tv Bloomberg Daybreak Asia Bloomberg March 21, 2019 7:00pm-9:00pm EDT
"i'm still very much on plan a paul: -- maria: the conversation will switch no doubt to changing her red lines, maybe dropping the stiff red lines that have to do with immigration, the customs union, the single market. the prime minister may be forced into a broader coalition with opposition. it may be enough to turn the hardline brexiteers in line, make sure to get the vote then. this is a real concern when it comes to the e.u.. is almost taking a step back. they don't want to be blamed for forcing the u.k. out of the e.u. the think they consolidate deal, but it is up to prime minister may. this is a domestic u.k. political story. >> maria, we are still awaiting a press conference from prime minister may at the moment but we have heard from the telegraph as well that chairman brady
really told the prime minister u.k. mp'sis week that don't want her around anymore. what is her future looking like? maria: it's very difficult. for the prime minister, no question. she had a confidence vote that should keep her safe in the job. it is this idea that she is not able to get the deal done that can weigh on her futures. there are questions as to whether she can be in power. what are your many times in brussels is that this is a prime minister who is in government but had lost control of the process and she has no power. it is very difficult for the e.u. to engage in a negotiation where the counterpart has very little say as to what happens next. what camp prime minister made you next? -- may do next? she things she can put it to a vote. this idea of the european
elections playing out in april may be enough to force some of the hard-liners in line or to prompt an election. is there space for a deal? will she maybe had to push the nuclear option for a second referendum, which we know she said many times she will never go that way. in the e.u., many would tell you that vote failed a long time ago. shery: we are seeing sterling gain a little bit of ground. it has been on a roller coaster to follow all these brexit negotiations, yet when you look at the forecast for sterling, it is at a much higher place than it is at the moment, perhaps showing you some optimism that there will be no no deal brexit. perhaps a perpetual extension of sorts. what would that mean to the british economy? we have already seen business investment getting pretty hurt. very fairhink it is
to say that it is undervalued. the economy is also underperforming. when you look at its counterparts in the e.u. and investment decisions, why would you please her money in the u.k. if you don't know what the legal situation would look like in a year from now let alone in six months? the currency is very volatile and has really underperformed for the past year. when you look at sterling, you see that volatility pickup. it is a currency that has become very difficult to trade. ago,ber just a few hours we were looking at friday being that moment of a crash out. that has been delayed. a no deal would never happen. parliament would not allow it. look at the technicalities, you know that is not the case. the default option is the no deal is very much on the table. we just heard that from donald tusk.
look at theback to many options on the table because this is by no means a binary choice. paul: there is a good point that you make, maria. there are other options. one of the options is to revoke article 50. we may be potentially seeing that as well. thank you very much for joining us with that analysis of the press conference we just heard from donald tusk and jean-claude juncker. let's move from the politics of brexit to the potential business impact, some of which maria was discussing. ramy inocencio is taking a look at that. .n unusual alliance theresa may is presiding over a brexit national emergency. paul,that is a quote, with what is happening with the joint statement coming out from the united kingdom. one is the biggest business lobby of the country.
the other is a big umbrella group for the trade unions. usually, they are not on the same side of things. they are calling what theresa may is doing a "national emergency." i want to walk you what they -- through what they are saying here. decisions in recent days have caused the risk of no deal to soar. wouldock to our economy be felt for generations to come. they are saying they want to avoid a no deal and that is paramount and that securing an extension is essential. they are saying a new approach is needed to secure this. for what it is worth, it's interesting that we have been talking about this petition by the parliament, you parliament, and apparently, this has crashed because so many people have been on it. you see one million signatures there. in that q&a we saw, one of the questioners said it was more than 2 million now. petition overy
100,000 signatures make that motion eligible or debate. mrs. may saying she will not revoke article 50. they think there is a 50% chance of a no deal brexit. inry: angela merkel brussels, speaking to the press. rainy -- ramy, fears of a no deal brexit always around. what our business is doing to prepare for it? ramy: it depends on which businesses you are looking at. for our audiences, the most important one is the financial sector, but in our own bloomberg news reporting, it seems that a catastrophe may have been averted. the e.u. and the u.k. are already cooperating on a no deal area, and ofhis course, both sides would probably lose around the board if there was a big market meltdown. food is another thing. going back and forth between the e.u. and the u.k., but
supermarkets and their suppliers have been stockpiling food. the one caveat is frozen food and chilled storage is pretty much used up. there is limited warehousing space. manufacturing and other things. ifs is a nightmare scenario this happens. more stockpiling. airbus said it plans in the u.k. end germany -- plants in the u.k. and germany. there is an agreement from both sides so they should be able to carry on unhindered. shery: ramy inocencio on the impact on businesses if we see a no deal brexit. all of the impact on currency as well. sophie: the pound is gaining ground early in the asia session, holding above the 131 handle. granting the u.k. and unconditional brexit extension period -- an unconditional brexit extension.
it fell as much as 1.5% overnight. markets having net short position overall on the pound, but asset managers and pension funds have recently been adding to positions mainly against the euro. let's check in on the euro pound . we have deutsche bank closing out its short trade. recommendation warning the risk of a last-minute ask didn't -- accident. it trading at the 87 level. let's check in at the open in sydney. thursday session. we see thet loss, asx 200 adding .3% this morning. kiwi shares are rising for a second straight session. shery and paul. paul: things, sophie. thanks, sophie.
just to recap, donald tusk saying the process was better than expected but essentially putting a binary choice on the table for the u.k. , past the deal and the deadline gets extended, or failed to pass the deal, and it only gets extended until april 12. third time is the charm. let's see what all of this means for the markets. garfield reynolds. what are you making of all of this? garfield: the reason the pound much isoving the low liquidity witching hour. they have been bitten on occasions by rushing to judgment and they are having it overturned by traders in london. and there's been an enormous amount coming out overnight, but not much light. you could take the view that this is in fact something may
might not have wanted because what she really wants is something to go to parliament and say, right now, you need to pass it or no deal. a lot of political strategy seems to have been around that idea that no deal brexit is the whgel with which you can ip the recalcitrant brexiteers by avoiding a risk of a hard brexit that might cause more economic damage and lead the brexiteers that push for it to blame. has done overnight is to make sure that if anybody is to blame, it is not them. there is a lot of blame shifting going on. we are still left with this knife edge, this binary outcome at the moment, and that explains a lot of what is going on with sterling. we were looking at how the volatility curves and sterling are extremely -- ands a very binary outcome
there is not a lot of certainty as to which of the outcomes we are going to get. negotiated brexit or a hard brexit. shery: we are seeing the prime minister giving a speech. let's listen in. pm may: -- the article 50 process. approval the council's of legally binding assurances in relation to the northern ireland backstop, which i negotiated with president young the last week. this should give extra assurance to parliament that in the unlikely event it is ever used, it will only be temporary and the u.k. and the e.u. will work immediately to replace the backstop with alternative arrangements by the end of december, 2020. after a lengthy discussion, the to ail today also agreed vote next week that in order to provide time for the u.k. parliament to agree and ratify a brexit deal, the date of our toarture will be extended may 22. if parliament does not agree on
a deal next week, the e.u. council will extend article 50 until april 12. at this point, we would either leave with no deal or put forward an alternative plan. furtherinvolves extension, it would mean participation in the european parliamentary election. as i said previously, i believe strongly that it would be wrong to ask people in the u.k. to participate in these elections three years after voting to leave the e.u. what the decision today underlines is the importance of the house of commons passing a brexit deal next week so that we can bring an end to the uncertainty and leave in a smooth and orderly manner. i will beorning, returning to the u.k. and working hard to build support for getting the deal through. i know mp's on all sides of the debate have passionate views, and i respect those different positions. expressed my frustration, and i know that mp's are frustrated, too.
they have difficult job city. i hope we can all agree we are now at the moment of decision. and i will make every effort to ensure that we are able to leave with a deal and move our country forward. thank you. laura. thank you very much, prime minister. bbc news. doesn't this delay just postpone the dilemma you still find yourself in? what is it that makes you think you have a chance of passing your vote next week? and can you confirm you'll definitely hold a third meaningful vote next week? you expressed what appears to be some regret from how the remarks he made last night about mp's -- do you think actually you should apologize for the remarks he made about what parliament has done? i said,first of all, as in relation to members of parliament, there are
passionately held views on all sides of this argument, and as i said last night, i expressed frustration, and i know mp's are frustrated, too. i am very grateful to those mp's who have supported the deal, to those who have come around to supporting the deal have not previously done so, and all those mp's i have been meeting across the house and talking to about the issues that they are concerned about in relation to this deal. but i think what this decision tonight does is show the clear choice that is available, open to mp's. getting the deal through next week in a meaningful vote means that we can have that extension may 22, get our legislation through, deliver on the referendum, leave the european union, and do it in an orderly manner. not getting that both remains that we will obviously, as the council has said, come back with a plan for the way forward. but if it involves that further
extension, that would mean a candidate in the european parliamentary election. i think the choice is clear for people. james. minister, donald tusk listed for options before april 12. deal, no deal, extend, or revoke. we know that your first choice is deal, but to help us understand your thinking, could you now rank in order of preference those other three choices? is no deal your second choice? ensure i am working to we can leave the european union with a deal. you mentioned a fourth choice of revoking article 50. i do not believe that we should be revoking article 50. that is not something we should be doing for this reason. we gave the choice as to whether to stay in the european union or leave the european union to the british people. they voted in 2016. they voted to leave.
the government at the time said we would honor and respect the decision. at the last general election, 80% of the votes were cast for members of parliament to honor that decision, respect the referendum. i think the time is now to deliver for the british people. the time is now to make the decision final. anks. sky news. what would happen if your deal doesn't pass? if the deal does not pass next the, will you bring forward yes side to the 12th of april of have a sequence indicative votes are a different plan from the house of commons to be revealed? pm may: i stand by the commitment we made in terms of the legislative commitment and obviously the commitment that the chancellor of lancaster has -- lancashire has made in the
house of commons. has been made by the european union council to which we have agreed does mean that there is a different agency on april 12. i believe this is important. it gives us the opportunity, and he's next week, to look -- mp's next week, to look at the choices that face them. we can have that extension to may 22. if we do not get that deal through, if we do not get that vote through, before april 12, we have to come forward with another plan. if that plan means a further extension, it means standing in those elections. tom. thank you, prime minister. you said to the house of commons on wednesday that if your deal is not passed, and i quote, "the house will have to decide how to can you confirm if they proceed with a long delay or softer brexit or a customs union, you will then an act that
-- enact that? pm may: we need to work with the house asked to how to proceed -- as how to proceed. framed the people the choices that will be available to them. i continue to believe that the best route for the united kingdom is to on of the referendum results, to leave the european union, to do it in an orderly manner. that means do it with a deal. the deal is there. memberson is there for of parliament. i believe it is important that we do see that vote going through and that we are able to leave and that orderly way. jason. >> daily mail. are we ever going to leave the e.u., prime minister? we have a whole load of new dates here. yesterday, you seems to be suggesting you would not ever sanction a longer delay. now, you are talking about it again. is that a redline for you? is this it?
are these the last dates we are going to see about brexit? pm may: yes, we will be leaving the european union. i fervently believe that it is the duty of parliament to deliver on that result of the referendum. i also believe that it is better for the u.k. if we can do that with a negotiated deal, do that in an orderly, -- smooth and orderly manner. that is what the decision from the council enables us to do. i hope all entities would agree with me -- mp's would agree with me that we are at that moment of decision. i will take a couple more. is andy here? yes. >> and he would cut from -- andy from pa. there is a petition on the parliamentary website that is going to more than 2 million signatures asking you to revoke article 50. are you confident that it is still the will of the british people to leave the european union or du think there is any chance the opinion has shifted
you think there is any chance the opinion has shifted since 2016? pm may: we saw the biggest and aquatic exercise in our history. we saw many people who either had not voted before or had not voted for many years turning out to vote in that referendum. and there was a clear result that we should leave the european union. and i think that it is important , if we want to show that we can be trusted as politicians, to respect a decision that we gave to the people. we did not say tell us what you think and we will think about it. we said here is the vote. what is your decision and we will deliver on it. i believe it is our duty as a government, as a parliament, to deliver on that though. the final question i will take -- is somebody here from deuche vella? >> prime minister, you put some of the blame about the situation
that the u.k. is in on the house of commons yesterday. do you put some of the blame on yourself as well? and would you do things differently, especially dealing with the e.u., given the fact that today again, you did not get what you wanted because you wanted an extension until june 30 and that is not what you got? throughout these negotiations, of course they have been tough. both sides have had their interest. they have been promoting their interests. any degree of negotiation involves compromise. onelieve we have a good deal the table. that is why i continue to promote that deal. and also, if we look at what has attention inght, terms of the days between the various legal risks around the european parliament elections -- and i recognize that that was there. but i believe what we now have in terms of the council's decision is a very clear mp's can in which
operate. they know what the choices are. if we get a vote through this week, we can leave on may 22 deal ratified. if we do not get a vote through next week, we have to propose a different way forward to the european union. if that involves an extension, then they would say that we should hold those european parliamentary elections. i do not believe it is right to be in a situation of holding european parliamentary elections in years on from people having voted to leave the e.u. i think they would write the question why it was they were being asked to elect people to part of an organization that they had already voted to leave. paul: all right. ukip prime minister, theresa may, reacting to what the e.u. was saying. two scenarios. deal is passed, there will be an extension until may
22. if it is not passed, there is an extension until april 12. theresa may remaining firmly on message, saying she will build support for this deal. be asay there will not second referendum and she does not feel the u.k. should be involved in the e.u. parliamentary elections which are coming up in may. for a reaction, let's get back to garfield reynolds. we are talking about no movement in the pound. everybody sitting on the sidelines. can you see a range it might move in depending on the situations we have? garfield: if we start to get developments that are seen as taking us closer to an actual deal to leave the e.u., you could see the pound push up towards 135 and maybe a bit beyond, but there is a good chance that any relief rallies that take place might cbe capped. 10-year gilt yields are about to fall below 1%. nobody things what is going on here with a deal is all that
good for the economy, so there has to be limited long-term upside even if some of the positioning leads to a bounce. the other thing that has to be dragging on people is that a no deal brexit still remains a serious chance. if that happens, you can see the pound go towards $1.10. it would be seen as a catastrophic situation. the worst of all possible worlds including probably may would struggle to hang on and you might have another election called and everything that goes with that. paul: let's talk about the other side, the euro. where do we see that trading? garfield: the euro has been doing a good job of being stuck between $1.12 and $1.15. you would have to think it would also slide down. and the argument for that, too, is just that you would see in fact a strong move into the u.s. dollar. and i think some of the brexit stuff that went on overnight
the broadxplain why dollar index came surging back , quiteht after having understandably, crashed in the wake of jay powell is extremely dovish fed performance. powell's extremely dovish fed performance. shery: you are watching president of france speaking in ofssels -- president macron france speaking in brussels. the e.u. has reiterated the fact that it will not renegotiate that divorce record. had aent macron has firmer stance against the u.k. when it comes to that deal that they struck with the prime minister, saying that if it is not this deal, then it is no deal. ands bring in kathleen hays discuss the u.k. economy. we have seen the boe now hold steady. given that all of this brexit uncertainty seems to get extended, can the boe even move? kathleen: that's it. they are stuck not in low gear
but no gear until this is resolved. they did meet today and forth to stay the course. no surprise. the bank of england did its own survey looking at brexit, talking to companies. two thirds surveyed by the say they already started implementing contingencies for a disorderly departure from the european union. ,f there is no deal in place mark streit ninth, could be pushed out in flux right now, 80% judge themselves already ready for it to happen, expecting it. 40% of the companies surveyed expect the brexit uncertainty to be resolved this year. half see it lasting into the next year or beyond. if we can really quickly, i would like to pull up one of my favorite brexit charts from the bloomberg terminal, and what you the bloomberg brexit
barometer. everyone said this will hurt the economy when it just first past. towards the end of the year, a little more optimistic. people are pretty pessimistic again. it is not too surprising to see that. i think it is interesting that this big position that came out overnight, revoke article 50 and within 15the e.u., minutes, it had 20,000 signatories. annierant, any lennix, -- lennox, among them. it is going to be a slightly tragic viral thing. it is clear that this has become such an intense situation. as theresa may just said, emotions are running high on both sides, so you know, the damage has already been done to
the economy. deals have been canceled. german manufacturers or purchasers are not doing things with the u.k. japanese car companies are not opening plants. some may be removing plants. it is definitely having a negative impact already. shery: despite that survey you are talking about. prime minister may confirming that they need to work with parliament to move forward, but at the same time, saying that she does not really believe they should be revoking article 50, so it seems she is really firm on not having another referendum. when it comes to those investment deals, that is the key point that you said. a lot of the damage has already been done, right? anykey question is, is of that damage really reversible now? kathleen: look at the city of london. look how many banks have already moved all kinds of operations into other countries in europe. remember, the u.k. has been like an entry point for many
manufacturers around the world to move their goods through the u.k. into the e.u. that has already been slowing down as well. even if you could have a second referendum, there would be a lasting price to pay, it seems. paul: all right. kathleen, just while we have you there -- kathleen: yes? paul: i beg your pardon. this does put the ecb and a very difficult position, too, doesn't it? just quickly. kathleen: there is a cloud of uncertainty hanging over the u.k., over europe. when jay powell talked about the rate hikes, he singled it out, saying they will probably find a way out of this. nevertheless, it is something everyone around the world is watching because it is one of those events -- you never know when it is a lehman brothers moment. i don't want to be that
exaggerated. one thing can lead to another. things can unravel. everyone is hoping a disorderly brexit is not the outcome here. paul: all right. kathleen hays. we will leave it there for now. thanks very much for joining us with your analysis of the news we have had coming out of brussels today. of course, two scenarios really put forward by the e.u. pass the deal, leave on the 22nd of may. don't pass the deal, extended until april 12. , cpive a palate cleanser numbers out of japan for the month of february. coming in pretty much as expected. cpi excluding fresh food, up .4%. that is on the line. we have on year shrinking a little to .2%. that 2% target for the boj still looking hilariously optimistic. the yen not moving very much. 110.77.
let's get back to the big story of the hour. we are joined by jacob kierkegaard. he is joining us on the phone from washington. thanks for joining us. very big news, obviously, today out of brussels. although it does leave theresa may very much in the same position that she has been in all along, doesn't it? what do you think the chances are of third time a charm for this deal getting to the u.k. parliament? of that isability extremely low, which is other 27 what the e.u. member leaders recognized, and that's why they presented theresa may with a plan b of what will happen when, in their opinion, the deal fails again. i think it is very clear, if you eer,a hard-line brexit you will vote against theresa may's deal again because this is
your best hope of getting a no deal brexit. and certainly get the kind of brexit that you want. but i have to say, it is extraordinary what happened today, because it basically means that not a single date, not a single date in this that the british first, theyanted -- wanted to leave on march 29. well, that's not going to happen. earlier this week, theresa may requested an extension to june 30. and again, the e.u. said thank you, but no thanks. we will decide what happens. the diplomatic humiliation of the british government is extraordinary. i think you have to go back. veryo find a new -- back far to find a nuclear arms power who has conducted themselves in such a shambolic manner. fate of thishe
exit deal on the two previous occasions has come before the house, if you were a betting man, what all of would you put on a no deal brexit right now? jacob: no, i continue to believe that the odds of a no deal brexit remain very low. as much as i believe that it is overwhelmingly likely that theresa may's deal fails next week, i think, very cleverly by the e.u., they have given the british parliament a few extra control over these proceedings and find an alternative path to pass the withdrawal agreement. because that is really what the e.u. want. they are interested in the withdrawal agreement. they don't care about the broader theresa may agreement. they want the with all agreement passed and then they presume -- withdrawal agreement passed, and they would presumably talk with
the parliament about a new political declaration and, quite likely, a softer brexit, and they have declared that this is -- i mean, they have given themselves and the british parliament time to develop. shery: they will eventually have to get the indicative votes the prime minister has rejected so far? jacob: i cannot imagine that we will -- if her deal fails next i regard as overwhelmingly likely, i don't think there is any chance that this will not happen because if her deal fails, i would theainly argue that amendment basically takes away control of the parliamentary willss from the government pass, and if that happens, then
indicative votes to me will happen. binding votes are likely to happen on deals that are very ones thatthan the theresa may wishes to put forward. the only real question then becomes will theresa may continue to suffer the indignity of this and remain as prime minister or not? that: she has acknowledged she knows mp's are frustrated, too. willder what the future hold for the prime minister, because we have seen reports from the telegraph as well that chairman brady in fact talked to her about the mp's wanting her to resign. jacob: there is no doubt that her time as prime minister -- the days are numbered. i would certainly venture to say that she will not remain prime minister may be more than 24 hours after brexit eventually happens. this will be part of the
pushesal package that such an outcome because she has clearly lost, you know, confidence of the majority of the house of parliament, and when that happens, you can only remain prime minister for a relatively short time, and that time is up in my opinion once brexit happens. paul: we do have to remember there was just back in december that theresa may survived a vote by her own mp's with a pretty healthy 83-vote margin. using the winds have changed that -- do you think the winds have changed direction that much any intervening few months? jacob: i think that is the case. basically, the fact that she -- i mean, she is probably very grateful that her opponents called that vote back in december because otherwise, they would surely have called one in
recent dates. now, she is, in principle, master of her own destiny at least within the conservative party, until december. obviously, she can be pushed out by a formal vote of no-confidence in parliament against her. that is probably not likely to happen until the withdrawal agreement has been passed, in my opinion, and brexit is actually implemented. that sense, she remains in some ways master of her own political fate. whencides to some extent she resigns, but as i said, i think, in reality, she does not have more time than the brexit process itself. for all have to make way new leader and quite likely also a new election. shery: we have heard from the french president as well, emmanuel macron saying there can be no ambiguity about the e.u.
elections. of course, they are coming up, and britain really does not want to participate in them, but they may end up having to. what are your prospects her e? jacob: if it turns out that the u.k. basically -- if the u.k., by april 12, tells the e.u. that we would like to participate in european elections, then there is no doubt that the e.u. will grant the u.k. a lengthy extension because then a second referendum, in my opinion, will be in the cards, and what this will mean is that, essentially, that the remain-supporting majority that exists in the british parliament have essentially decided to ignore the referendum. they might just as well revoke article 50 right away.
because that is what it will mean. there is no way that the u.k. holds or participates in the european elections and does not revoke brexit one way or another after that. and i think that's basically also what president macron is saying. shery: thank you so much for joining us today with some perspective on these latest brexit headlines. jacob kierkegaard, and senior fellow of the peterson institute for international economics. let's turn to mark cranfield. bloomberg mliv strategist. we have seen the latest headline, yet we do not see much reaction in the market. even the pound nonmoving that much. have markets become pretty much immune to the latest brexit mess? mark: i think you do have a number of traders who are finding it too confusing to form an opinion one way or another so some are just saying
out, winning to see some -- waiting to see some absolutely. you can see the options like it for the pound, that people are pretty worried that there is still a higher risk of an accidental no deal brexit because it has been pushed back to the u.k. parliament. they will have to decide whether to finally support theresa may's deal or not. they are so divided that they could sit through the cracks and there is still a risk that the u.k. tumbled out. the option -- tumbles out. the options market is skewed towards accepting a lower pound sometime in the next two weeks. although people realize to some pricinghat they rely on to tell them the options available, when people go to transact, they find there is no depth of the market whatsoever. they cannot get those hedges, whether they are paying the price or not. is that peopleed
would start to turn a little bit more bearish, thinking this is running into a brick wall. byy want to sell the pound the option market and it could turn into a pretty nasty situation. the possibility of a short-term flash crash and the pound is pretty high now. we may see a sudden drop any time between now and april 12. paul: your observations about the pound, could you equally apply them to the euro? mark: certainly, if the pound gets into trouble, the euro will go down with it. there is no way this would look like a good result for europe on the absolute basis that europe may come out slightly better than the u.k. forthis is just bad everybody. if the u.k. is allowed to fall out without a proper deal, nobody winds out of this situation -- wins out of this situation. bloomberg mliv strategist mark cranfield joining us there.
shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. 2%, that to present -- is the question. the latest inflation numbers slipped lower. consumer prices raised less than forecast. where does that leave the bank of japan strategy? for more, we're joined from tokyo by nick smith.
every time i read about the 2% inflation target in japan, i almost laugh. is that realistic, really? it's a little hard to believe, isn't it? i have been here in japan for almost 33 years or so and i have almost never seen 2% inflation. you have to feel for people at the bank of japan. every time we get numbers on the tightness of supply and japan, it is getting tighter and tighter. it is the tightest on record, yet every time the boj meets us to downgrade its forecast for prices, -- and has to downgrade its forecast for rises, it's a tough situation. economists have had all the help from the boj that they can handle. thank you very much. paul: what more can it do? not just in the situation, but what can it do if there is
another recession? decompression. what they have been targeting is bringing down the real cost of money. and therefore, you can borrow money for slightly less than nothing, and lending is hardly moving at all. it picked up for a while when they -- there was lending related to the earthquake and so on, but essentially, it is going nowhere. and in the meantime, they are interfering in the equity market . the evidence there is that you have got gresham's law writ large. their bed -- bad money is driving out good money. they are buying by the bank of japan. what can the bank of japan to? -- do? i am sure the only thing left to it is to push down the yield curve control by 10 to 20 basis points. will it help?
probably not. like i said, i think by more bonds and buying more etf is etf's is probably pretty dangerous. what was the downside pressure this time around? core consumer prices missing estimates, rising on the zero per -- 0.7% year on year. there are phone services or are these more fundamental issues that will continue to pressure prices into the year? nicholas: i mean, i think we are about to go through a weak patch with the dropping of oil prices feeding through into lower electricity prices. we are likely to have the effects of the government plans educate --down pushing down educational costs. certainly a lot of downward pressure for mobile phone
prices. it's very strange that the government says it wants inflation yet it is pushing very hard down on mobilephone prices. we are going to be weak fray a while. the thing -- for a while. the bank of japan ups its buying of etf's. that's been damaging for the market. shery: taro aso speaking in tokyo, saying the country plans planned.sales tax as how much of an impact will that have on the broader economy? mean,as: sure, i obviously, the previous occasions, the vat hikes have been very damaging for the economy. hit to consumers was ¥8 trillion. this is a 2% point move. it would be ¥5 trillion but for the fact that there is exclusion's this time that take down the effect. there is fiscal stimulus to more than upset that, and a suggestion that there will be
pressure on the bank of japan to maintain or increase what it is doing. so i do not think this time around we need to be particular ly worried. i agree they have been damaging, possibly because the measurement of inflation is too low. maybe the prices are moving up more than they look and that is why people are so sensitive. shery: this gtv chart on the bloomberg showing the trajectory of the japanese yen alongside the japanese 10 year yields, just quickly, what are your prospects for the japanese yen when you take into consideration than the u.s.-japan -- is a strong yen a risk here? nicholas: i think a lot of people -- what you really need to do is look at the real yield differential against the yen. there was a perfect relationship between the two until november 17, when kuroda started to talk
about you can push down interest yonds too far and be that, it's hurting things. he might increase, he might decrease, but i think kuroda has lost the narrative here. the spread between the yields is so large at the moment, that actually, it could shrink without the yen being that of effective. at the moment, we have things like the japanese are not buying as much in foreign bonds. the foreigners have been selling japanese equities. flows have helped keep the yen weak. 112,t my forecast at 110, which is about where we are at the moment. i am reasonably comfortable but i do admit there is some risk if the economy goes into a nosedive and the yen strengthens. if that happens, we have more things to worry about than the yen. shery: to your point, ¥1.6
paul: the fed's outlook and the claiming dollar are weighing on commodities from oil to metals with a lower forecast for growth easing expectations for demand. crude will bring its climb after climbing this week. asia cross now to our energy editor, aaron clark. he is in tokyo. what factors have curbed the advance here? aron: wti's trading around $60
per barrel. brent is $16 per barrel. a sort of halted their gains, but if we step back and provide a little bit of context, wti has risen 30% this year. that has really been driven by a couple factors, including the cuts from opec that started on january 1 and are scheduled to go to the first half of this year. so that has, you know, been very bullish for the market. the other factor has been supply reductions or disruptions in supply from iran and venezuela. nursing have boosted prices from the $60 level. a stronger u.s. dollar. we know that commodities priced in the greenback are less attractive as they strengthen for investors, so i think that is what we're looking at now. shery: what are the prospects over the next few months when you could see a stronger dollar not to mention worries about global demand? i think the two
fundamental themes that oil traders and investors are going to be looking at just sort of gets back to these basic supply and demand factors. on the supply side, you have u.s. shale producers. they continue to pump oil at record amounts, which gets into the global oil markets. record they hit a new last week of 12 point one million barrels per day. and then on the other side, you have got these opec cuts. and we will have to see whether they extend those cuts into the second half of this year or if they halt them right around june, so those are the two factors people are looking at. shery: thank you so much for that. aaron clark. let's stay with commodities and turn to the metals sector and bring in bloomberg's commodities reporter, david stringer. david, let's start with iron ore. it gain overnight on the prospect of more disruption. so what is the outlook? david: that's right. plenty for investors to chew on
both in brazil, where we are seeing ongoing disruption from the down disaster in january. very confused picture. analystssaying their -- it is becoming increasingly tricky to gauge how much output will be lost because of mine closures. we have a severe tropical cyclone on the way to the coast of western australia. that is seeing iron ore ports closing overnight. thoses have moved out of ports. the storm due to hit the coast over the weekend. what that could mean, the bank this morning forecasting we could see 10 million tons of supplies lost if those ports are closed for five days. so more disruption. that potentially puts more pressure on supplies -- the supply side in the iron ore market. paul: how about corporate? wee hours -- copper? reasonableng some
run-up in prices. what has got people worried? david: same story, really. copper has had two days of the climb in london. u.s. premiums eased off this week. it is all about the global growth outlook. people are getting worried about the strength of manufacturing in a weaker global economy. it also just that demand for copper could be weaker than people were expecting. that is affecting it. particularly after we heard earlier in the week from the fed, who sort of revised down the economic forecast. shery: david stringer, thank you so much for that, bloomberg senior energy and commodities reporter in melbourne. we will bring you more headlines on brexit as they develop. we have seen e.u. leaders agreed to postpone brexit day. the new date, april tell and -- april 12 and may 22. we will have plenty more ahead on "daybreak asia." this is bloomberg.
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paul: i'm paul allen in sydney, asia's major markets have just opened. shery: good evening from new york, i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top stories this friday, sterling recovers from its worst day in two months. leaders offer a short brexit delay. theresa may has been told to quit. the decision removes the immediate threat of a no deal divorce next week, but may my struggle to force a deal through parliament.
shery: asian stocks are expected to read job after wall street closed at a five-month high. let's get straight to the market action with sophie. sophie: japanese markets reopening this friday. the nikkei adding .03%. japanese bond yields take a hit. the 10 year yield falling to the lowest level since november 2016. showed corepi data inflation slowing last month. let's check in on the open. the cost beginning up .04%. up the board to check in on the antiquities, and the asx 200 higher for a second day. iron ore miners gaining ground bankdney as commonwealth says the cyclones heading for australia could disrupt iron ore supply as much as 10 million tons.
a see the asx 50 heading for second day of gains. could be looking at another fresh all-time high. let's check in on sterling. cable gaining ground early in the asian session. back above the 131 pedal against the dollar. recovering from the worst day in two months. the pound also rising against the euro. investors have been adding long compositions, mainly against the common currency. thanks very much for that. as we have been reporting, european leaders have staved off the threat of the u.k. crashing out of the block without a deal. that's given theresa may an extra two weeks to work out what to do. let's get more from bloomberg fx reporter david xfinity. we have been discussing no reaction from the british
parliament. is everybody on the sidelines? yes, there is a lot of uncertainty, even though the deadline has been moved. it got kicked down the road two weeks. markets don't know which way it will go. if it ends up as a no deal, it is not good for sterling. if theresa may's plan was passed, it would be good for sterling. that would remove uncertainty forward. given the attack on parliament for them not doing their end of the deal, she still is not that popular amongst politicians. chances of getting her deal through next week are maybe falling. we will have to wait and see what happens. a lot of volatility. it is rallying. it looks like deals will not get past. sterling says not very quickly. shery: sterling factoring in the fact that given the big divide
in the u.k. parliament, we could have an accident of no deal brexit. how is that showing the volatility you just mentioned? look at theu volatility, no surprise. looking at the one-month tenor, it shot of higher. given the uncertainty expected. as you get nearer to the election dates, it is expected to go higher. sterling is going to spike one way or another, depending on when they play out. around they are chopping 131 to 132, implied volatility, the markets put it in later down the line. shery: thank you so much, bloomberg david finnerty in singapore. let's bring in a former member of the bank of england monetary policy committee, now professor at dartmouth college. he joins us on the phone from florida. great to have you with us.
dates,s we have new april 12 and may 22. is this is essentially again kicking the can down the road? >> absolutely. was absolutelyte impossible. i think we should try to get real on where we are. apparently, theresa may went to talk to the leaders of 27 others, which apparently they said was 90 million of nothing. they said she didn't have a plan. they basically throughout what she wanted and told her this is what she better go and do. it prospect, and a lot of rests upon trying to rescue this deal, which has so far been thrown out twice. the speaker of the house says you cannot bring it back again unless it is going to be different. we we really have three weeks.
i just don't see what this clarifies. -- there ismarket not really much information. clearly, there are a number of options open. more of perhaps it is a possibility that the can gets kicked even further down the road. probably that is the end of theresa may. i remember several months ago that i said she was a big woman walking. now i think she has very little future as british prime minister. what we will probably see is somebody somehow trying to come to a realistic deal. the first thing we have to look at is whether the u.k. has the elections in may for the european parliament. think much clarification, but i think this is the most disastrous performance by a british prime minister ever. shery: she said that she knows that they are frustrated, too.
not surprising. that is out there. for the u.k.w parliament to take more control over the brexit process? the first thing is think about the prospect of the deal we talked about. may went and spoke to the parliament and called mps tracers this week. the speaker of the house, i heard him come back and say you are not traders. itors.d obviously the parliamentarians are not happy about it. i feel it was an interesting intervention that we should hear about. the head of the trade union congress and the head of, the cbi, the employers federation, went out today and described the
situation as a national emergency. firms, thes and current deal and no deal must not be the only choice. in some sense, the markets have seen that. i think people have to take this over. fromis utterly incompetent the prime minister and the government. -- whatwhat will see is we will see is vanity will prevail. that's a positive step. we see columns in newspapers around the world. martin wolf posted a column that says theresa may is taking a serious brexit gamble. theresa may risks becoming a rival to the state. theave to push out politician, get rid of theresa may from the negotiations, and the parliament will have to take it over and it may go to a second vote. in the end, i think it will get
pushed down the road. have you don't obviously very high hopes for theresa minister,re as prime but there was an opportunity to get rid of her in december and it wasn't taken. parliament had an opportunity to vote for no-confidence and they did not take that. may. not theresa is this a case of no politician wanting to own the outcome, because the outcome doesn't look particularly good? danny: yes. in some sense, we have moved from people being able to kick her out to her actually resigning. she has no control over the cabinet. flected responsibility means i one says something, the mr. have to go along with it. we have not done that. we have come on in and talked about this endlessly. you can't create this chaos. ,he bottom line is that no deal
the deal she had was voted out twice. nothing has changed in the last eight days. it's hard to see how anything can possibly change between now and april 12. what is going to change? some reality is the problem. the only word is political chaos. shery: in the meantime, we see fierce disagreements among the 27 eu members. did they essentially delay this no deal brexit because they didn't want to take blame for a hard brexit if it happened because of them? danny: one would think so. the big mistake theresa may made was thinking the u.k. government was holding many cards. especially thinking that they would be able to control ireland and that the 27 would not stick
together. the 27 have seen is absolutely stuck together, they stuck behind ireland. they said if you want to do this, it is on you, not us. some sense, the sensible thing to the 27 was to make it difficult for the u.k. to leave. not least because you don't want other people to leave. they have done it very well, they don't want to be seen to be responsible for this. it essentially, they pushed it back to the u.k. and told them to sort it out. paul: do you believe the odds of a no deal brexit increase today? danny: they probably did. i think we are seeing two outcomes coming, which is a no deal that nobody seems to want other than the extreme right wing of the party, and actually remaining. both prospects rose today.
i think the deal theresa may has put forward is really the thing -- the probability of that -- the possibility they will go for a no deal. i'm not quite understanding is they went on a no deal it would be forever, but they can change their mind. we have not thought about that as a possibility. prospect that pushing it ,uch further down the road perhaps into 2020, 20 21, 2022, and have new elections, it doesn't go there. i think it is becoming bimodal. it will be a no deal or it will be remain. paul: danny blanchflower, we will leave it there. professor of economics at dartmouth college. thank you for joining us. let's see what else is going on. let's get an update on the first word news with su keenan. su: the grounding of the boeing 737 max 8 is now sent to rebel
-- ripple through economic indicators from trade to durable goods. j.p. morgan chase says there's little chance of a short-term impact, but further ahead, the disruption may affect the make of the gdp. build thetinues to plane and says it will slow production as of next week. asbrazil, markets slumped the former president was arrested as part of the sweeping corruption investigation. the inquiry is now in its fifth year. it started as a kickback involving that has expanded to executives at major construction companies and led to the jailing of another former leader. has delivereddent an election boost to benjamin netanyahu, saying it's time for the u.s. to recognize israel's
sovereignty over the occupied golan heights. it's a break of decades of american foreign-policy and could sway israeli voters. held it since capturing the area in the 1960's. major iron ore and energy western hubs in australia are bracing for destructive winds and torrential rain as cyclone veronica approaches. the storm is currently a category 4. they have evacuated staff from the area. people are flying out of northern australia as the cyclone approaches. it is expected to strengthen into a category 4 when it crashes the coast saturday. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is
bloomberg. ahead, thailand votes on sunday. the first general election since the military coup five years ago. we will be in bangkok later in the show. shery: tencent posts its biggest profit shortfall in at least a decade. it's game business shows signs of recovery. we break down the numbers. this is bloomberg. ♪
paul: this is "daybreak: asia." i'm paul allen in sydney. shery: i'm shery ahn in new york. tencent posted its biggest profit shortfall in at least a decade. net income fell 32%. at least it's prized game business shows recovery after a brutal 2018. tencent is spending billions to sustain growth, investing everything from the cloud to retail and entertainment. let's go to hong kong and talk about this with mccoury group
asia head of internet, media, and education research. this is a huge mess, but at the same time, we some recovery in their prized game business. how encouraging is this? basis, thisrring quarter, it is 3% above consensus. organic numbers are growing very healthy. on the positive side, they have approved. to get seven additional gains from the government with approval. that is well with the plan. the growing at 38% driven by the video ads. many program ads. other types of ads, as well.
this is probably the bright spot in the quarter, more than 70% year-over-year. this business clearly shows signs of recovery on the margin side. i think this is a solid result, although there are mixed numbers. at thewhen you look analyst calls, they seem to show less of them since late last year. this chart showing the target. it has really been on a downturn. where are you putting the stock at? wendy: i agree that the call last night, the company's management is more conservative than before. given the tight regulatory environment, it is probably politically correct for the government to stay low-key. sentiment, ihe
would say overall, it is lowering the expectation. set.s been we have lowered our target price below the 500 price level recently. paul: we also heard from google this week planning to get into the gaming area. is that anything for tencent to be concerned about? wendy: i would say this is more a long-term hobby for tencent rather than any concern. publishes a videogame report this week talking about this game streaming trend. in our tencent notes, talking about cloud gaming, tencent is in the best position of the trend, given their capability in the game operation and their leading position in the cloud infrastructure. historically, tencent has been
good at providing customized cloud solutions for the game companies. in addition to that, tencent has adopted the open platform approach since 2010. all of this suggests tencent is best positioned to embrace its potential structure change in the gaming world. paul: one of the positives was having the approvals resuming in china. is there a risk over there, as well? china can easily give and take away again. wendy: just like any internet company in the world, you have to comply with local rules and regulations. in china, 2018 was unusual because of the reorganization and restructure. because of that, game approval was disbanded. 2019, we see with
new regulators in place, you will see a tighter gaming regulatory environment. however, we are going to enter into a new norm. 3000 titles to be approved, versus the for 2017 one you had too many games approved. however, we don't think it will affect the tencent game revenue too much. tencent has always been operating quality titles. i don't think they will actually have major difficulties to get approvals going forward. if you can tell from the frequency of the government's approval in the past three months, they have stepped up the efforts to clean up the backlog in the approval pipeline. even for tencent, they have obtained more approval recently. on top of that, they also got pc game approval.
shery: what does cloud streaming do for the dynamics in the cross-platform games industry? not to mention new players, such as alibaba? the cloudhink streaming games will enable the better gamer user experience. it will also encourage development of cross-platform games. interestingly, in tencent's current pipeline, they have a title called "fornite" which is a cross-platform game. this actually may also change the gaming landscape and open up opportunities for nongame companies, such as alibaba. alibaba has always had ambitions to enter the gaming space. they have definitely stepped up efforts on the internet in recent years.
their advantage for operating cloud gaming would be there strong cloud capabilities. they have been the number one player in china's cloud market for many years. that would open up new opportunities for them. it is a huge private internet company in china. by down started. in the past two years, they have done a lot of work. theyrecently, in february, also launched their many probe -- minigame platform. earlier this year. they may leverage the opportunity to enter into the game market and get a share. huang, macuarie group head of internet, media,
quick check of the latest business flash headlines. uber has hailed the nyse for its ipo ride. on the trading floor, it could be one of the five biggest listings of all time. they are expected to file for their offering in april. it can value the company at $120 billion. lyft starts trading next week. served as the ceo from 2004 until 2007. shery: levi's sword with
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of japan. we are getting japan's march preliminary numbers for manufacturing pmi. coming in at 48.9. it's at the same level it was at in the previous months. this is the fastest contraction in 2.5 years. the secondrst time, time the index has been below the 50 threshold. contracting for the first time since august 2016. nikkei japan pmi manufacturing numbers, preliminary numbers for the month of march coming in at 48.9. that was already the fastest contraction in 2.5 years. japan'slready seen
inflation numbers earlier today. that also missing expectations. let's find more about how this will affect the boj's 2% inflation target with benchmark 10 year yields falling to the lowest since november 20 16. let's bring in our chief agent economics correspondent. we have seen february core consumer prices rise year on year, again missing estimates. are we ever going to get to the inflation target? >> it seems like bad news on the manufacturing front and the inflation front. it is heading in the wrong direction. there are impacts from mobile phones. it's hard to say the bigger picture remains that inflation expectations are up. core inflation is going the wrong direction. some are talking about it going to zero. there was also talk about how most of the people don't care if
inflation doesn't it to percent. he signed with the bank of japan. it seems like the view in japan is the inflation is in the wrong direction. there's almost a resigned peace amongst officials. we will have to see if that plays into policy differentials and if they switch tax over. shery: we have seen the japanese government revised down the economic growth forecast for japan since 2016. what are the biggest risks for the economy right now? been caught in this for several months. it is slowing global growth and impacting demand. china and the u.s. and china trade war story. it is including a technology cycle, which is having an impact. towards the expected increase at the end of the year. by all accounts, it doesn't seem
to be near-term on the inside. the big when everyone is looking to is china settling, or bottoming out, sometime at the middle of the year. if that happens and a trade war is agreed, it will clear for sentiment. that will also help japan. paul: we also heard from the japanese finance minister that he will go ahead and introduce the sales tax. that is an interesting catalyst in this environment. enda: it is causing a lot of debate when you consider the pressure we just spoke about, and when you consider the broader story, the broader backdrop to economic growth. is it the right time to introduce a tax rate? there will be debate. the government fears they have to. there's no shortage of fiscal hawks. we will have to see. given the comments on the inflation target, whether he's thinking about the sale started. that will play out over the coming months.
it will depend on how economic conditions play out. paul: that's our chief agent economics correspondent, enda curran. let's get back to the top stories. european leaders gave theresa may a brexit extension. u.k. lawmakers don't endorse her deal and she has until april 12 to decide whether to leave without an agreement or request a much longer extension. the decision removes the immediate possibility of a no deal brexit in seven days time. >> the cliff edge date will be delayed. the u.k. government will still have a choice of a deal, no deal revokingextension, or article 50. date,th of april is a key in terms of the u.k. deciding whether to hold european parliament elections.
>> the decision today underlines the importance of the house of commons passing a brexit deal next week, whether we can bring an end to uncertainty and leave in a smooth and orderly manner. tomorrow morning, i will return to the u.k. and work hard to build support to getting the deal through. was: the prospect of brexit a prominent topic at the bank of england meeting today. our global economics and policy editor kathleen hays is year. what did they have to say? kathleen: they said they cannot move policy in either direction. many think that once the deal is results, the big question is when it will be resolved, that the boe could head towards an interest rate increase. they kept the policy unchanged today. mark carney spoke after the meeting at a press conference. he had a lot to say about how much the uncertainty is hurting the u.k. economy. the bank of england commissioned
its own survey. they said two thirds of the businesses they surveyed are already putting contingencies in place for a disorderly brexit. out,al, you just crash something the u.k. and eu want to avoid. nevertheless, they are preparing for that. 80% judge themselves ready to deal with it. it to be resolved this year. half don't think it will be resolved until next year or even beyond. let's look at the brexit barometer. it shows uncertainty is what is hurting the u.k. economy right now. containsit barometer gdp, unemployment, inflation. now we are looking at mark carney from the boe. i'm sure he has been watching our bloomberg brexit barometer. it shows that for most of the time since the vote in the
ofdle of june, the balance what is happening in the economy has been positive. you see going into the end of last year how it certainly has tilted. we have seen worse numbers on unemployment, all kinds of different numbers, investment. eu, manyliers to the people who purchased u.k. goods are already canceling contracts. the banking sector has been disrupted. we already know what the damage is here. it will hurt this. it will be bad for a lot of manufacturers in places like ireland. a lot of damage is already done. the question is where it goes next. shery: will it hurt the rest of the world? how big of a threat is brexit? kathleen: it all depends. if there is a no deal brexit, if there is a u.k. crash out, we have to look to europe. it is a big concern for the
european central bank, with inflation slowing down, inflation numbers looking -- growth numbers looking soggy, they have to invest making their first interest rate increase since the financial crisis. they are also getting ready to do targeted loans to banks. it's something the ecb is thinking about. the federal reserve putting its foot on the brakes on rate hikes this year. l asked about the global risk the fed has been talking about. he spoke about brexit and the threat it poses to the european economy as one more reason why they are being cautious. be optimistic, it will get resolved, everything will be ok. as mark cranfield was saying earlier, he spoke about the pound. even though you know it is happening, even though you know the risk is there, when something happens, you can never predict exactly how all of those
dominoes are going to fall, which is another reason why businesses are being very cautious, investors, as well. pound.rd to trade the many are sitting on the sidelines. i think we will see this if it continues and gets worse. shery: kathleen hays, thank you so much. let's assess the market impact of the brexit news. we are joined from hong kong by in life strategist mark cranfield. let's get started with sterling. whattle bit of a gain, is that telling you about the fundamental weakness of the pound? mark: if you look at where the pound is against the dollar, it's above 131. it's only about nine or 10 days ago that we were trading at almost 134 against the u.s. dollar. that relative decline shows a lot about what traders think about what is going on. as kathleen said, it's almost a binary situation, a toss of the
coin whether the pound goes up or down in the next few days. one of the things traders have to get their head around is the eu has firmly shot this in the direction of the u.k. parliament. theresa may says she will work with the u.k. parliament to form a deal. the problem is traders are getting tired of hearing this. that's exactly what has been going on for several months. the u.k. has tried to form a deal and have gotten nowhere. they know the clock is ticking very quickly. the eu has washed its hands of the situation. now they have to make big decisions about going against the pound or sticking what -- with what they have, or staying on the sidelines. those involved are probably saying the odds are stacked against the pound doing very well in this scenario, i will start hitting my positions. it will be finding that now is not that great. they will have to pay more money
for the hedges on the table. the situation is becoming quite skewed toward the pound having a bad outcome, almost regardless of what happens in the next 10 days or couple of weeks. it's really a question of market liquidity over taking whatever the politicians may say. it is just not there to support the pound. the pound has held pretty steady through this morning's developments. we have seen a slight decline in the euro. what sort of trade range can we expect there, depending on the speed of outcomes we may face -- the suite of outcomes we may face? mark: it gets some help from the fact that the dollar is relatively weak. that gives the euro a bit of an edge. it is not good for the european economy to have one of your major trading partners not functioning well. certainly the outcomes for europe are not that much better. paul: bloomberg in life
strategist mark cranfield thank you for joining us. let's get a check on what else is happening in the world with su keenan. we start with the grounding of the boeing 737 max 8 it is now seen set to ripple through the u.s. economy from international trade to durable goods. j.p. morgan chase said there are limited odds of a short-term impact. further ahead, they say the disruption may have gdp to rising inventories, less investments, and fewer exports. boeing continues to build the plane, but will start slowing production next week. brazilian markets slumped as their former president was arrested as part of a sweeping car wash corruption investigation. the inquiry it' is now in its fifth year. expanded to trap a string of executives and major
constructive companies -- construction companies. president trump has delivered an election boost to benjamin netanyahu, saying it is time for the u.s. to recognize israel's sovereignty over the occupied golan heights. his remarks breaks decades of american foreign policy and could sway israeli voters with netanyahu's campaign, which is mired in corruption allegations. 1960.aptured the area in global news 24 hours a day on air and not tictoc powered by 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is bloomberg. next, thailandp voting on sunday in the first general election since 2014. we go live to bangkok. this is bloomberg. ♪
shery: thailand votes sunday in the first general election since the military seized power almost five years ago. will they be free and fair, or has the outcome been determined? >> thailand's current stretch of army rule is the longest since the early 1970's. seized power in 20 after months of political crisis. postponedeatedly elections, cracked down on critics, and put in place a constitution that opponents say politicians.lected thailand has a hereditary monarch as head of state, while the prime minister has the government. sits a 250 strong elected senate, the upper house. the 500 lower house members are elected through this weekend's vote. parties winning a 5% lower house representation can nominate a prime minister candidate, but both chambers elect the leader,
giving the upper house a big say. to opposing political camp's divide. on one side, one represents the poor rural regions of the north and northeast, the party opposes military involvement and supports the exile of the former prime minister. on the opposing side sits the party.xing democrat drawing support from royalist elite in bangkok and the south. nominatedyalist party a prime minister. this year's dissolution of a party that nominated the sister as the candidate for the top job has further fueled doubts on whether the election will be free and fair. them already trailing other southeast nations, thailand's economic future hangs in the balance. for more on the election, we are joined by thomas, business professor.
thanks to you both for joining us today on bloomberg. with the hearing about how the constitution has been changed ahead of the election, what does this mean for how the next government will look? >> can you repeat the last part? paul: the constitution has been changed, as we just heard. how will that influence the makeup of the next government? of theink the makeup next government remains to be seen how the election turns out this sunday. scenarios, one is the
would form the government, and the other camp would be in opposition. i think that is the view that many people believe would happen thanks to how he has been able to use the constitution to its advantage. i think we also need to see who will become the party that can win. from all the polls, it hasn't totally confirmed it would be the one who is the best, in terms of election results. many other factors, including new and upcoming political party that has been firm in putting themselves that they are against him, as well as the other camp. i think the outlook would remain unstable for a while. the two scenarios would be one of those forming the party.
paul: let me bring in paul chambers. if he does become unelected prime minister, he will be in a different situation. he may have a lively opposition. how will that change the political scene in thailand? he becomes the elected prime minister, yes he will have a very large opposition. i think that is very interesting. party junta's political is unpopular in thailand. it will be ain, bear majority. that means the opposition in the
lower house will be immense. that means it will be very difficult to get things passed in parliament. t it willt could be tha be difficult to get things h will, eventually prayut be tired of being the elected prime minister and may resort to another coup. shery: what does it mean for the reforms? the constitutional reforms, i think junta has used this election to stage manage its way into electoral legitimacy. reformsy the junta's will try to allow the military to persist in power.
power as an elected prime minister, there will be a chance by the opposition to amend the constitution. they may be successful in making those amendments, which will certainly anger the prime minister and bring a lot of chaos to parliament. does it mean for thailand in the world stage when we have china and the u.s. going at it with trade tensions? what does it mean for thailand if he becomes victorious -- prayuth becomes victorious? differenty we have political directions, there is somehow a consensus on the economy. party sees the economy is a major issue for thailand going forward, especially in the world.
in terms of economic implications of who wins the elections this sunday, it would point to the direction that thailand would need to gain its footing in the economic area. i think the political conflicts of the past 10 years have been tremendous opportunity costs in thailand moving forward. in putting together the kind of structural reform we need, it such as increasing productivity of the manufacturing sector, and all of the sectors, as well as reforming the education. even we are looking at uncertainty in terms of who will become the government. i think the economic direction is quite more common for all of the parties in the sense that they look at the need to improve thailand's global and regional
competitiveness, as well as the need to address inequality in thailand, as well as how to deal whereotential threats globalization is not the same as it used to be. question foror countries that are export dependent like thailand. the conflict goes on with china lead tou.s., it would the global demand. that would hurt thailand's economy. shery: we will have to leave it there. thank you so much to both of you. with less than 500 days to go before the 2020 olympics, tokyo's governor has said having new blood in charge of the games would be positive. she spoke to. stephen engle. towards thetum olympics has been building in japan recently. the new leadership will encourage the momentum. mr. takeda denied the allegations.
i would like to support him in that sense. you really burst onto the scene, not only in japan, but also globally in 2016 and 2017 as he left the legislature to run for the governorship of tokyo. you really gave the national government of shinzo abe quite a scare. since then, shinzo abe had a snap election and the ldp won. you campaigned on a new kind of politics. can you tell me your strategy? on the one hand, your popularity rose because you challenged the ldp, on the other hand, do you need the ldp to win again in 2020? as the governor of tokyo, i would like to encourage more diversity. women's participation in politics is low in japan. a placelike to make it
where women can shine. in order to achieve that, we need support from the government. from that perspective, it's good for tokyo to get support from the ruling democratic party and the tomato party. we haven't heard exactly your tokyo will bether one of those cities. we know mgm is putting all of their chips in on osaka. having ayou stand on casino, which is not necessarily popular with the public? there are many discussions regarding casinos. we would like to further consider the positive and negative effects. >> there's been a number of talks about possibly having the former fish market as a potential site. is that something your office is discussing? yuriko: that is not on our
agenda. shery: tokyo governor speaking stephen engle. we have breaking news. we see activist investor paul inger losing the vote on the hyundai motor dividend proposal. $6iott was calling for billion in payoffs of special dividends. that would be more than six times higher than the one billion payouts proposed by the hyundai affiliate. they had a shareholder meeting. elliott has lost the vote. we see hyundai motors plunging .0 person that .0 -- .40%. that's it for "daybreak: asia." plenty of market coverage next. this is bloomberg. ♪
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♪ tom: 9:00 a.m., welcome to "bloomberg markets: china open." we are counting down to the open of trade. the top stories, sterling recovers. eu leaders offer a short brexit delight. theresa may has been told to quit. tom: the decision removes the immediate threat of a no deal divorce next week, but theresa may might struggle to force her deal through parliament. a busy 24 hours for hong kong with the biggest hang seng names reporting. we will run through the results for you. ♪