tv Bloomberg Daybreak Asia Bloomberg May 24, 2018 7:00pm-9:00pm EDT
yvonne: it is 7:00 here in hong kong. welcome to "bloomberg daybreak: asia." top stories, president trump cancels the north korean summit and says the u.s. military is ready for anything. a moresident used traditional form a message to convey his message, saying he still hopes to meet kim someday. betty: it is just after 7:00 p.m. in new york. gold stock has gained in a month and yen is rallying. as unlikely as it seems, amazon tries to explain how alexa
reported a couples words and kept their conversation on. we wake up over there in asia with some new headlines coming out of north korea. but now instead of rattling the cages, it seems to be more muted. and saying they are willing now to talk with the united states, almost like it seems on their terms, saying the trump summit relationship is unexpected and they wished the trump model could resolve issues and that there is no change in north korea's attitudes toward peace. yvonne: there is concern if this
would ignite pyongyang to do more missile testing after a six-month pause. it seems like they are taking cooler heads. they need to come back to the negotiating table but this is what we heard from the president earlier. trump: if and when kim chooses to engage in constructive dialogue and action, i am waiting. betty: so we will see if talks are still open from the u.s. side. we also have another headline from the bank of korea. it will be holding a meeting to discuss the u.s. north korean summit situation. this puts a -- this puts the south koreans in an awkward spot weeks after the historic meeting between north and south korea area -- korea.
let's quickly take a look at how the u.s. markets closed. we saw some sharp declines at the open but we have pulled back the losses. it seems the headlines were not as dire as first expected. dow ended down 75 points. as a be recovering down two point -- 2/10 of 1%. the nasdaq is unchanged. encouraging that we saw stocks rallying towards the end of the close. in new zealand, we are seeing optimism, up one third of 1%. japan could be lackluster here today. we saw the dollar fall back a bit after the news of talks being canceled. kiwi seeing some gains on the back of that. we are watching the lira resuming that slide.
it looks like the 300 basis point rate hike was not enough. of southe ishares korea falling to 1.3%. weakness,ittle bit of perhaps we are seeing what is to come with the korean open. the cost be is looking down as well. engle onng in stephen what to do next. you are in seoul when all of the optimism was positive. changed and mood coincidently, after kim went to the chinese leader, there was much more rhetoric and what bluffing for concessions.
that is an old tactic of the north koreans. mike pence used the libya model for d new colorization and the koreans did not like that much. i am not trying to sell donald trump's book, but look at the art of the deal. you have to be willing to look -- to walk away from the table. the united states called kim jong-un's bluff and canceled. the vice foreign minister is saying they were willing to talk at any time and that they express regret over the u.s. cancellation. so this could still happen. we have to keep in mind with trump and kim that they are predictably unpredictable. betty: so what is next? 2017 hostility? what happens next?
stephen: we do not know. trump is saying the military is that they never got off alert from north korea threats, given that the summit was going to happen. so that is still up there. donald trump is keeping the door open and saying if kim takes constructive actions before june 12, it still could happen, we have to get this right. he says if you change your mind, do not hesitate to call or write . that is the letter he actually dictated himself. he basically called this a sad moment in history. he cited the tremendous anger from the bluster coming from north korea. open hostility from north korea is his reason for canceling. he says, you talk about your make -- your nuclear capability
but ours is so awesome and powerful, i prayed to god it will never have to be used. basically, back-and-forth rhetoric coming from the two leaders. betty: stephen, stay with us for a few minutes. i want to bring in shaun king who's been five years of the congress department where he served as senior advisor for foreign commercial service. sean, how much do you want to say, i told you so to donald trump? >> i do not want to. i think he was right to accept the invitation to meet because it came through south korea, but i think he was also right to cancel today. my problem with his approach was thinking he had resolve things and failing to recognize that north korea's definition of denuclearization is different from ours. betty: so he was naive?
>> maybe. a lot of background in the issue , and thinking he could somehow do everything differently, that he was special. it is a lesson he has learned. the newhat you make of headlines coming out of north korea where they seem contrite? it was north korea who asked for this meeting. they have more to gain. they are the ones who were reaching out. i think trump called their bluff. yvonne: did the president essentially make things worse? know dealing with north korea requires a delicate diplomacy and this is blowing in the face of south korea and ruining that relationship between the u.s. and soul. l.s seou our trade talks still open? i think seoul owes us an
explanation, not the other way around. i thought the letter was thoughtful. it was strong. consideringstated the language we got from north korea overnight. he plainly let them know that the door was open if they wanted to reconsider. by trump's standards, considering his usual bombastic twitter, the letter was levelheaded. so you are saying the blame is on south korea? the reason we are in this mess is because of north korea. they are enemy number one and deserve the most lame. i think south korea sugarcoated it and spun it for trump. explaining to do to us. i do not buy the china angle. everything i know about north korea tells me they resist
foreign interference. giving kim some sanctions and relief, a gave kim confidence to play hardball with trump. this idea of china directing them, i do not buy it. i think china -- things were going china's way. it was trump who is considering pulling out troops if he had a deal with kim and that is what china wants. china wants us out of asia. so i do not buy the china angle. find the timing of this announcement interesting? a kind of sidelined the show that north korea had made in the northeast to show the tunnels where they conducted the six nuclear tests have been demolished. that is a side story right now. north korea wanted to control
the narrative. byald trump trumped them canceling the summit. >> i am glad you called it a show, because that is all it was. it was a side story before even happened. they have the nukes. -- from what i hear, it had already collapsed upon itself, leaking radiation. that was just a show and it means nothing to me. yvonne: do you think there will be a summit eventually? >> yes. north korea needs it and trump wants it. i'm out of the prediction business when it comes to these people, but i would be hard-pressed -- i will be in singapore the week before the summit. maybe it would be overshadowed
by my presence. i gave trump my number last time, but he never called. maybe he will pull it out before the midterm elections. the ones are always advocating dialogue with north korea. betty: is there a timeline? >> this has been going on for 70 years. momentumere is some right now, although it has stalled little bit. >> a few years from now we might all see this as one simultaneous event and forget this even happened. betty: shawn king, thank you so much. and thank you to stephen engle. let's get to the first word news with mark. the u.s. planays to slap tariffs on auto imports would violate wto rules. -- world trade organization
rules. washington will decide by the start of next month whether to impose duties on steel and aluminum and the eu says they still hope to find a solution. would obviously be against the wto and it is difficult to imagine, to create any sort of threat to the national security, so it is very difficult to understand. there is a long journey. his often carney says criticize policy guidance is more important than ever as brexit enters its final phase. spoke in london to explain why his message worked. his deputies told bloomberg the bank does not have a communicable -- communication
problem although forecasting has become more difficult since the brexit vote. is saidice department to have opened a criminal investigation into whether traders are manipulating the price of the coin. we are told the inquirer is looking at illegal actions that could move prices such as flooding the market with fake orders to fool other traders. sources inside law enforcement say disgraced harvey weinstein is expected to surrender to authorities later friday to face criminal charges of sexual assault. officials tell us the case involved allegations by a former to accuseo was first weinstein. the precise charges are night it clear. a grand jury has been hearing evidence for several weeks. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
snapshot. safe haven play is clearly at work. we saw oil down in the regular session where caught a bit after hours. let's go to the bloomberg charts. , risk is higher in 2018. the entire average rate is much higher than in 2017. the u.s. canceled the north korean summit, considering the iffs.errace -- tar in have brexit and venezuela the mix, adding to the concerns. chip stocks have been saved. apparently there is a big concern that as the demand for smartphones fell, so with these chip stocks. but demand is searching for towers.
expectations. best buy under pressure with disappointing earnings. has become the number .ne media stock the portfolio manager at federated investors, linda, joins us. linda, and despite the headlines and risk, you remain prop -- optimistic in the markets. linda: news flow from north korea is just news flow and it is a bargaining chip between the u.s. and china.
arehe end of the day, we really just seeing the art of the deal in the making. for us on a fundamental level, earnings remain strong, economy remains strong, the fed is accommodating in terms of inflation and consumer remains strong. that is really the number one drivers for higher equity markets. how important was it to see a more dovish statement coming up from the fed yesterday, or the minutes coming out? important thing of the fed's statement yesterday was really being patient with inflation. i expect inflation to be higher but they are just a patient. we have seen that of the last several years, where the fed is more patient as well. so for us it was not a big surprise. at federated, we believe at the end of the year we will have a
better three and a quarter percent 10 year. see productivity improvement and u.s. economy remaining strong, the markets can observe -- absorb the higher rate and move from it as well. betty: it looks like the june rate hike is in but there is a question about how many more we will see. given the more patient approach, your, i am curious what view is on another asset that has then moving on higher inflation expectations. the dollar coupled back with rate here in the treasuries. do you think we will see the dollar drift lower again? expect to rate increases this year. i know market is debating whether there will be two or three. i think some of it is reflective on the interest rates but it can whensafe haven, especially
we see geopolitical risks around the world, be it in italy, turkey, or just politics in iran and north korea. yvonne: we have seen a mixture of bad news. here's a chart for a viewers to see, but what i was looking at was the different markets in japan, the eu and the u.s.. we are seeing in japan a kind of rotation into defensive stocks, which is something we have not seen the rest of the world yet. jpmorgan is saying what is going on in tokyo is a harbinger for global stocks. do you think is a turning point for u.s. markets? linda: in the short-term, given heightened and negotiations with china, you can move more defensively. if you think about what drives the markets higher, increase in
earnings, the fed will remain patient, interest rates that will not be increasing, that really bodes well for the cyclical sectors of the market. although we believe in a more , i thinkportfolio tilting more toward value cyclical will be the treading force for us in 2018. given how cyclical some of the markets in asia are, do you think they are reacting more sensitively to a possible slowdown in the u.s. economy? is there is still a concern up there that we as reached peak global growth? linda: we do not believe it is. weakness and we
see it almost every year as we come through winter. now, q2e seeing right is starting to improve and accelerate. when the u.s. accelerates, the rest of the world will have some momentum. there are some issues in europe with brexit in italy to contend with but overall, global growth is quite strong. improve, i think you will see more of them on a global basis. linda, thank you. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪
betty: a quick check of the business headlines. a u.s. jury has awarded apple more than a billion dollars in damages from the samsung over a patent dispute. samsung argued it should only pay $28 million for infringing five patent. the decision in 2012 was whittled down a year later followed by more appeals. yvonne: china's biggest tech company says the industry must tackle user concerns about a. the commie -- about privacy. tencent denies it helped police eavesdrop on its subscribers. imagine your private conversations were sent to an
yvonne: it is 7:30 a.m. here in hong kong. happy friday. we are 30 minutes away from the major market open. today we saw a bit of a recovery at the end of the wall street session. betty: 7:30 p.m. thursday in new york. things are not as low as we saw at this -- as we saw at the open when stocks toppled on the back of headlines. yvonne: let's get to the first word news. mark: president trump says the u.s. military is ready after he canceled his proposed summit with kim jong-un.
he said it was a setback for the north and the world, but he warned america would act as her fired in the event of conflict on the divided peninsula. onto the hopeheld that the june 12 summit in singapore could happen or that he and kim could meet in the future. north korea said they will talk any time. pyongyang has shut down its main nuclear weapons test site but not independent inspectors. announced the move as a natural step. south korea and the u.s. have interpreted it as a gesture of good faith, although arms-control experts say decommission would not in the weapons. efforts to salvage the iran nuclear deal pick up in the unaware officials will meet for the first time without u.s. diplomats. russia, china, the u.k., france, and germany will discuss the economic initiatives russia
needs to keep the cap on its nuclear work in place. the energy agency reported that iran is sticking to its commitments. us chile boom is buckling under the weight of tougher credit rules, increasing supply, and the dude wage growth. sydney's average home prices fell in april. seven straight months of declines. as recently as 2017, city properties were gaining 16% a year. the downturn sees as mildly negative for the aussie dollar. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: let's get more on what
we should be watching is trading gets underway in asia. james thornhill, thank you for joining us. let's talk about this late recovery became to the u.s. session after these geopolitical developments with the summit not happening. let's look at the offshore korean markets. i was watching the one for the korean won and it was a moderate reaction. how are markets across asia likely to react to this news? james: wall street pulled back from they initial deep dive on the back of trump's letter canceling the summit. that subdued reaction is due to the fact that noise around this situation is not entirely unexpected. investigators are starting to live with that. peninsula, either
they are used to hard-core rhetoric on this sort of thing. it is common to them and they have become a nerd to it. -- inured to it. australia futures market showing probably reflecting the weakness we saw on wall street. australia also have banking sector worries that have been dragging out for some time. have beenur banks hugely underperforming. so it is not just a global plague dragging them. lower opens across asia. betty: is there a risk of more volatility? james: yes, i think there is. chart we putt this shows after the
extreme volatility at the start of the year, the market called down.- calmed in may, investors have come back that backs on -- put on. we have some issues that have not fizzled to the surface and the risk is that they do over the next few months. the first is the trade tensions between the u.s. and china. things seem to be settled for the time being but we do not know how that will play out. trump has an agenda where he wants to get a better deal for the u.s., we do not know when he is going to start ratcheting up the pressure on that. there is always a risk. the other issue is emerging markets. first we had a flareup in argentina, and the turkish lira has been smashed.
causesk there is that it contagion for the rest of the too bad itif it gets goes to the more developed markets. and the italian election produced a populist government who fought the poll on the manifesto which is anti-euro. they might water that down, at the moment there is uncertainty about what policies they will .oot -- they will follow we have certainly seen volatility in the italian market. thank you so much, james. out ourrget to check library for some of the charts you have seen on this are graham. -- on this program. ditch the ready to
benchmark rates and the risks that go along with it. kathleen hays is here with more. what does mark carney say about this? kathleen: very interesting speech is at bloomberg markets form on thursday. there is a transition away from the old libor system into the new one. at one time it was the gold standard until they realized the banks were manipulating the rates so they could profit. what is interesting is, as deadly pointed out -- dudley areted out, regulators designing the alternative.
he says it was built on a large edifice that is a structurally impaired foundation. he says there could be financial instability. this is what bill dudley said earlier today. view, we have to operate on the proposition that libor is likely to go away. i will say it should go away because it is not supported by a sufficiently robust regime. it should provide an impetus for action but should also make regulators nervous as we approach the deadline, especially if longer-term positions -- solutions are not in place. kathleen: in the u.k., there is a replacement for libor. is one as. there
well. carney spoke, he said he sees progress in the u.k. that has been made when it comes to changing banks for people to be -- behave better and improve bank culture. particularly when it comes to bad apples who do one fraudulent thing at one bank and then move on to the next. >> to adjust the rolling bad apples problem, mechanisms are now in place here in the u.k. so that when individuals move, their history will be known to the firms that are considering hiring them. firms will be required to share information on breaches of , theirual conduct assessments, and the outcome of any subsequent disciplinary hearings.
kathleen: it is interesting that the system was not already in place. you could break the law and get a job at another bank. so this same kind of thing has been talked about in new york for the last year. it seems like bankers are moving in a very important direction. hays, ourthleen editor in new york. be careful what you say in front of alexa. she might be recording you. amazon says a series of miscues activated a voice in a private conversation and it resulted in the chat being reported -- recorded and sent it to a contact without them knowing. spencer, this story is alarming. how did this happen? spencer: it is probably freaking people out and they are burning their echoes in the yard.
amazon has finally explained this. there was a news report with a limited explanation earlier but they have clarified their investigation. they say this couple was in their home, the device was plugged in, they were having a conversation in the background, not directly commanding alexa to do anything. somehow for the conversation, something sounded like alexa, so the device activated. something sounded like send message, which cued it to send a message. still picking up in the background information, alexa sounded -- heard something that sounded like a contact, so alexa sent the message. this is extremely rare but they are taking steps to prevent this from happening again.
this was an alarming event and raises privacy concerns. that story sounds like some conversation, to trigger all of those cues for alexa. report, ing from the know amazon says this is rare, but is it? spencer: i have not seen anything like this before, where a conversation is transmitted to a third arty. there have been bugs and flukes -- third party. there have been bugs and flukes, things like laughing, some people have had it but it has just come on at some weird time, not exactly knowing why. there are some instances where television were triggering it. alexaould hear the word
betty: this is "bloomberg daybreak: asia." i'm betty liu in new york. president trump scrapping the summit seems to surprise almost everyone. we spoke with democratic senator jack reed. it is startling but it is a function of the impulsive approach the president takes in this process. his quick and poorly staffed initial agreement to go and meet with kim jong-un, the up-and-down discussions about what or -- what might or might not be discussed. then i think he finally realized it is likely north koreans will give up their missiles -- will not give up their missiles automatically or overnight. with hiso boxed in
decisions when he realized he might be walking out of a deal with the north koreans that is much less commendable than the iranian deal. i think that might have slowed them down. happen inwhat has to order for the president to reconsider the meeting? back on a wellt organized and carefully orchestrated series of meetings with intermediaries who will talk about what will be discussed, what are the general terms, what are the north koreans willing to give up, what with the united states the willing to also give up, and then see if there was an opening. i think the south koreans have played a critical part in this so it would be at least a three way. that was jack reed there with bloomberg's kevin cirilli. too wereea says they surprised by the cancellation of the summit. they say they remediate -- remain willing to meet with the
u.s. at any time. let's get more from tom mackenzie in beijing. what kind of reaction are we expecting from china? tom: i think we should expect they are also, likely to stress the need for talks because they have long said that the only way to resolve this standoff between north korea and washington is for washington and pyongyang to sit down and talk. unofficially, there is a view that china will be relatively relaxed about the decision because it will give them leverage in ongoing trade negotiations with the u.s.. china is pivotal in terms of how these sanctions of north korea are enforced. they really have their hand on the throat of the north korean economy and they can relax or
tighten the grip as they will and they can use it as leverage with these trade talks with washington. we're still waiting for the official lines from china on this. they were also hoping that if the trade talks continued, the possibility that the u.s. might have pulled out some of their troops on the south korean border. to tie might be looking the north korean conversation in with the trade talks. yvonne: and geopolitics is linked to trade talks. visit merkel took a today twouesday visit to china -- day visit to china. what did they talk about? i would be surprised if the
germans were not trying to gauge the chinese response to what was happening. for was high on the agenda the chancellor. she was seeking assurances from china and china welcomed germany's efforts to maintain the nuclear agreement with iran. certainly both china and germany economic dayicant at play in a ron -- steak at stake at play-- in iran. merkel would have pushed on market access. she talked about this in her press conference and she warned the chinese they may face curtailment in the eu, further constraints around investment, if they do not reciprocate on making moves to further open up
markets in china. we have seen moves by politicians in germany and other european countries to look at further oversight of chinese dealmaking. more ins invested 45% the last decade in the eu than it has in the u.s. -- that is a concern for washington and policymakers in the eu. betty: this person he is not just in europe but in the u.s. tom, thank you. the trade for now on front is the u.s. china business council vice president for china operations. jacob, i was talking about a way to describe and highlight the limbo we are in when it comes to
trade and relations to china and the u.s.. we have a map on the terminal. sort of them riding the waves. first it was heading out from corpus christi, initially bound for shanghai. after china slaps the tariffs on imports, it has done a u-turn and headed back to southern africa. what a turnaround in this state of flux. how much further complications does this bring to the u.s. china trade relationship? tom: agricultural commodity pieces are difficult for us to plan around. these contracts are signed sometimes a year in advance so when short-term care of action
takes place, this ship might mighthe etsy -- the ship already be at sea. two sides, onhe one hand they wanted to make sure they had a positive platform for engaging with north potentially now going to be delayed. the second point is that they wanted to give china a bit more time to come up with a better list of deliverables that could be offered to the trump administration. medivation came to china and had some requests -- steve mnuchin came to china and had some requests. it is difficult for the chinese to find consensus internally if they do not have time to coordinate. so i says there is a time that will give the chinese a chance
to come up with a better list. on the flipside we are seeing the u.s. now considering slapping car tariffs on auto imports into the u.s. this seems like a bigger issue than steel and aluminum. is it justified to say this is a national security issue when it comes to cars? tom: i think from the business community's perspective, we are strong advocates against ever .sing national security we just want to make sure governments have rational reasons for why they are assessing the security of a product. in this case, we would hope that level heads could prevail for trade to continue without these
sorts of restrictions in place. is this what businesses want to see from the trump administration? what -- atnt -- at ip?point, when it comes to tom: you have hit on the right issue, from our members perspective, the terrorists are not the top priority. it is great to see american companies selling more to china, but now that we have this initial agreement in place and the chinese are clear, we can hopefully quickly hit it back to the structural issues in the relationship. whether it is lowering the restrictions on joint venture requirements, looking at made in china 2025, domestic tendering
, these are the issues are companies are more concerned about. we cannot forget cybersecurity as well. in that we are getting space the tariff area. is going to be more volatility to come. been stomachne has churning in the trade arena. what do you think might come out of the next round of talks? tom: when we talk with our contacts, we understand secretary ross will come to china for an intermediate -- inter-agency delegation. it will focus exclusively on and commerce. it will focus on structural
issues, particularly in agriculture and ways china can lower its import their ayers. that would -- import barriers. aboutill also talk opportunities for american farmers. this'll be a benefit for all. the big question is how far china will be willing to go to a -- address these concerns on the structural side. thank you so much. bloomberg users can interact with the charts we show on the program using g tv . cap cap on analysis and savior charts for future reference. coming up, we speak with gordon chang and his thoughts on
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it really puts them in a bind with what happened. keepurse, we are going to monitoring the market reaction to the headlines. >> as chongqing was saying, south korea has some explaining to do. mark joining us from singapore. if it is not the geopolitical therens, that news out this date, what are you watching in particular? news,re is a lot of bad but what is amazing is how well stocks have traded. stocks have traded lower during the day and fish unchanged. benefiting from a positive earnings season. suspiciousors were the talks would go ahead as
planned and until we have complete confirmation about what is going to happen, i'm not sure this is a sustainable market story. we saw in the u.s. where there is a knee-jerk reaction in the u.s.. i think today, bigger things are watching nervously and they will watch to see what happens in italy. >> i have been reading your blogs and you seem a little blair's -- bearish. againra sliding once after this massive rate hike. is there still the risk or is the worst over for the moment? >> i think the emergency rate curtailed. i don't think we will see lira
fit those losses. the economic problem. volatility.o-way i think it is going to be hard for it to hold. this is not mean many investors, but the economic is still there. i think overall, the lira might stay. it might lend a little support overall and the bigger concern might shift to europe. what about the dollar? how will this affect the dollar? driver is the key starting to turn over, so a repeated dollar bill last of the month, but suddenly i think it seemed like the game was changing. .ne is yields coming lower
we are starting to attract flows to u.s. treasuries. at the front end, it seems the yield has gone as far as it can go. ready toare not accelerate rate hikes. both front and and long and yields are dropping support for the dollar. on top of that, trade looks like it is starting to -- i think trump is wavering going back and forth and put the u.s. in the back foot. you so much in singapore come alive strategist on the market. you can find more on our markets live blog. you can get a market rundown and there is commentary and
analysis. you can find out what is affecting your investments right now. ,> staying on the cancellation really the roller coaster ride we have seen during this meeting between kim jong-un and moon jae-in. a very different now. what you make of the development #>> i think the chances are exactly the same that they were yesterday before trump canceled. becauseon i say that is he is willing to walk away. , maybe not chances june 12 in singapore, but perhaps down the road. >> are you surprised that kim jong-un responded? >> that is not surprising.
kim jong-un once the summit. he wants legitimacy and the concessions -- what we saw is the media voicing the opinion was to can get more concessions. that, ae and after hard-line response from the north koreans trying to get more in the run-up. this is decades-old strategy to try to get more concessions from whomever. >> it is a tactic they have used over and over again. stay with us. worldkorea takes on the from washington. hashing from -- what transpired. what do you think is the chances
are we will get a summit between the two? >> i think the chances are high in the reason is both sides what the summit to occur. sanctions. who wants he also doesn't want the united states to strike his military facilities. millennia, they have been fighting each other, so it would be good to have a big power supporting north korea that would not have territorial on the north korean peninsula. and it isat together not surprising he is consolatory . >> one player here that we have not talked to much about is south korea and its role in the back and forth. i just want to play for our , shawn king comment
on south korea. >> soul has some explaining to do. soul owes us an estimation, not the other way around. i thought it was very deliberative and thoughtful. i think it was understated considering the languishing he got from north korea and again, he let them know the door was open if they wanted to reconsider. >> how much do you think soul is to blame for this? >> this is really north korea. i do believe the south korean president did oversell the summit, but that is not really because here. also, you have some mischiefmaking by the chinese. they have been testing sanctions to much greater degree than they have in the past. the last two months have been
quite coming -- stunning. two reasons, but at the end of the day, the united states has the power to push both north korea and china into better directions and trump is a president who is willing to use that power. >> given how quick the president was to accept the invitation and walk away from a -- from it, doesn't put it weaker -- in my >> the south koreans did not like president trump scrapping the summit, but i don't think it isolates us. it was unforgivable you had them -- the north koreans not showing up. i think the south koreans, although they don't like us,
would certainly understand it. i think all of this will work out. >> what about china? push -- does this put less pressure on pyeongchang now question mark >> chinese banks and probably all for have been money-laundering for the north koreans. president trump has let them get away with that. saw this as a free pass. now if president trump changes his views, i think we could see theu.s. start to go after chinese banks for violating federal law. that would be a huge turnaround, but you have to remedy united states just disinvited china from the impact. that is a huge turnaround in on
sure people in beijing are saying if they could do that to impact, they could do that to the chinese banks. think the meeting with kim jong-un really certainty hot , trying to dissuade the north koreans to -- >> i think they really did stir the pot. we don't know what was discussed, but we do know that china's sanction busting has become much worse. in the first two weeks, the price of gas in the northern part of north korea has dropped dramatically. that only happens if the chinese are pumping oil. arehe conference call, they concerned about china flooding north korea with investment
money. there is a deep concern in washington that china will continue the sanctions rusting. -- busting. >> what you think are the chances in a worst-case scenario? -- what do you think the chances are in a worse case scenario? >> there's a lot more we can do. we can start inspecting ships going into north korea, but the the pressure is going after money-laundering. there are indications that the other three, big for banks have also been involved. that gives the u.s. enormous leverage and president trump has
not been willing to use the leverage, so i think the time -- -- ese fell they had the summit happens in you get a good agreement, we can forget the chinese sanctions busting. if we can't do those things, that leaves president trump with very little choice but to go after beijing and moscow. changnk you, gordon joining us. in the meantime, let's get you caught up with some of the rest of the news. paul allen joining us. efforts to salvage the iran nuclear deal began friday were officials will meet without u.s.
the. the european union says any plan to slap tariffs with trade organization rules. washington will decide by the start of next month whether to impose duties on steel and the eu says it hopes to find a solution. wtot would be against the and it is hard to imagine to create any sort of threat towards national security, but read what has been said
and it is a long journey. department justice has opened a criminal investigation to see if traders have manipulated the price of bitcoin and other cryptocurrencies. expanded -- say harveyment weinstein is expected to surrender to authorities on friday to face criminal charges. the precise charges are not yet care -- the precise charges are not yet clear. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries.
does this also raise the aunt of a trade war? think this morning, we thought this negotiation with going in the direction of the grand bargain idea and we are not really there yet so the market gets caught in the headlines and has to choose a decide in the normal way of going. wasink the initial response someone strong which means people were not expecting and therefore may have to position themselves in an outcome in -- >> we have been talking about the relationship is going to read couple. theve a chart that shows
correlation when it comes to yields and the dollar as well. we have also seen treasury yields stall. yen inat put the dollar a reversal? is that sustained? the yen strength -- it is interesting to see a recovering again. expectstion is i would we get somewhat lower rates and the fed willime, continue to hike rates. i think what we saw today is the aspolitical tension in your
well as the tensions around iran. there's a lot of things going on. >> i want to bring up the .inutes we saw yesterday it will be difficult to give four rate hikes this year. >> that seems to be alluded that way. i think there is a concern that the yield curve gets to flat and some sign that there is a global slowdown. andfeds stay on this course if inflation does rise, we do wouldue to hike and that
-- i think the rate hike probability is near zero. there are still decent in terms of it happening. quickly, they chances of the yield for the yield curve inverting have gone down considerably? >> i don't think it is. saw the last few days or so was very little. i think the market is set on that. another rate hike puts us on think we will ultimately end up early next year.
meet in the future. north korea has shut down its main nuclear test site. move.ng-un amounts the they had interpreted it as a gesture of good faith. the bank of england governor -- carney useys the speech to renew the history of his comments. he spoke hours after a deputy told bloomberg the bank does not have a communication problem, although forecasting has become more difficult. >> australia's long housing boom is buckling. the average home prices fell
3.4%, the seventh straight month of decline. bank sees the downturn as only mildly negative. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. from paul allen, this is bloomberg. geopolitics once again from the center, but pretty moderate reaction so far. >> have a look at the benchmarks right now. 1%.re slightly lower at not really getting any clear indication of currencies.
equity futures pointing down as well and just some lines coming through and essentially what we will tiltg for is we towards easing some of the discussions. their aim is not to overcorrected the oil market. let's have a look at what is happening across the board. there is your 10 year yield. weaker from overnight and has remained weaker to this time yesterday. youryear average is deadline. as you can see, we are picking
up a little bit. this takes you off with back your today. this is your average. of course as you wrap up this ago, the breakout two weeks , have a look at that side of the charts. the breakout is in yellow and we .re meandering into that range to central bank heavyweights are sending it half a message to the finance industry. our global economics policy editor here.
in london onesting thursday morning. the markets concerned about what is going to happen in transition to an ryder system to replace the offered rate which is written with scandal. we may have not realized it, but the new benchmarks are being developed and coming into use are still new and so they are still there. bill dudley says basically the financial system was built on this, which is on a structurally impaired foundation and he is ifning about instability traders are not ready for this transition to a new system.
>> there's no guarantee this will continue beyond 2021. away.likely to go by a not supported sufficiently robust regime. it should make market participants and regulators nervous as we approach the deadline. >> new benchmarks are being put into place in the u.k.. carney was talking about progress in the banking system come on changing incentives and he also talked about growing bad apples. these are people who had to leave their firm from misconduct and go to another job.
apples,dress the bad mechanisms are now in place so that when individuals move, their history will be known to the firm's better hiring them. firms will be required to share andrmation on conduct rules their propriety it assessments in the outcomes of any disciplinary hearings. --this is what happening talking about better culture as well. policy editor joining us from new york. we just got the korea,through for south saying he did speak to the u.s. over the phone this evening.
south korea saying they will still flesh to improve ties with the north. it certainly seems like they are not giving up on the effort just yet, although we heard from guests that perhaps june 12 is not really going to happen. place.uld still take surprised by the cancellation of the summit, but will meet with the u.s. at any time. i guess the big question from -- ne >> we've had no official response from the chinese side, but i think we can expect china to come out with a statement
saying they regret the decision by president trump and will probably call for both sides to continue to negotiate. we are awaiting the official comments from beijing. there is a view that china may use this as an opportunity to leverage itself and it position vis-a-vis the ongoing discussions with the u.s.. it can ease those or tighten those at will and so, there is a view they -- this may come into view in terms of economic talks them and beijing.
if there is now a warmer relationship between beijing and pyeongchang -- that is another question. important,bly more the economic trade flows between china and north korea. geopolitics on the agenda, --t have way been hearing we've been hearing so far? >> we can imagine the germans will be pressing the chinese for their response to what has happened overnight, but certainly we heard public the irans about nuclear agreement.
hardhave been working very to maintain this agreement after the u.s. pulled out. and germany have -- in iran.our on that was a topic for her. she also have this fine balancing act because berlin is aligned on issues, but she is also facing pressure from washington in terms of steel and now these tariffs as well, so she wanted to come out and she also pressed her colleagues that may face -- if they don't speed up.
second quarter in a row that we are seeing improvements. >> i know this is the highest and memory has been higher. how much guidance can you get that this is sustainable? the think we have think we have i the right product and right structure and we definitely do not see it slowing down. >> even though the chairman said not as good as expected. are you considering it or have you considered getting out of this? think there is definitely strategic value.
we did not do as well as we .xpect i think you look at the business and generally numbers show a decline, but we see an increase in topline. there are challenges. >> how important is china? think our priorities are to obviouslywe return -- a priority to return to financial health. >> -- ande have been doing well we have to look at our expenses
we those countries so that have a healthy business. 30%ink the result is around because obviously, there are countries where we invest in do not necessarily have the distribution channels, so we .ust focus >> we know you spent billions of ibm, at least motorola mobility has not panned out and i'm looking at some of the cost that have ballooned to a record. is there an argument or have you acquisitionsose
did not -- doi think when you acquisitions, i think the example -- i use an -- i would not say when you buy something, it would be automatically. it is not so much about whether we want to write it down or not, it is about how you evaluate. i did not have a plan to how you business.he mobility i think we have a view and the past it to the auditors and therefore, we go need to write
asia.s is daybreak i'm betty liu in new york. >> the indian beauty market is having a moment. fashion conscious shoppers are spending big bucks to look good and a sweet spot in this week's -- thanks for joining us. an interesting story you have here. now you have dealt into the entrepreneurship that you have. what got you into indian beauty? >> i wanted to be an entrepreneur.
to whyooking for ideas beauty was a small business in india. ofre were challenges early-stage growth and it was hard to build up in the market like india and with the coming like e-commerce, i felt like it was right. by theare inspired support has. customer walks in and they are educated by the brand. and youlittle different
are being asked to buy three or four of the same brand. i think in that environment, being customer centric it is very important. important is a for india to have this online model as well? stores.ve 17 i think it is a very good way to service. theeauty there is a lot of production in india. i think a certain amount of customer engagement is necessary. the customer wants to be treated the same way whether they come to the store or online.
>> the plan isn't so much to match the online business or kind of moret just of the experience? todayes, but what we are -- i think the customer choices online and off-line have to be different. some brands maybe much bigger online and some off-line. ofhave the best knowledge online. there a lot of knowledge to what customers are buying. 2000 of the best
products. in smallres are going towns which have never had a beauty store. quickly about growth. are you looking to grow organically or cap the capital market? what are your plans here? market has been growing and i think the momentum will continue. we are one of the few e-commerce that has already achieved in the last quarter of last year. the only objective is to take it ina market, so we are hoping
one or two years. you, ceo and founder of the e-commerce site for all things beauty product. not for look at what is coming up, what have you got? >> what is the real reason don't trump canceled question mark that is the key. a look at investment strategies coming along from 25 minutes to half an hour. end andlimited in the the -- whatown,
does this mean, do we have more dollar strength in the pipeline? bit with 3% little there. to our veryivide own betty liu who spent 10 years at number. most of you follow her on twitter, what a journey it has been. >> it has been quite a journey and i like to keep the advice short. foras been a great journey 10 years. i started here in 2007. i just want to recognize all the great people in bloomberg -- on bloomberg. i knew that was going to happen. i probably have the distinction of anchored every single hour of
bloomberg. i'm off to a new opportunity and i will tell everyone on social media what it is. keep rocking on. i love our viewers and our guests. >> what a pleasure to work with you. you really motivate all of us to bring everything to the table. >> not too much pressure on them. so long, this is bloomberg.
jong-un-invited, president trump saying the u.s. military ready for everything. 109, goldhe yen, seeing its biggest gain in four weeks, and oil down after russia won't consider supply kurtzman they meet next month. i am rishaad salamat in hong kongi am rishaad salamat,. haidi: i am haidi lun. , oleg deripaska's regulatio resignation.