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tv   Bloomberg Daybreak Asia  Bloomberg  April 9, 2018 7:00pm-9:00pm EDT

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yvonne: 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." the top stories this tuesday -- doing a deal. hints at a trade group in china. president xi may offer his first comment on this. we will be in height on. betty: from bloomberg's global headquarters, and betty liu in new york. the bank of japan governor talking exit plans. every pico kuroda expects normalization -- hera pico
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expects normalization to begin. kuroda expects normalization to begin. today, we are watching president xi jinping. tomorrow, we will be watching mark zuckerberg of facebook. let's take a quick look at the g tv chart. i thought it was quite apropos given we were watching the large-cap tech stocks and how they contributed to the rebound. incredible here, showing that 19%, nearly 19% of the population around the world checks facebook on a daily basis. 1/5 of the entire world checks facebook every single day. are you one of them?
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yvonne: certainly. you have got to check it on the daily. i also use instagram quite a bit. they monopolized most of the social media front. it's interesting and it will be a welcoming sign ahead of the testimonies for mark zuckerberg. he has been pretty busy meeting with lawmakers ahead of that, it is interesting to see the tech rebound did not do a whole lot in terms of boosting the market. a lot of what is really weighing. we have the fbi raid on president trump personal lawyer, michael:, led to -- michael cohen, led to political risk. looking ahead to president xi jinping's speech. we will be joined by the dallas fed president, robert kaplan. he will be speaking to us at 8:30 hong kong time, 10:30 out of sydney. they: you mentioned we have
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late day selling. the markets ended higher. take a look at the boards. at spooked markets. the s&p gaining .3%. the dow up 46 points. leading to perhaps not so much of a robust opening as we might have expected in asia, yvonne. yvonne: let's take a look at how things are going to fare, leading up to the spotlight. new zealand stock down .1%. the kiwi holding study. broad-based weakness overnight. futures are pretty much flat at the moment. the aussie at 76 .96. yields heading lower.
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a bounce back of more than two percent after trade tensions seem to be easing with president trump hinting at a deal with china. counting down to the opens in japan and korea. japanese futures trading in chicago. a riskyen, we did see off dealing. kurodahear from governor during his press briefing. the message was the boj is considering an exit in the next five years or so. news get the first word with jessica summers in new york. just. -- jess. >> the keynote speech in high heinan. his diplomats led take the lead. the speech comes 40 years after economic reformist began transforming china.
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hinted thatump has the u.s. and china will reach a deal. he says his administration will probably come to an agreement to resolve a dispute and prompted fears of an all out trade war. the chief economist says the bank continues to expect the two countries will reach a compromise. is said to be evaluating the potential impact of devaluing the yuan, in response to the worsening traits that with the rest. officials are setting up a two-pronged reaction. one models what would happen if to offsetere models the impact from tariffs. mark zuckerberg will tell congress later that facebook's problems are his responsibility. he is due to give two days of testimony over the worst crisis in facebook's history. to company did not do enough
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prevent fake news and potential harm to users. zuckerberg will try to explain how much facebook contribute to the walled while excepting he did not realize the consequences. , the latest high profile person to abandon facebook. he expects it will be decades itsre facebook change policy. he called mark zuckerberg's failure to look after users information hypocritical, noting zuckerberg bought land and houses around his home to ensure privacy. day,l news, 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. betty: the u.s. close was all about the final hour once again, and perhaps it was more about the final half-hour. su keenan has more on what looks like a pretty decent rebound. we are seeing this solid rally,
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and minute petered out at the end. su: some would call it a solid rebound. it's going to the chart. gains completely evaporated. this volatility plate the markets all -- plagued the market all year. complications in washington. look at the market snapshot. we did see stocks up high. any conviction. we did not see a safe haven moved to gold. oil was hiring in a big way, although it is trading lower in extended trading. take a look at what was moving. we did have tech showing big strength and health care stocks. apple was up higher on the new iphone, a red one they are going to introduce midseason. positive news regarding its therapies. deutsche bank, the new ceo.
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first big day on the job. the u.s. presence is very important. and taking a big drop in this volatile market. go into the bloomberg if you will. the s&p 200 moving average is something we are continuing to watch. that big drop we had in the last week fell below the 200 day moving average. as we looked down at the bottom, this is the number of stocks for the 200 day moving average. we are seeing it weaken in financials and industrials and it is being closely watched as well. >> i think you hear from the that earnings season cannot come soon enough. hopefully, it will focus more on the fundamentals. that's not quickly about the strength in tech as well as banks before the final hour hits. su: quickly to tech, the chip were strong.
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analysts talking about the fundamentals. these stocks got hit hard because of terrace concerns, the trade war. they all bounced back strong -- tariff concerns, the trade war. they all bounced back strong. deutsche bank moving higher on the news of a big change at the top. john cryan out. he is saying he will move forward in a big way to restore deutsche bank to its former growth. you have wells fargo in the spotlight, a consumer agency announcing that there could be a billion dollars in fines related to the scandals with accounts, mortgage securities tomato loans, and mortgage let click -- securities, loans, and more. yvonne: what a turbulent day on wall street. let's go back to the political risk.
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president trump has called an fbi raid on the office of his longtime lawyer, "a whole new level of unfairness." pres. trump: it is frankly a real to stay -- disgrace, an attack on our country, on what i saw stand for, so when this, and when i heard it, a heard it like you did. i said that is really a whole new level of unfairness. an actress claims an affair with the president. let's get over to washington, d.c., where joe is standing by. joe, do we know a little more about exactly what this probe is going to be about? this raid was going to be about? and how it was related to mueller's investigation? >> this was down on the mueller
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investigation. the deputy attorney general was presented some evidence. that was turned over to new york federal prosecutors, suggesting that what they are investigating is outside the scope of the russian investigation itself. it could involve the alleged hush money payment to stormy daniels. it could be related to business cohen had taken part in as part of the trump administration. it could be a number of things that were uncovered in the course of mueller's investigation into the russian interference in the u.s. election. did not feel that it was in his purview. the other interesting thing is that it was not a subpoena. they were concerned that material might not be forthcoming. or destroyed so they wanted to get their hands
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directly on it and take it into evidence. the next step by the southern district of new york and the federal prosecutors there. and by the fbi. of the russian investigation, but not directly tied into it. yvonne: certainly going to complicate things a little bit more. going onto the trade front, we heard from president trump hinting he would reach a trade deal with china. who is negotiating an end to the standoff right now? what is the end goal? joe: it is not clear who is negotiating. stephen mnuchin said he has been in contact with the vice premier of china. there have been no announced talks or negotiations going on. neither government is saying much of anything that there are actual negotiations going on. it could be that the markets have rivaled the concerns about a possible trade war.
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deals like this, trade deals, typically take years to negotiate. be able to get, some sort of vague framework for china and disagreements on minor issues. that would have to be forthcoming. betty: that is certainly going to be closely watched. in, we heard the president the same remarks talk about syria, promising he is going to be making some sort of decision about his response of the suspected chemical attack by the assad regime over the weekend. he says it will be met forcefully. what might he do? what are you hearing? this eveningeting with his senior military advisers about options. quite a job of keeping together the options they may have for launching an attack, whether it is a christmas. .
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we saw some sort of missile strike that russia suspects was carried out by israel. the french are ready to go in and also strike at syria. there may be some sort of coordinated response between the u.s. and some allies going in. the exact format will take is a little bit unclear, a little touchy, because there are russian troops in there. avoidwas some desire to such a direct confrontation. there are a number of options. willing to take a and whether this will be a consistent pattern for repeated u.s. and allied strikes, response to syrian provocations remains to be seen. it could come anytime, though. yvonne: thank you so much. we will be watching for that. our bloomberg congress editor in the next one in
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four to 48 hours. still ahead, we will hear mark zuckerberg in the spotlight over facebook data privacy crisis. criticism the ceo's star status is fueling the problem. we will see the testimony to congress. 'sonne: first, xi jinping balancing act as he opens the forum here and we will be live to hainan in just a moment. this is bloomberg. ♪
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yvonne: "daybreak asia this is." i am yvonne man in hong kong -- this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu. reassure both domestic business is an international investors. that cross to hine and, -- hine hainan. steve.
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here. we are the keynoteill give address. a lot of people are speculating on what he might say. he could respond quite stridently against the second round of tariffs coming from the trump administration, or he could take a tack that he took at davos and be more statesmanlike in continuing to be a champion for freer trade and globalization against the headwinds of protectionism coming from abroad. not necessarily naming trump by name or the united states. we don't know. in the 9:00 hour local time. , let's turnspective to the cochair and former commerce secretary. what are you hearing from the chinese? you are in a unique position former u.s.are a
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official and now in the private sector, but you have high-level meetings, including this year. what are they asking you? obviously, there are a lot of questions around u.s. policy. what is the u.s. objective? because the dialogues have broken down, we have the joint commission on commerce and trade, the comprehensive economic dialogue. there were meanings that let things move along gradually. if you don't believe in gradualism, then those go out the door, and they have. there is not discussion between the two sides among a few individuals, but not the way it was. there is a vacuum of this. what we heard in january, when it came to beijing, is we don't want a trade war, but we are not going to back down from one. hasdent she -- president xi
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been reelected. to benot allow himself viewed as being pushed around, so we are in a mess. heads -- needd, calmer heads. we are heading right into a trade war. >> are we in a trade war? he said wars start with bows and the battles have started. carlos: that's right. i would say that was the first istle, and then the 301 coming, at the option against property rights violations for technology transfer. that would be a big battle. if we are not in the war then, then i do not know what, you know, what is next. >> can these issues be resolved in the relatively short timeframe, two months consultative period? form 301, there is another of spirit in six months, can a
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deal that would appease both sides possibly be reached? carlos: i do not believe a deal can be reached to achieve the president's goals, president trump. he has talked about reducing the trade deficits as his main goal, his measure of success. i do not see that happening. there is so much to negotiate. >> one chinese official said to start selling us equipment. the deficit would be gone immediately. carlos: the first to be hit is soybeans. no one is going to win. we're both going to lose. carlos: how does that undermine the midterm elections in areas like soybean and agricultural products? carlos: after will be resolved,
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and part of the resolution of nafta will cater to those red states. separate matter, because politically, people feel we have to do something about if it has not impacted the economy, he could use it as a tool for the elections. if it is hurting the economy by will bean i think it very tough to hold onto the house and senate. >> yesterday, you said the u.s. has no strategy. what do you mean? carlos: if there is, i have not heard it. carlos: we are going into a trait -- >> we are going into a trade war with no strategy? carlos: i am not in the room, but the appearance in the outside looking in is tactical moves. i will wait for you to do something else. what is the objective?
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what is the endgame? do we want china to have an oursomy that mirrors that is realistic? how do we stop a trade war once it started? the world looks different after p or it we are looking at a new economic order that today we cannot foresee. it is stopped in three or four months, maybe we are able to prevent that. i just do not see it. >> you are the commerce secretary across the table from your counterparts. china will not be bullied. carlos: there is no question that my description of china, of beijing in january, was confidence. confidence that china is now large enough to not rely solely on a u.s., that china is large
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enough to take a leadership role. it was a very confident stance. filterings leadership through the government ranks. >> what do you expect from the chinese on this latest round of threats? we are hearing his lieutenants are hunkering down, trying to come up with another strategy following their retaliation last week. we are hearing also that the currency devaluation is a potential. that would cause a lot of other problems, too. >> there is a lot of speculation. perhaps stop buying u.s. paper. or even selling u.s. paper. which then would really escalate things. , we are.s. side
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updating laws to restrict foreign investment. the chinese will retaliate and restrict some foreign investment. there is no winner here. we are going down to the lowest common denominator. >> how do you think this gets resolved or does not? carlos: perhaps i could see it in terms of agreements. certain treaties and agreements were technology transfer. , a reorganization or rethinking of a role for the wto. all of this is happening under the wto. it was designed to prevent this, so i think we also have to rethink the international model. carlos: as -- >> this trump get reelected if he gets kim jong-un
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to dismantle his nukes and a deal with china? carlos: it will depend on the economy. that is a lot right there. if you do those three things, you have done quite a bit. i would say, realistically, the economy. tax reform has been good on the economy. the problem is that we are undermining all these things with trade and with all these skirmishes and battles and all the confusion and uncertainty. carlos gutierrez. yvonne, going to send it back to you. full date coming on sonny hainan full day coming on sunny hainan island. later: that will be live today in bloomberg markets.
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check that out of course. it will be the spotlight of the week. one of thetime, biggest investors has returned to the board saying it should only proceed with a deal from viacom if certain terms can be agreed. the unidentified shareholder -- to lead and a combined company and for cbs to be compensated if that does not happen. the merger with viacom is not the optimal strategy. the founder of noble group is pushing for a new restructuring deal. richard ellman resigned last month after differences of opinion about noble's future. to wipe outplan was equity investors. he wants shareholders to have at least 15% after any deal. heading into the bike rental industry with a deal for jump. is able to has -- integrate the service.
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the ceo says he aims to work with other bike renters as well but declined to say what the deal means for the losses. betty: up next, facing the music. mark zuckerberg preparing for a grilling on capitol hill. ♪
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>> 7:30 a.m. tuesday in hong kong. 30 minutes away from it is first major market open. tested after the late selling we saw in the u.s. session, betty. betty: that's right. the latest selling. 7:30 p.m. monday evening in new york. markets were going to close much higher but stooped at news of the fbi raid on the longtime presidential lawyer to the president, michael cohen. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." first word news with jessica summers. raided the fbi had offices of president's longtime
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lawyer, michael cohen. they seized documents after robert mueller applied for search warrant. he has been a key figure in a series of legal issues. he paid $130,000 to stormy daniels over an affair she says she had with trump. made the payment without the president's knowledge, using his own money. pres. trump: it is frankly a real disgrace, an attack on our country in a true sense, an attack on what we all stand for. when we saw this, i heard it like you did. a whole new level of unfairness. reports from china say alibaba chairman jack ma is prepared to abandon his commitment to create jobs in the u.s. if the traits that worsens. china's news service growth he made this thread on the sidelines in hainan. the boss met the president in
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january of last year. he said he planned to boost retailers across the u.s. to create up to one million new jobs. officegressional budget said the u.s. deficit will top $1 trillion by 2020, 2 years sooner than previously predicted. president trump tax cuts and spending increases will grow the point $9 trillion over 11 years while doing little to boost long-term economic growth. therest rates at 2.4% by fourth quarter, peaking at 4% in 2021. the bank of japan says it will consider normalizing policy over the next five years. that underlines how far its targets have slipped since haruhiko kuroda took office. the governor said the boj is aiming to hit 2% inflation within two years. recycle aroundto april of next year when he will quit the stimulus program.
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reached theas not point of exit. it's hard to talk about specifics of any exit far in advance as it could confuse the market. it depends on financial conditions and consumer prices. jessica: global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. yvonne: we are counting down to some of the major market opens in the asia-pacific. for more, let's get an update with sophie kamaruddin. so much for this rally sticking in the u.s.. they have more political risks, whether it is michael cohen, syria. we are looking ahead to president xi's speech. drivers of politics will be part of the sentiment drivers today. tepid startng at a to the asian session. lukewarm, muted. xi jinping expected to warn about the consequences of an escalation to a full trade war.
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he commerce minister said that it would hurt japan, south korea, and southeast asia. studying thely are potential impact of a gradual depreciation. while the u.s. and china continue to exchange trademarks, i want to illustrate how this affects companies that derive chunk of sales from china, hitting tech players like broadcom and qualcomm to minors .ike rio as you can see on the terminal, since trump first imposed duties in late february, starts with exposure to china has tumbled to the lowest level relative to the msci will benchmark -- world benchmark. this is certainly having pressure on things exposed to china. >> you talked about the middle space and the tech space as well. and slappingu.s.
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sanctions on russian oligarchs as well. what does this all mean for supply? sophie: alumina prices fell -- jumped the most in -- aluminum prices jump to the most. this is around concerns when it comes to supply. could take out 25% of the world's existing aluminum inventories. that would be aluminum buyers and processors drastically short frompply to buy the middle beer cans to aircrafts, so asian aluminum producers may have concerns. since marchmost 2017. commodities traders reportedly stopped to buy. we did see shares fall 50% according to pricing on the hong kong exchange's website. plus to add to this rhetoric,
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russia has promised a harsh response which could mean restrictions on trading products like titanium. yet another front to be considered there, yvonne. betty: thank you so much, sophie kamaruddin. lots to consider. mark zuckerberg preparing for testimony. hisworst of the crisis is responsibility. let's look ahead to the questioning with alistair barr in san francisco. there's going to be an apology to her here. -- tour here. >> mark zuckerberg will be saying sorry, i imagine, for a good 30 minutes of the wall thing. [laughter] betty: who will grill him the most? where will he get the hardest questions? alistair: under a couple of congressman, and
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they have come up with something called the honest ads act which is the new disclosure act that will force internet companies of all types, not just facebook, to disclose a lot more details about political ads. bill theyy want this worked on a lot. a lot of other people may be on the republican side, criticizing mark zuckerberg. they are going to be very concerned that conservative voices online in the u.s. don't get crowded out or censored. betty: there may be some progress on that front, alistair. there will be a lot of grilling and putting him in the hot seat. in the end, what will be considered success out of this testimony? alistair: first of all, he is not comfortable talking in these types of situations.
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obviously, still a very successful ceo. then, beyond that, success -- is there going to be any regulation of the internet, facebook, and social media, beyond this act? tothere something more akin the european new privacy laws that are coming in in may? something like that for the u.s.? that would be a big blow for facebook. betty: just the images of him on capitol hill. this is a good first step in all of this. he was meeting with lawmakers after lawmaker ahead of this testimony. what were they trying to get across here on a personal level? alistair: they were trying to get a sense of whether he was serious, especially about russian meddling in the u.s. election for we have midterms coming up later this year, and
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they want to know whether facebook is taking misinformation, fake news, and other ways to sow discord in the u.s. ahead of the elections. , thestatement today testimony he is going to give, prepared testimonies that were released today. toy're hiring 20,000 people monitor for things like fake news and misinformation. yvonne: alistair, we will look ahead to tomorrow. bloomberg tech will have a special edition of mark one:rberg's testimony form 30 a.m. wednesday hong kong time to 1:30 tuesday afternoon if you're watching out of new york. the worldnks around are determined to get out of aggressive stimulus on a more normal policy track, but politics and data could derail them again. let's get to kathleen hays, who
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is right here. we heard from haruhiko kuroda yesterday during this press briefing. he is talking about an exit, but has given himself a big window. kathleen: i think it is wise. he has been reappointed for a second year term of five years as head of the bank of japan. , intend to fill my entire term but considering policy normalization, during -- sometime during this term. i think that has a lot to do with the fact that as he said this, he also noted that they are not going to give up on achieving that price target. it's interesting. remember, for the longest time even last year, he could not say the word normalization or exit. he started to address it, and he's putting it in an important context. let's listen to what he said. the boj is still far from reaching price targets. it takes some time to change
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deflationary mindset. it's clear we are moving the path towards 2% target. we will continue to make all efforts to reach price target. >> just a couple of weeks ago, mr. kuroda said the boj would continue its exit as they reach the 2% target. maybe here is why. let me show you the gtb chart from the bloomberg which looks at japanese inflation. 1%, that is cpi, there may engage, only halfway there. the headlines are a lot closer. this is the number. the have got to do 100% again of what they have done so far. there are big plus to boj's easy paul -- easing policy. gdplongest growth period of in nearly three decades. a big minuses people's concern -- minus is people's concern.
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the bank of japan purchases the holding. wondering how long they can actually keep doing it. >> and kathleen, mario draghi said he is confident and growth, but uncertain about inflation. why is that? kathleen: i think he said it because it's true. we heard that so many times from mario draghi. report ofhe annual european central bank. that he seeswrote the strong expansion moving ahead. let's look at another bloomberg gtb chart, and it is a cool one. i can tell you, you only have to look. 1.4% year-over-year. showsk this chart, which ,ains in germany, in spain italy, france. they barely picked up from the start of the recovery.
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if you are not getting higher wages and having more money to spend, how are you going to boost inflation? i think that is really the issue here, betty. lately, of course, overall area growth has leveled off. germany, the biggest economy by far, they had big drops in industrial production exports in february. people say it is temporary, but there are question marks, and mario draghi is prudent to say this is where i think we are going, but acknowledge in some questions. betty: kathleen hays, our global policy editor. kathleen, as she mentioned, has the exclusive interview on daybreak asia. fromt kaplan, live beijing. 8:30 p.m. monday evening if you are watching right here in new york. up next, the company using crowdfunding to help startups. conference in the
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san francisco in just a few moments. this is bloomberg. ♪
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>> we are counting down to asia's first major market open this morning. nikkei futures looking like this, down .6%. some declines here after the gain we had in new york. we could not hold on to them. latebreaking news on the president. this is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man in hong kong. simtech in fort this -- in focus. ramy inocencio is there for us and standing by with the ceo of a new york-based company that says it wants to diversify and democratize access. ramy: thank you very much. hello from san francisco. it is a summit here.
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we are talking about getting access for nonaccredited lenders. anyone on a bank out there to crowdfunding. walk us through the concept of this. is ventureon here capital has done wonders for the world. the ecosystem has been pretty fragmented. only a few lucky entrepreneurs have had access to venture capitalists to get funding. it is a vast wealth generation event of the century. you have been locked out of it. people can invest a small amount. but a meaningful amount ps.redible tech startu
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ramy: it may be $10 or as much as $100,000 depending on what they said. what is the rate of return for our investors across asia pacific as they watch this? they are basically wanting to know what's in it for me? whenlike buying a product, someone makes an investment, they care about what we call return on investment. return on investment for crowdfunding is similar to that in tech, meaning if you invest in one company, very likely, they would succeed. perhaps one or two yield returns. at the time, unless you are a millionaire, you can participate. if you are able to participate with $100, that today would be worth more than $10 million.
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it can be quite fast. the risk of loss is also very high. uber onat is the next your platform? you have done a series of funding for three dozen or so. what are the successful stories right now? , we pick them's out of a vast pool. less than 5%. i do believe in each and everyone of them. it's hard to tell which one will be the next uber. it is an active campaign. a really taunted immigrant from africa who got multiple degrees in physics. it is incredible. going to take a shot at winning over the vacation home rental market from airbnb.
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and he is from india. he moved here at the age of 18 or 19. he just closed out a series. everyday people are given access to high-quality tech. ramy: one thing i am really interested about your company is that the mission is to diversify where people get their money to. in terms of women come in terms of minorities in america, why this mission? what makes it possible? is worth doing in life if it is not meaningful. fabric.core of the belief that good ideas exist everywhere.
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we always see opportunities are highly localized. for example, in venture capital, to women like 10% goes founders, yet the rest of it is all too male founders. the belief that if everyone participates, globally, that naturally levels the playing field for entrepreneurs. that means we have more ideas that get a chance to become businesses. ubers ande next airbnbs would never see the light of day. ramy: for people in hong kong and australia, those are your fourth and fifth biggest markets. what attracts them to be investors in republics companies? investing is complicated, normally. you have to know the people and
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meet the founders to go in. in singapore or australia or as easy asit is buying a product on amazon, so it makes it easy to consider the new investment class and participate in what is in my opinion the most powerful force of good we have ever seen, which is entrepreneurship. ramy: very quickly now, in terms of the jobs act in 2016, which is how this came about, this is under the obama administration. is there any fear under the trump administration that this might be rolled back? >> the current administration, as you know, there has been a lot of uncertainty almost every day. there is one certainty. the current administration is quite friendly towards policy
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that supports small businesses and startups. usually, the republican economic approach versus democratic. i do not think there is any real likelihood. expect to increase the cap on investment. and make it easier. ramy: that is a smile that i am seeing from you. stability moving ahead under the trump administration. kendrick, thank you very much. betty, back to you. betty: thank you so much. ramy inocencio in san francisco. we are getting some headlines from japan's finance ministry. aso speakingtaro in tokyo, saying it was a
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mistake to ask a school official to lie. that is at the center of this increasingly complex and widening lansdale scandal. aso saying it was a mistake and also is going to work to restore trust in the finance ministry after the ministry admitted to document tampering in relation to this land sale. we will keep watching for the headlines and how they might the markets for japan and the yen. this is bloomberg.
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♪ yvonne: monsanto shares surging after the wall street journal reported the u.s. will approve b ayer's takeover. that will remove the last major regulatory obstacle for the biggest deal on the season
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industry. last month, officials were not satisfied with bayer's plan because of concerns that it could hurt competition. plans to buy back 10 million of its shares from hna as part of the selloff in the hotel company. hna is offering just over 63 million shares. goldman sachs and jpmorgan are among the book runners and underwriters for the offering. betty: apple is green. its sights around the world are powered by renewable energy. emerged.ons have are companies say they conscious of both cost and climate change. yvonne: coming up in the next hour of daybreak asia, your market opened to it also, our
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exclusive interview with dallas fed president, dr. robert kaplan. he joins us in half an hour's time to talk about the trade front. he joins us from beijing, and of course, all ahead before xi jinping takes the stage in hainan. this is bloomberg. ♪ retail.
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♪ 8 a.m. in hong kong, live from bloomberg headquarters in asia, i am yvonne man. the top stories this monday, markets weighing trade tensions retaliation. investors are awaiting president xi jinping's speech. hainan. be live in hig betty: and i am, just after 8 p.m. in new york, goldman sachs sees the two sides reaching a deal on tariffs. the japan governor talking about exit plans, expected to make some kind of decision at the
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next five years. ♪ yvonne: buddy, as we count down to the speech in hainan, the big question, a seasonable chip, we see movement on the potential risk that could have when it comes to what that means. taking a look at this chart, we are seeing options traders paying relatively more to wager the yuan weakness. others are starting to hedge this, which would not be too surprising. given that we have seen that in the paststrength year or so, there is room for maneuvering and even to reverse course of little bit in beijing. betty: absolutely, we have been
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talking about what kind of leverage china has. certainly, the currency is one. they don't important enough u.s. goods to use that as a sledgehammer on the u.s., so it would not surprise me that there was more and more focus on the currency. we will be talking about the currency markets, the dollar and interest rates with our guests. don't miss our exclusive interview with the dallas fed president, robert kaplan who will be speaking to us live at 8:30 p.m. hong kong time, that is 10:30 p.m. in sydney, 8:30 p.m. here in new york. let's get to the first word news of paul allen. paul? paul: president xi jinping steps into the spotlight later making the keynote speech at the farm in hainan. we are waiting to see his reaction on the tariff threat
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coming from washington. so far, he has let his ministers and diplomats taking -- take the lead. the speech comes 40 years after economic reforms began transforming china. president trump has hinted that the u.s. and china will reach a deal that eases some trade tensions. he says that the administration will "probably reach an agreement to resolve the problem. goldman sachs chief economist says the bank continues to expect that the two countries will reach a compromise. the fbi has raided the offices of president trump's longtime lawyer, michael:, seizing documents -- michael:. he had been a key figure in the president's be go issues, paying $130,000 to the poor and star, stormy daniels. he says he made the payment without the president's knowledge using his own money. >> it is frankly a real
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disgrace, and attack on our country. an attack on what we all stand i saw this and heard it, i heard it like you ad, i said, that is really on whole new level of unfairness. paul: mark zuckerberg will tell congress later that facebook's problems are his responsibility. he is due to give two days of testimony on the worst crisis in the company's history and will say, they did not do enough to prevent fake news causing potential harm to users. he will also try to explain how much facebook ca contributes to the world. apple cofounder, steve wozniak is the latest high-profile person to abandon facebook, saying that he is not certain the social network can fix its issues and will be decades before it changes policy. zuckerbergt
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bought houses and land near his home to ensure his own privacy. in over 120 countries. this is bloomberg -- global news, 24 hours a day, powered by more than 2700 journalists in over 120 countries. this is bloomberg. ♪ i am paul allen, this is bloomberg. yvonne: we are starting things off pretty muted. a late day selloff in the u.s. session which is weighing things down just a bit. sophie: yes, politics taking center stage in asia. if you look at the region, stocks are under pressure and the yen has risen for us a third day as risk take center stage. u.s. futures off by 2/10 of a 1% -- retailers in declines, kospi lowering by half a percentage and goldman cutting the equities to market weight.
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in sydney, the asx 200 is using a quarter of a percentage, lower bhb and other energy companies. we have seenmoves an element, prices have jumped to the highest level in six years overnight, given the u.s. imposing sections on russian oligarchs. we do not only have the fbi's raid on the trump lawyers office, we have the president of china's keynote address, all of this as well as the japanese scandal erecting, weighing on stocks. according to a survey conducted offices the most popular in the past six months. his sorry -- his disapproval rating is near 60%. betty?
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betty: thank you so much, sophie. china is said to be evaluating the potential impact of devaluing the yuan. our chief asia economics correspondent joins us now in hong kong. we're told that chinese officials are setting a two-pronged approach. talk us through their thinking here? guest: good morning. our colleagues in beijing reported that they are looking at the local angles, one is how to view the yuan as a weapon in the trade war. a lot of the analysts have pointed to it as a possible weapon for china as trade wars continue. the second angle is that they are looking at a cheaper yuan and the devaluation would help their own exporters in the event that the u.s. wants to slap or clamp down chinese exporters. none of this means that china has decided on a devaluation,
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but it speaks to the wider thought emerging now that china can go well be on the world of tariff barriers and into the world of nontariff barriers, when it comes to retaliating. one of the options they have is of course, the currency. we are not there yet, but there is an indication that it is on their list. yvonne: and we have a chart here as he mentioned, there is room for that even that we have seen some depreciation, maybe they can tweak things to let things we can a bit, whether through loosening capital controls. but there are some serious downsides to devaluation, this brings us back to 2015 all over again. yes, in many respects, it the us president trump labeling china a currency
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manipulator, if they were to weaken it, it would give president trump the upper hand. make thewould offshore debt which chinese companies, it would make servicing that that more expensive. so there is a political aspect you would think that china doesn't really want to devalue their currency, on the if they really have to. yvonne: yes, it would be the last resort if they were to get to that point. as far as the turmoil in the other markets, we are seeing others be really stable. there was some action in the options market, is it likely to last? guest: remarkably stable, considering we are in the middle of heightened trade tensions. markets either moving in one direction or the other, but options are holding up quite well. a lot of it comes to factors out of china's control, up to the
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dollar. we know that the weak dollar took the pressure off the yuan, , thatth a weak dollar still have spill we had a lot of it depends on what happens with the fed and where the dollar starts troubling. i think right here, all indications are that the yuan is stable and authorities want to keep it like that for the reasons that we mentioned earlier. yvonne: thank you, our asian correspondent ,enda curran there. let's cross over to chief north asia correspondent, stephen engle who is live in hainan. he is joined by the executive vp and head of international affairs at the u.s. chamber of commerce. steve? to the: yes, let's get conversation with the executive vice president and head of international affairs for the u.s. chamber of commerce. just before president xi jinping
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takes the stage, there was a lot of speculation about what he might say. you will be and a small group meeting with him later today. what do you expect? will he take a tone similar to , that he is a champion of globalization, or will he be more strident and respond back against of added tariffs from the trump administration? guest: it is great to be back here in china's version of hawaii. the waters are hardly car market now, so there a great amount of anticipation -- the waters are hardly, right now. stay positive and look china's future and its engagement. the challenges that it will not be enough. he will have to find a way to signal that china is going to move more with speed, with more clarity and concrete steps in terms of the liberalization reforms that were articulated last year.
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at that is still not enough. we need more than that to escalate tensions with the chinese relationship. they have to signal that they recognize that some of the industrial policy they have in place me to be reformed. they will have to do something in the areas of market access and structural reforms to address some of these sensitivities and the relationship around intellectual property and others. so we are looking for those signals and where looking for action with this speech. >> how damaging will the trade action on the proposed in retaliation last week, a long list of different products targeting the heartland of america, and potentially the -- p's base. we are no stephen, we are not happy with what happened, i we are not proponents of president trump's agenda on tariffs. it hurts american business, american consumers an american workers, and it is not good for the bilateral relationship and
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for the global economy. china's response was not a big surprise, but let us remember that neither china nor the united states has actually put tariffs in place. what can we do from here, to resolve some of these issues? i don't see a grand bargain, but we need confidence-building measures to be adopted quickly. i think the burden is on china to begin with, to respond to some of the issues, that have been issues not just from the trump administration, but from prior administrations. whether that is accelerating the scope of globalization, whether it is dealing with subsidies in the state sector, whether it is dealing with intellectual property, there is a whole range of issues that china needs to react to in order to de-escalate the tensions. >> all indications is the chinese is not ready to talk on this right now. there are no formal talks that
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they have announced. i believe that there are talks happening, but we had a former chinese diplomat telling bloomberg that regime is not ready for talks, and that china will fight. do you get the sense that this is a more confident chinese leadership, that they will take this fight to trump? myron brillant: china is no question, a confident country, and they are clearly hawks here as well as in the u.s., there are hawks who are encouraging the escalation. it is not good for either china or the u.s. nor for the global economy, so we need to have constructive talks which are results oriented. the administration has been clear on that front. the other day -- at the end of the day, we believe that trade tensions are real and legitimate and issues that need to be addressed in this relationship. china has to take on some of those burdens to see tensions diffuse and to see a more prosperous and stable
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relationship going forward. know the we don't potential list of these proposedl $100 billion for tariffs. what would be the form of advocacy talks to get some of them removed? myron brillant: we have been clear of front that we don't support tariffs being imposed. we don't see that as a productive thing for the u.s. economy, we think it will harm american consumers, workers and american businesses. ultimately also, it will harm china's economy. what we want to see is china take steps and other areas. i think that the concerns -- line riser andor the trump administration has articulated about china's industrial policies and intellectual property issues, those are legitimate issues of concern. they are not new.
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the question is how china will react. we will get some early signals here today after president xi jinping's speech, but more importantly, something has to be initiated between the two countries. reporter: part of the first ising from president trump restricting chinese investment in the u.s.. i would like to hear an exclusive interview we had regarding building factories in the u.s., supplying auto parts to the u.s. industry. this is what he had to say about .he potential trade war >> chinese private companies are really not that concerned with china-u.s. trade disputes, because another americans don't buy from the chinese for any other reason that they do have strong needs. the u.s. still does not have a full supply chain on its own soil, so they have to come to us parts.hase our products are cheaper
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compared to suppliers in japan and korea. imo businessman, and the terrorists the tariff issue is very simple to me. i will not trade, if i do not profit. reporter: he is essentially saying that the u.s. needs chinese companies like his to fund the supply chain in the automobile industry. what with the restriction of chinese investment in the u.s. due to the economy and jobs creation? myron brillant: what we have seen over the past five to seven years, is increased investment from china, it creates jobs and strengthens the relationship. he went to see frankly, a fair and equitable exchange here. we want to make sure that eu investment is treated well in china. so i think encouraging investment from china is important. curtailing it would be a mistake, after all, the trump administration has been upfront saying, we welcome foreign investment in the country. so you have to be careful that we don't restricted. on the other hand, it is right
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for us to want reciprocal access here, and there have been policies adopted coming out of the financial crisis particularly, which made it difficult in some strategic sectors for u.s. investment here. we need a level player field, fair and equitable access, but we don't need to cut off chinese investment. in be a huge mistake and it would hurt the economy. reporter: is this all bluster, or will it be resolved in the next six months? myron brillant: that is a tough question to answer. we cannot afford a trade were between the two countries, that is the bottom line. the two most important economies, they are too big to fail, so ultimately, something needs to be done. whether it is a deal to resolve the disputes, we probably have a bumpy road ahead, but i'm confident that they will work something out. reporter: thank you so much. that does it for now, of course go by the next hour is the big hour. it is urgent jumping addressing the farm in china. back to you, betty. write, chief
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correspondent stephen engle there in china. the keynoteg you address by president xi jinping live later today in "bloomberg markets". we are awaiting that all important speech. still ahead, our exclusive interview with the dallas fed president, robert kaplan, coming -- 8:30 in hong kong and new york. tensions deepening with the u.s.. we talk with the cftc chairman next, this is bloomberg. ♪
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♪ betty this is daybreak asia, i am betty liu and new york. yvonne: and i am yvonne man in hong kong. despite escalating tensions thisen china and the u.s.,
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gust believes that energy ties within the u.s. will continue to strengthen with china. he spoke to bloomberg at the forum in high -- in hainan. aneconomic globalization is irreversible historic trend. we have been working with energy companies in the global market. as you know, we signed an agreement during president trump's visit to china last year. after months of negotiations, we finished a deal on importing tons of energy per year. this is real progress. even though china and the u.s. have certain disagreements, i am still very confident about china-u.s. energy corporation as china's policy continues. has greatent, cnpc cooperation with many u.s. companies such as exxon mobil and chevron. beope those ties will not
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negatively affected by the trade disputes between the two countries. >> you have been in talks to take a stake in saudi aramco's ipo. what is the latest on that? guest: we always value our cooperation with saudi aramco. the invested refinery in southwest china by saudi aramco came into operation last year and our negotiation on investment trends has continued through the whole process. recently, aramco has been preparing for its ipo and we have been paying close attention and evaluating how to deepen our cooperation. no matter if we become a cornerstone investor, we wish nothing but success to saudi aramco's ipo. reporter: the you export russia to export through this pipeline and will the prices be competitive enough? guest: i can tell you that both china and russia are accelerating construction of the east pipeline project.
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end of planned but the 2019. china is a huge market with fast growing needs for natural gas sees great importance in the diversity vacation of guest imports. we have u.s. energy suppliers involved as well. as an importer, cnbc certainly once those imports to be great in quality and reasonable in price. it should offer us very competitive prices. reporter: china has just launched oil futures trading in shanghai. what does it mean for companies like petrochina? --cnpc sees this as part of china's continued and enlarged opening up policies. we hope to get more warm reaction from our partners and see growing participation in the future trading platform. cnpc: again, that was the
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chairman speaking to our bloomberg correspondent in hainan. plenty more to come. this is bloomberg. ♪
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♪ yvonne: a quick check on the headlines. this company counted alibaba and foxconn among one of its backers as it launches its first car to rival tesla. it is hoping to raise $2 billion this year. china accounted for more than half of global electric car sales last year with deliveries growing at a monthly clip of 20%. yvonne: elon musk spoke with the ntsb investigators last weekend related to a fatal crash in california. the march 23 accident as well as a fatal crash in 2016.
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, also involving a tesla. both drivers had engaged in the autopilot system and of ntsb continues to investigate both accidents. coming up, our exclusive interview with dallas president of the fed, robert kaplan. this is bloomberg. ♪ this wi-fi is fast.
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i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. 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.
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♪ a 30 a.m. in singapore, features are joining and we are seeing stocks edging lower -- 8:30 a.m.. i am yvonne man in hong kong. betty: and i am betty liu here in new york, you are watching "daybreak asia." let's get to the first word news. paul: buddy, china is said to be evaluating the attention impact of devaluing the yuan. we are told that senior officials are studying option that looks at future trading negotiations and also, what could happen if the values would
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offset any impact on tariffs. reports from china say that alibaba chairman jack ma is planning to abandon his commitment to help create jobs in the u.s. if the trade spat worsens. he made the threat on the sidelines of the forum in hainan. the alibaba bosma the president in january last year and he had said that he planned to boost retailers in the states and help create up to one million jobs. beu.s. deficit will topping $1 trillion two years earlier than expected. it is said that the new trump tax cuts will grow the deficit while doing little to boost long-term economic growth. u.s. interest rates hit 2.4% by the fourth quarter, leaking at 4% in 2021. the bank of japan says it will consider normalizing policy over the next five years, underlying
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how far the targets have slipped since kuroda took office five years ago. speaking in 2013, the governor the bank would be hoping to reach inflation targets in two years, now he says that their goal will hope to reach their goal next year. the boj has not reached the point to consider an exit. talk about the specifics of any exit so far in advance, as it could confuse the market. financial on conditions and consumer prices. paul: are reading of the world's airports saw the new york airport, jfk dropping out of the top 10 busiest airports. china and india are expected to feature among the top three aviation markets. guangzhou climbed by 10%. atlanta is still the world's
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busiest, but traffic declined to their last year. global news, 24 hours a day, powered by more than 2700 journalists in over 120 countries. this is bloomberg. ♪ betty: thank you, paul. we will see how the asian markets are shaping up so far on this tuesday morning, sophie kamaruddin has more. sophie: buddy, asia stocks are falling as we await asia edge -- as we await president xi jinping's response to trumps tariffs. we are hearing from japanese officials, the foreign minister saying that he plans to visit south korea from tonight. the trade minister said that the country made wto filings together information, and that it will not affect relations with china. trade is are much top of the mind this morning. if you look at the markets, the nikkei 225 is down by .3%.
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check in on one sector feeling the pain, retailers. some of them are leading the decline in stocks, one of them dropping after forecasting annual operating income that missed the lowest estimate. takashimaya is the company. also, phyllis amount --felissimo also dropping 3.38%. one of the worries is a tightening labor market which is raising pressure to boost spending on tech. pharma, saidn ono to be plunging as much as 3%. a last look at one of the players in sydney on the move, this company gaining 4% this morning and clamping to it april 2014 -- april, 2011 high. prices went higher on monday following the u.s.
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nmposing sanctions on russia and one other companies falling 50% on monday. that is what we are seeing today. sophie, thank you. sophie kamaruddin checking on the markets for us. try tensions continue to affect the market. jay powell says it is not yet thinking on his markets. he says that they might raise rates if inflation keeps heading to 2%. we will discuss that with dallas fed president, robert kaplan in beijing. kathleen hays is also with us. we welcome our listeners on bloomberg radio also. the whole gang is here, kathleen, and robert, thank you for joining us. i figured we would start off with china. what would you like to hear from
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president xi jinping today? do you think he will deliver a blow on president trump on trade ? robert kaplan: i would say that i would guess that both sides might the well served to lower the heat on the rhetoric, because there have to be fundamental and private discussions, not only on reciprocal trade and tariffs, but also on the issues like intellectual property, technology transfer, the ability of foreign companies to do business in china. pretty of that requires blunt, direct private conversations, and i would guess that leaders around the world will be well served to set the stage to lower the heat on the rhetoric, so they can have this private discussions. forne: it is interesting the federal reserve, because
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coming into 2018, the consensus was about three or four rate increases. now, we are getting tariffs on aluminum steel. kathleen: we are getting tariffs on china, china fears back -- fires back. it was easy for fed officials at the beginning to say oh, aluminum and steel are a small part of the economy. but, it has escalated. at what point is that an issue for fed policy? it is important to emphasize that the only tariffs that have actually been implemented are on steel and aluminum. the others are for lack of a better word, threatened tariffs. i would behold full that would we look back on this a year or two from now, that there will be little in the way of tariffs that were actually implemented. that it is do think too early to judge how this will affect the economy, but i think
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the rhetoric, if it goes on long enough at this level, it will have a chilling effect. if you are a business person thinking about making a capital investment, it might be wise to wait a little bit. so the rhetoric has some effect, but i'm hopeful that when we look act a year or two from now, you will see actually, very little done on the tariffs. that is my best case scenario. i think we are in the early innings but i can tell you, having lived in asia and been a businessperson myself, i don't think the issues will get resolved quickly, i think it will take at the minimum, months reciprocal.he trade issues the intellectual property and technological transfer issue, will take years to resolve. this will be with us for some. of time. yvonne: short of a trade war, we've had a lot of stock market volatility. perley,: roberto
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formerly the head of vision monetary of fears, at the federal reserve board of governors, he thinks that it will not slow down the fed rate hiking. if you have business uncertainty, does it give the fomc, does it give broad kaplan -- robert kaplan any pause on rate hiking in 2018? robert kaplan: here is something that is important for me to do in my job and very important for a central banker to do. there are short-term events happening all the time which tend to make the news. these trade talks for example, this is an example of a short-term event. then there is the underlying fundamentals. notink the job, my job, is to overreact or jump to quickly to anticipate what might happen, but let it unfold. i will still tell you, speaking as a central bank are now, but
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iso as a businessperson, think we are in the early innings of the trade discussions and it is. too early to judge how it will unfold i do think that if you see the rhetoric continue at this elevated level, it could well do some damage. i am watching it very berry, carefully. but i think it is very soon to make a judgment on it. kathleen: what about your call for three interest rate hikes or for? -- or four. we have inflation forecast to hit 2% maybe by the end of the year, but it hasn't gone very far. have you given any thought to that? robert kaplan: so, you've heard me say before, my best case is for three rate increases this year, two more from where we are. one other things i focus on in the short-term, the cyclical developments, i still believe that 2018 will be a relatively , 2.5%year for gdp growth
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or a little more. iu've also heard me say, but think the big structural drivers aging economy, demographics, slowing workforce growth, sluggish productivity mainly due to skills of our workforce and weaker education levels, and the third issue, high levels of government debt to gdp, which i think in the out years will provide a headwind for economic growth, i think the short-term growth may look solid and i think we will make progress this year. i think you will see some firming in inflation, but i also think that in 2019-2020, you will see growth moderating. for me, the path of rates increases is likely a bit flatter. i also think we should be raising rates, but i think we should really be doing it gradually and patiently.
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because the underlying drivers in the economy are still very challenging. even though the short-term maybe looks solid. yvonne: it really is a conundrum. explain further. you aren one hand, saying that we are still in the early innings and we don't know yet how that trade dispute will shake out. but on the other hand, your best case is still for three rate hikes this year. the fed risk of though, hiking rates into what right now is a very uncertain situation come but that is only at the beginning stages, what do you think? robert kaplan: one of the things gdp growth isow trade. but it is not the only one that could slow gdp growth. again, aging, workforce, slowing workforce growth sluggish productivity, those can have an effect also. we ought to be raising rates. why? because we are at or near
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full employment, we don't want to risk overheating or over tightening the labor market. i do think we are making progress and will move toward witching hour 2% inflation objective, but i think it is all in the context that in the out years, i think growth will moderate. so the challenge for us, the trade-off that i am working on is that we will remove accommodations, but we need to stillgradually because we have a lot of fundamental headwinds for economic growth. we can address those, but trade, by the way, is just one of them, maybe not even the most significant. we need to find other ways to grow the workforce and get more people into the workforce, improve their skills. i think those two issues are as or more important than the short-term trade issues. again, i'm relatively hopeful because it is clearly in the interest of the u.s. as well as china, that we have trade.
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it is critical to each of our respective growth stories, and am hopeful that those issues will get resolved. but those are not the only issues i am word about. yvonne: so to paraphrase donald trump, you think both china and the u.s. will do the right thing. i would like to ask you about technology disruption. a very big area of study, research and thought at the dallas fed. what you argue basically, is that it is keeping prices down, keeping wages down. ethylene: you said that inflation is going to deepen. so how will the fed get inflation up to this 2% sustained level when you have a big headwind, a positive headwind in some ways? a it is not good for inflation or wages in some ways? robert kaplan: we have two contravening forces. when is the short-term cyclical forces, a very tight labor market, at or near full
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employment, everywhere i look, in my district, labor shortages, certainly for skilled labor but also for labor across the board. pressure.create which historically, the wage pressure translates into prices. technology-and able to disruption, that you are referring to, it is limiting pricing power in businesses. the extent that they see which pressure did come out of margins likely, and be translated into prices. that is that tension. the way this shakes out, my guess is that we will see some firming in inflation pressures this year. see inflation running away from us. i think the forces of automation and technology-enabled disruption will be muting for inflation but they also put a great onus on. policymakers to improve education levels. math, science and reading, we innked 25th
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industrialized countries. we need to improve skills training in our junior colleges but we need to wrap this up dramatically. we are not keeping up with the pace of technology-enabled disruption. the reason i talk about this everywhere i go is that we can do something about this. they won't be quick, but we can improve our situation and improve productivity. i just think that we are slow and lagging, and it concerns me. kathleen: are you concerned about the yield curve? last 24n saying in the hours that it is only a matter of time until the curve inverts. what is the message? what is it telling the fed reserve? there will be a bunch of one's thrown into the market and reducing the balance sheet. a red light, maybe? robert kaplan: well, let me tell you what it tells me, having spent my career in the markets.
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the flattening yield curve and the fact that that 10 year has been relatively muted, in terms of its upward rise, tells me that the outlook for growth, for gdp growth is sluggish. it is very consistent with all the comments i just made about the 2019-2020 years. i think will we be watching the year -- i for one, will be watching it carefully, i don't want to knowingly tighten into a flat or inverted yield curve. i think from an incentive part of view, that would not be positive for the u.s. economy -- from an incentive point of view. it is something i will be watching very carefully. i think the fed has some operating room, but i think it is something that i will keep an eye on very closely as we go through the year. i am not going to blindly say that we should be raising rates if the curve keeps
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flattening, is just something we will be watching. yvonne: robert come know that you -- robert, i know that also watch credit closely. you were saying that we are seeing a pretty healthy drop in stocks, given how frothy the levels of been. it we see credit spreads for -- widening right now. we are seeing bank lending picking up also. robert: we have to be mindful of the fact that one of the house leveraged, were corporate debt to gdp is at record highs. the good news is financials. the financial sector is the leveraged. corporate debt is at relatively high and we are late in the cycle. more concerning to me is the government debt to gdp, it is at record high levels. we just leveraged up at the government level, and we are
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late in the cycle, so it would not surprise me to see credit spreads widened somewhat, they have been very, very tight. that probably goes along with stock market volatility that we have been seeing lately. so i think some widening would not be surprising, but it means that tightening the credit condition -- that is what i was mention one of these longer-term drivers that i worry about, the level of debt in our economy and the fact that the u.s. economy with this amount of debt is more interest rate-sensitive than it has been. it is something that i am watching very carefully. have -- keepkets the decades have been -- keep the investor cap on. i noticed that there was a shift from libor to this new measure from the new york fed. but when you see a spread move out like that, you wonder, is it
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all technical? or is it perhaps that there are some worries about risk in international banking markets? how do you interpret that? and again, are you watching it closely? myron brillant: year, i am watching it very closely. ? robert kaplan: i am watching the so-called libor-ois spread, and i'm also confident that the the two-yearsury, securities have backed up in anticipation of what the fed has said. to10s has also find somewhat. i don't anticipated the same way that i saw it happening in 2008, i do think that there are some technical issues, but also what is going on with the curve and some of these spreads of that we normally watch, it tells me that the expectation for future growth is a little bit sluggish. there is always a tendency to say, we are having a good year
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in 2018, we just had a big amount of fiscal two -- fiscal stimulus late in the cycle, so of course, the next year looks great. the short-term will be solid, but i think the longer-term, driven by these structural trends are going to be more sluggish. i think the reason it is worth flagging it, we can do something about some of these. we can do things to improve labor force growth. we can give incentives to people to enter the workforce, do something on immigration reform, may be more skill-based immigration. but only if a talk about the issues. i think we have to do thanks to moderate the debt growth in the united states. i think it is unfortunate that we have ramped up that to gdp late in the cycle. if you look at the congressional budget office report, it shows that the 2020, we are looking at
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trillion dollar plus annual deficits. i think you are seeing all that in all of these fixed income measures you just referred to. yvonne: thank you so much, robert kaplan, dallas fed president joining us from beijing. betty: and of course, kathleen hays, our global economics and policy editor. don't forget our tv function, where you can watch live, catch up on past interviews including the one we robert kaplan as well as dive into any of the charts or functions that we always talk about. bloombergr subscribers only. check it out, this is bloomberg. ! >♪
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♪ betty this is daybreak asia, i am betty lou and the new york. yvonne: and i am yvonne man in hong kong. rishaad salamat is watching the president xi jinping speech coming up. rishaad: yes, we are looking for anything he will be saying about the tariffs imposed from the u.s.. the retaliatory tariffs as well. typehappens next, and what of opening up are we talking about here? it should be in about 15 or 20 minutes, we are waiting for president xi jinping's speech. there looking also to
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constituents of the speech, what the hidden message will be perhaps, and also having a look at what is going on between the sentences as it were, and what the headlines are. we'll have a guest and look at his view on what is have going on market wise, the implications of the speech are. there you have it. betty? betty: all right, looking forward to it. stuff ahead.ot of before he hundred over to rishaad salamat, a quick look at how markets are trading right it over.fore we hand here is a quick look at how markets are trading right now. the korean kospi lower, nikkei 225 lowered, the asx 200 also just a touch down. asian features,
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singapore, taipei, kuala lumpur markets are all set to open. -- asian features. it is a mixed market, sensitive trade tensions. -- asian futures. beene: yes, things have the low, compared to the 30 day averages. take a look at what china is looking like year, we see hang , 78 points. up that could be a good indication. dow futures, we see the trend continuing today, pretty much flat or lower just a bit. lots to look ahead, when it comes to what president xi jinping will say, this is the first time that he will be able trump onat president this tit-for-tat retaliation, so it is a fine line, what he has to do when it comes to reforms and opening up the economy.
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seems byat's right, it all accounts, don't expect president xi jinping to back down at all, even after he was taunted by president trump over the weekend, that he should "do the right thing." i don't think anyone expects him to bow to that. you mentioned that he will be talking about key market reforms, that maybe what was market perhaps in asia, yvonne. yvonne: yes, certainly one to watch with the yuan. we have reported that there could be eight devaluation as a way to bargain the trade tensions. us, marketfor coverage continues with rishaad salamat and haidi, next. this is bloomberg. ♪
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rishaad: declines for asian markets. traded tensions and potential retaliation. investors are looking for the president and whether he will -- president trump -- president trump sees a trade agreement and is optimistic. i am rishaad salamat. haidi: i am haidi lun. kuroda expects to make some kind of decision


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