tv Bloomberg Daybreak Australia Bloomberg August 11, 2019 6:00pm-7:00pm EDT
reporter: welcome to "daybreak: australia." i'm paul allen and a sydni. -- in sydney. reporter: we are counting down to asia's major market open. paul: here are the top stories we are covering. global warning. war is simply foolish. again edges higher after president trump negotiations with china may be called off.
and a tense weekend of protests in hong kong. there are new warnings about the economy. let's get you started with a quick check of the markets. we ended the friday session in the u.s. we some pressure with u.s. stocks sinking as the u.s.-china trade tensions increased. there was such a wild roller as though you on ended the week down half a percent. it is worth noting it was down almost more than 1% at one point, after president trump says the talks with china could get canceled for next week. still, it pared back the earlier declines after we heard from a white house official that suggestions that the u.s. might not do business with huawei anymore, they walked back the comments. semiconductors were some of the biggest losers in friday's
session. the nasdaq down 1%. u.s. futures at the moment gaining 0.1%. all eyes now on asia on this monday as we have markets out of action on holiday. that's right. if you take a look at stocks in asia, they are set to kick off on a cautious note with futures winning lower. sydney futures down more than 0.1%. on friday, we did see despite that wild week in the u.s. the nikkei and kospi closed higher for the second consecutive day after the second straight days of losses. to watch and see how markets continue to digest the news that the u.s. may be holding off on a decision related to huawei, and trump saying it is fine if september talks are canceled. as you mentioned earlier, major markets are closed today for holidays and a singapore, india, thailand, malaysia, and japan.
trading might be limited, but we will watch out for major earnings, including china literature, everbright green tech, and west china cement. paul: thanks very much. let's check in on the first word news. demonstratorsth clashing with police across hong kong. it happened sunday night in the scenes the most violent since the protests began some weeks ago. projectiles were hauled, including bombs, while police fired tear gas at in at several locations, including a subway scenes station, and were filmed beating protesters. the clashes followed three days of protest events that began at the airport on friday, most of which have been denied, and. versace hasdus -- lost its brand ambassador after a t-shirt sparked a wave of online controversy. had chosen hong kong
and milan as independent countries. they said they are deeply sorry and respects china's sovereignty. to of china's most experienced central bankers are warning of a prolonged currency war with u.s.. saidormer pboc governor the trade conflict could expand, and the yuan needed a more global role to deal with the challenges and a dollar-denominated financial system. former deputy governor chen yuan said the trade war is evolving into a currency war, and policymakers must prepare for a long battle. the former head of the u.k. civil service says the sterling could fall comparing to the dollar in the event of a no deal brexit. u.k. crashes out
of the european union at the end of the october deadline without a deal, the pound could reasonably be expected to fall further. boris johnson has repeatedly said they will leave in october with or without a deal. in north korea, the country has released pictures of a muscle test coinciding with president trump's announcement of potential new talks in ending wargames. north korea state media says kim jong-un oversaw the launches, and claimed the missiles were of a different tactical ability to earlier ones. fifthnorth korea's weapons test and is seen as a protest to slow negotiations. global news, 24 hours a day on air and tic-toc on twitter, and powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. the trump administration
is due to release this week its list of remaining chinese exports it plans to hit with new tariffs. it is expected to be the next big catalyst in the ongoing trade war. fromcrest me joins us washington. we saw a couple months back, the u.s. pr came out with a list including consumer items. what are we expecting this week? >> that list you saw back in may is the genesis of a list of the could come out any day now. the whole idea of this next round of tariffs is to hit most or all of the remaining u.s. imports from china that have not already been levied. for a lot of consumer goods, iphones and other electronics, clothes, shoes, toys, the kinds of things americans are going to the store to buy every day. we think there could be limited exceptions, possibly certain pharmaceuticals, rare earth
minerals. but essentially, this is blanket tariffs over most or all of what the u.s. imports from china that had not already been hit. the u.s.sounds like under trump has spawned some major changes on china's economic plans and aspirations. ros: yes, very much so. we had a very interesting story from our bloomberg reporters this weekend about the roadblocks that the trump tariffs are creating to china's plan to have a major economic could launch it to the point where it is a superpower. superpower 2050, as we have described it. the relationship looks strained on multiple fronts now. we sometimes hear from president trump that china just wants to wait until the next election, they want to negotiate with a democrat. there could be some genesis of
truth to that in terms of how beijing is looking at the trump because there is a real battle going on between the u.s. and china, not just on trade, but on overall economic and cultural supremacy. perhaps it would be better for china to wait it out. but that is a big impediment that china really faces there. shery: the former treasury secretary larry summers had a stern warning about the impact of the trade war today. take a listen. >> we are probably at the riskiest moment in terms of a recurrence of recession that we have been in since the financial crisis. some of that has to do with how long the recovery has gone on and the inevitable buildup of imbalances. a great deal of it has to do with the uncertainty and risks created by what i think is a rather sadomasochistic and foolish trade conflict.
how does his -- perspective fit into current views of the trade war? ros: there are different views about the merits of a trade within the trump administration, and there are some people who work for trump who are not as hawkish on trade as others. it seems like in the past few months, the trade hawks have been on the ascendant. like larry summers has not well represented, he talked in that interview about busin -- reduce business investment and prices for consumers. a lot of effects from the trade war. are tooknow that there many people within the white house at the moment pointing out these dangers to the president. it is a bit of a why? paul: bloomberg editor ros krasny, thanks for joining us. for more on the story, our guest
joins us. he is the chief global economists for principal global investors. thank you for coming in with us. we heard larry summers describing the trade war as sadomasochistic and foolish. he is not leaving a lot unsaid. what are your expectations if the september meeting does not go ahead? president trump seems fairly relaxed if that gets called off. guest: i am not sure he is as relaxed as those words say. i am sure he would like a trade deal. larry summers is certainly right, this is probably as close as we are getting to a recession. the u.s. economy is at a crossroads here. we can move down into recession if we have a major escalation of the trade war but we are betting on recovery in world growth toward the end of the year. what trump can do is limited wants to beow he
reelected next year and he cannot trash things too badly. china is limited in their main countermeasure, which is devaluing the yuan. they want it to be an international currency, and if they devalue it too much those thoughts go out the window. and they get more outflows, which is not good either. paul: we spend a lot of time trying to debate who will suffer the most here, and use a say-term changes -- and you long-term changes will damage china. but there is risk for the u.s. as well. take the bob: it would u.s. quite a wild to replace those, although they are making strides in that now. there is a company that has rare andh mining in colorado, there are some other sources. but that is a problem. long-term for china, it is a very difficult situation because there have been several articles in july in different papers about the number of companies
that are moving their supply chains, or at least thinking about it. apple, nintendo, some other large companies. that is the long-term issue for china, changing supply chains. shery: given all of the uncertainty, we continue to see this reaction in the u.s. economy, despite the fact that we see gdp growth is strong. we are seeing parts of the economy starting to take a hit. this gtv chart showing business investments have declined, and seeing the first drop since 2016. how much of this has to do with the uncertainties over trade, and how much is it the fact that we are in a late cycle? bob: i think both of those issues you mentioned are true. certainly a lot of uncertainty about the trade issue, and i believe that is a key reason why business investment in the last two quarters has slowed down from the really strong growth in the middle of last year. as we look ahead, we are in a
late cycle. if you look at the u.s., they least three long-run indicators that suggest there is some recession out there. payroll growth is slowing. we have seen with the latest profit revisions profits coming down. there are several other indicators. the yield curve is inverted, and that has been an infallible indicator of a recession. it may be a wild before those things to cold, but these are late cycle, and those are out there. shery: are you factoring in a possible recession, and when was that be? bob: at some point down the road, i think we will see a pickup in a global growth toward the end of the year, probably the last six to nine months, or a year. but i think we will see higher interest rates go along with that, even from these low levels. that couldes about,
easily start distress in the credit markets in the u.s. and around the world, but probably not until 2021. paul: we do have a question from a viewer saying long-term for china, will they get sufficient domestic demand to work their way out of the middle income trap? bob: that is a good question. if you look back on chile and south korea, those were two countries that moved from a military dictatorship into a kind of democracy at about the same income level that china is today. it is really hard to know if china can make that happen, what moves countries out of the middle income trap. it is dynamic private in price come -- private enterprise companies that are willing to take a risk. that is happening in china, but i am not sure it is enough to move them out. paul: i wanted to get your thoughts on a comment made by the u.n. secretary-general last week. he is concerned about the possibility of a new economic
cold war where you get rival trade blocs, rival technologies, internet currencies. how great of a risk do you see that if this drags out too long? bob: there is the risk of that happening. china is trying to develop its own trade links. they have their own internet because they censor the internet for what their people can see. i think that is a risk long-term. we are moving down that road a little bit. paul: today we are having --huawei this week taking the wraps off of its own operating system, so that will be interesting to watch. plenty more to discuss coming up in a moment. bob will give us his outlook for the fed. shery: later, a tense weekends in hong kong with demonstrations across the city. this is bloomberg. ♪
the trade war, central banks so they cannot dispel the clouds on their own. from jerome powell to mario draghi, pressure is mounting for governments to loosen their budgets if the slowdown takes hold. bob baur is still with us in sydney. thank you for sticking around. we have seen a lot of frustration with the fed action in july, despite the fact that they cut for the first time in over a decade. what will the fed need to do in the coming months to support the economy, and also keep markets happy? bob: i think they are going to 0.25% ined rate by september. if markets are not too erratic or we do not get too much of a plunge in markets and the data continues the way it is, we may or may not get another cut toward the end of the year. i think the fed is concerned with the uncertainties of business. right now, those uncertainties
have not lurched over into hiring plans. households are doing quite well in the u.s.. but i think that is the fed's main concern, that despite slowing spending we could see the business uncertainties work their way into pruning hiring plans from what they have been. shery: of course, it does not help that a stronger u.s. dollar is eroding the profits of the multinationals. will a fed rate cut do the trick here, or will it be offset by the fact that other central banks will be moving as well? bob: that certainly is true. but i think a fed rate cut will help. the dollar is strong, but in the last few days it has come off it speaks -- off its peaks. we have seen the yen appreciate, and the euro has appreciated some. notgh your -- the dollar is appreciating for this. it is not the only currency that
is strengthening. remarks from morgan stanley. with the dollar is now could into ae economy difficult situation and any further appreciation could be challenging. when you look at remarks like that, look at the dollar, the yield curve slashing recession, what do you think the risk is? bob: certainly the strong dollar is bad for emerging markets and that makes the interest cost they pay a lot higher. but central banks are turning very accommodating. we had five interest-rate cuts last week. 0.5zealand cut their rate points. that accommodation is offsetting some of the dollar strength, and i don't think the dollar will get a lot stronger from here. we do look for global growth to pick up toward the end of the year. if that is the case, strong global growth -- not strong, but
a pickup in a global growth is usually negative for the dollar. paul: that new zealand cut was intriguing because inflation is in the middle part of the target range. insurance cuts seem to be the theme of the moment, but what happens if there is a recession? central banks are getting low on ammo. bob: they certainly are. the other alternative is some fiscal support. germany is considering that somewhat now, and with the budget deficit in the u.s. continuing very strong, certainly fiscal support in the u.s.. you are absolutely right. central banks cannot do it all. eventually, i think we will see some resolution to the trade war, or at least it is hard for me to see that it will get worse from what it is today. principal global investors chief global economist bob baur. thanks very much for joining us today. bob: glad to be here. paul: you can get around up for
shery: hong kong police have battled protesters in several districts across the city in the weekend ofght demonstrations. they fired tear gas and rubber billets -- and rubber bullets to clear streets. our chief north asia correspondent stephen engle is outside police headquarters, and any sign this could at -- this could end anytime soon? stephen: no, absolutely not. there were more protests, more tear gas fired, rubber bullets fired, petrol bombs tossed at
police officers. one reportedly was injured. yet, there is no progress to ending this now 10 week standoff between protesters and police. i have been saying this almost every monday morning when i come to report the weekend violence. it is another tense calm as we begin the morning commute here on this monday morning. there is rain falling, so the protesters have dispersed, but that has been their tactic all along as it has evolved. they have applied for various protests over this weekend. most of the protest venues were denied by the police, except for victoria park. the protesters turned out regardless. they have been moving around to numerous different districts. the police have shown more of a willingness to respond quicker and with more force as well to clear the streets. again, the flash mob tactics have taken hold, and the
protesters as soon as the police charge retreat and move on. we will get the police report later today to get the number of arrests. we have heard there were between 16 and 18 arrests, but there were more yesterday sunday. we could see that number go. paul: you say there is not likely to be in the end to this in the near future, so what comes next? is there a bigger crackdown, or is licked tolerance beginning to wane -- or is public tolerance beginning to wane? stephen: nerves are fraying and patience is wearing thin on all sides, perhaps except for the protesters, who seem to be more steadfast in their resistance. a number of people in the various residential neighborhoods are lashing out, in particular lashing out at police for using tear gas. there is a perception game going on as well. there are many different reports about alleged police
interference in the planting of evidence. these are hearsay reports. of peoplealso reports from mainland china being bussed strong mainland and communist support areas. there was a little bit of tussling, but for the most part that went unfounded. there is a tense calm this morning. thei might be an extension of the protest at th hong kong airport,re which lasted for three days over the weekend. paul: stephen engle, thanks for joining us. let's get a quick check of the business flash headlines. ams is offering more than $4 billion in the second attempt to acquire its struggling german rival. the offer is worth 38 euros a share. became a takeover target
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paul: 8:30 a.m. monday morning here in sydney, the market open 90 minutes away. this is following a week in which the asx did close almost 3% lower for the week, but we saw gains on thursday and friday. it -- u.s.rket equity markets closed lower. shery: i'm shery ahn in new york, where it is 6:30 p.m. let's get the first word news. sue: we start with the former u.s. secretary -- treasury secretary. he says the global economies are at the riskiest moment since the
financial crisis. he told cnn that the slowdown has worsened into president trump's trade war, which he called "sadomasochistic and foolish." he added, the u.s. is losing out in terms of uncertainties and lower job creation, and this is for the sake of benefits that are "unlikely to be of substantial magnitude." >> we are probably at the riskiest moment in terms of recurrence of recession that we have been in since the financial crisis. some of that has to do with how long the recovery has gone on and the inevitable buildup of imbalances, but a great deal of it has to do with the uncertainty in risks created by what i think is a rather saddam must've to stick -- a rather sadomasochistic and foolish trade conflict. reporter: tragedy in china. at least 32 people have been killed and 16 more missing after a typhoon swept through china's eastern province.
more than one million people were evacuated as the storm approached, and damages are at over $2 billion. the typhoon made landfall early morning, and is now moving up the coast. morning,large parts of kashmir remain cut off from the outside world. restrictions have been eased ahead of celebrations for a holiday, but phone lines and the internet remained cut off. leading political figures are in detention. prime minister modi has promised a new era for the region, while his pakistani counterpart has warned of genocide. global news, 24 hours a day on air and tic-toc on twitter, and powered by more than 2700 journalists and analysts in 120 countries. i'm su keenan, this is bloomberg.
few markets across asia are close, including japan. for the markets that are open, let's turn to selina for what to watch. for some stock last was down 1.3%. this is on reports that moco anorts has planned investment and is under investigation. reports that crime gangs laundered money at casinos. we have heard that they will be fully cooperating, so we happens.how that harvey norman closed up 2.1 percent. they entered an agreement to buy resorts. and frontera, updated guidance announcing a review that
identified a small number of assets the company believes to be overvalued based on the outlook for expected future returns. paul: thanks very much. let's get more on what we should be watching us trading gets underway in asia. adam haigh is with us. last week, very volatile. trade tensions are ratcheting up once again. can we expect to see the outside swings continue this week? adam: i think traders will be hoping it will not be as volatile as last week. there is likely to be a bit of movement in prices, but some of what we saw in treasuries markets last week was a bit much for people to stomach when you have 10 or 15 basis point moves in a few hours. the sense is if that settles down a little bit, you might get a little more support for risk assets. as you noticed, the trade war and the headlines surrounding developments in the trade war continues to be a big driver of
short turn moves in asset prices. have a look at this gtv chart. this goes back to the bull argument you get for assets. you keep hearing the earnings yield on stocks remain pretty well supported at this point, given what the pressure is around the world, making bond prices rich for a lot of people, especially people who already have some defensive exposure in the portfolio. this week, there is not a huge amount on the data front. we got some chinese data on wednesday. that may move the data, and at the australian jobs report may give traders a little more on where the rba goes. but with an absence of fed speakers until you get to the jackson hole symposium, it is pretty baked in for another 50 basis points by the fed until the end of the year. it will take trade headlines to move the dial for risk assets. shery: given the flattening in
the bond yield curves in recent weeks, what does this say about how policymakers can get out of the slowdown? usm: i think what it tells is the market does not believe policymakers can get us out of this slowdown we are seeing in growth globally. the problems are very well flagged now, they are well priced into the market. but as we heard from the imf on friday, if we see this becoming a long-term issue between the relationship with china and the u.s., which many people believe it will be and no sense it will get fixed before the presidential election in the u.s. in 2020, then you can remain in a situation here where the scramble for yield across the world and long-term money looking for somewhere to get some kind of return remains quite tricky. this gtv chart in your library
shows it pretty quickly -- shows it pretty clearly, that the flattening of the curve has meant that the policy response we can expect over the next six or eight months has not really been factored in quite significantly by markets. markets are not expecting policymakers to be able to really get inflation going and get the growth side of the equation going, either. clearly markets still erring on the side of caution as we stand here. paul: adam haigh, thanks for joining us. you can check out our gtv chart library. to see some of the charts again, you can find that at gtv on the bloomberg terminal. the aussie dollar is looking vulnerable. joining us with an astronomy -- joining us is michael. three hours of testimony were given, then we had the statement about monetary policy coming out every quarter. after digesting that, are we anywhere near it? michael: that is a good
question, and the answer is no. we are pretty much where we were before in the sense that the economy is slowing a little. the monetaryut of policy was to get to 2.75% growth next year, which is trend in australia, you are basing pricing for two rate cuts. that tells you what the market is respect -- what the market is expecting. all of this is hostage to what is going on internationally, the confrontation between the u.s. and china dialing up. australia is not directly impacted by that because we are not part of the supply chain, but obviously sentiment is important here. that said, on friday they signaled that australia's economy might be through the worst because we have these rate hikes that have happened. be gatheringems to
steam. the old growth drivers seem to have impetus behind them. flushed out of bed. shery: we have a couple things the rba will be paying attention fed's september meeting. what are we expecting? jobs data this week, it is a bit of a crapshoot, that whole report. it provides volatility, but generally is short-term volatility. it takes a few months. putting in context what i was saying earlier about two cuts needed to get the economy growing next year, the question is, what are the triggers? the fed in september is a big one because if they cut, that would put pressure on the aussie and that is the last thing they want. they want the australian dollar stable or appreciating.
the start of september, we will have second-quarter gdp data, which will give us a better sense of where the economy has been. and we will have a current account, which is likely to show the first surplus in 40 years. in the short-term term, there is not a lot. paul: as you were describing, the testimony, the statement, the market expectations, those are pointing to a cash rate of 0.5% down the road. that has to be a dark place for the aussie dollar. michael: it depends on how high the fed goes. if you have australia at 0.5%, you assume the pressure would still be there on the aussie no matter what. the question is how quickly we get there. most people are confident we get another cut before the end of the year. some are talking two cuts. i think one is pretty well baked in. shery: thank you for that. coming up next, we are speaking to beckerman institutional founder and ceo daniel beckerman
paul: i'm paul allen and sydney. shery: i'm shery ahn in new york. you're watching "daybreak: australia." continuing worried about trade, but our next guest is betting on traits for the rest of the year. daniel beckerman is here to explain to us why. daniel: good to be here. shery: thank you so much for joining us. one of the reasons i am guessing is because valuations have come down so much. this chart showing the recent selloffs. is that what is making it more attractive? daniel: given what has happened with the yields, we have the 10 year at 1.75%. on a relative basis, i am looking at the s&p 500 thing i can get a higher dividend yield, and that will give me pay raises
over time. the earnings yield is about 5%. i am looking at this as a relative opportunity. shery: where do you see the relative opportunities within sectors? is there somewhere where we have not seen them at rally as much, but also has potential to rally in the future? daniel: that is a great question. when you look at financials, for example, that is a sector that trades under 13 times earnings, the cheapest sector in the market. there are a lot of opportunities for better valuations, even though we have this inverted yield curve. banks are lenders, so their book values are going to tend to increase as we have this drop in interest rates. it is no surprise to me that if you look at berkshire hathaway's portfolio, warren buffett has financials. shery: they took a big hit. daniel: absolutely. not every bet that warren
buffett makes is going to be a winner, but in our good get -- but in aggregate, it is hard to argue with his track record. paul: to get back to the point you made about relative value, i want to bring up this chart. to your point, it does prove that the dividend deal does outweigh what you will get from the rather miserable 10 year trade. but you have to bear in mind, the earnings season's been tempered. we were talking about the u.s. dollar. that does not bode well, either. it does come with risk. daniel: i think so. there is short-term headwinds related to the trade wind issues, volatility around the dollar. but if you go back over the past five years, the dollar has gotten much stronger and has not really caused any sort of economic calamity. i don't think investors should be making their decisions based on short-term volatility surrounding where the dollar goes.
it is very likely we could end up at some point with a resolution to the trade war, in which case equities and the dollar could reverse course. i know one of the things you like our small caps. daniel: you look at the major they all hit record highs this year prior to the august volatility. the russell 2000 is down 10% from a year ago. it represents an area where we see higher long-term rates of appreciation, and in particular the small-cap values space. this is an area that over long periods of time, they have generated outperformance. there is more exposure during this period where we have international instability. i think there are areas like this.
this is where you see rebalancing. chart showingv the s&p 500 at the most under a decade. do you prefer when it comes to small caps? daniel: my preference would be the s&p 600. that methodology screams out the unprofitable companies and has led to better performance -- the methodology screens out the unprofitable companies and has led to better performance. shery: do you worry there are regulations that could come to the forefront in the next couple of years that could potentially hurt their earnings potential in the future? daniel: i think it is natural. technology has been such a high-growth sector. it has permeated all other parts of the market. you have the tech heavy nasdaq up almost 20% this year.
the technology index has been up over 25% this year. and it is natural given the breadth and scope of these large technology companies that have not been quite as regulated as other industries such as health care or financials, it is natural you see some regulation. i think that is a good thing long-term for that area. paul: we need to get your thoughts on the granddaddy of all the risk factors at the moment, and that is the trade war. we had the reserve bank governor in australia giving tips on friday, saying resolution to the trade or is critical. is this the key to everything? think there is a lot of attention being paid to the trade war at the moment. if trump is trying to keep pressure on the federal reserve, which is to lower interest rates. but if you see a resolution to the trade war tomorrow and suddenly the stock market and economic conditions look a lot
better, there would be a lot less impetus for the federal reserve to lower interest rates going into the september and october meetings. are getting into presidential election season in the u.s. is there any political incentive to get this done now? as we saw in the last election, president trump does love to have a villain. daniel: that is a great question. in a way, trump has engineered his own rate cut. look at where the 10 year yield has gone, even as the fed has not moved yet. i think, yes, the answer is yes. longer run, yes, we do have that pressure prior to the election to come to some sort of agreement, especially as we have weakening economic data. but i think trump wants to keep pressure on the fed on keeping interest rates low. shery: talking about the presidential elections, there are some key topics that
candidates like to talk about, like drug prices. two pharmaceutical companies and pbm's face anymore challenges going into the 2020 election? daniel: there is so much rhetoric. this has been talked about for such a long period of time. you look at the pbm's, particularly within the subsector of health care, and it has done really badly. i think you are going to have heated rhetoric. it will be tough to get actual reforms done, so i think it is a wait and see approach for that area of the market. shery: we are almost done with the earnings season in the u.s. how did you like it? daniel: earnings came in not quite as tepid as i might have expected. we had a long-running expansion. but if you look at the overall market, various subsectors of the market, the majority of earnings are still positive. the consumer is strong, economic data is strong enough to support
stock prices where they are. they are at somewhat of a reasonable level. shery: great to have you with us. daniel beckerman, beckerman institutional founder, president, and ceo. if you missed any part of this conversation, gtv is your function. you can dive into any securities or bloomberg functions we talk about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
shery: i'm shery ahn in new york. paul: and i'm paul allen in sydney, and you are watching "daybreak: australia." the ongoing trade war between washington and beijing boosts fears on the health of the global economy and keeps economy investors on edge. james bond hill joins us now. what energy investors are going
to be watching this week? james: first on the docket will be saudi aramco's first ever earnings. saudi arabia's behemoth will be interesting as to how they are performing, and it should get some insight there. one of the world's most profitable companies. alsong that aside, we will be looking at the u.s. inventories data. the last week showed crude supplies rising for the first time in quite some time. there will be keen to focus on whether that trend continues. another thing investors will be keenly focused on is the trade war, of course. we have some chinese factory data that should give interesting insight into how the chinese economy is performing amid those trade tensions. shery: what are we expecting to see in these indicators, and how much has the trade war weight on commodities -- weighed on commodities? james: it is having a huge
impact on commodities markets. you just have to look at the gold prices surging to see that investors are racing safe havens and shoveling the speculative and. imf came out with a big report friday warning of the downside risk the economy if these tensions continue to escalate. all the signs suggest that is exactly what is going to happen. we had president trump over the weekend saying he might walk away from talks scheduled in september if he does not see more chinese movement in his direction on trade. andrly a very tentative uncertain situation we have over trade talks. factory datathe will be an interesting progress report on how the chinese economy is faring as the tensions play a bigger impact on the global economy. paul: james thornhill, thank you very much. let's get a quick check on the business flash headlines. blackrock's private equity firm has struck its first deal,
spending $875 million to become the largest shareholder in that the u.s. brand management company. and manage 50 clothing entertainment labels, including sports illustrated, nine west, co juice eco -- juicy uture. second quarter loss more than doubled in the global slowdown, a rise in global competition. the carrier reported the shortfall of $23 million through june, compared to a loss of $100 million compared to a year earlier. the airline is struggling with an aging fleet and depreciation against the u.s. dollar. reports from india say struggling jet airways has received three expressions of financial investors and a global company. no names have been released. the report says there is no interest yet.
will evaluate the bids and come up with a short list. a chinese operations center is preparing to be built as part of revamping and sharpening their chinese business. beijing has attracted a large number of car manufacturers and auto parts manufacturers, and a new industrial chain that covers sales and logistics. there is plenty more ahead in the next hour of "daybreak: asia." that is it for "daybreak: australia." this morning. it trading in new zealand is underway. here in australia, futures are lower by 0.3%. this is after we saw an exciting week on the afx. overall, we are off for the week.
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undergood morning, we are one hour away from the australian market open. shery: good evening from bloomberg's headquarters in new york. to "daybreakme asia." paul: our top stories this monday, global warning. larry summers says the threat to the global economy is at its highest in a decade. the yen edges