tv Bloomberg Daybreak Asia Bloomberg March 5, 2019 6:00pm-8:00pm EST
haidi: very good morning. i'm haidi stroud-watts in sydney where australian markets have opened for trade. shery: good evening from new york, i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. asia." to "daybreak: ♪ haidi: our top stories this wednesday. asia-pacific markets facing an uncertain start after wall street closes lower. investors still hungry for details on the trade deal. g.e. the big loser, falling the most in three months after the ceo warned of negative cash flow
this year. -- it can from the u.s. trade deficit has widened. shery: let's get you started with a first check on the markets close in the u.s. an uninspiring session, really lacking clear direction. the dow finished virtually unchanged. we have industrial companies being weighed down by president trump's ne new trade targets, india and turkey. the s&p 500 lose 1/10 of 1%. we had a little bit of a boost earlier in the session as we had data on home sales and services industries. beating estimates but that was not enough. industrials and materials led the decline. the s&p futures right now down 2/10 of 1%. we continue to feel the downward pressure. let's see how we are setting up for the asian markets. soph? sophie: first, the open in sydney. we are seeing the asx 200 open with little change, but could
resume gains. the aussie dollar is trading near a three-week low. investors will have the rba governor comment if the economy can deal. growth moderate to 2.2% on year-over-year basis in the fourth quarter for australia. in wellington, climbing for a fourth session in five trading sessions. a fresh high could be in sight. when it comes to the futures, we are seeing some pressure perhaps for japanese stocks amid speculation the boj may downgrade its use of output an expert at next week's meeting. haidi: let's get you the first word news with jessica summers. jessica: the bank of japan is likely to discuss a possible downgrade of its economy when board members meet next week. sources say policymakers make up the investment of industrial production and export demand.
a dovish shift among global central banks. recent data shows falling factory activity and the biggest drop in overseas shipment since 2016. the rba governor says the australian economy can cope with the continuing property slump. in the wide-ranging speech, link between housing consumption and income, he reiterated policymakers are betting it will eventually mean wage gains to offset the impact of falling home values. sydney prices down 13% from their peak, but lowe says that is manageable. theresa may is reportedly been told the brexit vote next week will be tight. hief is not the c confident that it will pass in the comments. may sent a team to brussels for more talks, but the government is not expecting a new breakthrough. there is a new warning about a no-deal brexit. it could threaten production in the you get -- u.k.
carlos ghosn could be released from jail later wednesday after a tokyo court rejected the prosecutions attempt late tuesday to keep him behind bars. ghosn's bail is set at almost $9 million. he has been locked up since november of allegations of financial misconduct. ghosn denies any wrongdoing and describes accusations as meritless and unsubstantiated. and bloomberg l.p. owner and former new york city mayor michael bloomberg has ruled out a run for the white house. the 77-year-old thinks he would be president trump, but it you understand how hard it would be to win the democratic nomination. bloomberg said it would be better to spend his time and resource helping the u.s. to move to renewable energy. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
shery: turning to the u.s. markets, this was one of those sessions where stocks ended exactly where they began. investors are still keen to hear details of any potential trade deals. su keenan joining me now. it seems investors sat on the sidelines again. another session of low volume. su: they are waiting for a lot of detail on the trade front. we know about slowing global growth. on friday, we will get gdp and jobs data. right now, stuck in the range is the story. we did see the dollar higher for a fifth day, but holding on gold, holding on oil. s&p futures barely unchanged as well as they look ahead to the next day. let's take a look at some of the big movers. earnings was the big story, disappointment as well. down the most in 17 years. i should say, excuse me, down the most since 2017. as an analyst points out, their
sales are continuing to drop. they had a 13% on revlon products, 20% drop in the last quarter. if you compare that with this 21-year-old billionaire kylie jenner, the world's first young self-made billionaire. she has a cosmetics line that is up 9% year-over-year and almost the same size by valuation with one of the revlon products, almay. planet fitness is a low price fitness chain teaming up with a retailer. news we will get into in just a bit. investors are dipping their toes back into an s&p 500 etf. you can start to see in the last couple of weeks, there has been some inflows but some are concerned such as goldman that we did not see more of an inflow as the market started to rebound in january and that is raising some questions, why not?
haidi: let's take a deeper look at ge. analysts saying all this gloominess could impact the debt rating as well. su: you have jpmorgan conference, the ge ceo announcing the free cash flow for 2019 possibly would be negative. let's take a look at how the stock has traded in the last five days. you can see the big drop on that news. the stock closed down almost 5% lower. it was down almost 8% in the trough of the day. if you look at the big picture of ge's stock, it has really struggled in the past year, but then had somewhat of a rebound as the new boss has been able to restructure, has been able to spin off pharmaceutical line for billions, and announced other changes. this particular announcement that the cash flow is an issue at least until 2020-2021, when the ceo sees the headwinds lessening a bit, is an area of
concern. strategy or's say it could affect their credit rating, adding more complexity to the turnaround. shery: with the u.s.-china trade tensions easing, it seems gold etf's are not as appealing anymore. su: all that glitters is not gold when the trade tensions seem to be easing off. you have the stock rally and the dollar stronger. let's go into the bloomberg. you can find our library of charts. the investors are yanking the most cash we have seen in the year from the largest etf, about $500 million has exited and walked out the door. take a look at the recent performance of gld. you will see why it really had a nice spike when all these crosscurrents were hitting the market, geopolitical concerns. but as it eases down for a moment, a lot of investors are finding it is better to take their money elsewhere. haidi: su keenan with the rep of
the overnight trading action. looking for more details on trade, investors did not get it overnight but we are getting trade data released on wednesday. that could show the u.s. deficit and goods and services with the rest of the world topping $600 billion last year. that would mean president trump's shortfall grew by more than $100 million. let's go to washington. promptuld the deficit president trump to potentially take more action? joe: while economists do not really dwell on the trade deficit, the president certainly has. it has been one of the main drivers of the actions he has made on trade. tariffs on china, pressuring south korea on a trade pact. and more recently, trying to revoke favored nation status with india. it is a big bugaboo for him. something he complains about regularly. the fact that the trade deficit widened may in fact spur more
action on his part. we still don't know what else he might be planning at this point, but ironically, a lot of his policies that have helped drive this trade deficit up. one was last year, the rush by importers to bring in goods ahead of tariffs on china. u.s. soybean exports have declined. also, the slowdown in other countries that means that they have less wherewithal to buy u.s. goods. shery: some of the president's policies also seem to have driven up the budget deficit. is this going to affect his spending plans at all? joe: he is going to be announcing his budget for the next fiscal year next week, possibly monday. it is expected to include cuts in various departments of the government. however, there is not a lot of
appetite in congress, and frankly, in the white house for enforcing, making those cuts to the budget heading into an election year. there will be at least an attempt at it, but right now, there is not a lot of concern. you don't hear the president, nor anyone in congress talking much about the widening deficit which is probably going to top about $900 billion this year, heading close to $1 trillion in the following years based on projections from the congressional budget office. so, this will have some impact, at least in what the u.s. is able to do if there is a disaster or something else. at this point, that is that look like there will be much of a rollback in government spending. haidi: we have another personnel change or departure overnight. the fda chief has resigned. does this mean the administration will have a harder time in an attempt to get drug prices lowered?
joe: this will certainly slow that effort because the fda director was very key in that. it will be sometime before they can put somebody else in place. he was also fairly well regarded, both at the white house and on capitol hill. the programs that have been put in place are still there, but they usually take a leader at the fda to drive the policy, to develop a policy, and to work to bring down the drug prices. there are several initiatives that he took part in that will probably still continue, including speeding up of some -- speeding up drug approvals. that will probably though have some -- lose some momentum going forward until a new commissioner is put in place. shery: joe, our senior bloomberg editor. thank you for that. still ahead, bracing for a tough
haidi: this is daybreak: asia. shery: u.s. stocks edged slower as investors await concrete details about a potential trade deal. joining us from minneapolis is bryce doudy. great to have you with us. we have seen more concerns over global growth slowing down. we have seen china soft and their growth target, a range of 6% to 6.5% for 2019. yet, when we look at corporate bonds, they seem to be ignoring these fears of a slowdown.
what is going on? >> globally, you are seeing a significant slowdown but much less so in the united states. it is really amazing how strong the labor market has been domestically here. bonds, theyonze, are doing all right -- corporate bonds, they are doing all right. stockholders need the companies to make enough money to pay them back. growth, while slowing, it is plenty enough to keep bond it investors happy to be buying bonds and have confidence that they will be paid back with a lend to companies. bostonwe heard from the member and he has known to be more hawkish. even he is saying it will take several meetings to determine of economic risks will clear up. he seems to be sounding more dovish. can we expect the fed's patience to be expended? -- extended. bryce: it would be pretty nice
if the fed was dead for the year. but, i still fear that they might stir up trouble either by still reducing the balance sheet by another half trillion, or let's say these employment report numbers are pretty strong, they might be back in play. it would be nice if they were sidelined for a while. gettinglobal growth front and center. inflation expectations. is a good reason to believe it will go lower still? bryce: i think inflation expectations have just about bottom doubt. we saw the breakeven rate hit 1.8%. now up over 1.9%. i think it can creep higher. let's look at this friday's employment reports. the averagely earnings number will be 3.3% year-over-year. that is pretty inflationary. we just had the dallas fed complete this study saying that
average hourly earnings number is actually understated. if wages are really growing at an even faster rate, for percent rate -- 4% rate, that will change people's expectations for inflation. we are finding out the slowdown domestically is not as much as people thought. if we have another $300,000 blowout jobs number, that it is really going to get people concern. without that, i think there is going to be some patients. -- patience. people have to see multiple months in a row of higher inflation before we get panicked as bond investors. we are not like everyone else. other people see silver linings. all we see is the big, dark cloud. it is almost like good news is bad news to us. if there is great employment, oh, no, here comes the fed again. it is a love-hate relationship with some of this economic data. haidi: how do you characterize eric's remarks from the boston
fed? he has been one of the longer standing hawks in that space and even he is saying that rate pause could be going on for longer than expected. it is interesting while he says the trajectory -- he also decides a lot of these external, the brexit, chinese slowdown being reasons to be patient for longer. bryce: right. so, i have never seen quite a turnaround by the fed. hard way ofn such a raising rates every other meeting, to being on hold, if not completely done. it is really a bit stunning. i can see why they are doing it. all of these issues, they can wait. they can be patient and let them clear up and see if there is going to be any lasting impact. a lot of times, we do see a pretty weak first-quarter. when you combine that with what you just mentioned is going on globally, why not wait?
i think we will see a rebound in the second quarter. i think some of these clouds will clear with trade and there will be some positive news to come along, but it is not really costing them at this point. i'm just surprised at how dovish the fed has gotten and different members' comments, but i can see why they are doing it. shery: we are already seeing financial conditions easing significantly in the past few months. when are financial conditions going to be become part of the the debate? bryce: you know, i have two thoughts. one is -- you are seeing the long bond, 30 year yields creeping higher and higher. i think more you get into this dovish talk, you see financial conditions change or like up, you see bonds get a little nervous about it. let's not ease up too much. we don't want things to get overheated again. on the other hand, it probably
is good to run things a little bit hot for a while. it would be nice to have financial conditions loosen up a little bit. n would love to see the loa growth has picked up for banks. these are all things that will pay off, maybe not this week, but you will see that money they are lending get invested in the economy and help the latter part of the year. i like that, but again, i'm nervous that the fed may have to get back in the game. haidi: bryce, appreciate your time with us. sit fixed income senior vice president joining us. you can get a roundup of the stories you need to do in today's edition of daybreak. bloomberg subscribers, go to your terminal. it is also in the bloomberg anywhere app. you can customize those setting so you just get the news on the industries and assets you care about. this is bloomberg. ♪
haidi: one of the shadiest corners of finance posing for a cleanup. agreeing to a plan to overhaul rules. bloomberg news financial regulation reporter joins us now for more on his exclusive story. ben, what are the banks and hedge funds agreeing on? ben: this has been the result of months of negotiations. some of the biggest names in finance -- jpmorgan, goldman sachs, apollo. they are try to figure out a way to change the language that kind of underpins $8.2 trillion or so of credit default swaps around the world in a way that would closely, more closely tied a default to the actual financial health of the company. the reason this is important,
because for the past couple of years, there has been a number of instances where essentially, a management firm has been accused of inducing another company to default or miss a payment and basically benefit one side of its trade. shery: how long will the overhaul take to complete? ben: this is kind of like just one step in what is probably going to be a long process. but, just getting here is a big deal. you have the bond side and the sell side that don't agree on much, but italy in a market as opaque as this, coming together and saying we have gotten a lot of bad press for how some of this stuff went down and we need to come up with a fix. just getting here -- they are going to propose these changes perhaps as soon as wednesday. here in the u.s. asically, this is . new line.
it could be a few months before anything is finalized, but once that happens, the hope is that they are going to make changes that will keep the heavy hand of government from coming in and try to clean up a market. the industry basically wants to sort this out themselves and not invite regulators. haidi: what has inspired the timing of all of this coming to a head? ben: if you remember earlier last year, there was one trait in particular where he hedge isd run by blackstone basically accused of encouraging homebuilder to miss a payment in exchange for a sweetheart loan. the people on the other side of it is essentially in insurance against a default. people on the other side of that crime foul. some legal action ensued and it became a situation that went up to the regulators in the u.s. and london. it was kind of a black eye for the industry in a lot of ways.
that is basically what really set the wheels in motion, really put the pressure on for industry to come up with some kind of solution and really avoid government from stepping in to a market that is kind of very handled by and industry. shery: thank you so much for that. ben bain. let's get a quick check of the latest business flash headlines. citigroup says iron ore may rally to $100 a ton. it brexit meet year supply crunch will trigger a rocket in prices and it will wallow similar shocks in the market. iron ore has jumped in recent weeks since the vale dam disaster which caused a poor percent supply lots. ss. haidi: jumping the most in seven weeks from of course it is already added more than one million users in india. billboard reported the service
jessica: i am jessica summers with the first word headlines. trade data to be released on wednesday may show the u.s. deficit in goods and services with the rest of the world down $600 billion last year. that means president trump's would have seen a shortfall, the main metric he judges the country to be winning or losing, grow by $100 billion. self-proclaimed velez well in leader -- venezuelan leader juan guaido is calling for support. speaking after a tour, he said police officials were present at a meeting he held with public employee unions and urged state
workers to prepare for a strike. the also says venezuela faces a long struggle for democracy. malaysia kept its benchmark rate on hold, say inflation is likely to remain low with inflation in january. the overnight policy rate at 3.2 .525%. the rate has remained steady since the bank lifted it by 25 basis points in january last year. deutsche bank predicts lower rates this year. and germany is locked in debate over whether to award huawei a license to operate 5g networks. berlin has said in outright ban is legally impossible, but officials across the initiation are pushing for tools to keep the company out. huawei has opened a cybersecurity lab in brussels. it allows customers to test the new networking equipment and the source code reviewed. 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 jessica summers. this is bloomberg. haidi: let's take a look at how all the markets are faring. sophie is in hong kong. sophie: aussie stocks are resuming gains, adding one third of a percent on the benchmark. it beinyou have it being led by materials. the aussie dollar trading at 76 u.s. cents. we are seeing it steady in the wake of that ahead of the gdp report. testing theollar handle should the data disappoint. that could be the way for the rba to shift to an easing bias. some stock movers in sydney. i want to highlight meyer, jumping the most since september after posting first half results this morning. back in the black even for a
drop, putting it down to improved margins and cost management. second-half sales are excited to be impacted by the changes to myer's brand portfolio. bubs australia jumping as much as 18% as it plans to form a chain in shanghai. it does organic baby food products to be distributed, covering 30,000 stores in china. we are seeing bellamy's gaining ground, rising for a sixth straight day after a string of optimistic calls from brokers regarding its business in china. shery: thank you so much for that. a dovish tide is one -- watching over the world's leading central banks, causing some to take patient posits. others shall open the doors to rate cuts in at least one from all sides. who'll join the dub parade next? kathleen hays is here with a
look. let's start in the u.s. another fed policy hawk now cooing like a dove. kathleen: that dove nest is getting fuller and fuller. it is not that the message got different. it is just that somebody, the president of the boston fed for many years now, one of the leading hawks. into 2018, heing was already predicting four rate hikes for 2018. for him to change his mind, this is a really big deal. the global economic risks, market volatility, both of them a big reason for the fed pause. is also looking very closely at is when is going on with inflation. >> fortunately from the federal reserve's perspective, the overheating risk i was somewhat concerned about over the course of last year, i think has diminished. in part, inflation has remained.
shery: again, significant. kathleen: we heard from another major dove actually, who has been dovish all along. minneapolis, seeing he is focused on keeping the u.s. economy going. he is not looking to raise heights -- rates either. haidi: we heard from the rba governor about an hour ago. he is not hawkish or dovish either. it adds to the sentiment that he is hanging on to this idea of above potential growth. kathleen: he certainly is. although, he went out of his way to tell us all the reasons why a weaker housing market, falling home prices are not going to hit consumption. why that is going to be temporary and offset by many other things. he did say as he said before, the rba's next move could be easily up or down. at least you can say he is not
firmly hawkish. at least the possibility that the rates could be cut. but for now, he says that australia's economy can survive the housing price slump. that is the theme. let's listen. >> it is influencing consumption decisions, but they are making working -- mainly working through expectations of future income growth. turnover is also having an effect, but they are not the main issue here. kathleen: he is also very concerned about australia's gross domestic product. within the next hour, we look at the latest gdp numbers. he did say it is going to show that growth was considerably slower in the second half of the year. let's take a look at what we are waiting for in the chart for the bloomberg library. if you go to the top section, you can see that the third quarter of the year growth was 2.8% year-over-year. not such a big decline. down to 2.6%.
this lower chart showing you what is going on with the trade balance. it has had some troubles in the last few years, but for now, you can see the green bars added to the sense that exports are looking pretty good. this is an important number. in will be interesting to see how the markets react, particularly if we have numbers weaker than expected. asry: the one central blanank been blasting stimulus from all sides. the boj. kathleen: if you had to say someone was king of the doves, you might say it is governor kuroda. our bloomberg news team in tokyo, a very important news story they broke, the boj is said to be discussing downgrading its views of output and exports when it meets next week. this is very important because they've been hanging onto an idea that there was enough growth in the economy, enough resilience from these global trade tensions that they will hit that 2% target.
let'sthink about this, take a look at another bloomberg chart. we will show japan's industrial production versus gdp. the white line is gdp which is mostly flattened out. the latest number barely positive after a slump. industrial production. here is the important part. it had been much stronger going into the final quarter of the year, getting a little weaker. we got that big drop and just barely positive. this is something i think that bears watching. also, the export numbers. of course, i think another country vying for king of the doves might be china. people think of china's pboc. you have monetary stimulus, fiscal stimulus. going all out on this done this turn -- dovish churn. haidi: kathleen hays there. the ceo over and all says the carmaker has not uncovered any major governance issues but has declined to comment on the
japanese court granting bail for predecessor carlos ghosn. >> in certain context, i cannot comment. my absolute duty and priority is to make sure our team remains totally focused, focused on its commitment, on its duty. withve launched a team renault as soon as we discovered what happened at nissan. we did not find anything wrong, anything non-conform, especially a little story about v ersailles. we finished all the audits an investigation by the end of this month. haidi: carlos ghosn could be released later on wednesday in japan. conglomerate telecoms and media editor, david mccombs is in tokyo.
what is likely the next step in getting to trial in his case? david: we can expect to see them starting to put together the case in his defense. they have outlined that already. they have discussed this narrative that the charges are the result of nissan's efforts to push him out in a corporate power play. that is a narrative they are likely to support. up until now, this has been a very lopsided case in the fake -- fact nissan has been leaking continuously information about ghosn's alleged misdeeds, whereas ghosn has not been able to respond. he has been in jail and cannot respond to them case-by-case. once the is out, he will be able to do that. there is some speculation he would be holding a press conference in short order and will be speaking out. the moment you walk set of that jail, all of the world's media
is waiting at the jail for him to walk out. the moment he walks out, he will probably have something to say and that will be the start of his defense, at least in the court of public opinion. behind the scenes, we can expect his defense team is working hard to build the case that these transactions that were allegedly thatal were either ones were signed off by nissan or perhaps misrepresented by nissan in the allegation, or in fact, they were a legal. -- the legal -- illegal. exactly what will the defense strategy be? will it be to focus on this idea that he was unfairly -- that is transactions were unfairly represented in an effort to push him out or these transactions were legal as they took place? shery: when can we actually expect this case to go to trial? hearingat we have been
-- before he was granted bail, we were hearing it could be several months. that included the time he would have been kept in jail. we could expect it is probably a couple months away. now that this has shifted so that time is probably more on carlos ghosn's side -- he would desire more time to be able to put this case together. this is very complex. these transactions, they are global transactions. they spanned the globe. there is a lot of paperwork having to do with them. who signed what, where and when. that is a lot of evidence to put together. teamidence -- team -- his has yet to receive all of the evidence. there is a lot of legal work to be done before this trial starts. it could be months away before it begins. shery: thank you so much, dave
shery: this is daybreak: asia. haidi: china has lowered its growth targets this year and a major tax-cut as the economy continues to slow as part of the fallout from the trade war. let's talk about the performance with a former director of the east asia program with us in sydney. what did you make of it all? it is quite queer the shift away from the risking to stabilizing growth and employment is paramount now. >> there is a lot of politics
that matters and continues to matter. china is facing them. the trade tensions with the u.s., that has made a big impact. slowing gdp growth. but also, border issues with the pushback against chinese technology. in that context, it is fairly negative for china and they have to concentrate on stabilizing thatconomy and making sure what they can do they seem to be doing. haidi: you look at some of the incentives and policies that came out, in particular, greater issuance of government bonds. it feels like they are going back to the old stimulus playbook. merriden: i think what we have to remember, they will do whatever they need to do to stabilize the economy and stimulate it so economic growth continues. the politics around this are absolutely the most important thing. shery: if you see the debt burden of china right now, already record highs. 26% of gdp as you can see on this chart on the bloomberg.
the largest corporate debt. also followed by household debt . the special-purpose bond, that just looks like another way of printing out more money, actually getting more into debt which is off the books. how dangerous is this situation? merriden: there is a lot of debate about dangerous it actually is to have a high gdp to debt ratio, and some idea that it is not as dangerous as we often think. but the chinese government has said about its monetary policy, it is though going to be prudent but loosening and tightening as necessary. there is a slight shift but the fundamental approach will be the same. they will do some stimulus but it will not be in an enormous amount sort of like we saw after 2007 and 2008 financial crisis. shery: proven but flexible, right? merriden: exactly right. shery: a clear sign of how and just they are about the state of their economy and where they are
headed? merriden: that is right. it is so critically important to make sure that these things -- there are so many underlying challenges for the chinese government and the elite in terms of making sure employment remains high, that state owned enterprises don't collapse. all of these various things they have to use economic and monetary policy to try and control and maintain stability so that the population does not become discontent. haidi: there has been a lot of criticism over people saying they need to abandon the gdp target because it is a measure of import, not output. it gives rise to efficiency in the economy. you talk about unemployment and this chart from the imf i found interesting to the extent they can tell unemployment is taking higher in china. for the first time, we saw the direct correlation saying protecting employment is paramount as a result of economic stability. declareast, we had him
himself leader for life. massive restructuring in the way power flows. is he in any imminent danger? there seems to be a lot of effort to show her and the domestic politics and policy side of things. merriden: i would not say he is in imminent danger, but we get this pressure -- impression in china of them being very monolithic. there is push back. within chinese politics, there are factions, leadership groups and they have different interest. not everyone is thrilled with what xi jinping is pushing. he has his own personal agenda to bring the china dream into life. this china rejuvenation. we talk about rolling back all of the reforms that we saw under the previous direction. he is -- there is a degree of instability and he needs to make that het he is showing
is managing the situation well and delivery on the key things the chinese communist party is supposed to deliver on, which is improving people's material well-being. your life is going to be better than your parents, and the sense of national pride. if you cannot show he is doing well, he will be in trouble. haidi: with the tensions continuing to come out of the u.s.-china trade, is it more of an opportunity for other nations like australia to take this window of opportunity and strike of a better relationship with beijing? merriden: there are both challenges and opportunities to that. if china where to buy more things from the u.s., that would cut into the various markets that australia has a great relationship like agriculture products. by the same token, china cannot necessarily afford to have everyone onside. if it has this tense relationship with the u.s., it cannot necessarily have a really tense relationship with australia as well. there are challenges and opportunities to those tensions.
shery: what i found really interesting out of the npc is that china seems to just many opposing views. they want to keep the yuan stable. they are actually going to increase flexibility. they want to open the financial sector. at the same time, they are saying they have to supervised enhanced supervision. how much of this dichotomy did you find in the npc report? merriden: those tensions and those dichotomies you mentioned, those kinds of contradictions -- it reflects the challenges of a country that on one hand -- and the political dynamic as well. trying to damage -- manage the economic rational development growth stability agenda, at the same time there is a real political push for china's rejuvenation, the china dream, the communist party. those are things -- difficult to
reconcile. we see that coming up in the statement like the work report because it is very hard to put them together and create something coherent when you got that political ideology at the same time as trying to run a kind of economically logical agenda. haidi: always a pleasure having you here. merriden in sydney. we have much more to come on daybreak asia. this is bloomberg. ♪
shery: tesla shares have fallen three days in a row, down almost 14%. the lowest since october. it comes after elon musk blind-sided investors with his plan to close most of tesla's outlets and shift to online only sales. ramy is here to walk us through what is happening. ramy: just when you think the volatility is over, we continue with this. as you talk about blind-siding investors, elon musk now
blind-siding their own employees. the biggest thing is we are realizing many of those employees actually found out they were possibly going to lose their jobs on the same day a blog post came out. that calls into question leadership as well as some cash flow problems if you talk to one analyst. hop into the bloomberg terminal because i will show you analyst recommendations in the gtb library. we are looking at some 13 buys, eight holds and 14 sells. the white line is the 12 month price target. it is not really reflecting the actual sales price. the share price, rather, of tesla. brian cut his price target on $192.y to he raises this issue of cash flow problems. i want to switch this screen on the bloomberg terminal. at the end of the year, tesla
had cash flow of $910 million. tesla actually paid off a convertible bond just last week of $920 million. that falls of the question on whether there is a cash flow problem here in addition to what has been a very weak start to the year in sales. also, looking at what is happening in terms of all of this growth in stores, for example. even a few weeks ago, elon musk in the company was saying we think that more stores, more service centers is part of our strategy, but let's actually see the actual growth. over the past two years, growth every single quarter, you can see on this chart. and then just nine days after they came out with their 10k filing, then elon musk actually said we are going to nix that right now. a lot of volatility and a lot of concern coming from investors as well as employees. just on the employee thing, one
new thing that came out is tesla is cutting more jobs at a california ca factory. haidi: ramy there. let's take a look at the market open in japan and south korea. sophie: japanese shares may be under pressure. nissan on the radar. we could have the stock move in the drop of chinese sales. the carmaker report lee considering changes of production to its u.k. market. we are watching on a report that it is to close a factory in china. in recent stock hall. pitch into neutral for the lower price target in the wake of his disappointing results. haidi? haidi: sophie kamaruddin in hong kong. coming up in the next hour, an exclusive interview with singapore's minister of communications and information.
haidi: a very good morning. i am haidi stroud-watts in sydney. asia's major markets have just opened for trade. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, asia-pacific markets facing an uncertain start after wall street closed lower. investors hungry for details on that trade deal. the bank of japan is changing its view of the economy. they may lower their assessment ahead of next week's meeting.
bery: will president trump the $100 billion man? may confirm the deficit has widened. we await more details on trade negotiations. straight to the market action with sophie kamaruddin. off with theng it open in tokyo, we are seeing stocks extend losses. amidrisk-off sentiment speculation that the boj may .owngrade its exports with today's session so far, we are seeing some automakers under pressure. we do have the yen trading just below the dollar. we are seeing the benchmark off by .1%. the korean won continues to lose
steam. economic indicators continue to fall. we are keeping a close eye on stocks. xi jinping may visit north korea in march. north korea appears to be restoring part of a missile site it tore down in july. checking in on stocks, you have aussie shares resuming gains, climbing to a september high. led by as this morning real estate and materials. in half anort is due hour after earlier being dented by governor lowe, saying it is hard to think of a scenario while rates rise this year. the ndx 50 climbing. the kiwi dollar is trading just around the 68 handle against the u.s. dollar. haiti. -- haidi. haidi: jessica summers in new york. jessica: the rba governor, philip lowe, says the australian economy can cope with the
property slump. between housing, consumption, and income, he reiterated that they are betting employment growth will eventually mean wage gains. sydney prices are down 13% from their peak. says that is manageable. self-proclaimed venezuelan leader juan guaido was calling for support in his campaign to topple nicolas maduro. he said police officials were present at a meeting he held with public employee unions and urged the state workers to prepare for a strike. he said venezuela faces a long struggle for democracy. ghosn nissan boss carlos could be released from jail later wednesday. that is after a tokyo report rejected a prosecution attempt late tuesday to keep him behind bars. ghosn's bail is set at $9
million -- at almost $9 billion. denies any wrongdoing and describes the accusations as "meritless and unsubstantiated." as wall street -- $8 trillion part of the derivatives market that is seen as one of the shadiest corners and finance. the issue concerns transactions by investment firms encouraging companies to miss bond payments they could otherwise make. we are told big wall toeet names are planning ensure any defaults are legitimate. bloomberg lp owner and former new york city new york mayor michael bloomberg has rolled out a run for the white -- ruled out a run for the white house. he says he understands how hard it could be to win the democratic nomination. he says it would be better to spend his time and resources raising the debate about gun
violence. global news 24 hours a day, on , air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thank you. trade data to be released on wednesday may show the u.s. deficit top $600 billion last year. president mean trump's first two years would have seen the trade for chol -- trade shortfall grow. curran karen -- enda joins us now. is not a keyance part of it. we know president trump a lot of time focusing on that number. enda: economists will tell you it is an academic measure that does not especially mean anything. what it does reflect is robust u.s. consumption. it does reflect u.s. fiscal
policy. tax cuts drove economic growth. it helped the dollar become stronger, which made imports cheaper. president trump has politicized the trade deficit. he has made shrinking the deficit one of his key pledges during his presidency, and that is why he is taking the hawkish trade strategy that he is. his supporters will say that is the correct approach, but the net effect is that the trade deficit reflects the robust u.s. economy and there is not any real indication yet that the trade policy and trade tariffs so far are going to reverse that widening deficit trend. seen the fact, we have policies themselves may have caused a bigger trade deficit with importers rushing to get ahead of new tariffs and importing more from china. enda: that's right. someis something we did
reporting on a few months ago with my colleague in washington, find a phenomenon of front loading where companies were deliberately rushing to get orders out of china and over to positioneither to an tariffs or the arrival of expected tariffs at a time in january. we heard stories of warehouse is chock-full of goods. that phenomenon seems to have eased off a little bit. i think it spoke to the sense of concern among exporters at the time that more tariffs world awaited. the trade talks themselves have come along way since the turn of the year. if anything, at the moment, it looks as though the trade truce will stay on hold even if the broader trade concerns are not going anywhere. shery: thank you so much for that. watches overide central banks around the world,
it appears the most dovish of all is contemplating an even more dovish stance. theleen hays is here with groundbreaking story. they have quite a scoop. they put out a story saying the boj -- probably the most dovish central-bank of all -- is itsing at downgrading forecast for the economy. that would be seen as opening the door to more dovish steps potentially. that theyhe things are supposed to be taking a look at, maybe acknowledging reality and saying we are not going to hit the forecasts we thought they would. in's take a look at a chart our bloomberg library. japanese exports. trade war, china slowing down. look how that hit exports, down 8.5% roughly. imports did not suffer quite so much.
that is the kind of thing they are looking at, and they are , march 14,t week march 15. it gets the market set for at least a change in therefore cap, what it means for their policy statement remains to be seen. haidi: the bank of japan, can they even do anything that is more dovish? kathleen: some people. speech on monday, haruhiko kuroda, the governor of the bank of japan, said he intends to maintain powerful stimulus and hit the 2% inflation target. back to the bloomberg library, their key number here, which is to white line, is back up 0.8. for japanion tracker suggests that by the end of the year, inflation could be back down to zero. one of the boj board members dissented in favor of more
easing. he thinks they could take rates below, more negative, more bonds, make the yield curve target below zero. when you listen to the speech is by one of the newer board members, who was a banker, he is concerned about the financial problems this can create. at the boj concerned that banks cannot make enough money under the current circumstances. expected for most people, governor kuroda will acknowledge that there's global forces. china slowdown, trade forces, and these may make it clear he is sticking on the path that the boj has been on for so many years. the first one to do bond purchase years and years ago, staying dovish. japan comesank of
up with data. kathleen hays, global economics and policy editor. still ahead on "daybreak asia," we will be discussing trade in an exclusive interview with singapore's minister for communications and information. our guestnext, will tell us how to position ourselves amidst all this trade uncertainty. this is bloomberg. ♪ this is bloomberg. ♪
haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. its 2019ina has cut growth target to the lowest in three decades. that did nothing to derail the stock market rally. the csi 300 index is at its highest level since june of --ost 29% let's skip to our guest. great to have you with us.
we are continuing to see this rally in chinese stocks. given what we have heard from the mpc on all these measures to cut the tax rate, not to mention a more flexible monetary policy approach, can we expect this rally to continue for the time being? >> absolutely. there has been so much concern given the fallout that coming from the trade dispute. the very fact that both sides continue this positive momentum i think is enough to keep lifting the market. the fact that the growth outlook was slightly moderated lower is a second priority. shery: we have heard china say they want to keep the yuan stable at equilibrium level, but at the same time, they want to increase flexibility. where are you expecting the renminbi to go? stefan: very much in line with the playbook, which i think the united states and china both
have, which is first and foremost not to use renminbi depreciation as a toolkit in this trade dispute. that is extremely important. it is very encouraging to see renminbi stable as it has been for the last little while. youy: is there a sense -- have started to see this phenomenon when it comes to the u.s. session at least, that the headlines on trade are positive from one day to the next but the positive impact is starting to fade. that they havee priced in a moderately positive resolution in the short-term and will be disappointed when the deal actually come through? stefan: that is the million-dollar question. are we in a situation where it is buy on rumor and sell on fact? investors can keep writing this way for a bit longer. we have the important summit expected at the end of march and some interesting announcements
that come after that, but over the next eight to 12 weeks, you know, once that is priced in, and we are getting there sooner than later, that stage, i think we can really expect them significant profit taking. haidi: when it comes to the nature of the chinese markets, not much has changed in terms of transparency, in terms of flexibility or the market oriented nature of what we see in trading in chinese equities. out of the npc, the work report, there were reiteration's that policymakers would be keeping an eye on fluctuations in either direction. still a giant ball of retail money in china that is driving these markets? stefan: it is a long-term process, so what we have seen with things like the hong kong-china stock connect program, the msci inclusion announcement from a few days ago , it is a long-term process to make the institutional framework
of chinese equity markets a little bit more robust. what you do not want to have forever is a market which is driven predominantly by very fast money on the retail side. really right now, the focus for the market, which is why it has done so well, is finally to get the united states and china at the table, make a deal, make a real deal, and that will certainly overshadow all these other sectors. shery: they have done very well. when you compare chinese markets to the s&p 500, the performance doesn't seem to be that rate. thegtv chart showing performance. it has been relatively low. will this trend continue? will we continue to see them american exceptionalism as well, especially against china? stefan: that is actually a very tricky question. i mean, i think what we are going to see at least in the second half of 2019, is dollar
weakness. be beneficial for emerging-market equities and other asset classes. american exceptionalism was the story for 2018. as was discussed earlier by another speaker, when we think about the trade deficit, that is now very serious issue and we will see dollar weakness and less american exceptionalism off the back of that. >> what is your investment strategy within the united states? bullishseen some strategies with industrials outperforming other sectors. even tech. stefan: we are big fans of technology. more than that, it is health care. health care is a very interesting sector to bn. late cycle, it is more defensive. it has a decent margins being protected and that is where investors should be. haidi: in terms of the pockets
of opportunity you are finding within chinese markets at the moment, towards the end of last year, we had a lot of bearishness on the consumer names. where are you seeing value given we have seen such an extraordinary run-up in a shares? stefan: we are just buying the .road market at this stage not making a lot of selective calls. we have the old sort of favorites, the big i.t. names and so on which are very interesting. have is aint, what we broad market that is doing well. it is really linked to expectations that a trade go in the united states is around the corner. haidi: always appreciate your time -- trade deal in the united states is around the corner. haidi: always appreciate your time, stefan hofer. you can get a roundup of the stories you need to know to get
shery: this is "daybreak asia." i am shery ahn in new york. haidi: let's get you a check of the latest business flash headlines. iron ore could rally to $100 per pound. it predicts a rocket in prices and the patent will follow similar shops in the oil market. iron ore has jumped in recent weeks since the dam disaster. the market is proving hard to replace. shery: -- suffered its worst session of the year so far after a selloff by its top shareholder sent stock falling.
icahn uploaded 5 million shares at a discount of about 2% to the previous closing price. he still holds more than 24 shares.hertz it could signal a reduced likelihood the company finds a buyer. tesla slumped on reports that the model three has temporarily lost customs clearance in china. areorities in shanghai holding 1600 cars after finding inaccuracies in the paperwork. customs officials say some of the vehicles are missing chinese while on brake fluid others have discrepancies compared to what is stated on the label. china, and china is putting high-tech on the menu to tackle the slowdown in the world's biggest consumer market, introducing ai and robotics. in an exclusive interview with she says she is
upbeat about the chinese market. the runwayve that for growth is still very long, in 1000,e already are 200 -- 1200 cities in china. there are means that so another 1000 cities in china that do not have any kfc. space alone has a huge space for growth for china. >> you are not concerned about the broader slowdown everyone is talking about right now? >> there are many, many challenges. what the economy has offered is ie of the challenges, but suppose my point is we have learned how to deal with many, many challenges in this market. macroeconomic
challenges, we have learned how to adapt and do the right thing that this time for our customers. yum china think that is confident in the value proposition for the consumer so it is less impacted by that macroeconomic challenge as opposed to maybe something that is on the higher end? >> we are very resilient business model. for customers coming in, the perage amount for person -- person is 30. it takes amazing. the total experience is good. that manynot businesses in china that can offer that. >> with a lot of the geopolitical questions now happening, a lot of development on the political front, do you have any concern that investors in the u.s. are more cautious about going all in on the china
play? >> i think investors will self select. there is always some investor who prefers one country or the other country, one business model over the other, so that is the investors choices, but for us, we are a very, very good if an investor wants to participate in china grows. >> the thing that has been on a lot of businesses' mind is the trade war. core supply of chicken does not come from the u.s., but some things like cheese, maybe beef, that would haven't had to do business, right, in terms of the tariffs? isthe bulk of our food sourced locally, but we do
import beef from australia, from new zealand, from south america. we have been doing that for quite a while already, so that not changing. the bit about cheese, yes, you are right. we have to switch the cheese supply from the u.s. to other countries such as new zealand, but the volume is not material enough to impact our overall cost structure. frome cheese supply is now australia and new zealand consider of america, where you would have gotten the tariffs? people are hopeful the two presidents are coming to a deal and all the tariffs will be gone. do you see yourself switching back? >> we welcome the opportunity. all good supplies around the world. , weever there's opportunity always explore, and we always
haidi: we are just getting the latest gdp numbers for the fourth quarter out of australia, slightly missing expectations. quarter on quarter, that growth number coming in at point 2%, missing expectations of .3%. the year on year number is a significant mix, 2.3%, missing expectations of 2.6%. some economists expecting the pickup in the fourth quarter to come in at 2.8%. at 2.3%, that is far from it. it is missing expectations. there has been concern given the clientn this
when it comes to property markets in major cities, and that is expected to feed through to the wealth effect. wage growth has been pretty sluggish. we have on the upside seen a pickup when it comes to capex as exports feeding through. australia had a trade surplus. to have fedt seem through when it comes to the fourth quarter gdp expanding, missing expectations. the 3%ly far shy of growth that the rba is expecting over the next little while, which is expected to be above potential growth. theeally does kind of go to narrative that perhaps we will be seeing one if not two rate cuts from the rba this year despite leaving rates on hold in this week's meeting. shery: as soon as august, right? we are seeing the dollar take a hit. we are joined now by our global
economics and policy editor, kathleen hays. this is a huge mess. -- miss. kathleen: it certainly is. consumption coming in on a quarterly basis. you get something like 1.2%. it is very important, not just interesting, that the rba is forecast for 2019 at just around 3%, so they are ending the year before on a much weaker footing than they thought they would be, and of course, haidi was just referencing the forecast that nomura put out a couple of days expect two rate hikes in april for a cut and the beginning of the summer. at so low,ng a look who finished giving a very important speech when he is concerned about the drop in home prices.
he says that it is being offset the market. said that australia can survive its property slump. let's hear what he said. it is influencing consumption decisions, but they are working mainly through expectations of future income growth. swings in housing price and turnover in the housing market are also having an effect, but they are not the main issue. >> exports holding up and the trade surplus maintaining itself in australia. if the trade tensions continue, this is a risk on solos plate. even though he repeated the movements here, if there is one, could be equally higher or lower on their key rate, he said it is hard to imagine a scenario where
they would hike rates. let's look at one of our charts in our bloomberg library. you are going to see on your television screen, mainly, we want you to look at this white line. going on three years of not moving that at all. even so, after so many predicting the next move have to be higher, some people thinking it could be lower. i say it is basically in a range. certainly, if they were to cut rates, excuse me, cut the aussie dollar rate even lower, and give their exports a boost, the rba, no hurry to get there. >> no hurry indeed and no hurry for the fed either. it seems it's getting pretty crowded these days. latest we heard from is the boston fed saying this could go on for longer.
kathleen: what is so significantkathleen: and that he was one of the first people going into 2018 to say they rate hikes over that year when so many people that maybe two, and he warned about commercial real estate. he was eager to get the balance sheet reduction going. he was in the hawkish camp and on the cutting edge. he seems to have changed his mind like so many of these governors, and gotten on board with meeting to order rates steady and see what happens. volatility and also what he is seeing on inflation. here is what he said earlier -- >> from the federal reserve's perspective, the overheating risk that i was somewhat concerned about has diminished. it remains quite well behaved.
kathleen: milk kashkari saying he will reap -- neel kashkari saying he will remain focused. i don't think they have gotten more dovish. phil lowe is still holding out for this pickup in the gdp numbers. it seems to me they are very close to getting to the point where they could maybe formalize their cause and get a little bit closer. thethere yet, but upcoming economic numbers will have a lot to do with that. shery: kathleen hays. let's take a look at how asian markets are shaping up so far this morning. sophie: asian stocks are trading, mixed with losses led by japan. the nikkei 225 off by .6%. the cost be raised earlier gains, being led lower by health care and utilities. chipmakers are the biggest drag.
over in wellington, kiwi stocks have lost momentum. now marginally changed after a four-day rise. we have an outlier this morning. .5%.ve it gaining the aussie dollar getting knocked down by the gdp report, losing .4%, heading back towards the softer gdp update may see the rba shift towards easing bias. i want to highlight the korean won. flipping the board to check in on some stock movers across the region, i want to highlight kitchen extending losses. now, they have downgraded to neutral with a lower price target, and doubts are cast. 11%th-quarter sales fell for pidgeon. in sydney, it jumped by as much as 18% as it plans to form a joint venture.
that covers 30,000 stores in china. want to highlight these shares. it is not entirely clear what is dragging gains for the athletic apparel maker, but it might the around south korea sending a proposal to the north to make a joint bid for the 2023 women's world cup, which has been encouraged by the fee for president. shery: that it -- fifa president. shery: that is interesting. first word headlines. jessica: the bank of japan is likely to discuss a possible downgrade of its economy when board members meet next week. sources say policymakers may cut this estimate. that would add weight to the dovish shift. recent data shows falling factory activity and the biggest drop in overseas shipments since
2016. trade data to be released on wednesday may show the deficit topped 600 billion dollars last year. that would mean president trump's two years so far would have seen the u.s. trade shortfall, which is the main metric by which he judges countries to be winning or losing grow by more than $100 billion. and theresa may has reportedly been told that the brexit vote next week will be tight. warned he is not confident it will pass. to brussels.am we are told the government is not expecting a breakthrough. a new warning about a new deal brexit. bmw says it could threaten production in the u.k. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. thank you.
china's top leadership has unveiled targets for the economy. investors want to know how the complex state apparatus plans to achieve it. david ingles is in beijing, covering the ongoing nbc. what is on the agenda today -- mpc. what is on the agenda today? david: the economic planner outlining some of their plans. smaller meetings between the different provinces and cities. a mediamight get briefing from the agricultural ministry, and within that space, it is important to know that we might see something. we might get something as far as what they are planning. as you mentioned, we have the work report. it was out yesterday and it is putting more meat on the bones. yesterday, i had a chance to speak with a lot of people. one of the talking points was
wide we have 6% to 6.5%? what does the range mean? let me show you this comment from our chief economist at bloomberg economics, tom orlie. he basically said the cost of not having a range are far higher than having one. he alluded to this. it is very complex. a lot of provinces, lots of things to go through. it gives a guide to everyone to strive for. for businesses, when they come up, there will be demand to meet that. we have that graphic. china's debt to gdp is actually quite high. it is not as high as the other developed countries. shery: let's turn to huawei because the embattled telecom giant, they are now suing the
u.s. government. what is the latest on that? legal offensive. the short of it is they are looking based on sources here to challenge or argue it is simply unconstitutional to single out a person or company for a penalty without actually a trial. we spoke to a huawei official yesterday. saying to looks how they are dealing with security concerns. listen in. america took a similar approach to europe and other countries around the world to be more open.d security is a global challenge. it is not a huawei challenge. it is a global challenge. if america wants to adopt the best technology, the only company doing end to end five g
is huawei. david: so based on what he is saying, do you go for the best or deem maybe not the best, but obviously, take away the risk of something being stolen, allegedly? shery: thank you so much for that, david ingles in beijing, covering that. we will have an exclusive chat with singapore's minister in charge of trade relations and .inister for communications we are live from the lion city, next. this is bloomberg. ♪
it is about transforming the economy through technology. singapore is in the second phase of a five-year plan. let's get inside. good to have you -- insight. good to have you with us. >> our investments in r&d for the digital economy are critical for our larger digital economy vision. in this space, we are adding dollars. aret we are focusing on s frontier technologies. driverse are important of transformation and industry and value creation for the future. haslinda: which industries do you think will jump on board? i think the applications, when you look at something like .i, there are several factors financial services, transportation, etc.
i think, in general, there is a range of sectors. to getprioritizing a few the ball rolling because that is where the immediate value creation is most apparent. outinda: you are rolling the 5g plan. what is the status of that? >> it will invite feedback from the industry. this pertains to how the spectrum should be allocated for the 5g will out to be effective. once we have completed the consultations, we are in a position to launch the process and our expectation is my next year, we should be able to start the rollout. 5g is important because when you talk about the data rates, lower it affords a new way of doing business is.
that is a recognition globally. what we want to do is make sure singapore is at the forefront of the change. haslinda: for this option, how much do you think you can race from that? -- raise from that? >> i think our most key objective here is to ensure that when we rollout the network, the network is one that is utilized effectively for value, creating possibilities. haslinda: the focus, like you said, is on 5g. are you concerned that huawei could be one of those being used for the 5g rollout? >> our position has been consistent. we emphasize vendor diversity to ensure we have got sufficient robustness in our system. whoever is operating our system has to meet specific criteria for the licensing which includes security risks being managed, and that includes other kind of
risks as well. to see whaty this else needs to be done. haslinda: do you not share the concerns of the u.s. government when it comes to always gear, basically -- huawei's dear basically -- gear, basically? >> we are doing our analysis and will arrive at a conclusion in due course. anyinda: has there been talk between singapore and the u.s. when it comes to toly -- to one way -- huawei? >> we are concerned about what needs to be gone and so on. we engage with a broad range of countries. of course. china, from from our region, australia, new zealand, u.k., and i think we want to see what the general
practices are, because at the end of the day, this is what we have to learn because it is a global trend. haslinda: you are saying it is too early to be concerned about while way -- huawei's gear? your depends on perspective. each country has their own views on these matters. the way singapore purchased this is we start by defining what our concerns and expectations are, and then from there, we evaluate the proposal that come to us, and then we make a decision on how to go forward. haslinda: minister, in your capacity as the minister in charge of trade relations, what do you make of the ongoing trade talks within the u.s. and china? there seems to be some implications on export numbers already throughout asia. do you see that being sustained? haslinda: i would say this.
i think these are the two largest economies in the world. the economic relationship has major implications for the rest of the world. we are a highly trade dependent economy, so we are watching this closely. the two countries remain engaged in a dialogue that is constructive to arrive at some kind of agreement, equilibrium, hopefully, i think is positive. that will have an impact on consumer and investor sentiments as well. we have to wait to see how this goes. a -- whether it is a sustainable trend or a blip in response to some news, we have to wait and see. our own hope is that the two countries can come to an understanding and an agreement that allows for an equilibrium on a sustainable basis to move forward. haslinda: they signed a trade agreement with the e.u. recently
in light of brexit in the u.k.. how do you see relations developing? >> that is a good example of how like-minded countries continue to move forward on the whole globalization and economic integration. ar europe, asia represents very interesting opportunity, especially for the sme's. europe is an interesting possibility. engender that deeper engagement. we think it will be a path .inder brexit, we have to wait and see what the outcomes are. i think our starting position is we want deeper engagement with europe. were to materialize, we can assess how we engage with the u.k. economy. haslinda: we thank you for your insights today. singapore's minister. back to you.
what is the likely next step in terms of getting this case to trial? as you can see, i am standing in front of the tokyo detention center where carlos ghosn is expected to walk out as early as today. the biggest question mark right .ow is what prosecutors will do last night, the tokyo court turned down an appeal to keep him detained. but there is the option of three appealing. additionally -- reappealing. additionally, -- is an option. otherwise, ghosn could post his bail, which is set at ¥1 billion. he could walk out today. in terms of getting to trial, his new defense lawyer has indicated it could come as early as this summer. there's a lot of moving pieces in this situation, so you never know. shery: third time could be the time after the last two times the prosecutor blocked him.
lisa, thank you so much for that. joining us in tokyo. let's review what to watch in markets later this morning. sophie. sophie: we are watching time when he tech companies after we got february sales figures. forecasting ater drop in shipments. keeping an on suppliers to target and kohl's in the region. flipping the board, we are keeping an eye on mgm china. evergrande may move after movectin projecting that it wil yarn year. i want to highlight ping an bank, which has become china's stock.nking this as investors are betting its retail banking arm will shelter it from the slowing economy of the mainland. haidi: before we handed over to "bloomberg markets: asia," let's
take a quick look at how markets are trading. the nikkei 225 lower by .6%. get a more dovish boj. the kospi also trading pretty flat at the moment. all the equities holding up even as the aussie dollar continues to decelerate in the wake of those weaker than expected gdp numbers for the fourth quarter. shery: let's take a look at future trading. we are seeing some downside pressure for s&p futures. .2%.n higher, the offshore yuan under a little bit of pressure at the moment. a stronger dollar this entire week, gaining for the fifth consecutive session. that is it from "daybreak asia." this is bloomberg. ♪
>> it's 9:00 a.m. in beijing, zhang high and in singapore. lcome to "bloomberg markets: china open >> here are the top stories. asia stocks search for inspiration. the top ix falls again from a year to date high. david: the national people's congress reresumes -- resumes here in beijing. yvonne: and a tokyo court jects calls to keep carlos ghome behind bars.