tv Bloomberg Daybreak Asia Bloomberg September 23, 2018 7:00pm-9:00pm EDT
haidi: very good morning. i am haidi stroud-watts in sydney. ramy: and from new york, i am ramy inocencio. welcome to daybreak asia. haidi: our top stories, china discards talks. trump promising more punishment if beijing response. ramy: the australian and kiwi dollars fell. haidi: a new survey says my chinese companies are hurting.
they see growing panic. not really an optimistic set up with trading across asia monday morning despite new highs with the dow on wall street. take a look at what we see. there is a lack of direction, a slew of markets closed, japan, south korea. chinese markets and taiwan are closed on account of the mid autumn holiday. we are seeing sri lanka not trading for a public holiday as well. , newng at australia zealand, earlier declines when it comes to kiwi trading. the a2 milk company seeing declines down 6%. we are also seeing a broad-based selloff with the kiwi dollar and aussie dollar as risk aversion returns in the trade narrative. cindy futures down -- sydney
futures down .3% despite finishing strong friday. >> opec has sidesteps trump's demand for lower oil prices, saying they will boost production only if customers are. willsay the cartel continue to pump fluid to meet demand. opec and allies have placed upon the next are million ball -- million barrels a day to fill the gap. the u.k. opposition labor party is raising pressure on theresa may for posing the option of a national vote on brexit. the motion will be put to delegates at the annual meeting this week where leader jeremy corbyn says he will accept
whatever the conference decides. may has the idea of a second referendum. the trump administration is considering an executive order that would launch an investigation into google, facebook, and other social media companies. they have obtained a draft of the order which instructs authorities to investigate whether any online platforms have violated antitrust laws. it also requires action within the months that addresses competition and potential bias. forast won the bidding war sky, beating 20th century fox and disney to expand their empire abroad. comcast offered $39 billion, 10% more than fox in an auction after a joint outbidding more. fox holds 39% of sky and now expects to sell the state to
comcast if disney agrees. japan has landed to drones and asteroids as part of a mission to study the origins of the solar system. they were moved around by jumping 50 meters and a time because week gravity made rolling difficult. -- tore set to lower i lower early next month. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
if we look at west texas oilrmediate, which is the traded largely in the u.s. and in new york, it has been inching above or near 72 in the past week. largely --which is which is largely used by the rest of the world is edging toward 80. saudi arabia's oil minister says they are going to pump it up to meet demands. they say saudi arabia did not increase more and all of the customers are receiving all of the barrels they want. signals it raises or the possibility that opec is not
willing or able to bring down prices from the $80 level and it also raises the question of what is president trump going to do about it. or july, he urged opec to do something and they increased production across the board. you are not seeing that now. >> interesting that saudi arabia applied -- implied that $80 was ok. -- tech stocks are not ok. apple, amazon, facebook all fell. what is happening? >> an executive order is now a possibility. this has been a major concern. any kind of scrutiny over these search engines. let's take a look at the thing trade. it took a big hit on friday. that is a question. does tech rebound? it was part of the record-breaking run up we saw last week. will we see more record closes?
let's take a look at some of the other stocks in the spotlight. it could be a big merger on monday in terms of news. comcast winning the bid for sky. what happens there will likely be a big driver on monday. there is also randgold and barrick gold. they continue to be in the spotlight. brandwoods is a big nike bearer. he just won his first pga golf tournament in five years. trump will be in the news. be pushing for a new on a new rounds of goods from china. the yield will be a spotlight. bank and tech weakness at last week. what i continue?
-- will that continue? he is expected to get some controversial speeches with his title of america first. it does not engender that will when we have this trade dispute. things of interesting this week with president trump. it is also fed week. a hike is expected. is there anticipation about what to expect from jay powell? >> yes. this will likely be the sixth rate hike since president trump became president. this is the first one sense pleasureressed his with the policy. over the summer, he indicated to a friend that he was not pleased that jay powell, video fed chair, was not -- the new fed chair, was not keeping rates low. it is unclear what powell will
said. there is a press conference after this decision this week. whether he will adjust the comments or make reference, that raises the level of scrutiny. you can find our library of charts. out of sync is the title of this one. the dollar ready -- rally has been fading. see thetion is, will we dollar reacted a big way from the latest move by the fed? many predict the dollar could go lower from here and positioning is taking place on the front as we speed. that was su keenan in new york. stephen engle is watching the next story. what is going on? steve: nothing in place for the
circuit breaker. we are in a cycle of implementation and retaliation and that escalation. implementation, the next round of tariffs is likely to comment new in hong kong time. that is midnight in washington dc. so less than five hours from now, the u.s. is likely to impose new tariffs on $200 billion of additional chinese goods to the u.s., that would be $250 billion in total. almost last of last -- almost half of last year's imports from china. say they will do this on $110 billion worth of goods from the united states to china. that is 70% of the total u.s. sales to china. as you mentioned, china has indeed called off any proposed talks that steve mnuchin and others from the white house have proposed for the latest round of talks. the growing consensus in beijing is that they are not going to
sit down and talk, or at least trump will not necessarily be in a conciliatory mood before the midterms. we have a few more weeks of pain. that is where we lead to the escalation. trumpdications are that will pull the lever if he has to on an additional round of tariffs of $267 billion of chinese goods. most all of the goods that china sells the u.s. this is the quote from trump. we do not want to, but we will probably have no choice. he is signaling pretty closely when he is going to do. >> you talk about pain. looking at china, are we seeing any indications that their economy is starting to see incoming stress from these? steve: the chinese economy is slowing and manufacturers across the border from here in hong kong are feeling the pain.
the headline is that manufacturing in china is under fire. they are seeing declining revenue and profit growth. this is a backwards looking survey. this has been done before the first round of tariffs was imposed and it has been exacerbated by a very high level of borrowing to stay afloat. the highest pace of borrowing among exporters since 2012. another quote from the book saying it smells a lot like panic. stephen engle there. the countdown is about five hours from now before the next round of tariffs is due. more on escalating trade war is coming up. we will ask a currency tighteninghow policy and protectionism could become a toxic mix for the markets. haidi: an asian banks are
>> welcome back to daybreak asia. haidi: several asian central banks get an immediate opportunity to react the fed hike. they announced policy decisions of their own. now is sally udd. it would be difficult to be a central banker in this kind of uncertainty we are seeing with trade. >> we do not get huge effects on
growth for inflation one way or the other when we try to account for where the trade war is at the moment. i think the fed will proceed along similar lines. at the moment, the data is holding well for the fed labor market. it is still a compelling case that policy needs to be adjusted higher and while the fed by a signal some caution or nervousness about what is going on with the trade war, i think the case is still high convictions for a rate hike. haidi: it is much more challenging for emerging central bank. takeesia will try to action to stem confidence. there is still a sense that momentum is dying against them. >> that is right. there's been a couple of difficult long for the complex as a whole.
i think the countries that are ruining -- running a deficit are more vulnerable. policy measures that are designed to shore up the country and further and stress. we think they will follow the fed by another 25 basis points. haidi: a lot of what happens is based on what happens with the dollar. take a look at the unusual divergence, the gap we have seen between what the greenback is doing and what we are seeing when it comes to treasury yields. 10 year treasuries last year bloomberg10% and the dollar index continues to decline. d.c. this as being sustained -- do you see this as being sustained? >> at the same time, u.s. data is continuing to be on the strong side and data elsewhere
in the world not looking as robust as you might have thought so it is causing a few people to scratch their heads and ponder why the u.s. dollar has come up a little bit. maybe there is a story around positioning. the dollar has had a good rally. it feels like people participated in that. we might cem concerns start to ease. maybe there is some nervousness running into the fed. our sense is that for so long the fed has described policy settings to accommodate and we expect that to be removed from this week's statement. when you have a market where dollar positioning has been long and rate positioning has been short, a be the market will be more sensitive to the change in statement from the fomc. ramy: sally, right now bloomberg news is reporting saying that jpmorgan says that
overconfidence on donald trump might be too much and that there might be some kind of this step or he might go too far. to what degree are you concerned about his confidence? i think the story is really one where we always thought one constraint to what trump is doing on policy, particularly trade might be what equity markets do or how they respond and how his approval ratings respond. moreything, trump feels involved recently, given that he has a -- he has been aggressive on the trade front and his approval rating continues to hold. it does the point where not feel like markets are providing any kind of constraint aggressiveuing this agenda on trade. once we feel like the china
story is dealt with, it begs the question, what else might be feel emboldened to pursue? ramy: the tao on friday hit a record. -- the dow on friday hit a record. , we're inead mid-september. we have less than two months before the midterms. indications are the democrats could take at least one house, the house of congress. to think that could be a stopgap where investors could breathe a sigh of relief? >> potentially. i think probably some of the stuff on trade could ease off a little bit in the midterm elections. world,other side of the if the democrats can successfully regain the house is not a new thought. i expect market participants were are you thinking along
those lines so i do not think those numbers will change the fundamental backdrop we have or stocks and bonds in the u.s.. it has been our view at jpmorgan that you want to stay overweight u.s. stocks. the fed is tightening policy but they are doing it gradually and the fundamentals around earnings and macro actor up are still robust in the you -- macro backdrop are still robust in the u.s. still well above trend. that is an environment where we think the u.s. stock market still offers attractive returns. haidi: where are you finding value? >> we think we are on the cusp of a bit of rotation. over thea solid run course of the north american summer and it could be coming to an end. a bias if we had one was more towards the cyclicals. we will leave it there.
haidi: a quick check of the latest headlines. filing revealed she sold out into transactions last week for $2.9 million. she received shares compensating her for the forfeiture of incentive entitlement from her former employer. we've been told that barrick gold is in talks to merge operations with randgold. they say the deal is imminent.
it could benefit from randgold's experiences navigating the tough business environment in many parts of africa. the woman who is accused president trump's supreme court pick says she will testify next week. republican lawmakers look to cast doubt on the allegations of kavanaugh by christine blasey ford. let's bring in roz in washington. into this past weekend uncertain whether she would testify. what has changed? >> it seems like christine blasey ford, she has a team of at least three attorneys. it seems they have been in talks with the senate judiciary committee, especially the republican leadership and republican aides on the committee and have got enough confessions they feel she would
be comfortable testifying. -- concessions they feel she would be comfortable testifying. she will be at the committee at 10:00 a.m. thursday morning. in the meantime, we are hours away from the next missive fired in the trade war with the implementation of the next charge of tariffs. presumably beijing will respond. we had news there will be no more trade talks. what happened? thingse were a couple of that china got frustrated about. some of president trump's rhetoric, certainly the againston of sanctions china for buying russian military equipment. and china to bring in the u.s. abbasid are to beijing in for a meeting. so i think between those things, they werefelt like
not making any progress, so why bother? wait until after the midterms when it was possible where the u.s. administration positions could soften a little. there was the briefing on friday by an administration official doubling down on trump's feeling about the tariffs that i guess there could be some short-term pain for u.s. consumers but he is prepared to see it through. i think that is probably what was in china's mind. haidi: thank you so much for that. we are just hours away from the tariffs being implemented. coming up next, a new fund aimed to help western companies in china. but these trade tensions are causing complications. we will hear from cafe capital next. tepid very weok
is 9:30 a.m. in sydney, japan, taiwan, and sri lanka. seeing a lower picture when it comes to asian markets that are trading picking up the sessions today. developments suggesting we will not be seeing in the short-term anymore talks between china and the u.s. as we count down to the tariffs on $200 billion worth of chinese goods. that impactse how u.s. markets here in new york. it is 7:30 p.m. you could think markets would be
friday, session lows on 29 and changes what we sell. this was in large part because of tech shares taking a bit of a hit because of reports about an antitrust probe coming out of the white house. let's get the first word news with haslinda amin. haslinda: opec has sidestepped president trump's demand for lower oil prices, saying it will boost production only if customers ask. speaking after talks in algiers, the saudi oil minister says they will continue to pump crude to meet demand. opec and allies have pledged to pump an extra one million barrels per day to fill the gap created by the collapse in venezuela and u.s. sanctions on iran. china has called off proposed trade talks with a new round of tariffs just hours away. $200 billion of chinese imports will be subject to duty.
the $50on top of billion currently hit, and president trump has threatened to double the goods targeted if china retaliates. hit $100ays it will billion of u.s. projects -- products at the same time. chinese companies are already under stress even before the imposition of new tariffs. says the lowonal rally has given way to declining revenue and sharply falling profit growth. the report also says the pace of borrowing is the highest since 2012, something it describes as an indication of likely panic. lawyers for the woman accusing supreme court nominee brett kavanaugh will testify in an open hearing on capitol hill on thursday. threatenede has been but believes it is important for
lawmakers to hear what she has to say. the white house continues to support kavanaugh, saying he is eager to clear his name. has won hisods first pga tournament in more than five years there the former number one captured the championship at the eastlake golf club in atlanta. his 80th victory. he is within two of the record. it marks a long-awaited turnaround after scandals and injury cost him lucrative sponsorships. hong kong has and not curated a to high-speed rail line china, dramatically lowering travel times by raising new questions about beijing's influence on the city. dollarsillion u.s. project took eight years to build and aims to carry 80 billion passengers a day. it can make the trip in just 14
minutes, down from one hour currently. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm haslinda amin him of this is bloomberg. ramy: thank you. cathay capital is closing a second $1.4 billion fund that aims to bring western companies into china. but the strategy is increasingly under scrutiny, amid frustration over china's trade and tech practices. he is notder tells us switching strategy anytime soon. protocol is kind of -- on this kind of approach [indiscernible]
we should really be able to build a sustainable corporation and the only way is to care about the interest of the client. so the client for us is important. in the long-term, you should be able to [indiscernible] i don't think we should change our strategy, we are very committed [indiscernible] toyou expect the trade war lesson in coming months? i think if our politicians are wise enough, they have to come to the reality that fighting is never a good thing for anyone, and [indiscernible] it is never good for any developer.
not for the economy, or human beings. i hope we will see an end very soon. >> there are many companies in europe, which are you focused on? >> so far, we invest in france, germany, those are the two main countries in europe and we and we have au.s. 50% commitment for chinese companies. >> what kind of businesses are you and justin -- are you interested in? goods,sectors, consumer health care, and we are much manufacturing,rt and we're focused on education as well. that was the cathay
capital cofounder and president in shanghai. comcast 18 bidding war for sky with the $39 billion offer. 21st century fox and disney to extend the cable giant empire. i know you can following this story, some analysts are calling this an eye watering prize. it shows i guess the desperate lengths they are willing to go to fend off tech platforms like amazon and netflix. ramy: that is one side of the coin. the digital aspect. netflix being one of the biggest names being floated in terms of what comcast really wants to get sky, because sky has some digital properties. they also want to basically get as many viewers as possible. getting into europe, something along the order of her -- of around 23 million viewers in the region.
all told, putting it together for about 52 million viewers stretching from the western united states all the way to western europe, california all the way to berlin. you were talking about how comcast really did not want to leave any space for fox to try to get back in there. they anted up and met them by 10% more. we are looking at, all told it is a premium of 10%. too priceyittle bit for fox, they said they would let it go. thatomcast ceo also said comcast, great day for sky is wonderful company with a great platform. we were talking about the tv side and there is also the digital side. there he is.
a tremendous brand as well as an accomplished management team. looking ahead, there is still some movement that needs to happen in terms of buying shares and whatnot. it seems on the regulatory side, not to jinx it, it looks like it probably is going to happen. know if comcast investors would necessarily be happy with that. the stock is already down 5% this year. there has been worries about how much they are going to pay for the steel. -- pay for this deal. this price is more than double y's price. were looking at the links that these legacy media companies will go to to stay relevant in the market. were also looking at what rupert murdoch is going to do next. ramy: talking about share
prices, we have sky on the screen. out of the three companies we are talking about here, they are really the biggest beneficiaries, the investors. up about 72% in the past year. on the order of about 58% year to date. also for fox, they are getting the by, 28% year today. see what happens when markets start trading in the united states on monday, to see how investors finally react to this, to see if they are happy or not. year-to-date, 28% for fox. let's continue on, not all trade wars are created equal. next, we will talk to a currency strategist who has written a brief history of trade wars in can tell us how this u.s.-china showdown stacks up against the rest. this is bloomberg. ♪
is "daybreak: asia." now: u.s. and china are hours away from a new round of tariffs on each other's goods, with no improvement in relations in sight. that's take a look at how this trade war compares to previous ones with a strategist. they released an interactive report titled "a brief history of trade wars pimco great to have you here. -- of trade wars." great to have you here. this takes into account the fundamentals. i'm curious how you look at this come in terms of what is happening fundamentally and if you think we will still be ok. >> very good to be here. in fact, that is the slight bit of silver lining. on the whole, although in the
from 1900have studied onward, has had many instances of protectionism, on the whole, global volumes have continued to grow. ofaking to the futility trying to redirect these kinds of things, the economy does eventually find a way and where there is demand, supply emerges. that is the good news. the bad news is that in almost every instance that protectionism was attempted on any serious skill, the market did not like it. there was a degree of risk aversion. happen now, that and if this continues, we are likely to see more. bits, the more worrying the one time we saw a time weant times -- one saw significant decline in volumes was the smoot-hawley tariff. there are some parallels between
what we saw now, be it a limited scope, designer, or ability by central banks to ease in the of event -- in the event of a downturn, not a lot of them have rebuilt their cushions. we also have the rise of economic nationalism setting a more adversarial tone all around. that was the case there then as well. if you couple that with rising borrowing costs from quantitative tightening, financing in increasingly large the fedicit, certainly has signaled the bar is very high for them to abandon rate hikes and we have seen that reflected in emerging-market asset instability. the parallels are worrying. the smoot-hawley tariff is widely believed to have been a serious accelerant for the great depression. ramy:
because a lot of the trade exposure that uses the end as -- as currency comes off the table. haidi: thank you. live in a look at stories trending across the bloomberg universe today. the most widely read story, andman sachs reports balances for investors to exploit on the web. an opinion piece discussing china's growing income inequality, despite the boom that has lifted millions of people out of poverty, it has also created an income gap. and we have been working hard on traveling high spring -- high-speed to beijing. check out all of those a stories, trending on the bloomberg, online on twitter or on the terminal. this is bloomberg. ♪
luxury online clothing marketplace had a debut on friday. the company plans to use the proceeds from its ipo to attract more customers and help luxury brands this play their wares on its platform. the ceo spoke to us from the new york stock exchange. here, theortunity is growth of online luxury will grow to .5% in the next seven years -- 225% in the next seven years. it is providing incremental opportunities. [indiscernible] the big question is, how is technology going to help retailers improve the consumer experience? this is something we are passionate about.
withve a partnership chanel. we are investing on both opportunities. >> when i think about where online luxury goods sales have taken off, it is asia. you derive about one third of your revenue from customers in asia. what is the success there? i know there is a partnership. how have you been successful in that market? exciting.s very chinese consumers are one third of the luxury industry, whether they shop at home or abroad. online penetration is very low in china. this means there is an for thele growth chinese territories. that led to our partnership.
have a our own team, we chinese app and website. magazines, local services, it's a truly localized experience. that is what is driving incredible growth to the brand in that region. om partnership,c talk about how you are using wechat. i know instagram is pushing hard into selling more on their platform. app. is an amazing we've had over 900 million users. chat,the instagram, we paypal, etc. of china in one
>> a very good morning. >> good evening from bloomberg's global headquarters. welcome to daybreak asia. it is a quiet day for asia with several markets closed. the aussie and the kiwi fell as investors seek tariff safety. >> trade talks canceled. president trump is threatening more punishment it aging responds.- if beijing
yvonne: the cartel says it will --ramy: the cartel says it will always respond to the market. let's get the first word news now with the haslinda amin in singapore. >> good morning. to sidestep president trump's demand for oil prices, saying it will boost production only customers ask. the cartel would continue to pump crude to meet demand. opec and its allies have pledged to pump an extra million barrels a day to fill the gap created by the collapse in venezuela and renewed u.s. sanctions on iran. the woman accusing brett kavanaugh of sexual assault confirms she will testify at a hearing on capitol hill on thursday. threatenede has been over her claims, but but believes it is important for
lawmakers to hear what she has to say. the white house continues to support kavanaugh. the u.k. opposition labor party is raising the pressure on theresa may, proposing the option of a vote on brexit. the motion will be put to delegates at the party's annual meeting with jeremy corbyn saying he will respect what the conference decides. theresa may has dismissed the idea of a second referendum. comcast won the weekend bidding , beating rivals to expand its empire abroad. billion inered $39 an auction after a drawn out bidding war.
tiger woods has won his first -- tour dement in five years pga tournament in five years. it marks a long-awaited turnaround for the 42-year-old after scandals and injuring -- injury. global news 24 hours a day on air and on tictoc on twitter. amin.slinda this is bloomberg. haidi: thank you so much for that. not trading, which is going to feed into the lack of liquidity. -- marketsing including japan and taiwan are closed for holidays. sri lanka also not trading.
let's look at markets that are trading in the asian session. trading, ang kiwi ceo sold off all of her stock holdings. -- on also seeing market the front lines of this risk aversion going into -- we have news over the weekend saying china has called off any of the latest trade talks with washington, which is hours away from tariffs taking effect on monday. downside wheneing it comes to the equity session in australia. 0.1% lower. a sense of risk aversion as we take a look at this trade story front and center again. ramy: one other story i want to bring you an alert to, senate democrats are probing a new allegation against supreme court nominee kavanaugh. this is from the new yorker, coming up by ronan farrow, who
brought us the first story against mr. cavanaugh. this second one relates not to his high school years, but to at yale -- years university. a classmate has described a party gone awry and a drunken incident deborah ramirez once the fbi to investigate. according to the new yorker, senior staffers learned of this and senate republicans reissued calls to accelerate the timing of that vote. an interesting development from ronan farrow and from the new yorker. we will see how this develops. we have been looking ahead with the initial story that christine blasey ford has said she is willing to testify before the committee. we will see how this changes the equation, if at all. haidi: certainly building more pressure on a brett kavanaugh. even more uncertainty over where
the confirmation is going. we might finally see some clarity. let's go back to our top market moving story which is china calling off trade talks with the u.s.. a new round of tariffs is hours away. let's bring in air chief is a correspondent -- chief asia correspondent, stephen engle. last week the markets were optimistic we were going to get more talks as things were looking, not quite so bad. what happened? >> china canceled the talks. we are expecting that. we also last week of those comments from -- at the world economic forum. he struck a similar tone that china will take a path of a leader in globalization. they will not weaken the you want -- yuan.
they will not weaponize the yuan. also the csrc saying they are hoping for the best, however, they were preparing for the worst. then came the weekend, where we heard china saying, we are not going to go ahead with these proposed talks from steve mnuchin. we are getting comments as well from donald trump, just yesterday saying, you know what? i don't want to, but it looks like i'm going to have to. that is the next level of tariffs. another round of tariffs on top of the $200 billion worth of goods likely to be enacted in four hours time from now. it has just escalated. have gone from implementation to retaliation to escalation. that's the cycle. >> disheartening is the word that comes to mind. a lot of investors hoping something would break in between. , whatms of moving ahead
are the chances donald trump, the hawks in this white house, might soften up? maybe it is a when question. >> i think it is when. the midterm elections are two months away. less than 50 days away. anything we see in terms of the u.s. backing down or backing off will come then. we did see they are not putting the full 25% on. they are putting 10% on and waiting for the rest of that stick affect and 2019. that shows that after the midterm there may be some room to talk. this is a political calculation on behalf of president trump and his administration. they think the tough talk on china is what the republican base wants and that that can help them in the midterm election. they are already down this rolled -- this road and it is
not going to be a big effect on the u.s. economy. we have seen economic growth continue. there is no downside to the to talk andon now act tough on china. we saw over the weekend secretary of state mike pompeo saying we did not start this trade war. it is continuing. but they started it by their actions. it is interesting trying to not even look like the aggressor here even as they discuss whether to start another round of tariffs. >> in terms of the midterm elections in the timeline, i was reading that even if there was a will that possibly there is not much oxygen in the room to feed this kind of fire in terms of trying to get any possible movement. arehis true from what you seeing as well? >> there is a lot of opposition to these tariffs. not only politically. there are a lot of people on both sides of the island get,
but also -- the aisle against this. but also we saw businesses that deal with consumers, we saw technology companies come out against the tariffs saying at some point this is going to start hurting come -- consumers. there is a lot of opposition and administration may start caving into that. we are not expecting to see that until after november. >> we saw an interesting approach from china talking directly to the american people. we know that iowa has a special place for xi jinping. >> that is right. the ambassador to china, the united states ambassador -- xi jinping went to iowa, state of the family's home there. there are connections to iowa. it is interesting to see what china's approach -- china, the glowing consensus is they are
feeling the midterm elections is the key date they have to circle on the calendar, they feel that donald trump is going to be in no frame of mind to be conciliatory or come to the table. he's going to want to talk costs up to the midterm elections. beijing agree in with that. perhaps talks will be delayed until after that time when they can reach some kind of common ground. >> in terms of how china's holding up, the narrative is that is going to help them more than it helps the u.s.. i'm wondering if the data is supporting that. -- whichtest facebook is a backward looking survey, indicates manufacturers and exporters in china are feeling the pain. it is being exacerbated as well by the rising borrowing for the highest level since 2012 or thereabouts by these exporters. we are seeing according to this report declining revenue,
sharply declining profit growth, and that was done -- these surveys done even before that first round of tariffs at $50 billion were imposed. they are starting to feel pain and the pinch from the global trade winds. but also the deleveraging campaign in china. well, this week we are seeing in the exporters being offset by strong services sector. the question is, how long can that be sustainable? , wen terms of those weapons have gone through this a lot in terms of the currency. those nontariff possible regulatory hurdles that could be inflicted, is there any word or anything you're seeing right now that this is something they could try to ramp up in addition to the tariffs, the numbers side of things that beijing is trying to strike halfway to washington, d.c.?
publicly.ll not say at the world economic forum we heard a number of different comments including from the premier. they're going to continue to open up. i have made a number of moves since april, may, about opening up the financial services sector , opening of the automobile sector. on the financial services sector, i spoke with jpmorgan, china's ceo, they are saying we submitted the application, but they have not necessarily heard from the process of that approval. they have not gotten approval. ubs has also applied and not gotten approval. i think that would be more behind-the-scenes whether they're going to be blocking that kind of market access. international editor as well as our chief north asia correspondent in hong kong. thank you as always. still ahead, more on tariffs
as we are counting down to this new round of tariffs, 10% here, i want to get your reaction, your thoughts as we lead up to this. side, peopleket have acknowledged it. what will be interesting to watch this week is maybe some commentary from the fed. -- where we differ i would say from consensus is the december side. we think they're going to pause. we do expect already in the run-up to the fourth quarter and also the first quarter the data in the u.s. gets softer because the very strong push off elements in the text -- the tax cuts. it will be interesting. the we have calculated is first of january, that is really
when we have to reshuffle on the estimate. we have estimated that for the u.s. gdp come all caps to duct more than on the final side -- the china side. we took both down. it will be an interesting equation to watch on the u.s. side. >> that is really interesting. i'm looking at the word function. a lot of folks are still thinking december is in play. what are you taking into account in terms of you saying they ?ight take a pause >> what we will see today plays this 25% over the next couple of weeks, especially after the midterm elections, it
does not look like we're going to move. what you would expect is some headwinds on the investment side. we have the consumption side and the investment side -- compared to two weeks ago, we think that could slow a bit more than most people expect. to more of your market views, just getting some breaking news, the white house responding to this latest delegation relating to brett kavanaugh calling the new allegation coordinated smear. a new yorking from times article, investigation into a new allegation of misconduct against brett kavanaugh dating back to 1983, nights new for, when he was a -- 1984, when he was a freshman at yale university. christine blasey ford is
providing testimony later this week along with kavanaugh as well. certainly a lot going on. how much does the political noise bother investors? as are seeing u.s. markets safe haven beneficiary of the trade war or political chaos that was created by president trump? -- >> wondering if there political development happening in washington there. >> i would say less so. what we're watching is what earnings numbers.
that will trump the political noise. u.s. -- inng in the the u.s. we see a bit of a slowdown for earnings growth. next year was very rampant of this year we have to ducted about 5% with the 25% tariffs we are seeing. it does make asian markets or especially china quite attractive. also aboutlking growth in fixed asset investment. this has been one of the pillars . you are seeing this as a slowing down. tell me more about what you are seeing it with your fear is. >> we are seeing it currently coming down. that is probably the part worried about. we are enough the state council
about a month ago, they told us as much. the more trade tariffs hit, the higher the domestic stimulus -- they will not be able to offset it completely. they will especially use and for structure investment to push against. insurance is the only number that goes up on the investment side in china. a number of asian central bank meetings. do you see opportunities given that we have a settling down? >> i certainly do. there is not that much on the equity side. what we see the most attractive opportunities from a risk reward point of view, there could be more trade tensions affected is the fixed-income side.
as i would say late entry into side, e.m.overeign sovereign's, 6.5%. we have not seen this on such .igh levels on the e.m. side you do not have that much china. the biggest as mexico. everybody was worried about it. now it is the trade tensions. especially with mexico. turkey, argentina, also it looks less promising. at least the currency has fallen enough to start this adjustment .rocess that inevitably happens the fixed side, also asian high yields have not seen this in five years. this is really the attractive areas investors should look at right now. >> we know of course that yield on the 10 year remains above 3%.
there has been a lot less concerned this time around. do you think if it pushes higher we are going to see a repeat of that cross asset volatility? risk for thens a cycle. we need to become is it that. -- be cognizant of that. the trade tensions have the potential to pull trade down a bit -- or growth down a little bit. that is the reason we think maybe the fed takes a little bit slower. if that happens, it will also help the position we think. >> we appreciate your time. directorffice managing coming to us from singapore and setting up the trading week. lots more to come on daybreak asia. ♪
>> this is daybreak asia. >> let's do a quick check of the latest headlines. the money laundering crisis at danske bank sees lawmakers scrambling to prevent the nation's credit rating from being dragged down. scandal has led to the fall of the chief executive. several staff are under police investigation. billion flowed through its estonian unit between 2007 at 2015. most of that should be treated as suspicious. apple will pledge support for privacy regulations saying it reflects the company's long-held view that privacy is a fundamental human right. sk use reports -- axios reports apple will tell the senate finance committee -- that information should not be extended to the company. up, opec's response to
>> it is a: 30 in the morning in hong kong. -- 8:30 in the morning in hong kong. there is no trading him across japan, south korea, taiwan, and china on account of festivals. sri lankan markets are also not trading. >> you are watching daybreak asia. let's get the first word news now in singapore. called off proposed trade talks with a new round of tariffs just hours away. $200 billion of chinese imports inl be subject at noon
beijing. president trump threatened to the amount if china retaliates. a china survey says chinese companies are under stress even before the imposition of tariffs. manufacturing's long rally has given way to declining revenue and sharply falling profit growth. the report says borrowing is the highest since 2012, an indication of panic. the iranian president has arab ally off supporting the gunman who killed 29 people at a parade. while he did not name the country, the remarks are ,robably aimed at saudi arabia
saturday's attack was one of the worst strikes by militants in iran's history. two drones oned an astroid as part of a mission to study the origins of the solar system. thrown -- flown on a spacecraft. they moved around by jumping 15 meters at a time. a german french lander will be delivered next month. a new high-speed rail line will dramatically lower travel time but raise questions about beijing's influence on a city. ,t took eight years to build and will carry 80,000 passengers a day. the train covers the 26 kilometers in just 14 minutes,
down from an hour currently. dayal news 24 hours a powered by more than 27 hundred journalists and analysts in more than 120 countries. this is bloomberg. >> thank you so much for that. let's get an update on markets as we get monday morning trading across the region. a number of markets closed today. a lack of liquidity as we get trading started. new zealand stocks lower. we are seeing quite a bit of damage when it comes to the aussie dollar. collateral damage in this trade war. oft last ray of hope potentially another round of talks in washington and beijing called off by the chinese over the weekend, said justin nothing substantially will happen until we get the midterms done and dusted.
also seeing downside when it comes to stocks trading lower by 0.1%. that is about it at the moment. japan and south korea coming online at this time. there is no trading day today. china and taiwan closed for the mid autumn festival as well. it is a big week for asia. not just the fed, but also central banks in taiwan. the philippines as well as new zealand making their monetary policy decisions this week. let's look at the oil patch. opec will boost upward only of customers request it. it is clearly a snub to president trump's recent twitter demands. sunday's meeting saw saudi arabia and allies working together. cracks are starting to show. we can bring an additional $1.5 million -- 1.5 million barrels. we have brought over half a million in the first quarter starting in june.
it is subject to demand. >> a lot of countries have spoken about their potential capacity, but nobody has stated exact figures. they cannot currently say the exact figures. we will continue monitoring what the mann -- with the market needs. i just told you russia's capacity. but numbers would depend on what the market is going for. >> what about the threat of -- but we continue on our course to secure our situation. now has morehouse say on price movement that opec. because of the tweets and the policy and the issues, directly or indirectly that touch the oil
market. what is going on in the white house has more to do with the recent increase to near $80 brent. i call it washington premium. >> bloomberg's asia energy reporter joins us now from hong kong. opec adding tom speculation about this willingness to push oil down from $80 a barrel. some would say it is sidestepping trumps tweet, others say ignoring the president. given oil is a primary source of revenue for opec and these producers, it is no real surprise they are aggressively pushing the price down. there is also the question as to whether opec can pump more. saudi arabia says it is meeting demand. other ministers have offered support. how often can they add to the
market? there are questions whether they can meet demand or how much oil they can pump. , whereing about demand is that headed moving from here? we have concern about u.s.-china trade tensions. possibly hitting economic growth. is that slows down, the demand for oil comes in the question. what are you hearing? demand with trade tensions is an issue. china is one of the biggest consumers of oil. when you look at what's happening in the market, it's supply is the issue. yuko sanctions on iran, you have venezuela's industry collapse comment that is primarily one the price is where it is at the moment. while libya is pumping more than it has, it is the highest level
since 2013. that is an industry that is prone to conflict. at the moment, the total market, ares not a big -- if there shocks to the market, we're going to see prices go high. >> talking about opec, we would be remiss if we did not talk about u.s. shale and the output there continuing to grow. not looking back in the rearview mirror. to what degree do we think this is going to keep going? what year are we looking at? how is this going to play in terms of supply coming out of opec? >> the shale story is quite amazing. they just keep pumping more. opec had a report out forecasting about 16 million barrels a day by the late 2020's. the potential to take market share is exponential. at the moment, it is a market that is constrained by
infrastructure. it is going to have a big impact on the market. one man's loss is another man's gain in terms of oil. thank you very much. last week we watched an historic summit in pyongyang. this week president moon jae-in face the formidable task of convincing critics the north is actually serious about giving up its nuclear weapons. >> they really want to have some economic cooperation with the south. they did not make any of the commitment so far. in north korea, they need the industries.
they wanted to have some cooperation. that is really what they want, in industry there. >> any investments that are of interest to cj group? >> for the industry. >> in north korea? why? >> north korea has a market. we will have a market opportunity. times, what we see is there is the connections within korea and china through new railroads. china.ough
we can growth through europe to siberia. >> you said there have been no commitments yet. what is next with north korea? >> the most important thing is the countries involved in this program make some agreements. there is north korea, south korea, and the united states. >> do you see any hope for that? >> i do have hope. need suchnorth korea an opportunity. >> we are seeing this trade war develop team -- between china
and the united states. how is that impacting business? >> not directly to us. we have much business in china. in chinese economy, we have some problem. and also because of the importance for china. chinese demand for korean cj's food.ke we are somewhat affected by that. >> are you concerned about a ?lowdown in the chinese economy >> that is right, yes. >> are you seeing it right now? >> not significantly this time.
time goes further, then we will have problems. viewfairly optimistic coming out from the cj group chair. talking to bloomberg, an opportunity possibly. up next, our next guest is we are entering economic territory as the u.s. and china trade war keeps up. we evaluate trump's prospects for success. ♪
china has said it will retaliate in kind. let's talk all about this with jerod munchen from the university of sydney's u.s. senator. -- center. last week we had markets kind of sanguine throughout the course of the week thinking this is as bad as it gets. the chinesekend pour cold water over any potential for a last-minute circuit breaker. >> i think part of the market response was because of the u.s. went with 10% initially rather than the 25% that perhaps was anticipated. as you say, the chinese have made clear over the weekend there were no plans for any near-term negotiations. most people are looking for the midterm u.s. elections as a hurdle to get over before any meaningful talks begin. the broader movement remains there is little
prospect of a near-term break that will put trade tensions alongside. is going to be a lingering tension. >> there is one side of the narrative suggesting this is one of the issues president trump is bilateral support within washington, that he is only going to be emboldened to push harder on the chinese. evidencenot a lot of there is any democratic opposition to these tariffs. some democrats are very much in favor of them. we can run for the transpacific partnership, it was the republican party that shepherded that through. it is not like the democrats are known for being big free traders. it seems like trump has more room to go. it is important to know this is a bipartisan issue.
there are few things that are bipartisan. being tougher on china is one of them. the question and the controversy is how to prosecute a tougher stance on china. the transpacific partnership was that. >> you say the u.s. cannot sustain these high tariffs because the country is a democratic country versus these other countries. china being nondemocratic. the u.s. prospects for success are not good. explain this further. >> the u.s. is a target rich country. you can see who produces what where. country wants to punish certain sectors of the u.s. economy, mississippi or wisconsin, or really tough places in trump's heartland, you can do that easily. it is hard to do that in china
because there are not -- they are not as transparent. they have a less-developed system where you can -- you cannot vote people out. there is no circuit breaker for punishing a chinese leader for doing something that goes against what are in the chinese interests. there is a famous chinese saying about eating bitterness. the chinese government, the communist party are happy to force-feed people bitterness if necessary. you cannot do that in the u.s.. there are going to be folks as we have seen in the midterm election, they have calibrated the trade war to compensate for that. there would be a lot of pushback if the united states tried to make people he bitterness. -- to make people eat
bitterness. a lot of analysts on bloomberg tv have been saying nobody will win, but for donald trump in his worldview, if the trade deficit with china turns into a trade surplus, that would be construed as a win. could that still be trade surplus and it still be a win for china? >> on the good side of the debate, the u.s. could cut a deal with china for china to buy more american goods. china has been public about that . have gone on the record they are willing to do that. point, that could be sold as a political win for trump. on broader structural concerns the u.s. has about china, the made in china 2025, the roll of take sponsorship in promoting he
industries, i think that is going to be more difficult. that is why there is a view among economists and analysts that perhaps we are in something war much more protracted rather than a classic trade war that can be resolved with a meeting of ways over the trade of goods and services. there is certainly potential for a political win to be stolen. the broader concerns are much harder to crack. 's questionng to ramy of what constitutes a win, it depends on how you look at the narrative of the trade war. is it ideological or based on the relationship? you can say a better trade balance could make washington happy. suppressan attempt to the rise of china that is different.
>> you can say the protracted nature of this is one of the ways the trump administration is hoping that companies diversify away from china and move them out of the global supply chain. that is one of the goal in this. the ultimate issue is what is a win? anyone.t clear for the trump administration famously came to some kind of tentative agreement about china buying more soybeans. were worried, a trade deficit is not how you resolve this. chinasue at hand is where is not adhering to basic international trade regulations with its force tech transfer, with its unfair trade subsidies, there are a number of areas where there is bipartisan support. goingestion is, is trump to see this to where china dresses those issues, or is he
going to settle for something that only he really cares about, which is the trade deficit? >> when you speak about mr. trump settling, what could china offer him that he would find palatable that would ease tensions in the near-term? in the near-term, i am not sure what china can do. what china needs to do is address the tech transfers, address subsidies, and those things do not happen overnight. they take time to develop. china is a maturing economy. it needs to address these challenges in order to satisfy the bipartisan asked about china's issues. -- angst about china's issues. >> thank you very much.
and senior advisor at the university of sydney's u.s. studies center. thank you very much. you can get around of the stories you need to get your day started. bloomberg subscribers can go to dayb on their terminals. this is also available on mobile. you can customize your settings so you only get news on the industries you care about. as is bloomberg. ♪
ramy: let's do a quick check of the latest business flash headlines. a ceo offloaded all of her shares after taking the top spot. a filing revealed she sold out in two transactions for 2.9 million u.s. dollars. she received the shares is a one-off benefit compensating her for missing out on incentive entitlements from her former employer. told thereg is being are negotiations to merge operations with randgold resources. a deal is immense. with a market cap of $12.2 billion, twice the value of randgold. it could benefit from randgold experience navigating the tough business environments in africa.
>> hong kong airport set a record for passengers and flight movement. passenger volume grew 5.2% from a year earlier to 6.8 million. that was driven by resident travel, which saw an percent 8% increase.n asia.s it from daybreak our markets coverage continues as we look ahead to the start of trade in hong kong. haidi: we will be watching for reaction in the chinese markets as we are counting down to win this next round of tariffs will come through. this is bloomberg. ♪
>> this is "bloomberg markets: asia." a quiet day. falling as investors seek safety. investors seek safety. >> canceling trade talks with talks just hours away. more punishment if beijing responds. rishaad: rebuffing the demand for cheaper oil. and from hero to zero. what has gone wrong over the past few months.