layer as we approach the end of october. the interest rate story, and how that links in with the gold price, maybe from a geopolitical perspective. you think we're due a slight pullback, but come september, is

the fed cuts again, maybe even 50 basis points. does that suggest more upside to you? mark: it does. it does, yeah. the conversations in the last two weeks, a lot of clients are expecting pullbacks. i hear that it tends to make gold go higher before we get callbacks. due a pullback. investors need to take a medium, long-term view. unfortunately, because the economy is swelling, globally, investors are going to have to cut interest rates. not just the federal reserve, but the ecb. the brexit scenario and increasing risk of no deal brexit. the day after that happens, the bank of england will have to move to decrease interest rates. and that's why gold is at all-time record highs in sterling in recent months, all-time record highs.

australian dollar's, chinese yuan. it's not yet and gold, but i think it will be in the coming months and years because of this monetary backdrop. matt: thanks so much for joining byrne talking to us about the incredible rise in which currencies, gold has been a huge winner. president trump, we just saw him and i bilateral meeting with the addiction president. now you see him -- the egyptian president. now you see him get out of a late-model suburban and walking into another building at the g7. so, leaders are being shuttled around from one building to the next. we've already gotten incredible comments from president trump, incredibly optimistic, i should say, possibly surprisingly optimistic, and conciliatory in terms of trump's relationship with iran. he said he approved macron

flying the iranian minister into this meeting. this is bloomberg. ♪

anna: look him back to bloomberg markets welcome back to bloomberg markets -- welcome back to bloomberg markets, the european open. nasdaq up on comments from president trump, as he said he had a call with the chinese.

they want to do a deal on trade. let's talk to maria tadeo on trade and enda curran. maria, the latest headline story really, president trump says there is movement on trade. maria: this is completely different to what we heard yesterday from the white house, when they told us if anything, the one thing trump regrets not doing was imposing more tariffs on china. today, we have trump saying it's the opposite. they called twice and said they are serious about the deal and he is ready to engage with them. he has great respect for chairman she and the conversation can move on from the trade deal. matt: enda, i wonder what you think about china's response. we heard from the foreign ministry spokesperson, but he may have not gotten all the information. yes, i think that's fair.

we're probably waiting for a more substantial response from the china side, especially in terms of details around a telephone call made. but a bigger message came from the vice premier, in charge of the trade negotiations. he was quoted as saying there's still a way through this, but china wants to resort to negotiations and de-escalate the overall tensions. that does not mean china is willing to roll over. you only have to look at the commentary in the state media to suggest china is willing to dig in on trade side and prepare for a long fight. the critical thing will be to see what response we get from the foreign ministry over the hours ahead over what president trump said and whether they indeed confirm the talks are back on track. anna: thanks very much, enda curran and hong kong. and maria tadeo in biarritz for the g7. thanks to both of you. that's the end of the european open.

stay with bloomberg television. up next is surveillance. s&p futures taking a turn to the upside after we heard from president trump at the press conference, where he talked about having a phone call with the chinese. this is bloomberg. ♪ ♪ ♪

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trump says beijing wants to get back to the negotiating table. after this comment about forcing companies to leave china's royal market. u.s. futures have completely reversed their losses. seaside shocker. emmanuel macron surprises his guests by inviting iran foreign minister for a flying visit but trump says he knew about it and approved of the invitation. a violent weekend in hong kong.