tv Bloomberg Daybreak Asia Bloomberg May 23, 2018 7:00pm-9:00pm EDT
yvonne: it is 7:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. welcome to "daybreak asia." the latest fed minutes show a rate hike is soon. it won't be such a bad thing. policymakers are in no hurry to pace of hikes, the dollar rising again. betty: i am betty liu in new york, where it is just after 7:00 p.m. wednesday evening. trumptensions are back as waits tariffs on cars. washington eases demand on north korea, saying it wants to see
credible steps toward the nuclearization. -- toward denu clearization. we sort of took a little break from u.s.-north korea and u.s.-trade talks. news still made headlines, but it was the fed minutes that caught the market policy attention. more of a dovish tilt to the minutes which shows a june rate hike is priced in, but after that it is up in the air. yvonne: it is interesting. for all this talk of easing being over, you can see today central banks coming to the rescue of the market. not just with turkey, we saw that 300 basis point hike, but also when it came to the fed, watching them overshoot.
markets took a dovish signal today. betty: absolutely. someone who will weigh in on the markets, how treasuries are affecting the emerging markets and how rising rates are affecting emerging markets, our exclusive interview with the msci ceo. let's take a quick look at the closed today. theame back from losses, dow ending higher, up 52 point. the s&p and nasdaq firmly in the green as we head over to asia. yvonne: we will see is that momentum can continue. said to be the u.s. considering tariffs on car imports to the u.s. could weigh on sentiment. take a look at how we are weighing when it comes to equities, the nzx 50 of 0.5%. nikkei futures heading the other direction. kospi futures slightly more positive today.
learning more about how the u.s. may be easing demand when it comes to the singapore summit, just how to get kim jong-un to the negotiating table. currencies, risk off moves when it comes to the yen. we are breaking below 110. the aussie as well as the euro. pmieuro losing ground, soft in germany and france and italy. the big story has been on the lira. some relief after the emergency hike from the central bank, rebounding about 2%. just a dent from the 18% plunge this week. taking a look at bonds marks -- markets, the curve steepening. 's, certainly one to watch. really honing in on these fomc minutes. let's get you caught up with first word news with alisa parenti. >> canada has blocked a proposed
a chinesef construction company. the prime minister announced its decision after launching a security review. shares have slowly declined to the lowest levels since the $930 million deal was announced in october on concerns it would be blocked. a leading member of the u.k. government has admitted the brexit divorce bill will have to be paid, even if there is no trade bill with the european union. theresa may insisted the $50 billion settlement and deal are part of the same package. although brussels has always said they are separate. eurosceptic conservatives say may should not pay anything until a deal is reached. the president of italy has asked giuseppe conde to form a conte to form a government. conte is backed by the five-star
movement and anti-immigrant league. has been in political gridlock since the election on 4.ch the director of malaysia's struggling 1mdb fund say they cannot pay debt of up 4. to $7 billion due in the next five years. government debt has been inflated by 1mdb and now exceeds $250 billion. that is far higher than had been disclosed by the former administration of najib razak. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti and this is bloomberg. betty: thank you so much. let's take a closer look at that rebound in stocks after the release of the fed minutes. the essential message to the market was, there is no reason to rush to hike rates.
the dip below 3%, the dollar giving back earlier gains and the major benchmarks crossed back into the green. su keenan a wrapup of what we saw. dovishas somewhat of a message. it like they know what to do in june. markets seem to say, we will take it as a positive. offsetting concerns of trump backing away from the china deal and the north korean summit at risk. the dollar was strong, but gave back early gains. we mentioned treasuries some of the s&p 500 finishing in green. 2000 has been benefiting from the dollar otherth, as opposed to international companies that are her by that. check out the losses by general electric. the ceo saying turnaround will take longer than they expect.
there is no quick fix. he did not alleviate concern for ge could cut dividends. targets missing earnings, disappointing investors. that stock under pressure. check out tiffany, blowout worldwide global sales. also announced it would buyback shares. its forecast was much better than anybody expected. that was a positive story. way,s up in a big announced a $1 billion stake in that country. let's go into the bloomberg. gtv is where you can find our library of charts. what you see in blue is the jpmorgan investor sentiment. j.p. morgan chase has a surveyed its clients to find the increased long positions in the biggest bond market, which is the 10 year. yields have been close to the
highest since 2011. bonds, baby, that appears to be the focus right now. yvonne: i was interested to see the u.s. 10 year yield below 3% after those fomc minutes. we saw the stocks slide on those minutes coming out. wells fargo, deutsche bank, it amid big job cuts. banks have the steepest loss after these minutes came out. we saw stocks across the board close lower. you haventeresting is a positive for banks, but there are other risk out there. wells fargo and deutsche bank, front and center on those. wells fargo shaking up their department. 15 employees from its public finance department were removed, retired or quit. deutsche bank considering 10,000 job cuts. its new ceo announcing part of its big shakeup. deutsche bank stock has been
under pressure. analysts saying these cuts could represent 10% of the workforce, and possibly a pullback from the equity trading. this is part of a sweeping overhaul, according to those familiar with the matter. they believe it is a positive. newers from los angeles, york and chicago units. back to you. the trump administration considering slapping tariffs on automobiles imported into the u.s. it may be a move designed to pressure mexico and canada to wrap up a new nafta agreement. let's bring in greg sullivan. tell us the latest, what is on the table at the white house? greg: we are hearing the trump administration is considering imposing tariffs on automobile
imports. this move would likely come a national security authority that allows the president to impose tariffs on imports deemed a national security threat. that is similar to what we saw with steel and aluminum. if the administration does open up such a process, we would likely see a review for months, a report, eventually a determination. it is interesting this comes to the backdrop of the nafta renegotiations with canada and mexico, as well as ongoing trade negotiations with china. there is some question whether this pittsburgh -- whether this could spur negotiations with the nafta. interesting timing and very big news. betty: it is indeed big news. trump could back away from a trade deal with china. what is the latest shift in tone?
greg: that was very interesting today. president walked back a previously announced deal with china, saying, negotiating a deal would be very hard. it would be hard to verify such a deal. it would have to have a different structure. announced,dent trump he took a lot of criticism from china hawks, some of his supporters, including many republicans. marco rubio took to twitter to say the u.s. was being negotiated by china. critics say the deal ignores broader issues. he took heat from allies when he seemed to retreat from zte penalties. it is surprising there is a shift. we heard comments from steve bannon on a supposedly walked back or putting the trade war on hold.
what kind recasting of agreement could be reached with china, hardly surprising amid so much pushback, criticism from supporters and some in his circle. greg, on north korea, trump continued to cast doubt on this someone with north korea and whether this will happen, which we have been wondering about the last 48 hours. why more uncertainty here? greg: very interesting today as we look ahead to the north korean summit. mike pompeo in front of a house committee said the u.s. is seeking credible steps toward denuclearization. it was a big pullback from an earlier stance the u.s. has been -- the u.s. has been seeking verifiable, complete irreversible denuclearization.
this change in tone cast doubt on whether the administration believes any agreement can be built -- can be reached with north korea. mike pompeo did not say what their credible steps would look like, which leaves the door open that the administration could open that door later. sides casting doubt over whether it is certain, seems to be doubt over what to expect coming out of any such a summit. trump said today we will know next week if the summit is still on. sullivan,nk you, greg our reporter in washington. as we count down to china's long-awaited inclusion in msci, we interview henry fernandez. we speak to an analyst who says trade tensions will cast a shadow over markets. this is bloomberg. ♪ this is bloomberg. ♪
betty: this is "daybreak asia." betty liu ibetty liu am -- i am betty liu in new york. editor our bloomberg kathleen hays, i know you have been digging into the key sentences and phrases. what is top of the list for you? makes it lookfomc like a slamdunk, a sealed the june ratee would be a hike. let's read the exact words. most participants, that means it was probably only jim bullard -- if it not think confirms their economic outlook, fiscal stimulus coming, it would likely soon be appropriate for the committee to take another step in policy accommodation.
sentence, the one where they are not declaring victory on inflation yet, even though it has touched 2% on the key measure for one month. here is what they's head. it was already noted a temporary period of inflation modestly above 2% could be helpful in thatring consistent with objective. sounds dovish, because they will say it is helpful to have an above target when it has been so long. is dovish. they say jay powell is probably in the three rate hike camp. no mention of emerging markets. seeing turkey have to raise their key rate by 300 basis points. their president opposing these kinds of moves. that is the kind of thing if it
were to spread into emerging markets, maybe the fed would take notice. but right now, much more focus on inflation. positive on growth, but no signs the fed is in a hurry to go to three hikes -- from three hikes to four. betty: thank you. other central banks making headlines, turkey hiking its key interest rate in emergency meeting, trying to stabilize the turkish lira. they are seeking reelection, have publicly opposed any moves for investment rates. they argued it was only way to halt the slide of the currency. for more, i want to bring in a and adjunctgist professor. it is part of the same thing -- theme, central bankers are reluctant to take away the punch than -- they are
essentially worried about that. because of that, we are seeing currency volatility like we saw in turkey. has been very reluctant to take away the punch bowl. he said for years that effort to were anterest rates foreign plot to derail the turkish economy. he put a lot of pressure on the central bank. the problem is, he has pumped up the economy in turkey. it is growing at 7%. inflation has grown to 11%. there is a lot of corporate debt financed from dollars from abroad. when you see rate hikes in the united states and start to see the federal budget deficit in the united states widen, what happens then is you get dollars flowing back to the united states. that takes away from the easy credit dollars that have been
financing economic growth in places like turkey. if some of these issues are specific to turkey, some are much broader. that emerging markets could potentially see dollar liquidity dry out. betty: could you see similar moves? are we on the cusp of similar moves by other central banks? patrick: we saw something similar in argentina. theack to just after november 2016 election in the united states. emerging markets to the big guys on expectations there would be big stimulus in the united states that would cause inflation and higher interest rates and that would then dry up liquidity. when those concerns started to subside, emerging markets came back. there is this calculation of exactly how much is the united states going to pull dollars back into the u.s. economy. yvonne: is this enough relief for the rest of em's?
given this intervention with is this adonesia, band-aid on an open wound at the moment? adapt to the reality we are probably entering a rising interest rate environment. how quickly interest rates will rise is a subject for debate. today there was this feeling the fed was dovish, maybe it will not rise as rapidly. that is also why people are buying inflation in the united states as well, to see how much pressure the fed will be under to raise rates after then it anticipate. anticipates. yvonne: were the minutes that dovish? 2%, webreak even above have seen them hit their target when it comes to inflation. is the fed it not acknowledging the risk of inflation coming
back? patrick: some is the signaled signalsis sending -- the fed is sending. we have seen the market bounce onand down this year, based whatever the news was that signaled inflation up and down. i think that in general the market has yet to make up its mind about how serious inflation risk is, end of the fed will have to respond to it. yvonne: before we let you go i have to talk about your time in china and what you are seeing today. we saw a bad day when it comes to chinese markets. pricing ine were this trade truce, but the president poured cold water on this again. what is going to be driving the chinese market for you in the near term? patrick: china has its own problems. they have to deal with overinvestment, excessive debt.
those will continue to weigh heavily on investors' minds. i far as u.s. trade policy, saw a picture online today of a cargo ship carrying a shipment of american soybeans to china that had turned around twice in the ocean. turnedgoing to china, around, going back to china, turned around. the perfect was metaphor for the aimlessness of u.s. trade policy right now. you have to look every half hour to figure out what exactly is the latest signal. the market may take solace for 10 minutes that president trump says we have a deal. 10 minutes later, maybe that deal does not look intact anymore. a trade negotiation team in the
u.s. has also sent incredibly mixed messages. reportedly a shouting match between two different trade negotiators in beijing this agreeing. they may beese, wrong or you can criticize them on several issues related to ip theft or whatever, but they have to be sitting here watching these next to signals, cpe, whether there is a deal or not a deal and thinking, what do these people really want? what are they really offering? who are our counterparts we can strike a deal with if there is a deal to be made? i think the market is trying to sift through this as well, on a minute by minute basis sometimes. yvonne: just like those cargo vessels. thank you so much, patrick from silvercrest management. this is bloomberg. ♪ ♪
yvonne: a quick check of the latest business flash headlines. apple is to reimburse users for battery replacement. it will be sent to customers who paid for out of warranty swaps and 2017. it applies to work carried out at apple stores or authorized agents, and covers iphone 6 or later handsets. they will receive confirmation by the end of july. barclays investors dubious about benefits of a merger with chartered or any other bank, adding skepticism from within the lender itself. sources at barclays say the deal is not being actively pursued and is not seen as practical as the bank undergoes a strategic overhaul. coming up, our exclusive chat with henry fernandez. don't want to miss that one.
yvonne: it is 7:30 a.m. thursday, a foggy evening in hong kong. 30 minutes away from asia's first major market open. 7:30 p.m. wednesday in new york. beautiful skyline, getting darker later and later. it was a pretty good day in the market for bowles. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." >> north korea is preparing to enjoy its main nuclear testing sites, even as president trump raised doubts about the historic summit. selected media have been traveling to the base to witness
the event, although independent nuclear inspectors have not been invited. seoul and washington interpret the destruction of the site a sign of good faith. >> we have made zero concessions to chairman kim to date, and we have no intentions of doing so. > >> the latest fed minutes say it warrants another rate hike soon, and they welcome a modest overshoot of the 2% inflation target. the fed is on track to raise interest rates next month, but officials remain reluctant to declare victory on achieving their inflation goal on a sustainable basis. and toyota fell on news the trump administration is considering slapping tariffs on imported vehicles. 25% is reportedly under discussion. the plan is said to be in its
early stages and likely to face significant opposition. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti and this is bloomberg. are counting down to major market opens in the asia-pacific. for more, let's get the sophie kamaruddin. a lot going on whether it -- when it comes to em. is it enough to calm the nerves? >> analysts are underwhelmed by the central banks move for turkey, seen as too little too late, with the central bank credibility in question. the lira is jumping. let's check out the move in the currency. more needs to be done for turkey. hike's positive impact will only last if they consider -- continue their
hawkish policy. pales in comparison to how it has fared, year to date. in the asia session we will get a sense of how japanese investors are assessing the rate hike after cutting their losses on tuesday. that sent the lira below the 24 level. now just hovering around that. yvonne: it is interesting how japanese retail investors have been honing in. the fed offers solace with more dovish fed minutes that came through. probably relief for the bank of korea? sophie: monetary policy chatter will be in the limelight, giving us a break from geopolitics. they are less confident a rate hike is in the cards for the coming months. most likely it will be in august. inflation remains below target. plus, industrial output and exports are moderating, but there is a chance of a
dissenting vote as hawkish members may focus on household debt. let's focus on the futures board. a mixed session in asia and japan. the yen, and appetite for stocks. trump import tariffs could dampen sentiment. first quarter gdp at the top of the hour and earlier from new zealand, the second highest export growth on record since april. betty: thank you so much, sophie kamaruddin. china is continuing to open its financial markets. it has prompted msci to include mainland shares on its indexes. more than 230 stocks will be joining that list. we got details last week. let's discuss this in our interview with ceo henry fernandez. good to see you again. >> thanks for having me. betty: what has been the reaction so far? very positive.
clearly the market did not know exactly how many stocks they would include. is, what stocks are suspended, which stocks are not suspended, to make sure we have the final list. so far people are excited about it. we have not had any pushback, negative comments, which is unexpected sometimes. everyone has an opinion. henry: absolutely. betty: it is a significant step, but a small check -- small step for china. they have a certain portion of waiting in the index. when are we going to see an increase and what will it take to see that increase? we are veryis point much focused on making sure next week goes well, that the august 2 half goes well.
second half goes well. most of our attention is making sure this goes directly, that we do consultations with our clients after the first phase. did you see everything you expect it, where their issues? is there anything we need to be concerned about? and do the same in the second steps. what are the areas it needs to improve in order to get to the second leg, it is too early to tell. betty: it was interesting, calpers said they were not interested in buying shares. what do you make of that? henry: everyone has an opinion. some entities as say, we are ready to go, it is a great opportunity. others say, we will take a pass, we will wait.
at the end of the day the way i look at it, one of the biggest events of our generation was the incorporation of china into the economic system of the world. real economy of china got incorporated into the real economy of the world. what has not happened yet is the financial markets of china. the second largest equity market in the world, the third largest bond market. that will get incorporated. itwill not happen overnight, will create huge instability. outside of china. some people will say it is a small step. let's see if others open the way for us. betty: did you have any dialogue? it is a proxy for a lot of other funding. they look to them as a leader. whyyou discuss with them
that is in take some of what their comments were? we talked to over 150 of our clients. there was a very strong level of support. like anything, there was not 100% support. reticent,e were more why do we need to do it now, why do you continue to put pressure to open up? we do not pressure anybody, we open up when the markets open up. there are some that will wait, but the majority will put their toe in the water. that is what we wanted, we did not want a sudden change. we wanted people to get a taste of what it was. we wanted to get people to the table. the suppliers of capital and the users of capital, experiment. it is not as bad or as good as people think.
we need to take the first step. and we will communicate that to the exchanges and regulators. yvonne: thanks so much for joining us. i want to talk about what we have seen in terms of reforms in china. they have already quadrupled the quota for the hong kong stocks last month. still restrictions when it comes to the 10% daily limit, which dampens volatility. also the cap and foreign ownership. are those concerns for msci before you decide on upping that waiting? yes, there are concerns about going forward with a bigger wait in terms of those issues you mentioned. weding up to make, -- may, have been working with regulatory agencies in china and hong kong, with the exchanges. everyone has been working
effectively in creating the conditions for this to be successful. for example, the discussion about raising the limit on the daily limit was not a long discussion. it was simply a matter of timing. another big effort was the discussion about the availability of renminbi in the market and hong kong, the offshore market. the central banks of both countries, of china and hong kong, the territory of china, they were all willing to work with us to say, how much do you need, what is expected to come, what is the amount of assets and currency we need to have? and they did that. that showed us there was willingness to make this happen, happen successfully, and work with us for the next leg of the inclusion, which is not too early to dell. -- tell.
we will start working on that in and start thinking, where do we go next from here? yvonne: the fact they quadrupled the daily quotas for the hong kong stocks, does that mean it is natural we will see a life we will seeease -- 5% increase to 20%? henry: in our internal discussions in the company, we do not want to go small steps at a time and drive the process crazy. therefore, our plan is not to go 5%, 7%, 15%. it has to be sizable steps every step of the way. therefore, the conditions need to be there to go to that sizable steps. it cannot be small, incremental
processes. we will be having discussions with various regulators in both areas to see what are those steps that will be taken. so far all of our discussions have been -- there is no question in our mind they are really intent on opening up the country. it is not an "if." it is simply a when. a way to do it in a stable, measured way, so it does not create upheaval in the markets. i personally believe and our company believes the process than we thought about a year ago, for a number of reasons. country, after the economic process it went through, is there in terms of consolidation.
investors are willing to do it. the connect program is working well. the place of china in the global economy, in the global system, is more prevalent. we think it will happen faster. betty: hang on, we have to take a quick break. i want to talk about other emerging markets like india and saudi arabia. we will be back. china may be opening its doors to foreign investors. other emerging markets are shutting them. we will be back with henry. this is bloomberg. ♪ ♪
betty: -- yvonne: this is "daybreak asia." betty: back with us for our exclusive interview, henry fernandez, msci chairman and ceo. i want to move from china to emerging markets. india is top of mind for many viewers. msci warned india for waiting on indexes, given the recent move, and i competitive. saying they will cut off overseas licensing deals to other exchanges. how was your review so far in india? henry: we are monitoring the situation. in the world we live today, where there is so much digital
capital all over the world, most countries are opening up and letting the free flow capital aom china to saudi arabia, lot of things are happening in the country, to the countries that could have been tempted to put restrictions, like russia. in brazil and mexico and other places. nobody is talking about putting restrictions. they are saying we need to bring trading on shore. we have a problem for them trying to develop trading on shore. but not kill trading offshore. i understand what they are trying to do, but there are a lot of different ways to do it. -- betty: it is perhaps a reasonable objective, but the wrong strategy.
what kind of moves are you considering against india? what are you leaning towards right now? henry: the step that is important to us is monitor and consultation with our clients. try to understand how our clients view the moves. particularly, a lot of our clients use derivative instruments to overlay , go into the market in futures before you go into the cash market, the equity market. a lot of these moves are pretty onerous. we have no parts in those moves directly, meaning there are no financial instruments severely affected. to us it is a matter of the principle.-
if a foreign investors want to access it, others want to do it through replication, and others want to do it temporarily or for a longer period of time through derivative instruments. [indiscernible] some of them do it through listed options, listed futures. betty: from india i want to move to saudi arabia. saudi arabia is putting moves in to become further into the financial markets. i know you are headed to saudi arabia this weekend. you have been there several times, have observed the market. they have tried to open up and put more measures in place. do you think investors are misunderstanding about the saudi arabia and market? henry: the pace of change has been dramatic.
investors have a huge opportunity to impact so many companies, asset classes. it is hard to focus on just one area. a lot of our job has been to educate investors. a lot of saudi authorities have changed. the capital market authority, trying to explain what they are doing. the change has been dramatic from the regulatory framework to the foreign ownership framework, to the infrastructure of the market. betty: are they credible? henry: yes, they say, we will do this by this date. there are few countries that say they will do it by the time they do it. it will be late or they do half of what they said they will do. they have a lot of credibility because of that. we want to make sure these changes are irreversible, so we do not go back to a closed
market or any controlled market. theink when you look at crown prince, he wants to open up the economy, whether it is private equities, the bond market or liquidity market. he wants to incorporate the economy and financial market to the global economy and global financial markets. betty: he made that statement when he was visiting the u.s. take the conversation brought her to emerging markets in general. there is a lot of debate about rising inflation, rising yields in the u.s., and the impact on emerging markets. awant to read a quote, bearish view on em's. he tweeted out, it is possible 1997-1998n a classic self reinforcing prices.
debt tousing corporate blow up, causing stress in the economy, causing further falls in the currency. that comes in the context of what we saw the turkish central bank do earlier today. henry: there is no question with interest rates going up in the u.s. and the dollar getting stronger, correlated to the u.s. rates going up that it will put pressure on emerging markets in the short-term. there is no question about that. in disasterver series. when you look at the last crisis, a lot of these countries managed. have aot of them floating exchange rates that have served as buffers to adapt. they have a fairly free equity so yes, there will be
adjustments that need to happen because that is the nature of markets. they have to react to the new information whether it is good or bad. different. and look atback russia. they have the same people that could have been predicting a disaster and russia when oil prices came crashing down. it is not a great place in terms of investing and all of that, but markets need to operate. there was not complete chaos are capital controls. i think countries nowadays need to be very sober about imposing any kind of controls or the old recipes they had. they need to let them operate and adjust the financial markets. argentina is an example.
the new government has pledged they will not create problems, continue to use the free markets to adjust to the new reality. betty: i will leave it there. thank you, for stopping by the studio. henry fernandez, in this exclusive conversation. stay tuned for an economic forum. russia's president speaks alongside his french counterpart, china's vice president, and the imf managing director. that is moderated by bloomberg's editor in chief. you have to watch that live on bloomberg television. this is bloomberg. ♪
a couple weeks. vicetate media citing the foreign minister, saying north korea will not beg the u.s. for dialogue. still harsh rules -- rhetoric. we heard from mike pompeo talking about how they are easing demands that they give up their nukes immediately so the summit can take lace. we are seeing negotiations leading up to this. talking a little bit more, condemning the u.s. vice presidents remarks about lines that came through earlier this morning. pence vice president mike making harsh words against the they korean leaders saying talked about using the libyan , and for denuclearization
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
yvonne: welcome. the top stories this thursday, a mixed start. -- policy makers agree a hike is coming soon. there is no indication the pace will accelerate. and i am betty liu in new york where is just after 8:00 on wednesday. trade tensions are back. a corridor of u.s. auto sales are from abroad. and washington is easing its
demand on north korea. yvonne: here are the final numbers for the first quarter for singapore. linep 4.4% which is in with what economists were expecting and slightly more positive from what we saw prior to that. we are seeing more momentum in the first quarter, despite some early estimates that the take-up would not be so strong. it is showing to be quite resilient. growth we've seen in many
asian economies but it is softening in imports which is more pronounced. agoaw just a couple months a hawkish tilt coming from the central bake in singapore. singapore.bank in we will see if this continues. like they are not in a huge hurry. it seems you mention to support what we saw with that effective april tightening by the singapore monetary authority. the question will be whether the current quarter will see the same growth, particularly in exports of electronic products out of singapore. we will be watching the reaction. here is paul allen with the first word news. the latest policymakers
sealed the economic outlook warrants another a great soon. -- rate hike soon. the fed is on track to raise interest rates next month but officials rain -- remain reluctant to declare victory. canada has blocked a proposed takeover of a construction firm. trudeau'sster justin government said they announced the discussion after a review this year. china has been uninvited with fears of war games because of what the u.s. called its continuing military's asian of the south china sea. of the southtion china sea. it is onlyists
concerned with maritime safety and the protection of fishing rights. the directors of malaysia's 18 db investment fund says they cannot pay debts up to $7 billion due in the next five years. government debt has been inflated by 1mdb and they now saying -- seek to hundred $50 billion. that is higher than what had been previously disclosed. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. betty: we are getting confirmation from president trump's office, at him ordering the justice department to consider the probe on auto imports. that could affect 25% of the and as we havet
been talking about section 232, it is the same authority to president is using to slap aluminum and steel tariffs. he is ordering the congress department to consider these. yvonne: we see a hawkish sentiments coming through here. he called the retreating from some of these negotiating tactics as capitulation and we are seeing that casting a shadow . let's get the latest from sophie. sophie: toyota shares are as slumping, extending the losses we saw overnight given trump's move to place import tariffs on cars imported to the u.s. take a look at how this is weighing on the make a -- nikkei.
we have u.s. 10 year treasure yield sticking below 3%. the yen is looking to extend gains for a third straight day. we have north korea also threatening and reconsidering the summit. gained rising for the fourth session in seoul. to extend0 is looking losses for a third day. lira is on the radar after city banks emergency rate hike. pessimism over turkey and north gloom.s exacerbating bitcoin, inefficient when we saw
the leo rebound, that point -- bitcoin slumping bringing the digital currency into bear market territory. trump siftingnt tone on talks of china confuses the markets. he is backing away from that weekend halting a tariffs on chinese goods. we are now hearing trump ordering a probe into auto imports. tom mackenzie has the story. has backed off. what is going on? tom: it's hard to get a gauge on exactly what his thinking is but it seems to be he is facing pressure obviously from republicans, but also the china hardliners within his own team.
he has faced criticism around the agreement those reached over the weekend. the fact that he did not mentioned the industrial policy in china, the made in china strategy or technology. he has faced criticism on his apparent to -- apparent turnaround. then he puts out this tweak weet saying they will probably have to use a and that structure this will be too hard to get done. and apparently contradictory comment from the president after he hailed the agreement over the weekend and the impact it would have on american farmers. china has said they will ramp up the imports of products from the u.s.. he was meant to be hammering out the details of this deal but now president trump has said the deal might not stand.
the tariffs are still there. he can still in initiate the $50 billion with a tariffs and china said if that happens they will retaliate. this episode highlights for us the lack of strategy and coordination, and the division within the trump team when it comes to dealing with china on trade. betty: this puts chancellor merkel are -- in a tough spot. -- is squeezed be tight squeezed between the tensions between the u.s. and china. what is she hoping to achieve? tom: what we've been hearing from policymakers is that the key priority for her, she is coming over with 20 different business executives, a key priority is to ensure that any agreement or deal between the u.s. and china on trade will not be to the detriment of german
companies. the trade flow between germany and china is significant. germany is the largest trade partner in the eu for china. she wants to ensure that german companies will not be frozen out if and when china starts buying in more products from the u.s. she also wants to a dress concerns around technology and cyber security. a concern berlin shares with washington. the eu does not have a united front with the u.s. on china when it comes to some of these key issues. on the chinese side they will try to get some clarity as to the moves in germany around --ter oversight in chinese around greater oversight in chinese investments in germany. they want to try to appease these concerns that will be highlighted by the german chancellor who will be meeting
chinese leaders today. then she go into southern china tomorrow. thank you, tom. let's check back on the a major asian carmakers. sophie was checking the toyota numbers earlier. we are seeing toyota inn 1.5%, honda is also down similar fashion. the administration is considering tariffs on those vehicles up to 25%. let's get the latest from jodi schneider. this seems to be designed to speed up these nafta talks but it has bigger implications. goingthe talks have been on for a while. the u.s. has wanted to move them out at various points and there is a division between canada,
mexico, and the u.s. u.s. wants things that would benefit the u.s. but not the advantageous to other partners in the talks. so they have been going slowly and this looks like a way to try to leverage the u.s. concerns and to say they could take some other steps. the aluminum and steel tariffs were meant to do that. mexico and canada were exempt from those as a way to push again for the talks. so this seems to be one of the reasons to do this. these would affect other countries and european partners are very concerned with us -- with this. everyone is saying there will be a teal -- deal now between china and the u.s.. this complicates this. betty: we just got some headlines about the upcoming summit. the north koreans threatening
possible reconsideration and condemning mike pence's remarks and that they will not bad to the u.s. for a dialogue. this meeting seems increasingly unlikely. jodi: doubts are being expressed on both sides now. even though mike pompeo came forward and said the u.s. would look at credible steps towards denuclearization rather than the insistence on complete which had been the stance before, now it looks like they might be walking back a little. at the same time, both sides expressing a great deal of concern and out about if talks will take place. president trump's latest comments were that we will know .ext week we may have the talks, but they might not be on june 12. so it looks like there is an
new york. headlines coming out from a giant aluminum maker saying they are suffering under sanctions and the discontinuation is likely after october 23 unless the sanctions are lifted. production of metal and sales would be severely impacted. also noting they are taking all available steps to protect and that the impact might be materially adverse, also mentioning that production of metal and sales would be impacted. the company is saying these sanctions, unless they are lifted, the company will discontinue likely after october 23. yvonne: we will continue to watch those lines, considering what we see when it comes to oil price and commodities. let's look at asian stocks, they
are mixed after u.s. stocks reversed losses. a lot of news in the last few hours when it came to trade. joining us is the asset management chief asset strategist. how are you feeling about risky assets at the moment? given the fact that we have seen developments when it comes to , ite taking a hawkish turn sanctions in russia, i know you are watching commodities. do you think central banks are going to be able to put that foot and come to the rescue among these tensions? i am of the view because i think you can already see it in the message that came from the
fed. they are looking at inflation more cautiously. the underlying business cycle is still strong. that is the most important driver. i think there is some valuation support. all of these noises are feeding into it. yvonne: what does this mean for commodities? we're talking about geopolitical the midst of this volatility. is that still the case for you? commodities, you have to be careful about which commodity we are focused on. for oil, i feel there is a slight risk because of what is happening in iran. shale might not be able to offset that. it is more about oil itself. gold has not done much. yvonne: we saw it moves coming
through in turkey with the 300 basis point hike to try to stem the bleeding we are seeing in the lira. is that enough of a rebound for the rest of the emerging market space? a have seen foreigners as block right now, some exhaustion when it comes to equities globally. can the spread more widely? >> i think turkey is a disaster because it has for a few quarters been looking at policies which were inconsistent with economic stability. that has to do with politics there. the fact that oil prices are going up as negative for turkey. they should we be punishing companies that are oil exporters? i do not think so.
emerging markets are still quite high. you have to be country specific and turkey is one basket case. i think the hike will help but more is needed at this stage. betty: i wanted to ask about the dollar and how it has been coupled with treasury yields lately. do you expect that to continue? i think the coupling back is what is driving the dollar. is we will probably see a little bit of a cap on 10 year yields at this stage. we have seen it fall two basis points in the last few days. i think the yield in the u.s. is attractive and the only safe haven left. from japanese investors, it is important and the cap should
help stabilize the dollar dynamics. betty: where do you think yields will end up by the end of the year? >> on the currency? betty: the 10 year yield in the treasury market. is 325, but i think we are not going to get there in a straight line. the fed is moving more cautiously with inflation should help. there is a strong possibility we will not get the full hike in december, which is critical for the forecast to come into play. if the hike happens, we're -- we'ret 350 here it looking at 350. betty: there is a theme that the central bankers are reluctant to .ake away the easy money not just here in the u.s., we have seen it elsewhere in japan.
how might that affect your outlook? concerns ofve the global tightening, that is overplayed right now? >> i think it is a tricky situation for central banks. after theany years financial crisis we are seeing some inflation but those signs are concentrated in two countries. you have the italian situation which will make the ecb more risk-averse. i expect the rate hike to be postponed further. at the moment they are trying to feel more optimistic and that makes of it -- that makes the job tough. from an investors view, the central banks are in a tough situation but the invested -- investment risk is not as high
as they talk about. itty: we are going to leave there. we want to recap. the russian producer is saying financial firms might stop their operations with the company after october 23. yvonne: this is after they were saying they might not be able to maintain operations at a certain level and it might result in significant reduction in it comes to their cash flow. they are saying they may have to discontinue the production of , sales are less likely after october 23 unless sanctions are lifted. onnty more to come "bloomberg daybreak: asia." this is bloomberg. ♪
latest headlines. deutsche bank is considering cutting as many as 10,000 jobs in a sweeping overall of the new ceo. they are also said to be retreating from global equities market. we are told they are reducing their presence in the u.s., central europe and africa. being accusedis of deception. allegedly statements from elon musk have made tesla owners believe the car is capable of driving itself. keep the says they have to their eyes on the road and their hands on the wheel at all times. betty: apple is to reimburse users for people who played -- paid full price for battery
yvonne: we are half away -- half an hour away from singapore trading. gdp is growing at a faster pace in the first quarter than anticipated. betty: you are watching "bloomberg daybreak: asia." let's get to the first word news with paul allen. carmakers are opening lower after president trump ordered the congress department to consider an investigation into auto imports. they are considering slapping tariffs on imported tariffs on vehicles. the investigation would use the same legal provision that saw
the u.s. impose tears on imported steel and aluminum. north korea says they may reconsider the summit and says they will not beg for dialogue. they preparedas to destroy their main nuclear testing site. independent nuclear instructors are not there. washington says the pressure is still on. >> it is my view we have made zero concessions to came and we have no intention of doing so. and we have no intention of doing so. paul: jared kushner has obtained a permanent security clearance. he is cooperating with mueller's investigation and rick -- and has turned over all requested information. his security clearance had been downgraded in february. has askedent of italy
a law professor to form a government. he is backed by the antiestablishment five-star movement and the anti-immigrant league and has agreed on a so-called contract for a government of change. italy has been in political red mark -- gridlock since march 4. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to see how the asian markets are shaping up. sophie: we have some catalyst to weigh on from trump the -- trump ordering and threatening to cancel next week's summit. it is dragging on japanese
carmakers from the possibility of u.s. car tariff. toyota fell nearly 2%. is now looking changed juan has changed. korean bonds, we are seeing a 10 year yield fall for basis points. bond traders might be wary of pushing them down further and less the meeting comes a goes without significant -- cigna playing -- signaling a rate hike is possible. the ceo has resigned and we have -- we will be interested to see how the stock
fares in hong kong later. yvonne: a lot of problems with resolve as well as we are talking about how the operations andot sustain at this level financial firms might be impacted with this. recapping with sophie said, the acting ceo has been appointed as the acting ceo after alexander boko resigned. that takes effect may 23. that according to a hong kong stock exchange filing. the federal reserve slow.ues to signal a a contrast to turkey where the central bank has been forced to rescue the lira with a giant break rise. kathleen hays is here with more.
that start with the fed minute. kathleen: it is important. one of the shadows hanging over the emerging market, for turkey what will he do for their bond market? if you are concerned about that, maybe you are relieved the fed did signal a june rake clearly. most participants judged an incoming information broadly confirmed their current economic outlook and it will likely be appropriate for the committee to take another step. in moving policy accommodation. thing is theesting fed minutes did not declare victory on inflation. people took it as a sign they will be cautious in raising rates. it was also noted that a temporary inflation above 2% would be consistent with the
metric inflation and it could be helpful in anchoring expectations with a level consistent with that objective. a lot of people are saying it is a dovish fed. people say the fed could be getting closer to a neutral rate and guidance could have to be changed. get -- for the fed gradual rate hikes, they have an eye on inflation. but for turkey this is an important emerging story. with the rate hike, will it work? kathleen: it remains to be seen. sometimes the central bank draws every currency trader in the world trying to make money. but they tried to come to the rescue earlier today.
about what happened. the turkish lira has been hit hard recently because the economy is overheating. they see twin deficits growing. the president called for an early election to help stabilize the lira but it backfired in part because he has threatened to take more control of the central bank. he thinks they should not be raising rates and that it accelerates the lira's decline. so the central bank in turkey boost its rate by 300 aces points. -- basis points. let's take a look at the terminal. you can see the move from 13 on their main liquidity rate up to 16.5. the blue line is the lira. in june it was down around three so this was a dramatic selloff. it is not clear what is going to happen next.
he also pledged to uphold global .onetary policy principles this is probably also giving the lira a little bit of help. it is a big contrast the bank of korea meeting. no rate expected. exports are pulling back a bit. a much calm her seen for korea than for turkey -- calmer sc ene for korea been for turkey. australia -- media says australia needs to be punished for its air against. -- for its arrogance. none of us get worked up over media, whether in australia or china. they had preventively about the relationship and put for their
two cents. what matters is the high-level discussions that take place here and i was in china last week and constructive discussions with the mayor of shanghai. i was in shanghai. positive.sions were we focused on opportunities broadening and deepening our trading relationship. >> so you do not have any concerns for the tit-for-tat? do you think anything diplomatic needs to be done to improve this relationship? i think dialogue is critical. we want to make sure we continue to engage in constructive discussions. i do not think mega phone diplomacy is helpful.
let's look at the nature of the relationship. our trade investment is broadhip with china and deep. there are differences of opinion in certain areas, but like any which are relationship, or will be differences in opinion but we approach the differences in a respective white, mindful -- in a respective -- respect fouled away. way.spectful try to peace and prosperity in the region. i want to go to the statement from the chinese prime minister's saying australia should discard its traditional
way of thinking and take a proactive approach. we heard from him talking about alternative model of development . is that something australia could get on board? what you think he is talking about their --there? >> i could not be certain about the exact specifics. china has said repeatedly in the recent past that they believe australia's policy is to be holding to the united states. policy in independent the best interest of australia. what willwe look at be in australia's national interest and what is best for australia. we engage in a way with allies like the u.s. and major partners like china, as well as countries like japan and korea.
we are getting news from the australian court that they have cleared westpac of manipulating a key interest rate. the court ruling that they convened in unconscionable conduct in the trades. they have been cleared. westpac was the only bank fighting this in court. others settled earlier for 100 million us trillion dollars on australian dollars on this case. is -- anglo merkel prepares for a meeting in asian. -- in beijing.
justice department to import tariffs. we will get analysis from sophie in a minute. let's take a look at why the china germany trade relationship is so important. see ishe first chart you the trade flow function on your bloomberg terminal. it is a book -- orbit view of the trade relationship between china and germany. relationshipde stands at nearly $180 billion with china. u.s., china, the and hong kong. to break open the relationship. we can see the exports and imports are for the most part
fair. --k at the right-hand skied side of the screen. inorts were going to china $7.7 billion. for the most part they are even. looking ahead, chancellor merkel will try to keep this study or push a higher. some of the themes are respect for ip and reciprocity and making sure a trade continues, especially in light with what is happening with the united states and china. latestlet's wrap in the tariff headlines about donald trump and the auto imports tariffs. china said they would lower their tariff imports on auto imports. sharee sharepoint -- points are sliding.
reaction can see the for japanese automakers. toyota is down 2%. it is at its lowest in the past two months. the largest drop in the last two months. nissan and hyundai are now at lows for the day and we're just getting started. you were talking about happened a few days ago out of china. let's look at the board and look at what is happening with the imports of german automakers into china. make theee they biggest share of what is going into the country. cars, a similar number four toyota and bmw. all of these together make up about 70% of chinese auto
imports. since vw is not on this one, flip the screen. volkswagen makes the biggest share of all german automakers to the tune of 4.1 million cars imported into china. the yellow line is the total of new auto sales in the country. 24 million. volkswagen's it is shares 16. is 1/6.re seen a turn in town from the trump administration. we are now talking about tariffs on u.s. auto imports. return ase war quickly as the trees happened --
happened?truce >> i don't think a trade war is the most likely scenario. trump cares about stealing automobiles. we have seen that clearly. and automobiles. we have seen that clearly. just lowered to 15. the eu has an important 10%. 10%.s an imports of not surprising to me that the widening of the trade deficit the u.s. has the eu can be traced to germany. germany is in the hot seat. we are talking about a
potentially 25% tariffs on imports. that could shrink the deficit a bit. >> we will see. it is going to make a big difference. the difficulty is that in the german case, a lot of the automobiles that are being sold in the u.s. are produced in the u.s. german producers have a big presence. that might make the situation difficult. it is clear that the trump keen onration has -- is import quotas. as we have seen in the steel area. with autos it will be difficult. ford and gm have significant presence in europe. i think this is mr. trump threatening but probably in the end willing to settle. yvonne: does it push the -- germanycloser to
has faced internal pressure to open the economy further. they said a few days ago that they are facing more protectionist when it comes to investments from china. >> i think we need to differentiate a little between on one hand trade flow and the other hand rules that surround investment in each other. many of the complaints the u.s. has are also concerns shared by others, germany in particular. respect fors, intellectual property rights, all these things. she is meeting in china and the focus will be more on the economics and trade.
in meetings with president be moret -- xi it will about dealing with the iran deal. for othersk signatories, now they are only five plus one. their big concern is if they continue to maintain relationships with iran, they could be liable to find something since. sanctions.d i think it is important to have a united front and protect against that. betty: i want to jump in here. we had henry fernandez on earlier today and he was talking about the inclusion of a-shares, helping to accelerate the opening of china's financial market faster than what people have expected or will expect.
i am curious if you agree with that sentiment. >> yes, i think that is part of it. but i think the trump rhetoric has pushed the chinese into making concessions. some of them are a bit long in the macon -- making and have been accelerated. as the economy has become more , inificant -- sophisticated think all of these things play a role in making china more transparent. we should not get confused. the party leads everywhere and
bank of korea seems to be stalling. -- by the bank of korea seems to be stalling. this is after they raised their interest rate by 25 basis points in november. not a big reaction when it comes to the one right now. things are perhaps slowing especially when it comes to the labor market. sluggish of late. plenty more to come when it comes to bloomberg markets. how markets are trading right now, we are seeing a mixed picture with trade tensions coming to the market. this is bloomberg. ♪
♪ david: you think that women can run defense companies better than men, or all companies better than men? [applause] marillyn: it is a team sport. it isn't all about me. david: donald trump said your biggest product, the f-35, was too expensive. engaged and team had a chance to have a dialogue with them. david: what is so unique about the f-35? marillyn: it is the most advanced fighter in the world. >> would you fix your type please? >>