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tv   Bloomberg Daybreak Australia  Bloomberg  August 20, 2019 6:00pm-7:00pm EDT

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paul: welcome to daybreak australia. i am paul allen. shery: i'm shery ahn. sophie: i'm sophie kamaruddin. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering in the next hour. president trump raises pressure on the fed days before the repeated call for a big interest rate. hong kong protesters reject the olive branch, deemed unacceptable. as it faces pressure
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misses forecast. the depressing demand for smartphones. later, we will have more on the earnings but first let's get you started with how markets closed in the u.s. on this tuesday session. later, we will have more it was stocks down, yields down, risk obsession for the markets in the u.s. this of course as we have seen investors cautious of the gathering on thursday, getting started and gearing up for what could come out on monetary policy changes. that led to more concerns on trade tensions as well. the s&p 500, we saw every sector in the red. we have materials and financials leading the decline. that halted the three-day rally. we also had a pretty mixed picture for u.s. retail earnings. a big week of earnings for u.s. retailers. 4%e depot surged more than on signals that we could see a
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stronger second half. in the meantime, the nasdaq fell 7/10 of 1% while the dow fell. we are waiting for the minutes coming out on wednesday. u.s. futures unchanged so let's see how we are setting up for the markets in asia. sophie: asia futures are nudging lower this wednesday. geopolitics back in the next and more earnings on tap including byb. group dueorts and apa to report. the asx 200 posted the biggest jump since june, following the rba minutes indicating there could be further easing. fed officials saying we do have monetary policy looking effective. we are seeing downside pressure for kiwi stocks. nearly 1.5% at the start of cash trade. we will get an eco health check across the region from korea.
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a pulse check on exports amid the ongoing trade dispute with japan which looks to strengthen economic ties with china. on tap, thai trade figures which comes after the government approved a $10 billion stimulus package. the government has cut its growth in exports forecast due to that strengthening, which made it one of the best-performing currencies this year. paul: let's check in on the first word news now. ritika: italy faces a new political crisis. the prime minister resigning and saying the populace coalition is dead. blaming the anti-immigration andue for his decision withdrew support from the government. salvini hopes strong poll ratings will see him when a step election and go without the need of a coalition partner. the european union has rebuffed boris johnson's plans on new
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talks on a brexit deal. the arrangement is intended to prevent a hard border with ireland, but the u.k. says it leaves brussels holding all the cards. the two sides remained deadlocked with just weeks to go johnsone split, which insists will happen with or without a deal. the u.k. government may delay two announcements and assign it is considering a step election. the bank of england governor mark carney may not be named until after brexit. there is also speculation the budget may be pushed back to next year. carney stepped debt at the end of january -- down at the end of january. kongst leaders in hong have rebuffed the chief executive carrie lam's apparent olive branch, saying they failed to meet the new demands. she laid grounds for the talks and investigate claims of police brutality and launch a
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wide-ranging study. her opponents say the offer may be a media stunt and a waste of time and money. global news 24 hours a day, on air and on tictoc on twitter. powered by more than 2700 journalists and analysts. i'm ritika gupta, this is bloomberg. shery: jumping back into the wall street close, stocks fell across the board in a choppy trading session on low volume. we saw mixed results from retailers which is a big part of the earnings parade this week. su keenan is here with more. who could blame investors for being on the sidelines in such an important week? su: a lot of news is about to come and we are starting to be in the final weeks of summer where a lot of wall street traditionally takes off. a lot of that adding to low news volume. you will notice financials is one of the weaker sectors. let's go right into the bloomberg. underperformance from financials
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resumed before this was called. this is a chart of xlf, an exchange traded fund of the financials. again, continuing to underperform. let's go into the big movers. pacing some of the decline. bank of america, shot in the financials. we look at the other stocks that are big movers, beyond meat getting a big upgrade from j.p. morgan chase, the only upgrade. they have a strong earning. baidu continuing to ride on it strong earnings. apple tv slowing netflix down, showing increased competition in this space. take a look at the retailers under pressure. shery mentioned at the top, kohl's missed. the news was not all bad but he continues to show the retailing well, itome depot did is under pressure. macy's had a week earnings report. it got hit in this, as did t.j.
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maxx. that is a holding company for a number of retail stocks. paul: let's talk commodities. oil rising to a one-week high. we have gold edging higher as well. what's going on? su: we have the wednesday inventory data out in the morning. that is expected to show a big decline in u.s. inventory. for the wild ride, and a lot of volatility in oil for the month, the major trend has been downward. if you look at the big picture, theis down some 15% from april peak but at a one-week high. take a look at gold which continues to run higher and higher. a widely followed veteran investor saying you should buy gold, or people lives -- leaves you should buy gold at any price on the heels of an imf report
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showing several countries are increasing holdings. shery: thank you so much for that with the latest on the markets. joining us now is anne. great having you with us. let's start with retails because this is a big week for earnings results. we seem to see the sector a little cheaper these days but given the recession fears, trade tensions, could we really dive into the sector wholeheartedly? anne: i think the sector and the aggregate, for the first time people are talking about consumer spending slowing down. you look at the gdp growth in q2 , two big areas were consumer spending and government spending. now the slowing down is fueling some fears for the rest of 2019. to your question, the whole story really can hide. retailers coming out with models that are winning in the digital and e-commerce space. you have others continuing to struggle. shery: who are you talking
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about? ann: if you look at the performance so far, they have done a good job of market ing. they have done a great job of competing online. even kohl's, one of the mix performers. the partnership with amazon which was a bright spot. maybe in the aggregate, it is looking challenging but they are trying to find their spots in the e-commerce landscape. paul: what is your assessment of the earnings season so far? has it been encouraging? time to take some profits or do you think there is still more to run? ann: the overarching theme has been continued message of uncertainty. even week to week within the earnings season, on the one hand, news about tariffs. we have seen increasing recession fears. what has been interesting about the last couple of weeks, typically in an earnings season, you expect to see some predict
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ability and the way stocks trades. it has been hard to see direction one way or another. paul: you're optimistic on the consumer, a lot of people are. the retail sector is looking better than many expected. i want to take a look at this chart and get your thoughts. this is u.s. pmi's compared to global peers. we see that the u.s., the yellow line, is getting towards zero along with the rest of the world. what does this tell us? the consumer might be ok, but how about the manufacturer? ann: great question. i think with that chart highlights is it is a tale of two economies. the pmi data shows for a number of quarters a slowdown. if you look particularly towards what the impetus might be for further rate cuts, it has been the manufacturing sector. it has been the pulldown and that part of the economy. that is part of the reason jay powell pointed to justify the rate cut we had in july.
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that would be the data set that is a focal point. we will see the conversations unfold the end of the week. shery: we have seen defensive outperform. this chart on the bloomberg showing the s&p 500 lagging, while gold and the yen and bonds have really rallied. are we a little bit overstretched here? ann: if you pull out the s&p data, a very interesting analysis that looks at the exposure of names which had predominantly export oriented topline with more than 50% and compared the earnings results against those two. i think even within the s&p, peeling back close tariff exposures, which have more domestic focus, particularly if consumer spending holds up. shery: we have flash pmi's in europe this week. we have been hearing speculation there could be more action. how closely are you watching
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that? ann: particularly as we look going into the g7 discussions this weekend in france. the german central bank said the anticipation is the second consecutive quarter of slowdown and a crisis package if needed. i think that rhetoric is getting louder. i think that is new. in conjunction with uncertainty in italy, brexit looming for halloween, we are looking at that closely more than before because of the global impact it will have on markets. berry,ll right, ann cornell capital partner. , joining us to discuss earnings after new zealand missed estimates. china is a key market. we will ask how a2 is weathering the slowdown. shery: next, attention turns to the fed as markets wait for direction. we will ask what to expect from the annual gathering in wyoming. this is bloomberg.
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shery: bond traders expect jay powell to kick off the symposium later this week with a speech that opens the door to a series of rate cuts. kathleen hays is here to its claim why they may be disappointed. the markets were already disappointed with the historic once in a decade july rate cut. so there is a big chance of could disappoint as well. kathleen: it is so funny, you cut the rates the first time in 10 years and people, it has a lot to do with what president trump said, coming out the very next day saying 10% tariffs on more chinese imports and that stole the show and set the stage. jay powell has a big task. this is a traditional speech the fed chair gives at jackson hole symposium. ether george, in the middle william.
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this is from last year. at this point, he is definitely thinking about writing this speech because he knows it will send a message to the world. in fact, what the world of traders, bond traders is looking for is more rate cuts. they are expecting them soon. let's take a look at this chart and you will see two lines. this turquoise line is where the effective fund rate is, 2.1%. ret, look at what they' looking for if you look at this white line. this is suggesting that the funds rate is going to be at least 60 basis points below where it is now by early next year. that is more than two rate cuts. is that possible? at least two, is that possible? what are people expecting? let's look at donald trump. he was speaking to reporters today, with the leader of romania.
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he could not resist the temp tatian to once again say europe is doing stuff, germany is doing stuff. the fed needs to cut the rate and it needs to do the big one. listen. president trump: you have to be proactive. we really need a fed rate cut rate because if you look at what is going on with the european union as an example, they are cutting. take a look at germany and what they are doing and paying. they are doing something inverse. we have to keep up to an extent. kathleen: very surprising if jay powell is that aggressive, but that the july press conference after that first rate cut in a decade, he referred to what the fed had done as a midcycle adjustment. people are looking for some signals this is the beginning of an easing cycle, a series of cuts. that is what people want to hear. paul: jay powell is getting plenty of unsolicited advice from the sidelines. what is going to drive his
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message, he knows everyone from wall street to the white house and pretty much all over the world is going to wait to hear. kathleen: one thing for sure, as donald trump -- i get the press conference today, he said i am not giving up. maybe it will hurt the economy, but you have to pay the price. with that kind of you, people think the weakness in europe and china, could there be a recession in the u.s.? another bloomberg chart. we will look at the you -- new york fed's probability of recession in the next year. it is up to almost 32. whenever the odds over 30% you get a recession following that, that has happened since 1967. we see market signals. yield curves flat to inverted. negative bond yields around the world. more central bank cuts. eric rosengren, he explained his dissent.
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he things the economy is still strong enough and it is not the fed's job to fight trade wars. ress jay powell on friday. one more chart. it is retail sales. as long as consumer spending, and you can see how they came in stronger than forecast in the latest reading. not really roaring yet but this is the kind of thing eric rosengren is pointing to. is this the type of thing that jay powell references as well? signaling maybe the door is open, maybe a crack, but whether they walk through it is data dependent. global economics and policy editor kathleen hays, thank you. president trump has agreed to drastically scale back plans to slash billions of dollars in foreign aid after secretary of state mike pompeo persuaded him against the move. let's get the latest now from washington. joe, what did pompeo say to get
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the cuts off the table? or are they all off the table? joe: it is probably not a settled issue yet. this is a long-standing fight. a number of republican budget hawks among them. the president acting chief of staff, budget director, who had been targeting for an eight an area to cut. the u.s. spends $50 billion a year on foreign aid. a third is for military assistance and security. it all amounts will little over 1% of the budget. up, the budget office lined for billing dollars in cuts to foreign aid. pompeoretary of state and treasury secretary steven mnuchin had argued against these cuts, saying it would damage efforts around the world for the u.s. in both diplomacy and security. for the moment, they have prevailed. the president is willing to scale back those cuts to perhaps
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a couple of hundred million dollars worth of cuts to the foreign aid but. in any event, that is likely to run into resistance in congress. the authority is within the administrators, but congress could disprove them and likely would. shery: he may not need approval from congress when it comes to the president talking about indexing capital gains taxes. joe: this is something that has been on the president's mind for more than a year, probably longer. he has been talking about indexing capital gains. capital gains taxes. this is something he has brought up again as the administration starts talking about ways they can head off any slow down of the u.s. economy. while at the same time insisting the economy is in good shape. it's unlikely that such a plan t
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could pass in congress. the administration things they could do that administratively, but it is likely it would be tested in court. shery: thank you so much for that. our bloomberg congress editor. we will have much more to come. this is bloomberg. ♪
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shery: this is bloomberg technology global link. i'm shery ahn in new york, alongside paul allen and emily chang. let's take a look at the top global tech stories of the day. emily: facebook's new digital byrency project being probed investigators in the eu. the proposed libra system may unfairly shut out rivals. toebook previously promised meet with all regulators before launching. youtube is finalizing plans to end targeted ads on videos
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likely to attract kids after regulators asked whether the company has breached the online privacy act. the ftc reached a settlement but it is not clear if the at move as a result of the deal. youtube maintains the primary site is not for children, that young people should use youtube kids app. cars says it plans to meet in china on track with work shai progressing well. building work on the plant in shanghai is almost complete and the installation of machinery has begun. it is the world's top electric car market and tesla will pay more than $300 billion annually in taxes to make cars there. paul? paul: thanks. xiaomi profits missed estimates as the company fights to maintain its position in a shrinking smartphone market. let's bring in our china correspondent selina wang.
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can we blame this one on the trade war too? selina: xiaomi is facing headwinds, one of them is china's overall slowdown which we have seen pressure the overall smartphone sales. it does get most of its revenues from the lower market smartphone business but try to expand in the higher-margin areas which includes internet services like selling ads, online content like games and music and selling other connected devices. xiaomi went public, promised into making it a seller of all sorts of content for music and games. investors have not bought into that vision which you have not seen from shares languishing, trading about half of its price when it went public. most of the revenue areas have slowed down a lot. investors have not seen a lot of promise in new strategic areas.
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the one bright spot was connected devices unit. it grew 44%, led by sales of tv's. emily: let's talk about competition. how are they dealing with competition from cheaper options, as well as huawei, which to be fair has some issues that should concern itself. selina: huawei has a lot of issues that is causing it to double down in that ms to market. -- the domestic market. china grew it to 37% in which is pressuring not just xiaomi but also low-cost competitors. huawei is aiming to get about half of china's market share by the year end as sales have been diminishing abroad. their founder ren zhengfei say they will not give up, they will just make up for it in china. downi has been doubling and investing in off-line retail
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in china. shery: selina wang, thank you for that. that is bloomberg technology global link. don't miss bloomberg technology 7:00 a.m. in sydney, 5 a.m. in hong kong, 5:00 p.m. in new york. this is bloomberg. ♪
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paul: 8:30 a.m. wednesday morning in sydney. the market opened 90 minutes away. looks like we will give up some healthy gains we saw on tuesday. futures looking weaker by almost three quarters of 1%. i'm paul allen. shery: i'm shery ahn. you are watching daybreak australia. that's get the first word news now. itska: thailand is lowering forecast for economic growth in exports, blaming that trade war. the finance ministry says gdp will expand by 3% this year, almost a full percentage point lower than earlier projections. the estimates indicate thailand is on course for the weakest
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annual growth since 2014. risen almost 7% in the last year. reports from kashmir shows thousands of people have been detained during india's crackdown on the disputed region. authorities say 2300 arrests have been made. the area remaining in lockdown and cut off from the outside world. semiautonomous status removed. the trump administration admits recent missile launches by north korea are a concern and says talks to halt the nuclear program have lagged. mike pompeo told cbs things are not moving as fast as washington would like and the test firings are a worry. pyeonyang says it was a test of a new type of weapon in response to u.s. joint military exercises in south korea. an indian spacecraft is entered moon orbit and a mission to
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study water deposits at the moon's south pole. it reached orbit a month after blastoff. it will circle the moon in tighter rotations until reaching an altitude of 100 kilometers. then the lender will separate an attempt to achieve india's first lunar touchdown and the first ever at the moon's south pole. global news fully four hours a day on air and on tictoc on twitter. powered by more than 2700 journalists and analysts. this is bloomberg. shery: thank you. we could see some asian stocks after a three-day rally. let's turn to sophie. sophie: it has been a busy morning for earnings in australia across industries. the coalminer offered a mixed report card and cut its 2019 budget. full-year year net profit more than doubled but expect revenue growth to come in at the lower
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end of its single-digit goal. targeting 45% to 60% of its underlying profit to be allocated to dividends. domino's pizza revenue for fiscal 2019 came in stronger than forecast. it saw a boost in sales at the start of fiscal 2020. see that momentum continuing into the year. paul: thanks. let's get some more on what we should be watching as trading gets underway in asia. adam haigh is with us. volatility has been easing a bit in recent days but jp morgan strategist saying there is a reprieve for equities coming. what is behind that? adam: initially, the retreat and volatility we have seen as a function of going towards jackson hole. have not really had any fed speakers to move the dial. market volatility throughout august is largely governed by headlines and movements on the trade front. what jp morgan is now pointing to, the fact we had that
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pullback in stocks. effectively, program strategies and systematic computer-driven strategies have become underweight inequities by a little margin. not huge but a little underweight. what you will have to do is see incrementally some of those program strategies reallocate into the equity market. with bonds being fairly well bid still, you would not expect too much of a huge move to drive that. they expect volatility to remain reasonably low on the back of that. things could change if we get something meaningful coming out of jackson hole on friday. whether that is an even more dovish than we expect or other development on the trade front. for the moment, jp morgan say given you have that underweight inequities, we will have to see more money coming back into stocks to keep volatility low. shery: let's talk about the bond markets and the hunt for yield.
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a 30 year german debt later today with a 0%, kind of a landmark sale. what might demand be like and what is it tell us about a world starved for yield? adam: it certainly on the fixed income radar, it is going to be the most closely watched event in anywhere in the world on wednesday. as you say, 0% coupon on a 30 year german sovereign bond. we have had a 0% coupon before in german government debt but only a 10 year maturity, so really testing the appetite for investors further out into the curve, the 30 year long end of the curve. there is some sense in the market that some of the folks over at bank of america have stressed the idea that maybe you do get some sort of a buyer's strike. you don't have as much of an appetite for that kind of yield on debt from those maturities
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given how much of a sovereign bond rally you have had globally. especially in germany where there were all-time lows in recent weeks. it remains to be seen. will demand kind of surprised people? will that be the long-term asset managers and pension funds that want to get your hands on 30 year german money. paul: adam, thank you for joining us. one company shrugging off global trade tensions is a2 milk. shares up more than 50% this year but lower by 50% in new zealand. a2 expecting continued growth. joining us is the ceo, jade. not reacting to well to this morning's results but they were not too bad. income which net was up 47%. the market was expecting more. were there any factors that
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caused a2 to underachieve? we just delivered a very strong result for fiscal year 2019. highest revenue growth in the history as a company. -- one point through bit $1.3 billion in sales. we are investing significantly for the future and we have delivered exactly the result we said we would. it is a very strong result. paul: you are seeing some strong sales growth in china. the u.s. as well. market, pulling out of liquid milk entirely. what is the reason for that? jayne: very small business in the u.k. compared to the opportunities we have in the u.s. and china and the broader region around asia, it is not a significant enough business to justify the time and
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investment efforts that goes behind growth. we have focused on where we are going to make a big difference for the shareholders and paying dividends. shery: you seem to be banking on china and the u.s. very heavily. two countries that have been in the middle of a trade war. is that a risk at all to your business? there's a lot of things we can't control that sit around us. we are focused on the things we can control. we have invested a lot to understand are consumers both in china and the u.s. that tells us exactly what we need to be doing with respect to the channels we are selling products through and how to build our brand and better exchange with consumers. that is paying off. we are focused on doing what we can do and we are playing the two biggest he could -- consumer economies in the world. we have delivered a result that
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is a strong result in a think it comes down to a uniquely high quality product. a brand that is resonating around the world with consumers. we have a unique culture that is driven to do the right thing by consumers to deliver great returns to shareholders. shery: we have seen beijing pressure some firms on political issues with hong kong. does that at all affect your strategy in china, when you are trying to grow up in a country that has heavy pressure coming from the government? we are building our business in china for the long-term and we want to be good -- in china. we are listening to what is important to the community, to the regulators and important to the consumer. we will build our business in the right way for the long-term. paul: in terms of building for the long-term, we have seen
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reports that there is likely to be stricter enforcement of chinese e-commerce. people importing your products into china in suitcases effectively. you estimate you will have to spend more on marketing in the chinese markets to market yourself more traditionally, i guess? we have invested in the second half of the year significantly in building the brand in china. we are very conscious of the mix of channels that are important to consumers in china. our strategy is a multichannel strategy into china. you can see in our results that is really proving to be quite a successful strategy. we're focused on what matters to consumers. the new regulation changes that came into play this year, we managed to do very effectively.
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we welcome those changes because it is good for consumers to increase consumer protection. what's good for consumers is good for us at the end of the day. we are very clear about what we need to do and we are doing it. paul: there are other challenges in china as well. we have mentioned the trade war and e-commerce restrictions. overall, rates declining and competition is climbing. a2 is a single product company. are you looking at offering a broader range of products? actually not a single product company. we sell fresh milk, powdered milk, nutritional milk products for growing kids, as well as infant formula. embedded in our results is strong growth across the board in china with a mix of products we sell. as well as strong growth in the u.s. with fresh milk. we are building a platform that is beyond just infant formula.
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our company started from fresh milk. every product we produce is built from the very unique fresco product that is the essence of everything we do. shery: for those fresh products, you have to advertise. we have seen marketing spend in your market be increased. are you nearing the peak of how much you will continue to spend on that realm or could we see even more from here? we are investing behind strong brand that has a lot of extraordinary attributes about it. what we did this year helped us understand our loyalty rates for consumers in china are amongst the highest of any other company selling infant formula. building brandis awareness. we demonstrated our ability to do that well in the second half of the year. we've got a strong plan in place
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for the coming calendar year. we were clear in the outlook statement we are looking to spend 12% of sales on marketing in fy-20. we will make an assessment through the course of the year whether that is the right level or we need to do something different for the future. shery: just before we let you go, last quarter, we were anticipating higher dairy prices do have impacts on margins. are you seeing that? higherwe definitely have costs flowing into fy-20. we have done our very best to offset that. we have in our outlook statement indicated from a growth margin standpoint, we don't expect a negative impact on shareholders. paul: all right, thank you very much for joining us. a2 ceo.dlicka, new can see our past interviews on our interactive tv function tv. you can dive into any of the securities or bloomberg
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functions we talk about. become part of the conversation by sending us instant messages. >.u can check it out at tv
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paul: i am paul allen in sydney. shery: i'm shery ahn new york. more protests planned in hong kong, including some subway stations. demonstrators and authorities remained deadlocked ahead of china's national day on october 1 and tension expected to stay hot. stephen engle is here with the latest. a very critical period for the government. stephen: we had this weekend which was a fairly peaceful weaken of protests especially on sunday where anyway between one under 28,000 people and the protesters say 1.7 million, they turned out sunday.
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fairly peaceful. no teargas was fired. the police saying on monday, if you play nice, we play nice. i paraphrase. it is a critical period now. we have gotten rumblings that china will not allow protests out on the streets leading up to the october 1 national day holiday which happens to be the 70th anniversary of the founding of the people's republic of china. xi jinping will see a big military parade. he does not want the headlines to be we have the 70 anniversary, and we have one million plus people protesting on the streets of hong kong. we are in this golden window. that is what a pro establishment, pro-beijing lawmaker, fairly moderate one in hong kong. he spoke to bloomberg yesterday and he is saying this is the golden window. these next six weeks. because also, the protesters, many of them are university and high school students, they will
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be going back to school. some high schools already started school this week and there is hope among the government leaders that the protests will die down. however, protesters have been telling us that they have many class strikes planned in the first few weeks of the school year. they don't plan to die down their dissatisfaction. there is this period we could see eveither more action from carrie lam. she offered eight olive branch to set up this dialogue platform. the lawmaker that spoke to us yesterday said i fear her moves do not go far enough. paul: u.s. secretary of state mike pompeo has been weighing in, perhaps giving the white house's strongest comments in support of the protests. how will that go down? stephen: that will not go down necessarily to well in beijing because they have long complained about the so-called
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black hand of foreign influence, be it the u.s. or taiwan influencing hong kong protesters. mike pompeo this morning basically gave the strongest words to date from the white house, saying it is the hong kong people's right to protest peacefully. recently, he has linked to the protests in hong kong to the trade war with china. he said china needs to fulfill its promises. one of the challenges in the trade deal is you need to make sure china actually lives up to its commitment it would make. in hong kong, the chinese government made a promise that the central government and central understanding they are one country, two systems and need to live up to that promise. adding confusion and uncertainty is this alleged detention of a british consulate official in hong kong who was crossing the border from hong kong -- excuse
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me, from shenzhen back to hong kong on august 8 and has were poorly gone missing. that will definitely add to the political intrigue. paul: all right, chief north asia correspondent stephen engle, thank you. oil searches looking to resolve in proper new guinea. we will hear from the managing director next. this is bloomberg. ♪
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shery: i am shery ahn in new york. paul: i'm paul allen. you are watching daybreak australia. forsearch is hoping progress in its project, which has been in limbo since the new government came to power in proper new guinea. risk of delays and political uncertainty. managing director peter botten told us when he sees a possible
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resolution. peter: we are engaging in discussions now. i think those discussions generally made progress. i think everybody knows where everybody is on this. there are further discussions later this week. paul: we have seen a very weak oil price recently. is that making negotiations with buyers a little more difficult? peter: it creates a dynamic. when you are discussing lng contracts, generally speaking, they are over a number of years. five, 10, maybe even 15 years, this is a long-term relationship. buyers are taking a long-term view. clearly, the prices have been pretty low recently, as we go into the northern hemisphere winter, new expect prices to close. is overlying the
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oil price. the quicker we get resolution, the better. paul: the trade war casting a long shadow over everything right now including global growth. how much is this having an impact on your outlook? peter: certainly from an oil price outlook, there are various challenges in the middle east and what is happening there, challenges in venezuela, oil prices are relatively subdued. we are lucky because we are at the bottom end of the cost curve for our production so we are still making money. from sentiment perspective, clearly the world trade situation is overhanging. demand is weak. paul: the last time you spoke with bloomberg, you said the u.s.-china trade war might be a blessing for oil search. has that proven to be the case? peter: a blessing in one area because if you are trying to sell gas into china, you probably could do it at an
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advantage to the u.s. if you are looking at oil prices and oil growth, the world trade issues are clearly attenuating growth, attenuating the ability of oil prices to rise. was oil search managing director peter botten. a quick check of the latest business flash headlines. xiaomi will be want to watch later on as second quarter profits missed excitations. millionme slid to $278 in june, $90 million short of the forecast in the slowing domestic economy and slowing demand for smartphones. it's fighting to hold position in a shrinking market while attempting to grow higher market businesses such as connected devices. attackwework is under ahead of its ipo. the share offer is excited to
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raise $3.5 billion in what would be 2019's second-biggest listing. rett wallace says the company has worked hard to conceal the numbers underpinning the plan. wework has not commented on the accusations which includes wallace calling the prospectus a masterpiece of obfuscation. >> i found myself more confused rather than less confused about what the economics are. the only reason this is a particular issue for this company is the burden of proof. if you lose $1.6 billion on the bottom line, you would think you would be motivated to make it easy for investors to understand why the handover more money to get. they obviously decided they didn't have to do that. has picked aramco new advice on an ipo. initial work on the offering and excited to play key roles in the
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selection of underwriters and venues for the listing. part of aramco's first ipo attempt, but the success for the blockbuster bond sale puts them in position to secure the ipo. shery: plenty more still ahead in the next hour. we will be speaking to the head of global bonds. paul: that is almost it for daybreak australia this morning. we have trading in new zealand underway. 1.4%ng somewhat weaker, right now after we saw u.s. equity markets lower as well. futures in australia looking weaker too, off almost three quarters of 1%. giving up a lot of the gains we saw on tuesday when the asx closed 1% higher. the kiwi and aussie dollars both coming under renewed pressure again. that is it for daybreak australia. we will have markets action and
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the rest of the day's news as well when we get underway next. this is bloomberg. ♪ from the couldn't be prouders
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♪ good morning, we are under an hour away from the australian market open. welcome to daybreak asia. ♪ paul: our top stories this wednesday, president trump raises pressure on the fed days before jackson hole, repeating the call for a big cut in interest rates. hong kong


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