tv Bloomberg Daybreak Asia Bloomberg May 22, 2017 7:00pm-9:01pm EDT
yvonne: asia-pacific stocks are seeing rising after wall street was lifted by oil, and global equities at an all-time high. we are watching developments right now in greater manchester. >> that is right. president trump takes his message to israel, saying he sees hopeful signs of middle east peace. >> tuesday will bring the present's budget request. congress will see where the cuts have to be made. anchor: digging deep. rio tinto is the latest to tackle dbet, offering to buy
debt, offeringedebt to buy that billions. anchor: plosser continue to watch president trump's first overseas tour. we will look at how his domestic agendas tracking while he is away overseas. this is daybreak asia, coming to you live. i am betty liu in new york, where it is just after 7:00 p.m.. anchor: it is just after 7:00 a.m. in hong kong. i am yvonne man. yvonne: we were expecting a risk on feeling, but it seems to be shattered just a bit as we get more development out of greater manchester of fatalities at the manchester arena just a couple of minutes ago after reported explosions. a fluid situation, but we see the moves on dollar-yen here this morning. betty: that is right. dollar-yen. come into my terminal on the many futures on the s&p -- mini-
futures on the s&p. when the news broke, greater manchester police tweeting that there were a number of fatalities. a number of fatalities and injuries. about whereonfirmed the bush and from, what was involved, but they are confirmed right now. fatalities and injuries in this area, so we are going to keep track of this and as you say, could easily be taking that risk , taking that away quite quickly. learninglso, we are from witnesses, opening to sky news, that reporting allowed during a concert at the manchester arena -- we will continue to watch those headlines. dollar-yen holding a bit of a support good 111.08 is where we stand.
pointing to decent gains, but remain unchanged on the index. 50, the kiwi. 1% gain ahead of thursday's budget, which may show us are. the kiwi at 70 u.s. cents, along with the yen right now. australia, a lot of excitement heading into that opec meeting in vienna this thursday. oil stain branch above $50 per barrel, the highest we have seen in one month. we could be seeing a slight modest bounce at the open for stocks on the asx 200. 74.73 u.s.though, cents, flat right now. the dollar losing its grip against the yen. 111.07. we have already seen .5% down on dollar right now. could be a tough day in tokyo if we continue to see more developments coming out of waster manchester, so that
a look at what we expect in the region this morning. betty, how does it all look on wall street? betty: before this news, it certainly was risk on an risk on. stocks advancing to the third day after president trump's first foreign trip overshadowing this chaotic week we saw last week. i want to bring in su keenan with more on what happened today. su: we did see this doing well. we have gold up and oil up, which we will get to. playerials were the star . we closed with a rise. let us go into the big movers. a lot of what is coming out of saudi arabia, coming to an agreement worth hundreds of billions of dollars. a lot of companies benefiting from that. you see them on the screen. also entering into a deal with a jet parts maker. intraday dynamics. blackstone dynamics with a big bump reflected in the stocks.
let us go over to the bloomberg. hedge funds, a very interesting trends, have been selling the dip when it comes to commodity courtesies. you see the graph in the bloomberg chart, the white is the commodities. dip, this isach being sold. sort of counterintuitive, but it is where the hedge funds are placing their money right now. anchor: smart money. what about the big jump in industrial stocks? what was behind that? su: a lot of the focus is on president trump's meeting in the middle east, but there was a lot of huge business leaders over there. lockheed martin came home with a deal. raytheon arabia. they will be making armored workles at the saudis
together with the u.s.. let us talk about the auto industry. stocks were up on what is a big change in this. let us go to the top ford for the word on that. to mark foreful everything you differ our company because he did amazing things. but we are in a different time now, and it requires the kind of leadership that jim will bring us. su: that is the chairman talking about mark fields, the ceo that is now out. the company concerned he was never able to do the turnaround, coming up to speed with the high-tech they had hoped for. well favored in silicon valley, which is where ford really sees itself with driverless cars and a lot of the new technology, so it will be interesting to see where the stock is from here. anchor: we have been talking about the oil prices as well. a lot of excitement leading to
the opec meeting. do you think the opec can actually succeed in driving the market higher even after vienna? su: a lot of the traders are saying the extension of the agreement, which is what we hearing, is already priced in. let us go into the bloomberg chart to give us an historical perspective on what is in the past to change the price of oil in terms of the production cuts. ends atoing back -- 2009. in 2008, they were making cuts of 5 million barrels per day, and if you look at what we are doing now, we're talking about maybe more than one million barrels per day, but it is cutie in comparison. there are some traders in the what the believe that opec members may do now is come in with a surprise out of the vienna meeting. in other words, not only formalized the nine-month extension on the output cut deal, but announced that they
are going to make a larger commitment in terms of the cuts that they make as again, was successful in the past. somehat that might push gains into the market, but again, this is the market that is very skittish and as we talk go homel, some days you in an ambulance or a limousine. these are the big swings that are possible in the months ahead. anchor: looking for some potential surprises out of vienna. thank you. first word news now with nina melendez. nina: thank you, yvonne. the yen jumped after news of a fatal explosion in the northern city of manchester. early police reports say there was an explosion during a concert at the manchester arena and several people are said to have been killed. thes not known what caused explosion, but the nearby victoria station is closed and all train service is canceled. supply of iron ore has grown even bigger with the rise in stockpiles eclipsing that through the whole of 2016.
for a fourthnded weekend have risen by a total of 22 million tons this year, easily surpassing the 20.9 million tons added last year. the price of iron ore has stabilized in the $60 region. after speaking on concerned, writing global production will top demand. north korea's says it is ready to begin mass production of a , sayingum range missile sunday's test proved its combat readiness. capable of hitting u.s. space. more launches will follow and scientists are continuing to work on nuclear warheads. hong kong stocks rose to their highest in a most two-year, led by a rally for insurers. the hang seng closed up almost 1% higher as chinese stocks moved by their mainland peers. the shanghai composite the client by .5% while shenzhen
fell 1.5%. the hang seng has gained 15%. shenzhen has accounted from us one third of that demand. global news, powered by more than 2600 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. betty: donald trump now in israel says there is a rare opportunity for peace in the middle east while on the second leg of his first foreign trip as u.s. president. ramy inocencio walking us through the event of the past when he four hours. it has been quite a trip so far. is there for 28 hours and it will be a whirlwind. he has already met prime minister benjamin netanyahu along with his wife ivanka trump. the prime minister and his wife were there to meet him. it is coming against the background in the context of one donald trump was full force for israel, and now in the past few months, walking back the promise or at least the pledge to move the u.s. embassy from tel aviv to jerusalem, so it is
interesting to see what may come out of this, if anything. of course, mideast peace is the big goal, but this has also eluded presidents ever since the whole entire issue started several decades ago. let us take a listen to what donald trump did have to say in terms of trying to rally arab countries to the side of israel, and in pushing back one major country in the region. pres. trump: what has happened with the ron has brought many of it -- with iran has brought many parts towards israel. if there is a benefit, that would be the benefit, because i have seen such a different feeling towards israel from countries that, as you know, were not feeling so well about israel not so long ago. ramy: so donald trump talking about trying to be in solidarity with the united states as well as with israel, trying to push back against iran. he also noted that other arab countries are in collaboration
or are corroborating or thinking at least that this is something that should happen. solomon said he would love to see peace between israel and the palestinians. benjamin netanyahu also waited. >> the arab leaders who you met yesterday could help change the atmosphere, and they can help create the conditions for a realistic piece. ramy: so looking ahead, donald trump also meets with prime minister -- excuse me, palestinian authority president mahmoud abbas, where he is excepted to talk about the big vision for mideast peace. yvonne. yvonne: yeah, i cannot help but wonder, i saw that they both went to the red carpet, but the welcoming ceremonies were very different in saudi arabia versus jerusalem. idoes that kind of differ?
as to anye is no word deals that have come out just right yet, but you know, this is definitely in stark contrast to the opulence we saw when donald trump arrived in saudi arabia and spoke to representatives from most if not all of the muslim world, along with 50 u.s. euros, 40 saudi arabia and companies there. companiesrabian there. in terms of what's potential boons there might be, it could be along those lines. some stocks traded in the united states that are from israel have seen a bump ever since donald trump took office. has risen byelbit a% since november 8 and security company, physical security systems for airports and borders, has risen 23% and
checkpoint, which is dealing with i.t. security also, it was about that much in terms of the past several months or so. very quickly, dive into the bloomberg terminal, because i want to show you how important as well israel is to the united states as well as china, interestingly. the united states is israel's top trader at $30 billion in 2016, but china is in the number two position at 11.1. yvonne: a lot of investment going into the tech sector in israel out of china as well. facing things at home. his economic agenda with a northern economist. investors seeing value and why is wall street rushing in to etf? this is bloomberg. ♪
anchor: i want to update you on breaking news out of greater manchester. reports of an explosion at an ariana grande concert. there are a number of fatalities as well as a number of injuries. we do not know much more than that right now, but here is some video. there have been quite a few videos circulating on people's twitter feeds and facebook showing the scene of chaos at the arena. greater manchester police and emergency services are tending to those who have been injured, and a number of fatalities. we have been talking about the market reaction. we saw the dollar just tumbling againstthe 111 level the japanese yen, so people rushing in. investors rushing in for a safe haven. we seem to be stabilizing right around as we are waiting for more confirmation on what exactly is happening, where this
reported its motion, if it is even an explosion, and what is behind that. yvonne: that social media video showing the panic that happened shortly after the bang somewhere hearing, heard by a person living opposite the venue. continue to watch those breaking news headlines coming out of there. meanwhile, let us talk more about the white house, set to issue the administration's formal budget request on tuesday. a proposal of $1.7 trillion of cuts to spending, a social programs, is expected as well as a lowering of individual tax rates. let us discuss that with carl tannenbaum, joining us in hong kong. we heard about the budget before. is this going to be any different? the theme still seems to be the
same. they will be cutting when it comes to domestic programs and beating up on defense. carl: there is a difference between skinny and anorexic. the cuts being proposer in the latter category. they are making room for an ambitious set of tax cuts without blowing up the american deficit, which is projected to grow quite a bit in the next 10 to 20 years. some of the gymnastics necessary may prove to have too high a degree of difficulty. many in our congress will want to preserve some of the tax preferences and spending programs that are on the docket for change. anchor: democrats were saying this is a proposal that will be dead on arrival. given what we have seen the last week, with political turmoil regarding this russian investigation, do you think this will be more so a bump in the road or actually a barrier to trump's agenda? carl: the ongoing investigation is going to distract the congress to a certain degree, but i would point out that the road to the tax cut program
proposed by the white house was already going to be a bumpy one, given the massive changes recommended and the reliance of some industries and countries on those preferences. there was going to be an alignment of lobbyists and their representatives against the outline as it was stated. betty: i was reading through your notes and you never bought into this whole trump bump that other investors expected, and certainly from last week, you kind of looked -- it looked like your crystal ball, you know, was correct. i want to point out this terminal chart here, guys. up, 82300.g this it shows that the economic ,urprises interestingly enough are becoming more in the negatives and downside. when you look at the citigroup, economic surprise index, are we possibly going from trump bump to trump slump? while, betty, i appreciate
your recognition. i am rarely correct, and i would have to say that my expectation was less based on mr. trump's behavior, and more on the legislative realities. tour through the budget rules, they are quite arcane. that said, the absence of the trump momentum probably is not going to change the odds all that much, as a mentioned earlier. the investigation will likely ever congress's attention, but they will have to get down to hard dollars and cents. some of the fundamental changes they are proposing probably are not going to win enough support in our congress. betty: but outside of that, then what does this mean? we are listening to all these fed speakers. you bank into- do more rate hikes here? carl: i do. one of the themes i want to stress is that the american
economy has performed really remarkably well in the midst of the turmoil we have seen from the white house. growth is on a trajectory to reach another 2% year. we are going to have a very strong second quarter. earnings growth has been very strong. really remarkable, the resilience of both investors and ahead,s people, to move even though the political environment is highly uncertain. betty: thank you so much. good to see you on the other side, carl tannenbaum, chief economist at more than trust in hong kong. up next, a new ceo will drive ford into the future. jim hackett. we will ask what we should accept from the new ceo. this is bloomberg. ♪
york. investors welcomed ford's decision to announce a new ceo. jim hackett will replace the retiring mark fields. massiveon now is will job cuts at the automaker follow? let us take a quick look at this chart. guys, let us pull up this chart here. hereave at your now? -- it now? this one shows the headcount at fort, which tracks the headcount ord, which tracks the share price since 2002. the different shaded areas mark the different ceo's. bill ford junior, alan mulally, and mark fields. increased has seen an , iteadcount off the lows is still lower than the early to mid to thousands, so they have not built back up their headcount.
here is jamie butters in detroit. this was a surprise. i'm not sure. or not hiring, i mean, was that really what ousted mark fields? jamie: no, this is not like when bill ford had to make big cuts in the wake of the jack nasser area or alan mullally having to the greatring recession. this is still a profitable company. they are not losing billions of dollars because they have so many factories that he do not need like they did 10 years ago or 10 years before that. company thats is a is doing fine, doing ok on its basic operations, but it does not seem to have a compelling vision for the future, and even its own operations, they are not to out of size, but they are not as sizzling as they could be or should be in a more perfect world, if they had a better lineup to fit the way the americans taste right now. ford's was this about
shortcomings as a future mobility company or more about the failures of the existing auto business? jamie: it was a bit of both. mark fields is having to carry out the decisions that alan mulally made five years ago, so he invested a lot in small and fuel-efficient cars, taking weight out of the f-150 to make it more fuel-efficient, but in the meantime, the price of gasoline has fallen, and consumers just want more and more suvs, and ford has kind of ignored that segment. at the same time, they have not really inspired a lot of confidence in their vision of future mobility, and they put them together, and you see the stock market value that has fallen below gm, below tesla, and it just is not where bill ford would like to see it. anchor: jamie, great to get your perspective on this. the president of the dallas fed
anchor: seven: 30 a.m. tuesday, on this rainy hong kong morning. 30 minutes away from asia's first major market open. markets closed higher, although quite a gloomy evening. rain in new york. i am betty lou in new york. yvonne: i am yvonne man in hong kong. you are watching "bloomberg daybreak: asia." first word news with nina melendez. in the northern english city of manchester confirm a number of people have been killed in what is been called blast at a music concert. bangs insideo loud
the arena. manchester's victoria station, which that's into the arena, has concertcuated, and all canceled. opec's hopes of joining the global oil glut has been undermined by the second largest member. iran parked more -- the restrictions are expected to be extended through next march when opec meets later this week. however, iraq's noncompliance may persuade others to break the agreement as well. india says there should be no so-called asia premium on crude sales to that part of the world. the oil minister held talks with the general said the cartel has subsidized western buyers at the cost of asian clients for too long. 86% of its oil, 70% of its natural gas, and 95% of its lpg from opec. finalizedan union has a top brexit position,
reiterating a hard line on the you k's potential divorce bill, and refusing to discuss trade ties until there is agreement on a departure agreement. accounts must be settled on both sides to build trust. britain's exit bill has been put as high as $112 billion based on his past financial commitments to the you. president trump has begun his visit to israel by telling for mr. benjamin netanyahu that iran will never have nuclear weapons. he calls for peace with the palestinians, but was vague on details, saying he prefers to leave it to both sides to sort it out amongst themselves. he will visit the west bank later today for talks with president mahmoud abbas. pres. trump: i believe that a new level of partnership is possible and will happen. one that will bring greater safety to this region, greater security to the united states, and greater prosperity to the world. nina: global news, 24 hours a
day, powered by more than 2600 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. anchor: thank you. more now on what we should be watching as trading gets underway in asia. our bloomberg markets reporter adam haigh joining us from sydney this morning. this rally in equities seems to have some to go. watching the moves of the kiwi dollar has been very strong going into the thursday's budget. is there further upside for the kiwi? holding on to are those gains from overnight, yvonne, and it has been very strong. if people were really expecting we might get a bit of a on thursday,udget that is propping up the currency now as we go in there. let us see how developments actually play out when we get the details on thursday. it might be the case of a little bit of disappointment coming when the news comes out, but of course we have to await the details there. elsewhere, the yen is stronger
this morning. we have seen a move to the upside against the u.s. dollar on the latest revelations coming out the running trump. this report from the washington post. that looks like it will weigh on japanese equities when we get the session started in 20 minutes or so. oft there is still a bit upside sentiment washing through from that stronger u.s. session. it is not a huge move. i do not think we will expect any big moves in equities at the open, but there is still a little bit of positive sentiment following through, and of course, with everything we have been learning about the u.s. economy, and the way that the bond market is positioning for our eyes andw, ears are still tuned to fed policy makers as they continue to speak this week, and those minutes coming out of the may 3 meeting we will get on wednesday. that will be key as well. jpmorgan joining goldman sachs
and bringing down the treasury yield forecast for the end of this year. you know, kind of almost catching up till what the u.s. bond market has already done. betty: adam, hang on. something that will affect other emerging markets is what is going on in brazil, which is yet another revelation of the new president being accused of bribery, allegations of corruption. we are doing breaking news that brazil's rating may be cut by s&p. again, that is all the headlines we have right now, no surprise. they have been plunged into yet another political scandal. rating may be cut by s&p and of course, we have seen the real plunge. outside of brazil, let us look at another emerging-market. adam, i want to bring you back here on india, it has been looking at a very different
story here. they have seen the stock market boom which is growing, tracking funds from all across the country, so tough to me about what people in these rural areas in india are buying equities. yeah, betty, it is interesting that you are seeing these inflows coming in from provincial city street bring up a chart on the terminal which shows the extent of these inflows. some of the smaller towns around the country, people are just wanting to get involved in the equity market. the equity market has been on a great run since the ascension to power entry 14. ofinflows through the end march, through these provincial cities, was up 41% to a record just so it really is continuing to flow in, and this is because people are bored and disappointed with their investments that they have got
in plain vanilla savings accounts, maybe property here or there, and getting extra returns. there are seeing them come through as indian equities continue to go higher. plenty of people on the sell side continuing to upgrade estimates, but that leads some doubt as to whether the rally can continue for you just leave you with a thought from morgan stanley, who predicted over the next 10 years that they think a local equity savings will rise by something of the order of $420 billion over 10 years, so i mean, tough one to call. level continues to flow in, there is no reason why we cannot see further moves from these people buying more and more indian stocks. betty. betty: indeed. thank you so much, adam haigh, in sydney. and itate hike in june, leaves one more by years end.
this is so widely advertised. what about asian central banks? what is on tap for them? kathleen hays joins us now with more and the fed board manager is speaking in indianapolis. she is at a conference sponsored by the minneapolis fed on opportunity and inclusive growth, so basically, she is talking about technological change, globalization, shift in costs. so far, she is giving a different speech. it is not a monetary policy speech. lately, she has joined the mainstream. she's basing washington on thursday. maybe, we will get more guidance than. it seems everyone is saying at least two more hikes. i wrotean president -- an essay just when what he is seeing. basically, the baseline hikes --
inflation is close enough to target. he is worried about imbalances. bullsle are not -- bond are not on board. the net longs from hedge funds and other speculators according to the trading commission, they tallied these all the time, have gone from a record low at the end of the year, to a 10 year high. thank you for bringing up #8672 just in time. that big move down. record net shorts for 10 year treasury futures. now, you have a 10 year high in longs because people are betting that the fed is wrong. what is the market looking at? they are looking at things like inflation. inflation has gotten close to target. gains of 1.7%. inflation executions have fallen.
the market expectations for two years, five years, and 10 years. they have come back down, so this has happened every year with the fed, it seems. it is one to hike so many times and bond traders just do not quite get on. as adam just said, jpmorgan dropped its 10 year note yield forecast for the year. the bears seem to be pulling in their horns. i am mixing in my metaphors. polls have horns, bears have -- bulls have horns and bears have teeth. they growl. what does this all mean for asia then, kathleen? big numbers for japan and singapore. kathleen: if i am at the bank of japan, i am saying thank you. you are going to push bond yields down and it will make it easier to pull off our yield curve control, keeping our 10-year jgb around zero. we know that because yields have been low around the world, governor kuroda just a couple of weeks ago acknowledged that we do not have to buy bonds right
now. not $80 trillion, $60 trillion annualized. the economic calendar, very interesting. we are going to get the industry activity index, and sales from tokyo. i want to take a look at all industry activity index, because it is falling .6% in march after rising .7 in january. let us look at #739. we are looking at industrial production. the index is very broad, but it includes industrial productions. you can see industrial production has been struggling. it was up, but now it was down in january, up in february, projected down in march. there are other signs of rising wages and other things showing there is some recovery and of course five court is of gdp growth in japan recently. tap today,dp on holding at 0.7% year-over-year. bank of thailand metes and a couple of days, seen welding
their policies ready. anchor: kathleen hays, thank you. want future we would like to bring to your attention is our interactive tv function. you can find it by typing in tv under bloomberg. not only be able to watch us here at daybreak asia live, but also dive into other functions we talk about day in and day out. there's kathleen. you can become part of the conversation and is an instant message during our shows. this is for bloomberg subscribers only. be sure to check us out at tv . this is bloomberg. ♪
developments coming out of greater manchester and brazil. s&p putting its long-term w rating on negative loss -- long-term ee rating on negative loss. betty: a lot to make investors nervous right now. let us get a quick check of latest business flash headlines at this hour. apple's remarkable success story passing a major milestone with rvt saying it could surpass a market cap of $1 trillion. the banks as apple has the potential to generate earnings per share of $12. that would take it past the magic trillion. data compiled by bloomberg had 389 buys, eight holds, and no cells. >> the mysterious ownership structure of china's insurance is under the microscope again with a union in the u.s..
the union is worried about job losses and labor costs. anbang has faced pressure for more disclosure about its ownership details since the company launched a global acquisitions spree in 2016. anchor: it is no closer to expanding in china. china promising full and prompt market access to payments companies including visa and its competitors, mastercard. mainland competitor union pay, alibaba's financial and tencent, they expand abroad. wall street's biggest banks are scrambling for a larger share of the etf market amid predictions of a surge in business. global etf assets are expected to rise from $4 trillion to 25 trillion in the next decade. i want to bring in eric from bloomberg intelligence. he is joining us now via skype from philadelphia.
want to talk specifically about us and etf segments, but first off, wall street banks are just flooding into etf's right now. why is that? >> that is where all the money is going. if you look at where flows are going, about 60% of flows good to etf and the other 40% goes to vanguard's index funds, and you are not going to really challenge that 40%, so the 60% peopleo etf's is where are interested. that is where it looks at the future is, so they want to have a piece of that pie in wall street banks. from the got revenue etf market by being market makers, trading. they want to be issuers. they have been at it for six or seven years. there are some decent success stories. success.bank had some goldman has had some initial success in the past two years with smart beta products that came in cheap. wall street banks have $42 billion in etf assets, only 2%
of the assets. that is why i call it a jumble. it is very difficult to carve out a living in the etf world. this: i want to talk about one etf launched by jpmorgan in september. it feels like there is an etf for everything these days. this one is a multi-strategy hedge fund etf, so basically, it is doing better than the actual hedge funds on wall street, right? eric: it has more volatility, but that said, it is doing good. look, the bottom line about this product, which i think is compelling, is you are getting jpmorgan hedge fund management and actively managed, for about one third of the cost of an actual hedge fund, so they said they want to democratize hedge fund investing. the question is, for who? retail investors have not really alt crazy buying liquid
s. it is unclear whether they would be able to peel off and an endowment and use the etf instead. it is decent for the first year out, but that is nowhere close to some of the bigger hedge funds. anchor: hitting closer to asia one, i want to get your take the etf market in japan in particular, because it has been seven years since the boj has essentially become a whale in the market there. after they doubled down mass year, they owned 60% of the nation's uts right now. -- etf right now. has a cushioned the whole market? eric: we saw it happen here at the fed. this whole thing is a lot of interesting press. let us break down the number. the bank of japan owns 119 billion of etf assets. their whole market is less than 200 billion in etf, so they are 67%. eye-popping,ve,
and everything is awful. however, that 119 billion is in a stock market that has 5.5 trillion market caps, only 2%. whether you think qe is good or bad as a holder for conversation. it is not that much. of thatcture can handle exit. all they would do is the redemptions. it would just put selling pressure on the stocks iemselves, but it is not -- do not see it as an etf structural problem. it is more of a question whether you think a central bank should be helping to sort of push along or prop up the stock market. yvonne: when the boj doesn't start to begin exiting out of its qe strategy and exiting out of some of these etf's, are you saying it will not be as volatile -- we are not going to face any liquidity issue? eric: here is what is going to happen. they are only in popular indexes. in the big money is
indexes, and when they go to exit, they are essentially going to hand in the shares of the etf, get the stocks back that are in the holdings, then they are going to sell the stocks in the open market, so really, at the bottom line, they will be unloading stocks in the market and it will drive down prices. i do not know if it will be a liquidity problem. yvonne: just before we go, the japanese government, basically the boj, is it good to have them as a shareholder? are they good shareholders? eric: that is a good question. i do not know. that is a question for some meals, i think. we have people concerned that vanguard and blackrock are starting to own too much of stocks, and their corporate there are concerns -- private companies pushing capitalism. the boj could have different issues. that is a legit concern if the bank of japan is in the top 10 of all the stocks. that is a decent concern. betty: thank you so much. good to see you. it covers the,
etf market for us. you can get a roundup of this story and many more that you need to know to get your day going in today's edition of daybreak. bloomberg's if that was there to dayb on bloomberg. you can customize your settings so you only get news on industries and assets you care about. this is bloomberg. ♪
2019-2020 and $700 million dated between 2021-20 35. this is all in an effort to cut back on debt in an era of falling commodity prices. paul: those days of rio tinto's aggressive or ever-growing dividends seem a long time away now. rio has been aggressively in the past by 30% year to $9.6 billion. moody's has responded to this latest plan from rio, calling it credit positive. betty: staying in the mining a company has announced it will defer and investment decision on the coal mine in cleveland. what is that about? paul: this decision has been a long time coming. you are in fact. we will be waiting on longtime more, from the sounds of it. it costs $16 billion. it is so remote, it needs its own rail line and the dredging of the terminal, which is near
to the great barrier reef. deferred,ion now because the company wants to await a decision by the state government on royalties. dani had asked for a nine-year world to holiday. their role woody questions on the vibe of -- there were already questioned on environmental concerns and the itling price of coal and drags on. the less likely it seems this will ever happen. seems like the case. paul allen joining us from sydney. betty, just talking about what we discuss in the last hour with carl tannenbaum from northern trust and the trump bump as we look ahead to the markets. have it like he did not in his forecast for the u.s. economy, and there seems to suggest reasons why he has not, because take a look at this chart.
it shows the treasury spreads between the 10 and two year yield. it really has not budged at all. we have seen some retracement in the 10 year yield in the last couple of sessions. it continues to head lower here, and we continue to see this curve flattened. it seems to suggest that what really is going on, telling a different story from what the equity markets are seeing, and when we actually see the big pickup in growth. it makes you wonder if the bond traders are on the wrong side of the trade here. betty: we always know. they are many people, so -- [laughter] betty: so you might expect that. it is in line with the economic surprises we have seen for the downside. i want to break in here really quickly. breaking news here at our producers are telling us u.k. antiterrorism officers are meeting in london according to the bbc. this is after those fatalities from an explosion, reported explosion in greater manchester. how it is may be in the double digits.
♪ set to-pacific stocks rise after wall street lifted by oil. global equities within a whisper of an all-time high. >> the eurozone falling, failing to break the impasse on greek debt relief, delaying the repayment of $18 in loans. >> president trump takes his message to israel, saying he sees hopeful signs of middle east peace. >> south korean companies
stepping up investments in america ahead of top-level talks. >> this is the second hour of "daybreak asia" live from bloomberg's u.s. and asia headquarters. i am betty liu. i want to recap some headlines out of greater manchester, an explosion at an aria ground a concert -- our rio grande concert. it looks like the fatalities are in the double digits. u.k. terrorism officers are meeting in london. please consider this incident possibly be terrorism. we have noted the reaction and several markets, bidding losing the japanese currency. it looks like we are hitting fresh highs for the japanese yen given these new headlines raking out of the u.k..
the yen continues to strengthen, 110 point 93, political risks as well, the st talking about the latest in this russian collusion case. president trump had asked intelligence to deny russian collusion, so dollar-yen sliding as we look ahead to the market open in tokyo, seoul, korea, and sydney. we were expecting a mixed open, the yen down five point 2%. as you mentioned, getting strong on the back of this news out of the u.k.. rising against all the majors, against the dollar, one 10.97, so a pullback from some markets, south korea strong, new zealand down by .2%
the kiwi in focus ahead of the new zealand project, up 5.1%. the asx 200 early open, pretty flat. bonds higher, that story of ,eeing more flight to safety yields across the board down in points,f by 4.4 basis so a different mood to what we were expecting an hour ago before this news out of the u.k. come up because we did have a solid session coming through from u.s. equities. let's look at some stocks we want to watch in the region. sony is having its investor relations today, up i almost .2%. shares have doubled since april 2012 when the new ceo took the home. nz banking group expects a
pretext profit due to the proposed bank levy, down .4%. a less stronger in sydney, waiting for earnings fair. stronger in sydney, waiting for earnings fair. >> let's get to first word news with paul allen. officersiterrorism meeting in london after several people were killed at a concert by american singer ariana grande . twoesses say they heard loud bangs in a hall outside of manchester arena near where the bars were located. the bbc says the number of deaths may be in double figures in several more people wounded. finance ministers have failed to break the impasse on greek debt relief, delaying the completion of a bailout review and payment of $8 billion in loans. athens will need that much to pay bills and july, and the
delay as to the uncertainty around an economy that has slipped back into recession. the french economic minister says he expects the deal will be done. in three weeks time, we should find an agreement, compromise, among the member states about the question of greek debt. i would like to emphasize that today that it was a useful and constructive time. ofl: china's record supply iron or has grown bigger with stockpiles of clinching the whole of 2016. reserves expanded by a fourth easily2 million tons, surpassing the 20.9 million tons added last year. hasprice of iron ore stabilized after sinking in march and april.
ready toea says it is begin mass production of a new medium-range missile, saying sunday's test proved its combat readiness. state media says the new missile is capable of hitting u.s. bases in japan and is an answer to president trump's policies. moreficial statement said launches will follow and scientists are continuing to work on nuclear warheads. hong kong stocks rose to their highest in two years led by a rally for insurers. the hang seng closed almost 1% higher as chinese stocks outstripped moves by their mainland peers. the shanghai composite declined while shenzhen fell by 1.5%. a hang seng has gained 15% so far this year. tencent a loan has accounted for a third of that advance. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg.
the latestollowing out of greater manchester after the u.k. terrorism office according to the bbc are meeting in london this hour following concert by ariana were leaving,ds reports that fatalities may be in double figures could we get the latest from our london bureau chief on the phone. please considering this incident now possibly terrorism. what more do not aground? >> that's right. the dpc is reporting that police are considering it possibly a terrorist incident. of a bomben footage disposal van going towards the site. the police themselves have not commented officially get, but
what the bbc is reporting his that the death toll could be in the double digits. the picture is still not entirely clear. obviously this is a rapidly developing situation. i wanted to take a moment, is there anything significant about this area? i know this explosion came inside the arena, the greater manchester arena, is there anything of significance here in this area? >> it is an important city in the u.k. followingmainly young , families, young people, but the u.k. is in the middle of an election campaign in less than
three weeks. you mentioned that, the middle of the middle of election campaign and heightened security . what about security? we know security is very tight in london, but what about the outer boroughs and outer metro areas? i can't comment on those, but the security presence is incredibly strong in liverpool station down from the bloomberg office. see heavily armed, submachine guns, please caring submachine guns, so the level of is severe. incident has not
been confirmed yet, but bbc is reporting that police and the are considering it might be. all according to bbc right now. thank you. we will keep track of this with you. our london bureau chief there for bloomberg. let's stay overseas on the subject of politics. donald trump in israel says there is a rare opportunity for peace in the middle east. he is on the second leg of his first foreign trip as u.s. president. ramy inocencio has been walking us through all the events. it seems he is having some political success, if not a political's moving of the tensions that have surfaced between the past few months. we have been seeing images, and there you are right now, donald stepping ivanka trump
off of air force one and meeting prime minister benjamin netanyahu. of of the goals, the thawing u.s.-israel relations, especially as it pertains to the end of barack obama's white house. israel was very upset about the nuclear deal with iran, but donald trump himself saying iran should be grateful to the u.s. because of the deal they negotiated with the previous administration, but there are a lot of tensions now. donald trump has also walked of thepotential move u.s. embassy to jerusalem. with that said, he says there is a bond that is not able to be broken. take a listen. reaffirm the unbreakable bond of friendship between israel and the united states. a friendship built on our shared love of freedom, our shared belief in human dignity, and our
shared hope for in israel at lasting peace. we want israel to have peace. wanting israel to have peace there, but he also talked of the eye lightning rod issue. we have been reporting about what happened in the oval office a few weeks back when donald trump allegedly shared garnerednce allegedly from israel with russia's foreign minister and its ambassador to the united states. donald trump has vehemently denied that and also touched it again here. take a listen. >> i never mention the word or the name, never mentioned it. so you have the story wrong. never mention the word israel. pushing back. the big thing here is the peace in the middle east as it
pertains to israel and the palestinian authority. when he moves on tomorrow morning, tuesday morning, he will meet mock mood of all's and give a speech on his vision and what piece for the region might look like. >> investors are waiting for business deals, perhaps not as big as the ones out of saudi arabia, but which sectors could see movement? are looking at movement that has already been happening office,nald trump took defense stocks, cyber stocks, security stocks, because if the united states gusto on this binge spending that those are some of these stocks that could .ise even further here i want to show you how important trade revenue is between the
united states and israel. the united states in 2016 was israel's biggest trade partner and has been for a long time, topbillion, and in terms of trait categories, precious stones, diamonds, electrical machinery, aircraft and optical and medical instruments. i talked to you about defense it systems hasb been up 23% since november 8. we are seeing some of these stocks rally here. , we will see if the political and business continues on. we are headed to rome and the vatican when donald trump takes off tuesday morning, landing just before noon time in rome. he is expected to meet pope
francis, then moves on towards the continent, where he will meet with leaders from brussels and sicily for the g7 at the end of this week. breaking news out of manchester. the police department tweeting an update. they are now confirming that 19 people have been killed in this explosion after a possible terrorist attack. this as areating terrorist incident, confirming 19 are dead, 50 injured from that manchester area incident that happened after a concert there. those of the latest lines coming up from the u.k. beforeit happened just 10:35 p.m. when police were called to the area. istainly it looks as if this
being treated as a terrorist incident. we still don't know to what , to who it is, who is behind this are what group, so we will be watching for more headlines. yvonne: there is a terrorist officials meeting this hour in london. coming up, behind the turnaround job at sony. bringing the company back to profitability in five years as ceo. positioning in the wake of recent market turmoil. that is next. this is bloomberg. ♪
is plenty writing on president trump's trip to the middle east. steve, great to have you. risk aversion returning to the currency markets, especially dollar-yen given the unfortunate incident in greater manchester. it seems every day and new headline of political turmoil in d.c. how difficult is it to trade the dollar at the moment given the intangibles out of d.c.? trading headline risk is immensely difficult because you are waiting for the next line down the tickertape, even more so on the political landscape where things can turn on a dime. we are seeing a propensity for investors to move to the sidelines. decent positioning and non-us dollar safe haven assets, and we expect that to
continue strong for the near term, at least until there is clarity on political developments. the risk you mention aversion weighing on dollar-yen. i want to show the one-month risk reversal. we bounced back in the last couple of sessions, but have only retraced a third of the plunge we saw last week. the greenback is still trying to find support on the prospect of fed tightening, so do you think we will be stuck in this range given the counter forces of 110-15 or will it be politics driving the dollar lower now? >> in the dollar-yen space, i don't see any reason to sell the yen. we are still dealing with u.s. illitical risks and w see geopolitical risk on the korean peninsula come back into headlines. i believe the market is being cautious because of the fed
speak. we are looking at us 70% probability for june, 60% for year-end, so there is room for a showedprice that underpinned the dollar over the short-term, so there is apprehension to take this move any further at the moment. medical risks are the dominant force right now. >> why has the dollar been weakening? how much further does it have to go? >> i think it is complete uncertainty on the u.s. administration and the degree of confusion. investors are selling u.s. markets in general over the short term. i think it is the fear of the uncertain. moved into this uncertain mode, it creates a lot of turmoil and friction. what you generally see is the market position for a low volatility carry trade for the
and when you have this volatility ratchet higher, you see these traits rush for the exit and the momentum really rushes, and that is what happened last week. this is the most worrisome part for traders. if they get in a position heavy, the rebound could be significant, so that is why they are erring on the side of caution. just want to pull up the emerging volatility index to give you a quick sense of how much the emerging-market currencies, the volatility in these currencies, is surging. this yellow circle here, a big just this month and volatility in emerging-market currencies. is idea or significance that followed to the in emerging markets might be any better or
worse than what we might see in the dollar or yen? >> i think we were going along comfortably. obviously the prospects of the u.s. interest rate hike was weighing on emerging markets basis. shocker is brazil the key that ratcheted volatility higher. i think also a lot of decisioning within these carry trade come the high-yielding emerging markets, a lot of that ran for it the door. i remained guardedly optimistic on emerging-market currencies. once this wave of u.s. political risk of bates and brazil leaves the headlines, i think that space will look attractive. yield friendly kerry appeal, so i expect investors to rotate into emerging markets once things simmer down. >> thank you so much.
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a report from japan says sharp will release its profit forecast through march on friday. it also says forecasts will be accompanied by a three-year business plan. the nikkei news is expecting income of 300 $60 million and income of $20 billion. resisting only for the nikkei stock exchange in july. problemsfaces further with s&p global ratings, saying it could default on its death within -- death within a year. more trouble ahead. singapore listed noble stocks and bonds have plunge recent the on concern that the company's estimated liquidity will not be enough to cover debt due by mid-2018. come on bloomberg
>> it is 8:30 in singapore. half an hour away from trading in the lion city. >> you are watching "daybreak asia." let's get the first word news with paul allen. paul: opec's hopes of training glut are being undermined by an iraq as a punt 80,000 more barrels of oil a day then the quarter permitted. expected beions are extended through next march when opec meets this week. iraq's noncompliance may persuade others to break the agreement as well. india says there should be no
asia premium on crude sales. the oil minister talks with opec's secretary general in vienna and said the cartel has subsidized western buyers of the cost of asian clients for too long. oil, imports 86% of its and 95% of lpg from opec. the european union has finalized toough race it position marie iterating a hard line on the u.k. divorce bill and refusal to discuss trade. accounts must be settled on both sides to build trust. xit bill has been put as high as 112 you and dollars based on past commitments to the eu. president has told prime minister benjamin netanyahu that iran will never have nuclear weapons and called for peace for
palestinians. itsays he prefers to leave to both sides to sort it out among themselves. to the west bank for talks with mahmoud abbas. i believe a new level of partnership is possible and will happen, one that brings greater safety to the region, greater security to the united states, and greater prosperity to the world. paul: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. antiterrorism officers meeting in london at this hour after 19 people were killed, 50 injured in what are called blasts at a concert i ariana grande. stephen engle is monitoring the airlines -- headlines. >> 19 people have been confirmed killed in this what is perceived
to be an explosion at that atana grande in manchester the manchester arena. about 50 others have an confirmed injured. what we are hearing from the police as they have been monitoring the situation is that they are treating this until a terrorist incident until police know otherwise. there are a number of rumors and reports coming across the bloomberg terminal, but some report saying they are looking it is theer possibility of a suicide bombing. there are reports that police in manchester are planning a controlled explosion. whether that means there is another suspected bomb there, we do not know at this time. what we do know is that the explosion happened outside the the adjacent hall to the manchester arena at 10:35 p.m. monday night, three hours
, 5:35 a.m. hong kong time. witnesses say they heard a loud banging or possible explosion as the performance had just completed and people were filing out of manchester arena. explosione saying the was not in the concert area, but was as people were leaving the arena. the arena has been sealed off by police. recapping, police have confirmed 19 deaths come a 50 others injured, and they are treating this as a possible terrorist incident until they know otherwise. the british transport police in addition saying emergency services are at the scene and we are working to establish more information regarding this explosion. will provide further updates as soon as possible. we are monitoring all the reports coming in.
this is a fluid situation and we will be watching the market reaction throughout the morning. a bit sanguine in the early going. i just came off bloomberg radio chris conwayed to saying the market reaction was muted to start, but as we get more confirmation that this is a possible terrorist attack, we could see more market reaction going forward. thank you for clarifying these details as well p it we will stay on top of this. -- as well. we will stay on top of this. sawicularly in the yen, we that an immediate surge in the japanese currency, but it seems to have stabilized around these at levels of 111. yes, again was stronger on the back of what we heard out of the u.s. i am looking at the pound at the moment. look at the volatility since the
news hit the wire, a strong drop against the u.s. dollar. it is only down 5.1% against the dollar at the moment off yesterday's close. big volatilitys if i switch it out to the three day chart. selling goingis through quite quickly into the markets. in terms of the yen, up by .3%, and bonds higher as well. markets there'll as steven mnuchin, pretty muted. of news like lot this, investors do seem to take a lot of it in stride and focus more on what is happening locally in the markets, so the asx 200 up by .1% on the back of crude, and what we saw in iron ore. zealand pretty flat, and the nikkei affected by the japanese yen. the south korean kospi flat.
ton you switch the gmm the americas function, most equities in the u.s. starting to sell down. that is probably where you will get most of the reaction later in asian trade as we start to see how europe and u.s. may respond to these attacks. >> coming up, sony slashing costs to turn the company around. we assess the progress and look at the challenges ahead. this is bloomberg. ♪
months. apple has the potential to generate eps of $12 , taking it past the magic $1 trillion. , forberg has 389 buys holds, and no sells. >> peach aviation the first carry to accept bitcoin for tickets. crypto currency will be in place by the end of the year. peach and to link with local governments and companies to spread the usage of that coin. the ceo says he wants to encourage more tourists to revitalize less well-known parts of japan. these are closer to expanding in visa closer to expanding in china.
it expanded payment companies. is struggling in china, while union pay, alipay, and tencent financial expand abroad. its is thisenting outlook at its investor relations day, and you are , how he has been able to turn around sony's consumer electronics, and how dominant they have been in the five years since he has taken over. is this restructuring of sony complaint? the senior technology analyst at macquarie capital securities, would you say that he has done his job, and if so, what is next? he has done a phenomenal job in restoring luster to japan's last remaining consumer
electronics company. turning profits after 11 years of losses was a major achievement. they will continue to invest in strengthen the brand, products, and invest in new growth areas. we are looking for dissing what does growth areas are in the time to come. on lettingfocus is investors and consumers more importantly no that sony is about excellent's, that the brand represents this arbiter of excellent in terms of product and services. decade or the last the last 15 years, there has been consistent pressure to cut costs, and to their credit, they basically pushed out premium ofducts to provide the best
what they can provide, and this is recruit wards in terms of better profitability, of course at the expense of some strong topline growth. in the months to come, i think stabilizing and creating growth the firm will be key. >> images sensors have been a growth area for them. speaking about growth, i want to put this chart that shows a demonstration of how much the leadership has translated into shareholder value. in the five years as ceo of sony, the stock has outperformed the broader market by 35%, so that begs the question, is --
how much is the future baked into the stock price? is there much more to go or sony stock? sony's share price, the valuation contains two components. growth in underlying its businesses come and certainly we want to see more in that area. the other aspect is sony's brand, and they have been able to use technology and designed to reinforce the brand, which is captured by the outperformance within the broader market. if you look back at the sony brand compared to where it was five years ago, it is stronger because of the attachment of the brand to successful products and things like cameras, and certainly the playstation game system. in years to come, you might see a further expansion of the brand into other services and other revenue streams.
with this turnaround largely complete, worry does not have to worry about fighting fires, but ignited growth. should it be a steady ship he continues to power through, or is it aggressive growth that he should be pursuing? >> i think there will be two aspects. i think he was to continue stabilizing consumer electronics to ensure they create great products for consumers, but at the same time, that is not enough. that is why he is orienting managements attention to develop new businesses, and this is where the jury is still out. focusingo different, on and discovering new growth or is will be a priority.
we will see is that that in the next year or so. >> some of the lines coming out in this investor meeting, improving its pictures operations, so we have seen these blockbuster flops, one line of business sony still struggles with. they have announced a new head to leave the tv and film unit, but in the long term, is this a viable business option for sony and should they just sell the studio? i think sony has done well with the content is this, the music business in particular. pictures are an issue, and one seek they need to do is partnerships in distribution and content development, especially to reinvesting key franchises and to build a healthy slate that ensures revenues in the
theater and in the what we call the video on demand space. for them, this could be a multiyear process, and to be honest, i don't think they will talk much about the strategy given new management come in, that we should expect a strategy revamp within the next year. >> thank you. the senior technology analyst at macquarie capital securities with the latest out of sony and joining us live from tokyo. more to come here. we are awaiting a press conference from the greater manchester police after that explosion at a connors -- at a with 19rande concert killed and over 50 injured. in the meantime, you can get the roundup of stories with today's edition of daybreak. bloomberg subscribers can go to dayb on your terminal.
this is "daybreak asia." waitingto recap, we are at the top of the next hour, greater manchester police conference tos this close more details about this explosion at the greater manchester karina. that 19een confirmed have been killed in these , so we and 50 injured will stay on top of this news. the same time, we are also watching the federal reserve. one official sees more rate hikes. in asia, they seem to enjoy surprising the market these days. kathleen hays is here with more. tells about this new bloomberg intelligence study. the fed is transparent, telegraphs, but not so with
asian central banks. , who isg intelligence making the moves, pboc, reserve bank of india, and they made a list of the most surprising asian central banks and why you tended to be more surprised or less surprised. if you look at the percent of unexpected moves her meetings, the monetary authority of singapore leads the pack at 40%, at 34%, thechina reserve bank of india at 28%. bsp.east surprising is the they have been targeting inflation since the 1990's. they are a standard, conventional central bank. true that banks with the least meetings surprise the most. the monetary authority of singapore meets twice a year. the bank of china meets four
times a year, but they don't have scheduled meetings. another interesting thing is big banks tend to surprise more than they cans because afford to take these unexpected steps and not have it swamp them and some negative way. unforeseen at the decisions, you know who wins? indiathe reserve bank of time with the bank of indonesia at 15 unexpected. south korea behind it at 13. the boj has 12. that's interesting because the bank of japan is so transparent. in fact, they found out more transparency does not stop surprises, so it is interesting to see how different asia is from the u.s., boe, and other central banks. alwaysere certainly expecting those surprises out of
governor kuroda. what does it mean for asia? we see a low yields. this could ease some pressure for the boj. >> it could. bonds have rallied come along end, everybody is bullish. u.s.,bond yields in the less pressure on governor kuroda and his team to keep the 10 year yield for the jgb down at zero. what we are waiting for now is -- veto data. we have supermarket sales, department store sales. cpi for japan at the end of the week, seen moving higher. singapore cpi today seen holding steady. the bank of thailand meeting this week as well. another comment about the fed, because we did have a fed governor speaking. one interesting comment she made
was seeing little progress on core inflation. we showed you a chart that the core inflation measure instead of rising closer to 2% has pulled further away. she is discussing something the bond bowls are watching. reason they might doubt the fed's resolve to keep hiking rates. >> thank you. let's talk about softbank, much to discuss as the vision tech find has been making news for months. the details have been scarce. now though masayoshi son has secured $93 billion in the first round of funding so far. let's bring in our bloomberg gadfly columnist. what did the big headlines? what did you get out of it? the key thingsof is that we tend to now know a lot more about who is involved. one take away for me was we get
more clarity on where the line between softbank is self, softbank group, and the softbank vision fund is. it is a very faint line, to be honest, but at least we know where it is. one thing we did hear out of the statement is that they will have the right to sell some of softbank's recent investments to the fund. 25% of arm is one of those. iny have recently invested and nvidia. intel the vision fund may buy some of that. some of those assets have been transferred off the balance sheet and onto the vision fund. softbank only holds a small majority of the vision fund it self. that is one of the key takeaways from my point of view. >> is there a risk to softbank
investors from being tied to this fund? >> that is a good question. there really is. consolidating into financial because it is softbank is they own the managers of the fund, so ,eally it is a softbank vehicle so they have said under accounting rules that they will be consolidating commit meaning it is a roller coaster ride investors will be on. so what is next in store for softbank? thing my mind, one masayoshi son once to get sorted telco the sprint u.s. they majority own and control.
they probably want to merge with t-mobile usa, maybe some other beener, but they have not successful in turning it around and bringing it back into profitability, so it is quite a drag on softbank itself. i think we will see a lot of effort in the next month and year's to get that merger done. culpen, thank you for the latest on softbank. we are waiting for that press conference of the top of the hour out of greater manchester, the latest out of possible terrorist attack. >> we will watch for headline on this. "daybreak asia" continues. ♪