tv Bloomberg Daybreak Asia Bloomberg April 8, 2018 7:00pm-9:00pm EDT
♪ betty: asia-pacific markets said to fall for you -- because of u.s. inveighing on investors. haidi: president trump says china will take down its trade barriers because it is the right thing to do. slow and steady. the fed chief says inflation wages, jobs, all indicate gradual rate hikes of the way to go. a new ceo board names for deutsche bank.
welcome to daybreak asia. i'm haidi lun and city. betty: i'm betty liu in new york. on friday.e we saw we will get a taste on whether that will spill over into the asian session. i wanted to pull up this chart. if you are trying to look for any silver lining, heidi, maybe this chart would for that. it basically shows you how the s&p still perhaps to some bold relief, has not quite reached the 200 day moving average. technical level has held pretty well in the selloff. continues, maybe in the selling, there may be all caps be a buying operant -- they -- and there may perhaps be a buying opportunity. haidi: that is what all the a spiritlysts tell finding opportunities in the
return of volatility. quite a bit of courage in this uncertain environment we are in at the moment. ready, let's take a look at the setup and asia. it is looking dire as we get into trading. markets that are trading, new zealand where we are seeing losses underway. the kiwi dollar largely unchanged. we have seen pressure coming off . also the aussie dollar coming off that three-month low we have been sitting at for the last two weeks. let's take a look at the set up in sydney. we are seeing the downside of 32 points going into that sydney the aussie dollar, 76.77. chinese inflation numbers, key. at the opens in japan and korea. we are expecting a speech from the governor as he kicks off his second term as the boj governor. chicago seeing upside of 3/10 of 1%. the nikkei closing on friday.
we have the yen weaker today. but could potentially fade into positivity when it comes to equity sentiment. strengthening so far this morning we are seeing. incrementally for the young. let's get the first word news. haslinda amin in sycamore -- in singapore. haslinda: jerome powell says the outlook for inflation and jobs supports the plane for gradual rate hikes while they like of rising wage gains shows the labor market is not tight. in his first speech since becoming chairman, he said policy makers still aiming for 2% inflation and will maintain the current strategy of slow but consistent hikes. it remains the case that raising rates too slowly would make it necessary for monetary policy to tighten down the road. which could jeopardize the expansion. too quicklyrates when increasing risk that
inflation would remain persistently below are 2% objective. and our passive gradual rate increases balance these two risks. haslinda: the united states says not. is willing to talk about nuclear weapons when president says kim jong-un. sources tell us washington has confirmed cam is ready to discuss the issue, following initial indications from seoul. cnn reports the u.s. and north korea have been holding secret direct talks to prepare for the summit. the venue has yet to be announced. malaysian prime minister is offering peace and prosperity as he heads into the election campaign. to helphe is promising world voters pay off debts and provide affordable housing for the police and military. it is a strategy aimed at his civil servants, and the states of sidebar and sarawak. the leading operation party is pledging to fight on suspect --
despite being suspended. >> we are going to carry on as members of this party. we are not accepting that this party has been dealing in the sets. againstput in an appeal deregulation. former brazilian president has spent his first night in prison after having himself -- gaming himself into police. he surrendered on saturday after hiding at the headquarters of the union workers outside del potro. he was flown where supporters clashed with riot police. rubber bullets and tear gas were fired as he began his 12 year sentence for corruption. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm haslinda amin. this is bloomberg.
betty: think you so much. deutsche bank has named christian as their new ceo as part of a sweeping management overall. -- overhaul. he replaces the previous ceo after he led the bank for less than three years in charge. with more, a big decision. a huge challenge for the new ceo. >> huge challenge to turn the tide of the declining revenue. christians doing takes on a major role. there are critics and analysts saying it will be more about deutsche's, less about the bank because restoring growth and respectability is a large order. he is a life or. lifetime employee at the bank. he became -- began as an apprentice to the has been there on most 30 years. he has one great praise for being involved for getting deutsche's to adopt deep job cuts and supervise the internal investigation into the money
laundering scandal which there russian unit which ended up closing down for the securities. guy fritchey was promoted at the unit. he will be coming -- he will become the former deputy ceo -- he will become the deputy ceo. the former deputy ceo has left. the focus -- take a look at the stock price and revenue. the stock price shows deutsche bank is down 20%. it is trailing its peers in europe. it is the biggest lender in europe. take a look at the one-year chart. you will see the pressure that has been on this bank. only recently, in very recent weeks, there was pressure on both the ceo to speak out and say he was committed to his job as well as pressure on the chairman to reach an agreement with the shareholders on who should be the successor. haidi: what happens now? what are the major challenges
facing these new leaders? takes over immediately, become ceo effective immediately. john, whose reign had only been for ceo -- further years, moves into the role of president. there were many shareholders that were pushing for his ouster. there was at least one who was pushing for him to stay. words coming out of the meeting that took place earlier this evening are here and the u.s. are that this was not a united decision. wing had risen as a favorite. in terms of what he was responsible for, he oversaw a multibillion-dollar sediments and wrongdoing cases. he had to cut risk. his job was to raise capital. -- the key goal of restoring revenue growth and the banks reputation was elusive. that led to the flurry of
speculation in recent weeks as to what would happen. we know effective immediately, christian sewing will be leaving the bank forward. -- leading the bank forward. so much for you that. one of our top stories i deutsche's. management overhaul. president trump has stoked the trade fires again by saying china will dismantle its barriers because it is the right thing to do. he tweeted this saying that he and the president will always be friends. china will take down trade barriers. he expects typical taxes, a deal on intellectual property" a great future for both countries." on this. analysis roz crosby is following it out of washington. as a president have any reason to think that china will "do the right thing? is unclear if anything
has changed in the u.s.-china standoff since friday when the markets in the u.s. fell heavily on a ratcheting up of trade tension. the best guess here is president trump was trying to sign an optimistic note. we do think there are talks going on all the time between the u.s. and china. and presumably those will be stepped up now. within these huge trade barriers -- with these huge trade barriers sitting on the sidelines ready to be implemented. supposedly, the u.s. team and these latest talks led by steven mnuchin and the u.s. trade representative, mnuchin was asked about it today on one of the tv political shows. he kind of punter it that i can talk about anything, that you will see it when you see it. is there reason for optimism? hard to say. perhaps the ball is next in china's court in terms of the speech that president xi is
giving this week. betty: do we know anything about these back channel talks that larry kudlow has referred to? are any of the trump team members worried about the volatility in the markets? and how that is affecting those talks? ros: yeah, it was interesting today that both treasury secretary mnuchin and larry kudlow both talked about how the stock market is still up since president trump was elected. and that the economy is still strong. earnings are still strong, according to kudlow. i think they definitely have the stock market on their mind. they are getting pushback from various groups. certainly seeing the volatility can't berket, which too pleasing to in an administration that has claimed credit to the fact that the market has been up. pushbacka volatility, from certain members of congress who wonder if this is going to reflect republicans in the midterm elections in november. agricultural groups.
there is a lot of concern in the united states about the heightened level of volatility. on the other hand, president trump has shown an ability, or a desire, to go at it alone. to play to his base. and to go with his get instinct. ut instinct. gut looks like it may be telling him to go to china. betty: thank you so much. stats.est on the trade we have much more ahead. we will talk about the simmering trade tensions between the u.s. and china. that's right. our next guest says president trump's strategy is less about reducing the u.s. trade deficit
♪ we are counting down to asia's first major market open this morning after the carnage we saw in u.s. markets on friday. naked features are looking like this. down over 1%. this is daybreak asia. i'm betty liu in new york. haidi: i'm haidi lun in sydney. looking at a down day we are setting up for after those u.s. benchmarks ending the day lower by more than 2%. that u.s. jobs report and not help. let's talk about trade. our next guest says u.s. trade strategy has evolved over time,
simply aiming to reduce the trade deficit to stop china for moving up the economic ladder. joining us from hong kong is alicia garcia, a chief asia-pacific economist. i have raised this two other guests, it is an ideological fight. particularly when you look at targeting chinese tech. it seems clear it is an attempt to suppress chinese -- rebalancing global power. alicia: absolutely. that is the end goal for the u.s. clumsily,tarted very the 22nd of january. certainly not washing machines. they realize that was not the target. as they moved on, china has realized what they are after. that is why china has reacted so massively. frankly, to its detriment.
china cannot retaliate because it does not have enough to retaliate about, it does not import as much from the u.s.. it can't stop importing what it needs to move up the ladder. that is china's problem today. to be fair, if you look at the way that it has diversified, from the perspective of the food security trying tona has been diversify its food sources of from places like africa, do you think they have done enough to w frome -- diversify a key markets like the u.s.ay? -- like the u.s.? alicia: i'm not worried about food security. i think the problem is semiconductor security. that is much more important for china. if you look at what china has been trying to stop -- stock from the u.s., at least more
than 50% are really low-end products, including agriculture. i don't think agriculture is what china fears. ist the u.s. is targeting products, only 3% are low-end goods from china. most of them come over 80%, are high-end goods. future. is targeting the . china is targeting low-end growth. including agriculture. that is not something that china worries about her what it can't import to get something better in the future. betty: that is absolutely right. it is more of the high-end goods looking to the future that could cramp china. i want to put a chart up. about what you said about china not having the firepower to retaliate come a tit-for-tat, it
shows you how much they import in u.s. goods which is still below. this red line represents how much in tariffs that president trump is threatening on chinese goods. this is how much the chinese import in u.s. goods. there is still a big gap there in between. do you believe it is true from what president trump said over the weekend? that the chinese will came in first, they will blink first because they do not have as much leverage? alicia: i would argue they are already blanking. they overreacted. although the u.s. announced a 60 billion package, we actually calculated the amount of those products at that very detail level that the u.s. announced. it was much less than that. it was barely half. a 50 billion,with real 50 billion package.
it was too big for what china can do. china can do many things, but not on trade. which worries me even more. we will see how the market reacts. it will be worse if it reacts differently than trade. betty: the jets -- it's interesting you say that why do you think the chinese scramble together a package like that? alicia: four populist reasons. populist reasons. for both, it is nice to show they are reacting to their "strategic enemy." that is what we have seen. i don't think china benefits from this package, frankly. they will have to backdrop to what they will do is do it through announcements of reforms . i think that is what they are going to do. to show that they will open their market. that is the best-selling point, offering the u.s. market access.
everyone has been asking for market access in china for ages. if china can show that, i think the u.s. may backdrop. i think that is the only way for china, in my opinion, to stop the bullying from the u.s.. if they wanted to up the ante, sure, they are running out of space when it comes to the trade side, but what about the treasury side? the nuclear option? would they ever threaten or attempt to do that? if push comes to shove, i think they will. the only way they can do that without incurring massive losses is to do it aggressively and quickly so they can sell before others realize. that would indeed be -- in other words, in order to not hurt themselves, they would be forced to play aggressively which beat be a massive event for the rest of the market. they also have -- their
experience in 2015 was not as successful. the chinese regime controls capital outflows a much better than they did then. there is a lot of ways for china to receive inflows that they did not have at the time in terms of direct access to the bond market. it might not be as painful as it was in 2015. i would consider, of course, first of all, reform. market access. second, perhaps, what you just mentioned comey u.s. treasuries. a wayrhaps diversifying into other dollar assets if they don't want to use their dollar they would incur additional losses. and of course, last but not depreciation. manage depreciation and another way or another. haidi: so many of the issues
associated with china opening liberalization and reforms, long-term structural reforms need to happen but they will take time if they will happen at all. trump is looking for a quick fix. to appease to his electorate. how does this end? how do you reconcile these two? alicia: there is a number of reforms that are good for china in terms of its potential growth in the future, i don't think that is what trump is after. i don't think he cares how much china will grow in the future at this point in time. what he cares for is that china opens market to pharmaceutical industries, lots of announcements that they were. they were not really as immediate if you think about what happened with the insurance sector. they would have to wait three years. they could say we open now. that are clears to the market in terms of actual
fair market access. i think what trump needs is not reforms for china, but reforms -- but chinese reform for the rest of the world. reciprocity and market access good that can be done pretty quickly. the question is, will china do that? they really are not wanting to do that for so long. in china's dna to keep its markets closed to the rest of the world and avoid foreign competition. it is going to be a tough one. i think that is the only one they can offer to the u.s. at this point. not only to the u.s., but also to europe. if europe allies of the u.s. in against trade war china, that would be so much harder for china because there would be so fewer other places to go to access technology. particularly technology. haidi: great to have those insights.
♪ betty: a quick check of business flash headlines. facebook has suspended another data analytics company amid growing scandal over privacy standards. qqq misled users by thing information collected through quizzes was for academic research while it was in fact shared with marketers. facebook says the firm will be capped off the site while the claims are investigated. struggling commodity is moving headquarters as it pursues a
♪ 9:30 a.m. here in sydney, 30 minutes away from asia's first major market open. looking at a strange start to week, given that selloff, a renewed selloff in u.s. stocks friday. betty: i know u.s. futures are trading higher right now. markets. in new york, did and friday -- end friday deep in the red. i am betty liu. haidi: i am haidi lun. let's get to first word news with haslinda amin in singapore. bank'sa: deutsche
supervisory board has named a new ceo, replacing john cryan amid a wide overhaul of senior management. the co-deputy ceo was an early favorite. he was a deutsche bank veteran and currently heads the private and commercial arms. revenue hask's slumped, it an income has slumped 42% since the end of 2013. donald trump says they will dismantle trade barriers. the two biggest economies widen their cap. he says it is the right thing to do for china to go back on their word. talk assistance suggest a trade war can be averted. -- top assistants suggest a trade war can be averted. >> this is not a trade war. there is no war here. all we are trying to do is defend american technology which is crucial to american economic
growth. the leaders of europe's the biggest economies rowlands washington within days of each other, hoping to avert their own trade war with the u.s. the clock is ticking on a may 1 deadline to stop washington imposing tariffs on steel and aluminum. in whiteutions may lie house efforts to forge a trade coalition to tackle china over its alleged unfair practices. china's foreign currency holdings resume gains last month and the ui cap its best quarter in a decade. -- the yuan capped its best quarter in a decade. they were fractionally below estimates in the bloomberg survey. march is a turnaround from february when china's holdings fell for the first time in 13 months. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.
i am haslinda amin. this is bloomberg. ♪ haidi: thank you. we are counting down to some of the major market opens this morning in the asia-pacific. let's get to sophie for a look at how we are setting up. trade tensions and doer. -- tensions endure. what are you watching in particular? sophie: it could be a dramatic monday after trump's trade tweets and the cooling last month. they saw the s&p tumbled more than 2% friday. china back in the mix after a to daybreak, so we will get the first reaction to the latest developments ahead of xi jinping's speech at the forum. today is the mark of governor kuroda's second term. we will start with the current account balance, do this monday followed by machine orders and prices thiss --
month. when it comes to the nikkei 225, we are looking at over 1% at the open. the kospi also facing a weaker start, but geopolitics are less of a point confirming kim jong-un has discussing -- will discuss denuclearization. malcolm turnbull has marked and uncomfortable milestone after losing a 30th straight news poll opinion survey. miners at sydney could come under pressure as commodity markets got hit again with trump's call for more tariffs on china. betty: also on the trade front, south korea could up the ante against the u.s. sophie: according to wto filings , south korea may slap $482 million in tariffs on u.s. goods in response to trump's terrace -- tariffs on washing machines. this could go into effect in 2021 and 2022 or following a wto ruling that could find u.s.
measures to be illegal. south korea could not specialize which products it would target. in south markets korea, looking at gm south korea after they missed first-quarter estimates. regulars began a special inspection on a dividend stake on friday. and latte shopping will set off shopping business -- cinema business. and new rules could push of debt ratios for korean air, so look out for that. betty: we will. thank you, sophie kamaruddin checking on the markets. one issue affecting investors this week will be fed chair jay powell seeing strength in the u.s. labor market to keep raising rates gradually this year, but could the current trade battles change his mind and his colleagues' in the fed? kathleen hays here with more.
we saw jobs growth weaker in march but it is wages that piqued our interest. both of those things happened, you are right. winter weather, people still see a report that to a certain extent could have been impacted. the federal reserve will put that to one side as jay powell signals more rate hikes. let's look at some of the details of the report. the nonparstart with zeros. they rose 300,000. bad weather, construction workers, all kinds of things can hurt that. february we had unseasonably warm february whether. then you got the job report of a surge of over 300,000 workers. unemployment steady at 4.1%, howard -- average hourly earnings were up. pretty good number except production workers who make up 80% of that pool. 2.4% their wages stuck at
year-over-year. jay powell says the economic outlook supports gradual rate hikes. the labor market is not yet overly tight. that is the gradual part of it. seeing good business investment that could help them move ahead. let's jump into the bloomberg and look at a gtb chart. the subject jay powell is talking about, you make up your mind, but unemployment is down to 4.1%. average hourly earnings, you see the blue line, they are up am a but not a lot of acceleration even with the low unemployment rate. this is the rate of not moving very quickly. we are left with this inclusion that the fed is looking at a forecast for this, eventually causing inflation to rise. john williams, of san francisco, about to become head of the new york fed, still on board with three or four rate hikes. he gave a speech.
charlie evans of chicago who has been dovish, he is saying he will be on board with another rate hike. he is referring to june. if inflation is that 2%, getting close to 2%, the board, the core opinion in the fed is move ahead and figure inflation will catch up. and everything in terms of weakness will dissipate. what about conversations of trade? could that put a stop to rate hikes? kathleen: most officials have not gone out of their way, but they did questions when they are asked. jay powell was speaking, he got questioned about this. he is not ready to make up his mind. he says it is too early. let's listen to the answer he gave. >> the discussion on tariffs is at a relatively early stage, and we talked about this at the fomc meeting a couple of weeks ago
now. people really don't see yet any implications in the near term for the outlook because we don't know the extent to which the tariffs will come into effect. how big will that affect be in the timing? kathleen: the tariffs impact is easy to shrug off. a full-blown trade war is something that would maybe be stronger. charlie evans said the impact is relatively small for the u.s. economy. neel kashkari said on saturday on fox news, yes, the fed is paying attention to trade, but it could be chest pounding. it could lead to a trade war. we have to wait and see. a former economist, the head of monetary board of governors, now at another company, he said it is hard to think we get more bad news on tariffs. this will slow down the fed's
path this year. bill gross from jana sanders looking at the report, tells us, i think it was the weakest jobs report. he is looking for one or two rate hikes. thank you so much for that. our economics and policy editor kathleen hays. she will be getting more answers and clarity in her exclusive interview tomorrow on daybreak asia. she will speak to the dallas fed president robert claflin -- robert kaplan. 8:30 p.m. if you are watching out of new york. china's escalating trade disputes with the u.s. will dominate the agenda as president a policy forunches asia. we have a reporter -- he is expected to address the trade tariffs for the first time. we are looking ahead to the keynote. one thing coming up is is reminder that xi is also playing to a domestic audience. yeah, absolutely and
especially after the national people's congress where you pushed through his constitutional reforms to become sort of the job for life leaders here in china. he does not want to show any weakness. so it is interesting. our 15th consecutive year conservative -- covering this forum, and the u.s.-china trade war, spat if you want to call it brewing up this tropical island where xi jinping will be speaking. it is an interesting dilemma that president xi has to make or has in that speech tomorrow because before this trade row started gaining steam, it was expected xi jinping would use this occasion to announce a further opening up of the chinese economy to mark the 40th anniversary of china's opening world wearyr -- the
now he has to show some strength as well. how does he balance that? i spoke to a senior u.s. business lobbyist if you want to call him that last night, and he said he would doubt xi jinping will mention the united states by name, a la what he said at davos, portraying a leadership role. he is the free trader while the united states is going down a path of protectionism. the mouthpiece for the communist party, in their latest piece, they said trump's tariffs have ignited a worldwide firestorm of frustration and confusion. i am going to guarantee that xi jinping is not going to portray first ration and confusion. he will portray resolve and strength in light of these threats. it will be interesting to see if he does address the united states by name and if he is more strident or strikes on opening up town to the chinese market --
tone to the chinese market. betty: more pressure on president xi. what else could arise from the dialogue? the first three issues are going to be trade, trade, and trade. it will be the main issue. domestically and kind of goes into the opening up theme as well, xi jinping does not come down to this island that often. developers here and speculators report a lot of money in the last eight years since the chinese central government really emphasized making high non-into a -- hainan into a global tourism spot. rail.f money, high-speed but this is not the hawaii of the east just yet. bali, even the philippines, even though boric i has been shutdown, they get more of that vacation travel. there is speculation that there
are plans in the works to legalize or take baby steps to legalize gaming, either online or sports betting as a baby step to the casinos here in hainan. any clues xi jinping could give to the central government in that direction would be big news. betty: thank you so much. stephen engle, our chief north asia correspondent, watching very closely what president xi' reaction if anys will be. president trump again saying china will be the first to blank. the peterson institute for economics nonresident senior fellow mary will be joining us to give us her view. this is bloomberg. ♪
betty: president trump said china will be the first to cave in on trade your he made those comments as his counterpart prepares, as we discussed with stephen engle to talk to investors. let's discuss this with the peterson nonresident senior fellow mary lovely. do you agree with the president that the chinese might be the first to cave in? mary: no, the chinese will not. not only do they see this as fundamental to their role as a leader in the global economy, -- the people are behind them. as you heard, president xi does not have to run for reelection. he has quite a bit of room to let this run. betty: do you think there will be any response to trump? mary: i don't think they will respond to any kind of threat like this.
i think they will respond to the actual implementation of tariffs. betty: it is going to take a while, certainly a few months for tariffs to be implemented. do they hit the right spots? the president has outlined -- are they going to be effective? mary: we have been analyzing that. they are hitting the right spots in that they are heading what we would think of as intellectual property, intensive industries. and that is where they were supposed to. , light heiserr said he was going to hit high tech. the problem with that, and is a large problem, most of the exports, two thirds, are coming from foreign investment in china. those are foxconn, samsung, etc. , and those are input into things we buy or produce and reexport.
strong tendency that this mail -- this will backfire. the thing they are worried about, china producing in the future, china does not export yet. those are aspirational goods. they are hitting goods that are being used as input through either our own operations are those of our allies. were just speaking with their previous guest about where the medivation for this trade war or tussle billy comes from. there has been a lot of talk about ideological sides between the u.s. and china and coming from a need to want to suppress china moving up when it comes to global power and the economic side. do you agree? i would. i fear there is no show of understanding on the part of the united states china wants to develop, has an aspiration to
develop an needs to. at -- at thee the expense of corporations or intellectual property. it has to be consistent with market-based growth and the respect to intellectual property. say witha lot of conjunction with our allies to make sure the growth path is consistent with the goals i have outlined. haidi: are the grievances president trump has put forward, some of them see fairly historical and others current. are there others shared by allies? mary: japan has asked the united with, together with them in confronting china over the issues of high tech transfer. they are shared. as china becomes more of a
primary innovative nation, there are issues china also shares. this is embodied in its exports. yes, we do have allies with these concerns now. we should be joining with them and discussing with china a world in which this is not consistent with global trading growth is good for china in the long run as well as us. complicating factor is spillover to regional economies, these trade exposed ? onomies particularly in asia taiwan to south korea and australia potentially being exposed, what do you think the fallout could be? mary: it would be tariffs around $50 million of goods, so the spillover is barely contained. everyone seems to think it doesn't go any further, it is not disruptive. it could get much worse.
enough risk for parts of east asia and even wider. there is opportunity. go out, you can see territories -- companies moving offshore from china and other parts of east asia. there is opportunity. but overall, this is a move that will raise costs. it will lower quality, and they will have a higher rate of default. it will increase costs on the supply chain. betty: all right, thank you so much, mary lovely, the peterson institute for international economics nonresident senior fellow. numbers crossing our terminal on the bloomberg, just ran -- japan's current account balance just missing at ¥0.76 trillion
they had accounted for ¥2.19 trillion. this being supported by the income from overseas investment, but as you can imagine with the rising yen, exports have been not as robust as before. this is for the month of february. these numbers coming in higher than what we saw in the previous, in the month and previous year, but undershooting what economists had estimated, adjusted for things like inflation, also coming in undershooting estimates of ¥1.02 trillion. the trade balance on about -- ¥188 billion that is after -- under what they had estimated. so we are watching here. the japanese market, it is just about to open. keep a look here at the currency markets now, pretty much range bound at this point after the selloff we saw in the u.s. you can find in-depth analysis
♪ haidi: a quick check of the business flash headlines this hour. onar will meet investors monday with plans for the first international bonds in more than two years. they will meet potential buyers in the u.s. and the u.k. the government is working with credit suisse and deutsche bank with an offer that could include 5, 10, and 30-year notes. they last launched in 2016 when it raised $9 billion. betty: boeing is celebrating a win over airbus. american airlines ordering 70 93 minus. they will expand wide-body sales in the u.s., which comes on top
of americans cancellation for the a350's. it is the second time this year boeing has convinced a wide-body customer to switch to the 787. hawaiian airlines dumped that a 330 last month. suspend.m. korea may production because it cannot pay its bills. the chief executive said the company cannot pay contractors and may have to shut down temporarily. beduction this company may transferred to china. they lost $1 million this month alone. betty: in the next hour of daybreak asia, we are talking strategy for chinese stock trading with investors in shanghai and shenzhen after missing out on fridays selloff. and president xi jinping went to tackle trade. we get a preview from the brookings institution. this is bloomberg. ♪ retail.
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oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. ♪ haidi: asia-pacific markets said to fall at the start of the week. betty: president trump says china will take down its trade barriers because it is the right thing to do. haidi: investment in malaysia if he wins the upcoming election. betty: moore surprises from north korea can washington says kim is willing to discuss giving up his nuclear weapon.
this is the second hour of daybreak asia. i'm betty liu in new york. haidi: i'm haidi lun in sydney. forre bracing ourselves what tweet comes next. is the other shoe yet to drop? president trump thinks china will work towards dismantling trade barriers. of course, we are awaiting resident xi jinping keynote address on tuesday. see if he picks up on this topic of trade in some sort of response. i want to throughout this which gives us a broader context of how we have seen the markets react. we knew volatility was on the table for 2018. 2017 was unusual with its lack of moves in the market. thisrade that arrive does cycle heads towards its peak. this is the morgan stanley cycle gauge. that is nearing levels here that we last saw that proceeded the
previous recession. and not saying we will see a recession, but we know toward the end of this growth cycle, growth is looking a little vulnerable at this point in the cycle. on top of that, you have these trade uncertainties. betty: it's interesting, i was thinking the other day, president trump has been taking havet for how the markets risen under his presidency. it looks like he could directly take credit now for the spell off that is going on. this is not based on any worries of economic fundamentals. this is really all based on a selloff. it is based on the rhetoric and the trade war happening between president trump and president xi. in the meantime, as we are watching the impact of the market, let's get to the first word news with paul allen. paul: thanks, buddy. jerome powell says the inflation in job supports the plan for rate hikes while they lack of rising shows a label market is not -- labor market is not take. powell said holidaymakers are
still aiming for 2% inflation and will maintain the current strategy of slow but consistent hikes. >> it remains the case that raising rates too slowly would make it necessary for monetary policy to tighten. too abruptly. which could jeopardize the expansion. raising rates too quickly would increase the risk that inflation would remain persistently below are 2% objective. our path of rate increases is intended to balance these two risks. paul: united states says north korea is willing to talk about nuclear weapons when president trump meets tim jernigan. -- kim jong-un. sources tell us washington has confirmed kim is ready to discuss the issue following initial indications from seoul. cnn reports the u.s. and north korea have been holding secret direct talks to prepare for the summit, although a venue has yet to be announced. malaysian prime minister is offering peace and prosperity as he heads into the election campaign. he is promising to help rural
voters pay off debt and provide affordable housing. it is a strategy aimed at his key supporters, civil servants, and others. for a leading opposition party is pledging to fight on. on asare going to carry members. we are not accepting that the party [indiscernible] we will put in an appeal against deregulation to the minister. presidenter brazilian has sent -- spent his first night in prison after hitting himself into to police. he surrendered on saturday after hiding at the headquarters of the middle union outside sao paulo. he was flown where supporters clashed with police. tear gas was fired.
a new survey suggests most written's support holding a vote on the final brexit deal hammered up a between london and brussels. the poll for the group, known for britain, says the public should have the casting vote on whether to accept the agreement. those in support of the vote succeed opponents by 80% and respondents also said that staying in the eu is giving the second referendum. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. haidi: thank you so much for that. not much of a set up going into the art -- and the start of asian trade. u.s. markets acting violently to this new potential round of trade tariffs. tit-for-tat, if you will. lower bykets ending 2% the close of trade on friday. we also had the disappointing u.s. jobs report suggesting
after the blowout that was february, growth is moderated going into march. these implications as we get those fomc minutes for its march meeting when it hiked rates. let's to look into. let's get over to sophie for what she is watching. sophie: it looks like a muted start to what could be a manic monday. we do have stocks in seoul, tokyo, and sydney looking to extend friday. you have financials, real estate dragging. in tokyo, the nikkei 225 is being led lower by energy, telco, and tech players. in australia, health care and consumer staples are leading the drag so far. the returnus will be of chinese markets after a two-day daybreak. we are waiting to hear from xi jinping, when he delivers his speech on tuesday. u.s. futures are indicating a more positive start to the week. we do have benchmark treasury yields picking up, climbing
toward 2.79%. after dropping by six basis points on friday. check out the yen. we have it not budging too much expectedwas less than in february. we gave -- they hopped around that one of seven level after its biggest loss since september. they are expected to be limited. the latest data showing earlier this month, leverage funds boosted their net yen long positions to the highest level since november 2016. currency markets have been calm while the initial trade war shots are taking place on the equity market by little field -- battlefield. the gp market volatility index has fallen for a third straight week as of friday. strategists are questioning how long that can last. there is caution in the air ahead of next weeks of a trump rump summit. abe-t any move to label china as a current -- as a currency many
belated would be speculation. betty: thank you so much. sophie checking on the markets. trade is on top of the agenda as you mentioned. the u.s.-china trade tensions remaining high ahead of president xi's speech. kathleen hays is here with the latest. trump got up on sunday morning with this tirade on twitter. --hleen: people talk about he is bombastic, unpredictable. i think at the very least we could agree that he goes with his gut. what i thought from the tweet early sunday was that maybe he has decided it is time to be combative and be more constructive. and i willsident xi always be friends no matter what happens with our dispute entree. here is -- with our dispute on trade. it is like saying, we know what is the right thing to do.
it's like he gives him a pat on the back. may become reciprocal and a deal will be made -- will be made. great future for both countries. we know that china has already pledged to counter attack with great strength on tariffs. you can see that 100 billion hit them between the eyes. i would like to ask this question, who loses the most to this tariff war? let's look at our chart on the bloomberg. you can see that the point of -- uxs right now, usa exports are not even -- they are about $136 billion. much trump'se terror of proposals, they will put tariffs on war goods -- more couldin the u.s. exports since china experts more than 500 billion of goods to the u.s., you could say they do not really have as much leverage. the u.s. has the leverage. i think both sides no right now -- know right now that a trade
war could have ripple effect in their own economies, in the global economy, that both sides want to avert this is the question is, how do they do it? how do they get to the table? how much is china willing to give up? how much is the u.s. willing to concede to china to get a deal done? we are a long way from that. trump'st sounds like may be more in step now with his team that have been trying to downplay the idea of a trade worker but did we hear over the weekend? kathleen: it started with larry kudlow, the new economic council director. he has been in front of these trade questions because they have been saying -- i think they are trying to put more of a factual surrounding to what trump has been saying. said, hey kudlow has pounds the table, this is not a trade war. he says on friday -- said on friday that there are back channel talks going on. he said the u.s. trade rep and the president will be huddling
to look at their strategy with china. here again, he echoes in the statement he made more of that constructive town. let's listen to larry kudlow speaking to bloomberg tv on friday. >> i think ambassador lighthizer and the president are thinking about submitting a list of suggestions to the chinese. i underscore, i think, but that is a possibility. ok? possibility. if so, then hopefully the chinese would respond with some ideas that will solve this technology transfer. the chinese and u.s. have been working on this for a long time for this would be a picks up. steve mnuchin on sunday talkshow today saying china tariffs will not have a meaningful impact on the u.s. economy, although he acknowledges when asked about the damage to agriculture saying
the president will support agricultural, will support the former is. this has been a key constituency in the presidents of voting back -- voting block. they say we are willing to work with the chinese, it's clear we want fair and reciprocal trade. that is what they all keep coming back to. periodday public comment is in play. a couple of months, plenty of time to start some substantive talks. i think everyone will be very interested to hear how president xi response to well of this. if he bring some of this, the sense of, ok, let's it down and talk or not when he speaks in about 24 hours from now. haidi: thank you so much for that. editor.al economic president xi jinping has his chance to respond when he addresses the forum on tuesday. our correspondent tom mackenzie joins us from beijing. we keep being reminded, president she, -- president xi
is playing to a domestic audience. what balancing act is as likely to be? tom: you are right to point that out. he is quite possibly the most powerful later on the planet right now. but he does have a constituency here in china that he has to appeal to. it is a challenge, a tight rope challenge for president xi. he has to show he is prepared to retaliate. that he is prepared to stand up against the tariffs from president trump. equally, he doesn't want to see this trade relationship deteriorate to the point where china's economy is thrown off the track. what we may here at the speech tomorrow is not -- is an articulation of the premises that cheney policymakers have already made to further open up their markets. this year is the 40th anniversary of the reform and opening. bank. -- opening period. we make it more details around that.
certainly the chinese have said recently that they are prepared on this to the end trade issue. domestically, president xi is going to want to enter the economy is on a good footing so they can focus on some of the domestic issues that are high up on their agenda. there is also this potential good ability cap. -- credibility gap. the rhetoric for many has not reality, has not matched the rhetoric on many of these voiced decisions around opening up and reforming many of these sectors, whether that is allowing foreign investments. whether or not president xi will address that gap is up for debate. it will probably take more work from the chinese, but it will be interesting to listen in to what he has to say at the forum. betty: absolutely. china's foreign-exchange -- exchange reserve rebounded last month. is that upward trend going to continue if these trade tensions continue to persist?
tom: certainly there is a view tensionsrade continue and become more sustained, then we may not see this regular tick up. if you put the month of february a side here in china, for the month of march, what we saw is the fx reserves taking up by 8 billion u.s. dollars to a total of $3.14 trillion. i mention february because it was the first month we have seen a dip for 13 months per we saw a take-up. then we saw february where we saw a dip. march has rallied. because of the strength of the u.n.. turn among, pull that up, and you can see the reserves in china from about the end of 2010 to now. the fx reserves are marked in those blue bars. 2014, but is013, when we were topping about 4 trillion u.s. dollars. you saw this gradual reduction in those fx reserves for 2015 and 2016.
the year of 2017, they started to take up strongly. that is correlated with the yellow line which is the cny versus the u.s. he they have seen their best quarter in a decade. that is what is underpinning the strengthen these fx reserves. betty: tom, thank you so much. our china correspondent, tom enzi -- tom mackenzie in beijing to trade tensions looking to dominate. the annual forum for asia. we will be live later this hour. are counting down to the real panetta markets after two days of the holiday. this is bloomberg. ♪
york. trading concerns are dominating the markets today as we see asian markets seem to be holding steady despite those massive declines we saw in u.s. equities and the rising treasuries. leaving risk appetite dampened, president trump stoking trade fires saying china will dismantle its barriers because it is "the right thing to do." joining us from hong kong is can long, portfolio specialist at the spring investment. a lot of rhetoric continues to ratchet up higher and higher. as an investor, what do you do? do you stand your ground? ken: we do. for us, we think there is a lot of geopolitical noise going on. anytime when markets correct, we would tend to take advantage of the situation. for us, when we look at the fundamentals, still very strong. you have chinese equities and a lot of the companies in china that are in the process of cyclical recovery. we are seeing companies having good cash flows. for us, there is a lot to ask --
let to like. continues, if this it feels like we are in the beginning stages of this. what if this continues for months? which is likely to happen. that iscan, but also why when it comes to investing, there is a lot of noise that is in the marketplace. looking at longer-term perspective, when we invest, we look at on a 3-5-year time horizon. for us, over the next couple of months there could be more volatility happening in the marketplace. that leads to some opportunities. when we look at certain sectors in china that are having good earning momentum, sectors like material sectors as well as real estate sectors, still seeing revision. we want to shy away from the noise that is in market place. and focus on the fundamentals. en, i want to stay on china. as we have seen from the huge list on what companies they are
targeting, it is a high-tech products you would you stay away from some of these chinese textures in anticipation of this? ken: we would. if you look at the run-up over the past couple of years, the lobby -- the stocks are priced for perfection. anytime where there is negative sentiment emma or if these companies report earnings, slightly underperform what the consensus police are commend these companies will have a big price correction. that is where you want to stay away a bit from some of these ip names has done well, and focus on the sectors that is underperformed over the past couple of years. sectors like financials in sectors like energy stock, which has underperformed. but still have very good in promising earnings growth potential over the next couple of years. has there been a fundamental shift this year from growth to value? ken: slightly. obviously, we have seen that much over the past few years.
growth stocks have done well. this year, we have started to see the weakness and the correction happening. value stocks have started to perform. that trend can continue to happen, especially giving how much tech stocks have run-up over the past few years. have valuations come down enough for them to be attractive enough or do you think that some of the individual regulatory stories for tech are really weighing on what the forecast, with the growth outlook is going to be? ken: that gap is enormous. we are at historical highs in terms of pe valuations, as well as growth stocks. that is why we are in a in terms ofere comparing valuations as well as chinese growth stocks. again, wee time and see -- we think this is a good opportunity for value investors in china.
moving from china to the u.s., i'm curious your take on what we saw what the jobs report on friday which was a little bit of a mixed bag. the jobs growth undershooting estimates. we are starting to see more wage pressures here. how do you think the markets are digesting this? are they pricing in enough inflationary pressures? ken: probably not. if you look at some of the commodity markets as well as some of the gold markets, they did go up a little bit. but then more recently, they have weakened a little bit. we believe investors are not focusing so much. you also have had news coming from the r.b.i. of india that they are lowering their inflation estimates for 2018. chatter there are some about inflation. the markets and investors are still putting that aside. betty: they do seem to be doing that. thank you so much. ken wong of a spring
investments. in some of the traits he is making in the trade war. you can get a roundup of that story in today's edition of daybreak. go to dayb on their terminals. it is available on mobile in the bloomberg anywhere app. you can customize your settings so you only get news on the industries and things you care about. this is bloomberg. ♪
♪ a quick check of the latest business flash headlines. deutsche bank supervisor aboard has named a new ceo. code deputy ceo christians really --christian sewing was an early favorite. he has the banks private and commercial arms. deutsche's biggest revenue sources trading stocks and bonds and income has slumped 32% since the end of 27 -- 2015. haidi: struggling commodity
table -- trader noble group is moving its headquarters to hong kong as a person is a controversial restructuring of more than $3 billion of debt. the group says the move took effect over the weekend and it is registered -- and its registered office remains in bermuda. they value -- the value collapsed since a research group began to question its business and accounting. suspendedebook has another company, qqq, has been the growing scandal over privacy standards. cube you misled users by staying information and -- it collected through quizzes was for academic research while it was in fact shared with marketers. facebook says the firm will be kept off the site while the claims are investigated. more news for zuckerberg to answer to. up next, all on the table, the u.s. says north korea is willing to discuss denuclearization at the upcoming summit. this is bloomberg. ♪ welcome to the xfinity store.
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betty: in singapore, half hour away from the open of trading. stockswe're seeing asian holding on after pretty steep stocks in the. .riday session betty: you're watching day break asia. let's get to the first breaking with paul allen. says chinat trump will dismantle trade barriers. he's tweeted that beijing will act because it's the right thing to do. deal will be struck on intellectual property. president'sof the
economic team continue to begest that trade war can averted. >> there's no war here. we're trying to do is stay technologyamerican which is crucial to american economic growth. >> japan's widen in february. returns on overseas investments and surplus in trade. was $19.6 billion. andtionally below forecast surplus $5.6 billion in january. japan's current account has been every month since june 2014. partly as results of the week of yen. of europe's two biggest economies will visit washington within days of each other. hoping to avert their own trade war with the u.s. the clock is ticking on may deadline for eu proposals to stop washington imposing
tariffs. possible solution may lie in the white house as efforts to forge coalition to tie china over alleged unpractice. trump's trade threats left president xi jinping a balance. reassure both domestic business and foreign investors. beijing says it will fight to end on trade. china's foreign currency holdings resume gained last month as beijing remains capital reserves. reserves rose to $8.3 billion. fractionally below the estimate in the bloomberg survey. march is a turn around from china's holding fell for first time in 13 months. global news 24 hours a day, more
than 120 countries i'm paul allen. this is bloomberg. betty: thank you so much paul. time to see how the asian markets are shaping up so far morning. the asian pacific index is holding steady. >> investors is looking cautious front. assess the trade given trump's tweets over the weekend. take a look the dow. stocks in sydney .nder pressure nikkei down to tenth percent undere tech stocks pressure. you have engineering stocks some biggest boost. the currency against the dollar. we get the manifesto the
leading party in malaysia following disillusion of pearlment on saturday. wasnt to highlight what happening with the metal space. gainingaluminum stock ground. afters aluminum prices u.s. imported tariffs on russia. sanctions on russian metal could ofeaten significant amount global supply. sanctions may result in technical difficult. worldan's biggest aaluminum maker. we are seeing slightly under pressure. keeping steady and over in jumping atngineering the first quarter operating profit and the stock was kb security.uy at tokyo. is slipping in
outsiders. come in leap year. that is not for the investment. are employedeople as workers. none of our companies are used designing and planning and etcetera.g, we get nothing. >> chinese investments have been the world.rywhere in it's not just in malaysia. also in the u.s. which the u.s. is taking issue. also in indonesia. it is the rise of china. people don't like chinese investment. the rights.efend don't want to sell chance of this country to foreign who will develop -- 700,000 for this. we don't have enough people with the wealth to buy all this
expensive -- no country wants to an influx of huge numbers of foreign people into their country. that is what is happening in europe. fences, bob wires in order to stop foreign income from coming in. nothing from the investment. no work for our people, they tax here. pay they are going to be tax free. way chinese in malaysia. good definition. you see our workers and our managers. are welcome. former malaysian prime minster speaking to bloomberg. moving on to north korea, the states says north korea is willing to talk about nuclear
weapons and president trump meets kim jong-un are soul bureau chief has more. us through the significance what the trump administration is saying here on kim is willing to do. >> it's very significant in the sense that for the last month or so, since trump said he would talk to kim jong-un, even in pretty much in the dark as to will happen. whether the key point of disarming nuclear weapons in ncaa will be part of the talks. neither the u.s. or north korea about this. beside trump saying he will talk to kim. -- north korea has not mentioned this talks at all in statements they put out everyday for the last month. questions as to whether the talks would occur and secondly if the key point of talks that is to
denuclearization of north korea would occur. that has beennd, confirmed. details actually which was pumicer -- reporting purposes. there's suggestion that the happen in pyongyang or at least that's the recommendation. it would happen toward end of may. all these details were up in the air. we were in the dark. claritye getting more on that. haidi: john bolton is new advisor.security lot of uncertainty and distractions. do you think preparations are going? >> apparently well. theeast according to reports that came out of the weekend. unbeknownst to the public, trump administration has been talking setting up the summit. they've been talking about where
and when to meet. none of that was clear to any of purpose clearly things are moving along. obviously this will move even taking overbolton his -- starting his position and pompei leading the discussions. is on track. betty: all right, thank you so for that. haidi: up next, president trump says the world trade is unfair to the united states. we'll be discussing that view with the brookings institute senior fella. this is bloomberg. ♪
tone coming from the united states. perceivedhe protectionist rhetoric. does he become more stride i retaliation. then more promises or at least threats of looking into more tariffs by the trump the tuneation to another $100 billion u.s. dollars. retaliate.na what kind of face will xi the world and audience here. that is the big question. we had more tweets comes from overnight.nt i will recap saying china will take down its trade barriers thing tot's the right do. taxes will become more reciprocal. there's going to be hard for the on such a back down short time flame. they could be standing tough in face of this protectionist
rhetoric. tariffs have ignited a worldwide fire storm of frustration and confusion. my bet is that xi jinping will not display frustration or confusion. tomorrow.lay resolve haidi: world is watching. you else of importance are expecting that could come up dialogue? >> right, lot of the talk here about the ongoing reforms. that's what the chinese like to talk about and this is the 40th anniversary of the opening up of china to the world. they want to highlight that and element could be some at least we're reading in the tea of thehere, opening up hainan economy potentially gaining. bloomberg reported there are potentially to open up hainan island to compete
against the likes of mccow. revenue goes the to the las vegas or foreign gambling companies. that perhaps the chinese could start some trial programs online gaming and betting that down the road could pave the way for casinos. been speculation in property and also in infrastructure. i've's high speeded rail, been coming here for 15 consecutive years, i've noticed in thee and improvement infrastructure. but the tourist numbers, in 2017 areotal still mostly domestic tourist. they're not getting the foreign become they want to hawaii of the east. they're not getting the numbers elsewhere in southeast asia. there could be moves of foot. indication from thisdent xi to hope up
economy. fori: thank you so much that. previewn island with a what to expect. that keynote speech from xi on tuesday.ng let's bring in joshua at the institution and john hopkins school for advance international studies. from washington. ideological war. partly aimed curtailing sense ambition of beijing? >> i think certainly that the trump administration has identified range of chinese trade.
i think there's a growing states in the united wars.hina moved away from is inconsistent with the broaders of liberal nature of system.e heidi: how does this end? have president trump who like quick fixes. audience.ng his home he wants things done. on the other hand, xi jinping, he's also playing to home audience as well. these ambitions beijing will not give up easily. key question. difficult question is what does like.k how does united states and china resolves to the satisfaction of leader. we don't know that.
that's what people are concerned trump may very clear from the beginning he's comfortable with tariffs. he's very skeptical of the of trade. but then what does it look like and how do they do a deal and does it satisfy trump. betty: we were asking the peters institute last hour what the response is going to be. i want to you listen and viewers thought their she position going to be. >> chinese are not going to be to cave in. not only do they see this as sort of fundamental to their a leader in the global economy but also i think they feel that the plays very well in the stands people at home are behind them. we've heard, president xi
jinping does not have to run for reelection. a bit of room to let this run. betty: would you agree that this on?d drag the chinese president really has no constituents to really worry about? >> i think that's certainly true. states see in the united for instance the agriculture sector is already pushing back strongly. concerned from the beginning about
we might see move eventually. will hold strong. betty: before we go, what kind of negotiations do you think are happening behind the scenes? >> there are back channel on.ersations going i think that the key issue here is not simply can they provide a of reciprocal market. united states is looking for doeschange the way china business. that's going to be a difficult fulfill. trump to betty: thank you soph. joshua meltzer senior fella at the brookings u.s. on the -- trade.te on the u.s. you can watch us live, catch up on the past interviews as well
heidi: quick check of the business headlines. sale in more than two years. potentialwill make buys in the nikkei and u.s. this week. bank could include 5, 10 and 30 year note. qatar sold bonds in 2016. raised $9 billion. betty: boeing celebrating win over airbus, ordering 47lines drime -- dreamliners. of americans cancellation of order for 22a350s. second time that boeing has an airbus wide body customer in the u.s. to switch 787. an airbus wide body dumped thet month.
heidi: chief executive told companies unable to pay contractors. may have to shut down temporarily. workers were toweled production of the suv might be transferred to china. made almost a billion dollars to fund operations. coming upk what's is here on bloomberg television. watching?ou tensions.th the trade height horses something to watch here as well. dominatedre or less by government behavior.
currencies will be along as well. ins going to be joining us over an hour. how is a look bond wise and curve getury yield interpreted by bond traded. qt going on at the moment. off to the -- to a unicorning founder. miranda cue. us about her e commerce side. going to be missing you heidi. we go. heidi: we'll be tuning in. look forward to. let's get you quick look how
now.markets are trading to the outside, we are seeing largely reserving judgment it seems when it comes this trade.ens with australia seeing just a moderate gains there as well. in on asian futures as we head into the open of trading in singapore, taiwan bit of upside to be seen. lots to react to. china trade is the biggest thing that we're afterring in term of that data calendar. is it all right, that she.bay day break hay market coverage continues with rish next.
rish: president trump said china will dismantle because it's the do.t thing to fed chairman confirming so but steady rates. jobs, wages and inflation point to gradual hikes. bank this man are with immediate effect been in hong kong i'm rishaad salamat. steven engle at the boao resort. trade, trump and taking bitter tourism with highly