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tv   Bloomberg Daybreak Australia  Bloomberg  June 18, 2018 6:00pm-7:00pm EDT

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haidi: u.s. talks extend the global slide as trade tensions are threatened between the u.s. and china. the trump administration maintained a hard-line, mike pompeo calling the claims of openness in beijing a joke. >> opec considers a compromise output plan to head off an iranian and billion. >> and they are like casinos. how it could of the anti-. >> from sydney it is just past
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, 8:00 a.m., i'm haidi lun. this is "daybreak australia." we are two hours away from the open of asia's first major market. >> and it is just past 6:00 p.m. here in new york. good morning. we are looking at how the action on wall street will play into the asia-pacific trading day. once again, there has been a lot of attention on this trade rhetoric and we are waiting on the next actions from both the u.s. and china, as it has gone back and forth. haidi: it feels like that very much. the market has been sanguine about the trade threat, putting it on the back burner for the last few months, but finally ready to pay attention this week. a risk off session playoff right across the u.s. and across global equities, as well. it is acute when you look at particular groups. >> let's get a reminder on how u.s. stocks ended, because you continue to see the divergence. the dow jones industrial average heavier weighted toward it industrials, towards banks as
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well, but industrials really being hit within the s&p 500, while the nasdaq is still showing resilience. let's take a look at the bloomberg for another snapshot, another way to look at that. this is a ratio of the dow to the nasdaq, and you can see clearly the trend has been downward for the dow, versus the nasdaq. this is a proxy for concerns about trade, versus tech we have seen in the u.s., haidi. haidi: pretty interesting that you are seeing tech emerge amidst all the talk a couple months ago about the rotation from everything growth to value. take a look at how it is setting up in asia, quiet week when it comes to trading, with a number of markets off because of a holiday. and trading in new zealand
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getting underway and we see a little bit of downside as we head into the early part of the session. the kiwi dollar at 69 .45. and sydney, looking a little bit brighter, we saw support for prices, supporting the energy sector, as well as materials. we also see the aussie dollar trading under the $.75 level, really losing further ground overnight. and we are getting the rba meeting today, where they are putting policy on hold again. commodities, oil is one of the top stories of the day. the report on the street that perhaps we will begin in some sort of compromise ahead of the opec meeting, somewhere in the tune of 300 or 600 barrels a day being added, which is much less than the 1.5 million barrels russia had been pushing for. gold holding steady. the commodity index losing some traction. it was another tough session when it comes to the agricultural stocks, the
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tug-of-war you can see between erazilian soybean producers, on of the beneficiaries at of this trade war. and crossing the bloomberg, we had heard from president trump, one of the promises made at the singapore summit was the suspension of a war game. just getting this report that south korea is saying the suspension will be limited to the joint military drills in august. that is according to a military spokesperson, sent to a text message. the suspension of other joint drills will be decided upon later on, so slowly getting more details as to what the arrangement or agreement that was made to suspend the u.s. south korean joint military practices will be. ok, more on that story as the details emerge, but in the meantime we have first word news. u.k. prime minister theresa may has suffered a
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defeat on her key brexit legislation, setting up a battle with the house of commons on wednesday. lawmakers in the house of lords passed an amendment to ensure that parliament can direct the final stage of negotiations. meanwhile, leaders are considering issuing a formal warning following a summit next week, that the u.k. risks crashing the block without a deal. and japan's nikkei news says kim jong-un will visit china as soon as tuesday. that comes after the summit with president trump. it would be his third visit to beijing in three months. the two leaders are said to be discussing strategy. mike pompeo says he may soon return to north korea. >> there is a great deal of work to do. we still have to flush out all the things that underlay the commitments that were made in singapore. i was there in the room with chairman kim. i met him twice in pyongyang,
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one in singapore -- once in singapore. and he has made fully clear his commitment to denuclearize his country. >> president trump calling on a space force to be added to the u.s. military, an armed service that would be separate from the pentagon and the five uniformed branches. but it faces resistance from the air force, which currently overseas the military space program. they ministers also says it wants to send robotic explorers to the moon next year, and another human lunar mission within a decade. says it hasral bank set up a team to monitor international and domestic financial changes. it will also guide you to stabilize market expectations. a statement on the website says the chinese economy is currently sound and will be in reasonable range for the rest of 2018. in reports $10.3 billion corporate bonds by the end of may.
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global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: thank you. taken a closer look at the u.s. market close. julie: a mixed performance. dow and s&p fell, but nasdaq in the green. and su has more. su: a lot of weakness in the consumer international stocks, which could indicate that trade concerns are there. energy stocks rose. you do have the bonds and gold, while it has been lowered, cheney results show that there is -- the results show that there is a seven-week high. now taking a look at the big movers. advanced micro devices, 11 year high. they have come out with more competitive chips and their gain is intel pain.
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they used to dominate the market. they probably still do, but now there will be a duke out between the companies as we go forward. kimberly-clark showing the weakness in the international companies, and what is going on with gevo. ? they make an additive to gasoline. you may not have heard of it, but the epa just approved it and have boosted the level at which they can added to gasoline, which means a lot more sales. now the chart for game stocks. this is a brick and mortar store under a lot of pressure, because of the downloading of video games. now there is a report, sycamore partners private equity could be interested in buying it, look at that takeoff. and not going to the bloomberg, short volatility appears to be the way to go. check out the chart. a lot of big-money positioning against volatility, so the bottom line, are we worried about a trade war? if you look at the chart, it
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does not look so. julie: really interesting, given what is going on elsewhere. now back to the oil story. you talk about oil on the rise, the latest talks surrounding the opec meeting. at least they are taking it is bullish. su: there was talk russia wants to boost. a lot of countries do not. the latest talk coming out of opec is that there is a compromise. does the market like it? you bet. we had oil above 66. and talk about some of the headlines that are coming out. $1.5 milliona a day boost. there is word venezuela will help to block a boost. and then there is a compromise of maybe 300,000 barrels, up to 600,000 barrels. opec, again, these are the cuts. red for russia is where they
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want production to come up. white is where we are talking about. and the closer we stay here, the more likely the bulls are to be in control. julie: quickly, watching the media merger in the making. haidi: volatility across three stocks, what is the story? su: they are popping. take a look at disney, comcast and fox, the bride in the three-way cuddle. they are all lower today. one of the latest headlines, comcast made a bid. there is a report that one for century will be, the board will be reviewing that on wednesday.meanwhile, reports disney may boost their bid. do we have more headlines? these are fascinating. again, the bond trading at comcast has shored. it was up 500%, again because it is such a debt laden transaction that could occur, and it looks like a lot of people want to own
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a piece of that bond action right now. haidi: thank you so much for that. big session for the markets. su, wrapping it up for us. the u.s. secretary of state, mike pompeo, has amplified the tough line in the brewing trade war with china. he told the detroit economic club the action is long overdue. >> they have been claiming globalization and openness in china, but it is a joke. let's be clear. predatory economic government that operates against the rest of the world today. haidi: ok, bringing in our bloomberg editor in washington. strong words from the top u.s. diplomat, is this all part of a game of chicken? joe: strong words indeed, and it may well be. the president hasn't shown he is willing to come out with a strong opening bid in in you negotiations with a lot of bluster, tough talk as we saw
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with north korea, only to soften later on. however, this is an issue that the president long has held his position on, that china is ripping off the u.s. mike pompeo used the word larceny to describe the theft of intellectual property. it may be they are buckling down for the long haul on this. julie: are there any signs of give as we try to work out what the ultimate result is going to be? joe: they emphasize that there are still negotiations going on and we have time before the new tariffs take effect from the united states. but i would also point out that one of the president's top economic advisers said today that the u.s. economy is in good enough shape to whether some of the uncertainty that surrounds these trade talks. that indicates the
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administration is willing to at least take it to the brink, if not beyond, if they need to in order to get concessions that they want from china. julie: there has been legislation introduced to try to give congress more of a say in the trade negotiations, but it has not really gone anywhere, right? joe: they have pretty much sco h ched that attempt. if there is anything, there is wide sentiment to punish china for their trade practices. the one area that congress seems to be willing to go against donald trump is on the zte sanctions. donald trump is wanting to lift them, as a personal favor to president xi of china, but the senate, and the house, i actually looking to reverse some of that, either prohibit the u.s. from buying equipment from zte, the senate measure goes even further. so the sentiment on china is not quite as a strong as reversing the trade sanctions on the e.u.
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and other u.s. allies. julie: thank you so much, joe. still ahead, more on the looming u.s. china trade war and its geopolitical impacts. we will get the views from the deputy chief of staff. haidi: coming up, a look at what is driving global markets so far in 2018. it has been eventful. we take a look at --'s thoughts. this is bloomberg. ♪
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haidi: we are counting down to the open of trading, a very rainy sydney this morning. we are trying for a third day of gains. we could be looking at indicators to the upside, just shy of 1% when trading gets underway here. julie: i'm julie hyman in new york, i will take your rainy
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sydney and raise you a very steamy new york. we are talking about emerging-market stocks and currencies, hitting a six-month low as the potential for a trade war heats up, but our next guest says we are in the early stages of a multiyear run of strong em equity performance. the for fully a manager at ubs global management joins me here, grants, thank you for coming. >> great to be here. julie: we have seen the trade war concerns, and you have rising interest rates in the u.s., which do not tend to sell strong for emerging markets, so what do you see here as ripe for opportunity? >> when you look at emerging markets broadly, we believe we are in the early stages of a longer-term, we will call it 3-5 year level of performance, relative to develop and equities. the reason we think that is, corporations, earnings growth is
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quite solid, balance sheets are in better shape than they have been, and if you look at the countries, capital accounts are in better shape. so one of the concerns investors have brought up, is whether or not this is a repeat of the tantrum in 2015, where you had the u.s. dollar strengthening. we do not think it is a repeat of that. weaving the near-term underperformance is an opportunity to reengage in the asset class as a whole. julie: when you talk about reengage in, are you talking about buying them as a group? we have some notable trouble spots, right, within the emerging markets. you have turkey, brazil, south africa coming of argentina and ca, andla -- afri argentina and venezuela. do you need to be discerning on where you look? >> you do have to be discerning. we are not concerned about the top-down country specifics, but
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you obviously have to take a broad view. for us, we do not have exposure to argentina or turkey. one of our biggest exposures is china, so we think that that country is transitioning from export led growth toward something that is much more sustainable, based upon services. so more akin to a korea or japan or even here, in terms of the ultimate drivers of gdp over the long-term, we are talking 10 years out. not in the next year. haidi: would you consider china to be in the same basket os the rest of the -- as the rest of the em families. it is so specific in its characteristics and over the last few months we've almost seen chinese equities behave like a haven when we see volatility across the rest of the em complex. >> you hit it on the nose, you cannot have a broad brush painted with all emerging markets. if you look at china, there distinct advantages to investing in china that you do not get in
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other emerging markets. when you look at health care, technology, those are unique opportunities that are single or to china, and you cannot get elsewhere in the emerging markets. so for us it is a huge opportunity. investors, if you speak with investors in the united states, they are looking at china for the first time as investable asset class, beyond just getting access to their broader global emerging market industry, they are talking about taking advantage of those opportunities in china, so we think the long-term story is in place and the near-term volatility -- it gives us an opportunity to get take advantage of lower prices. haidi: you mentioned the taper tantrum, and to be fair last time many have used this time to get fundamentals in order. so if you take a look at asia, is there someplace you think of
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as being unfairly penalized by the stronger dollar environment, and therefore are looking opportunistic? >> if you look at asia in particular, china, that is the best area of opportunity. the secular drivers that you have within technology, if you take a look at e-commerce, and the lion's share the has been taken on by alibaba, it is massive and it is a story that is not ending, just because you are concerned about trade wars in the u.s. so anytime you have the market seemingly turn a little more volatile because of the tensions with washington and beijing, on ultimate liu -- and ultimately we look back at other presidents, and we see as an opportunity to involve in his asset classes that have underperformed, because of the top down macro concerns that may not have the fundamental drivers, those issues at the corporate level. julie: turn to the u.s. for a
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moment, i know that you are overweight tech, but at the same time you are not overweight internet and media. talk about threading that needle, because certainly within the fang you have a lot of internet exposure. >> it has been a recent change for us in our u.s. portfolios, and it is more of a question of regulatory concern. so we have questions from clients and they often say, is the bubble -- is this bubble 2.0? we are nowhere near levels that we were 18 years ago, but one of the things that has changed is facebook and alphabet, they have gotten so large, that they certainly are concerning, at least to us in the near term, that they might fall under the focus of the regulators here in the u.s. and in europe, so we have been cautious around that. the technology that we have is more self related, so if you are looking at names and enterprise space, where we think the multiyear levels of growth, taking shares from traditional software players, that is where
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we have the biggest -- at this time. microsoft is one of our biggest holdings, as is salesforce.com, it is the fastest-growing tougher company minus microsoft in the last 20 years. julie: which is remarkable, considering its size. grant, thank you so much. thank you for your time. you can get a roundup of the stories you need to know in today's edition of daybreak. bloomberg subscribers can go to the terminal, it is also available on mobile. and you can customize settings so you only get news on the industries and assets that you care about. this is bloomberg. ♪
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haidi: i'm haidi lun. julie: this is "daybreak
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australia." coming up tomorrow, mario draghi will be speaking. it will be moderated by stephanie flanders. you can watch on bloomberg tv, radio and on live go. the central bank watchers, get ready for that. haidi: a quick check of the latest business flash headlines. fujifilm speaking -- seeking damages, caving to the whims of carl icahn and -- and backing out of a takeover deal. suing in court, saying the change of heart on the deal was due to external pressures. that says it is confident the board acted correctly in terminating the transaction. julie: vw has failed to pick a new leader. the former leader was detained, because prosecutors say he may tamper with evidence in the investigation into the diesel cheating scandal. a german is the process is fun was wiretapped. the shares extended declines to
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ask percent. -- 6%. haidi: of that gaining after google announces a $550 million cash investment in the chinese online retailer, jd. the company wants to explore opportunities, including in regions like southeast asia, europe and the u.s. last week, google struck an alliance with a company to sell groceries in france. ocbe aims toore's double profits to around $740 million by 2023. the bank was to boost technology spending and a staff in the area. are expanding their presence under the greater bay area plan. beijing wants economic output from the region to exceed that of greater tokyo, new york and san francisco. haidi: coming up, we will go to the tokyo stock exchange. we will be live where the
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marketplace is set to make a debut today. they questions on whether mercari can extend its success internationally. this is bloomberg. ♪
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markets open in just about 90 minutes. futures looking pretty positive, we could be getting outside of 8/10 of a percent, ontrack of a third straight -- on track for a third straight day of gains. watching energy producers, as we received sentiment on oil overnight. julie: i am in new york, where it is 6:30 a.m. you are watching "daybreak australia." the u.s. senate has now passed a defense policy bill. what is interesting is it includes a provision that would reimpose penalties on zte. the white house has been against this bill, so this sets up a
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clash with the administration, which is aiming to fix it in negotiations. the president has been trying to lobby the congress on this particular part of this measure, so we will continue to bring you those developments on this as they happen. now first word news with jessica summers. jessica: crude has rallied as opec discusses a relatively modest production increase. that is before the meeting in the end of this week. sources tell bloomberg that a rise of 300,000-600,000 barrels a day is on the table. it is an attempt to bridge the gap between russia's push for a big rise and iran's resistance. iraq and venezuela are backing iran. mike pompeo has amplified president trump's tough line on the brewing trade where with china. he told the detroit economic club the action is long overdue, he also said the chinese appeals
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for openness are a joke. he says beijing is the most predatory government operates against the rest of the world today. >> we are taking a really hard line on foreign practices that harm america. whether that is threatening our technology and leadership to property theft, we are hard at ensuring that we protect american property. everybody knows that china is the main perpetrator, it is at a n unprecedented level of larceny. jessica: the policy of separating immigrant children from parents who illegally cross the border threatens to balloon into an election year heading for republicans. it is a zero-tolerance approach that was fresh adopted in april. the president said the u.s. would not become a migrant camp. >> immigration is the fault, and all of the problems we are
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having, as we cannot get them to sign legislation. we cannot even get them to the negotiating table. i say it is very strongly the democrats' fault. jessica: the world health organization says compulsive gaming qualifies as a mental health condition. the agency says classifying the gaming disorder as a separate addiction will help families and health care workers be more vigilant. they say that cases are rare, with no more than 3% of gamers affected, but some psychologists say this could unfairly stigmatized some young people -- unfairly stigmatize some young people. global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: thank you. a quick update on your markets. early trading lackluster at the moment. extended by a third of a
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percent. kiwi dollar is under $.70 per u.s., seeing some downside. as you take a look at the kiwi against the aussie dollar, that is at a six-week high, with australia the worst hit at of the trade war involving china. sydney futures are brighter. and this is set to continue today. .7 the aussie is a buying 422, ahead of the june meeting. the yen unchanged, despite concerns we will see safe haven demand if the trade tensions exacerbate. sterling falling to a six-month low. theresa may suffering another blow from brexit legislation, setting up for a battle in the house of commons to determine the fate of that. the u.s. 10 year yield is largely unchanged. a reminder we saw the stocks closing a little bit lower, a quarter of a percent looking at the s&p, as we are waiting on
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the next barb or a road to be fired in the potential growing trade war. more on what we should be watching as trading gets underway in asia. adam is with us. you have been taking a look at the recent retreat in em's. lots of debate on whether this time it is different. what are you watching? >> i think what is interesting about what is happening in the space is that people have had a good for so long, and they have been willing over the past couple years, when we have had selloffs in the markets, to keep their bullish thesis and the push there and buy as they have sold off. what is happening now is the magnitude of the declines. this is a great chart. it is on the bloomberg terminal. showing us your today outflows of the em equities in asia coming to 2008 levels, where we all remember what happened back bank my but what has triggered this is the fed last week came
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out, ratcheting up the speed of the hikes coming in and tightening u.s. monetary policy alongside potentially ecb next year. and this coming at a time when the trade tensions are heating up in reaching a new kind of level of escalation between china and the u.s. so as we heard from the likes of james o'sullivan and jpmorgan yesterday on bloomberg tv, this is not a great set up for em, when you have a combination of tight u.s. policy and an escalation of global geopolitical risk, likely have between the u.s. and china, it makes it a tough backdrop for em. and how it has been a positive story, the likes of great economic growth story, way into the cycle, across many emerging markets that have good economic fundamentals, at this point people are moving that fundamental story to the side and it is being replaced by other worries. julie: when it comes to the other worries, this be the first
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day in several sessions that chinese traders have to react to that. see, what are we likely to the reaction to the latest escalation in the trade tensions? adam: i think what we saw over the last 24 hours is a marginal risk off tone. we saw certain moves in some commodities, soft and hard, and some equity markets did retrace. but fisher markets in hong kong and china are pointing slightly weaker this morning. we are not expecting any large declines, but as people the point of from chinese currencies and bonds, potentially what you could have, if we do get a follow through with the tariffs, in the next wave toward china, that the authorities in china will have to respond. as the chief economist of deutsche bank pointed out
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overnight, this may result in looser policy in china in the back half of 2018, and going into 2019, as a result of these more stringent economic fundamentals with what is happening with the tariffs, so they are pointing at two more cuts by the end of this year. some easing of restrictions within the housing market, and some of the two tier cities in china. so if you get that response from authorities, we could see an incremental policy for chinese risk assets. julie: down the line, perhaps. think is so much, adam. gtvot forget to check fouour library, that is on the bloomberg terminal. shares in mercari will begin trading in tokyo on tuesday, after it became the first tokyo -- japanese start up to be valued at $1 billion. we at the stock exchange.
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david, give us more background on the company. >> good morning. ,n about 90 minutes, mercari the largest tech debut since 2016. it is a flea market online, if you will, more like ebay compared to amazon. more like yahoo! japan, which runs a fairly dominant auction site here in the country. it was founded in 2014 and the revenue into march was roughly under $200 million. it is still losing money. the operations in japan are turning a profit, but elsewhere, like in the u.s. for example, it is looking like it is a net loss. and we are looking at a loss, not a lot, but the valuation of the company, it is going to be interesting how it actually trades. julie: top end of the range
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there, so what indications are we getting about how the stock could do? ipo price is at 3000, they are raising quite a bit of money. $1talked about billion. the cofounder, who owns about a third of the company, or a third of the shares, that makes him a billionaire. yesterday, in the gray market, some people were telling us it was already at 4000, so that is a 36% pop from the ipo price. we will have to wait and see when things get underway. and it will help the market does look over all could be on the up today. haidi: what are they planning to do with all of that cash? >> well, two things. one is really to bolster their international growth. in the u.s., for example.
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about 100as million downloads, 37 million in the u.s., where they have had trouble retaining clients. and consumers, really. because they're up against rivals the like of ebay. and amazon. part of that is going into that market. the other part is to bolster the financial services business. their payment business as well. so those two things, again, we have yet to see really whether or not they can take the successful business model here and replicate it outside.it is not just this company, we have seen a lot of companies that dominate locally and a struggle abroad, so hopefully this is one that will move against the grain. julie: ok, thank you so much. haidi: david in tokyo. ahead of that mercari ipo . will beijing or washington come
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out on top of the trade war? we will take a look. this is bloomberg. ♪
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haidi: as you can see, a good day for europe at the favor the world cup, wins for a, sweden and england. julie: for the latest results, you can go to bloomberg go. see how you are faring in your predictions. full disclosure, i did not make any predictions. i do not know enough to make a depictions. i'm julie hyman in new york. haidi: i am by the sidelines as well. you are not alone. i'm haidi lun. you are watching "daybreak australia." the cap administers and maintaining a hard line on trade, with a secretary of state colin china the most predatory nation in the world.
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and a former secretary of commerce has told bloomberg that a trade war is already here. >> people are talking about whether we are going to be in a trade war, whether a trade war is coming, but make no doubt it is here. we are in a trade war. and i am surprised it has taken the market so long to recognize that. haidi: joining us is a former clinton white house deputy chief strategy now blue star ist, karen. set the scene as to where we are at in this latest installment of the trade saga. we are looking at u.s. imports from china, the red is where we are at in terms of the $50 billion, or thereabouts, of the goods targeted by the tariffs. it is a bit of crystal ball gazing, but where to next? it does not look like either side is willing to make any sort of conciliatory rates here.
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karen: it is hard to predict, given that the president i think prides himself on being not predictable. bu i wouldt have to agree with carlos, we are certainly in a trade war. frankly, what the trump it isstration has done is not designed to solve the problems that they articulated paid it will not help with -- articulate. it will not help with job loss, it would not help with intellectual property theft by china. in contrast, what china has done is very strategically targeted products and commodities for their tariffs. and you know this, the price of soybeans has dropped for farmers
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in iowa by almost 2.5%. so they are being very strategic. and the jump administration has picked the wrong solutions solve their problems. haidi: i think there are some analysts that would argue against this concept that there are imbalances in the trade relationship, but a lot of those i think could arguably be put down to the nature of china's economy, and if you're looking at structural change, that one overnight, so what can the u.s. or beijing due to reach a negotiation? karen: in the clinton and ministration, when we had problems with -- administration, when we had problems with steel imports, we sat down with russia and we negotiated a voluntary restraint agreement, where the countries agreed to gradually
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restructure, stop or slow down there imports and restructure their industries. i mean, people can disagree about what the size of a problem is, but sitting down and negotiating with countries is typically what is done in crisis natures.e of this it is not that these problems are not real, but i think all economists, right, left and a center, would say you do not solve these problems with the tariffs that ignite a trade war, that is bad for everybody. julie: your firm helps companies navigate all of these negotiations, or the tit-for-tat. what are you telling them, given this level of unpredictability? karen: what is actually happening with foreign investment, at least anecdotally
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from our firm, people are just holding off. they are doing one of two things, they are either holding back and looking at firms in the u.s., as they desperately try to keep their head down. right now you have austrians better steel producers, responsible for thousands and thousands of jobs in the united states. that is a good thing. and they are holding back on their investment and try to keep their head down, because to raise your head in this administration means something bad will happen. these are productive companies, these are companies that provide americans with very good paying jobs and good benefits. julie: at the same time, some companies that have courted attention from the administration have gotten positive response, or at least positive rhetoric response, so do you think that approach is too risky to be worth it? karen: i think just to echo what you said, they have gotten
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positive rhetoric, but i think the challenge is two fold. one, if there is actually results tied to that rhetoric, and secondly, whether those results hold. you saw japan's leader come early on into the administration, being embraced, only to be rejected later in the administration. so, you know, it is very unpredictable, very disruptive, which is not good for the u.s. economy. i think the markets are catching up to what disruptive policies actually, the role they actually play in the economy, which can be devastating. julie: it is great to get your perspective. karen, joining us from washington dc. back to the breaking lines we had earlier, the south korean defense ministry says a joint
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drill planned for august has been suspended, for filling the commitment made by president trump to kim jong-un. stephen engle is in hong kong, now getting confirmation from both sides, interestingly, that these will be suspended. >> not much of a surprise, given the fact that this was the main concession, if you will, given by donald trump in that summit with kim jong-un in singapore. the only part that is surprising is he would give this concession, when, as they signed the document, the north koreans really did not give up many concessions, other than to convince donald trump and the u.s. delegation that they are committed, that they are promising to do complete denuclearization. so we are putting a lot of trust, i will say the united states is putting a lot of trust
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in the word of kim jong-un. what we know now is the freedom guardian military drills, that were planned for our guest -- for august, have been suspended. we do not know whether other military drills, given my they had other big drills planned for i believe april, that were suspended as well, as the peace overtures were coming from pyongyang. so larger wargames are usually countries,n the two but no word on whether those will be canceled. this is a confirmation of what donald trump said in singapore, that he would suspend, not cancel or pull out troops, but suspend these upcoming drills in august. haidi: thank you so much, stephen engle in hong kong. plenty more ahead. this is bloomberg. ♪
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haidi: i'm haidi lun. julie: i'm julie hyman. this is "daybreak australia." five chinese resorts on a tropical island laying the groundwork for entertainment bars or cashless casinos. they are betting that the island will be spared from gambling restrictions, as officials seek to boost the tour is a ministry. we go to tokyo now. explain to us what the entertainment bars are and whether they have already been around. >> yes, they have already been around. this would be a resort hotel that includes, for example, baccarat tables at which anybody can place a bet, buy some chips and place a bet. the only difference would be is if they win they will be getting back chips that would be good for spending at local restaurants, at the nightclubs and that sort of thing.
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so when we say cashless, we mean you cannot win. you can lose cash, but not win cash. you would be winning prizes. these have been set up for years on the island, but then in 2014 local officials said, wait a minute, this is really gambling, so they shut it down. and the resorts to get to beijing, to court, not beijing has approved a go-ahead for -- now beijing has approved a go-ahead for this. haidi: what are the rules when it comes to gaming in china? is the only legal gambling, legal casino gambling, within the entire country.that has been the rule since as long as we know. and it has been a big boom from the cow. -- macau. collecting gambling debts are illegal. the rules are strict and that
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has led to the massive growth in macau. you do have these entrepreneurs nearby looking for a way to skirt that by offering prizes rather than cash. it is a big difference, because in macau they have a separate currency, so when you do gamble you are also changing currency, and that would be a big difference with hainan. haidi: thank you for that. that is all for "daybreak australia." daybreak asia is up next. >> we are watching the trade tensions, and we have william at the american chamber of commerce. we will be talking about what comes next. he says the u.s. feels like they have run out of options to get china to seriously address the imbalance in the trade relationship. he says they will focus on ad commodities, as in how these
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will disrupt the supply chains, of course. haidi: action on daybreakthe -- the action on daybreak asia is next. this is bloomberg. ♪
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yvonne: it is 11:00 a.m. here in hong kong. i am yvonne man. welcome to "daybreak asia." the top stories this tuesday, asian stocks face a shaky start. chinese markets set to return later. akenodities weekend on -- we on protectionism. mike pompeo calling beijing's claims of openness and joke. hyman in new york. this hour, oil climbs as opec considers a compromised output plan to head off an iran- led rebellion.

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