tv Bloomberg Daybreak Asia Bloomberg April 2, 2019 7:00pm-9:01pm EDT
>> good morning. a story and markets have just opened for strayed -- us trillion markets have just opened for trade -- australian markets have just opened for trade. >> welcome to daybreak asia. ♪ top stories this wednesday, asia-pacific markets facing a mixed start. futures signal muted gains. pressure.der theresa may turns to labor for
frexit support. her move open the door for a softer split. forecastto pessimistic when it comes to global growth. >> let's get you started with a quick check of the markets. most u.s. stocks finished up leading the gains. the s&p 500 was unchanged. the energy sector was one of the biggest decliners which was interesting, given that oil finished at the highest level this year. for the first time in four days. digesting thebout budget revealed yesterday from the coalition government. we are seeing some stock winners coming out. about 0.1%.t ,etailers in particular
consumer stocks we are seeing the budget putting more money wallets of voters. the rba staying on hold with rates. withwhere we are trading the asiana u.s. dollar. new zealand further downside. 67 53.llar, trading at the seventh straight day of gains. putting australia and 30 first place when it comes to the rally we have seen. let's get you the first word news. uk prime minister theresa may turn into the labor opposition in an attempt to find the brexit deal acceptable to parliament. she wants jeremy corbyn to help her.
way to al opens the softer form of brexit, potentially keeping the country inside the customs union and even the single market. >> i am taking action. i am offering to sit down with the leader of the opposition and agree to a plan we would both stick to to ensure we should leave the european union with a deal. >> we are prepared for no deal. not everything will be smooth. there will be problems. means allared unforeseen problems should be manageable. warning mcconnell is president trump's threat to close the border with mexico would have a catastrophic impact on the u.s.. he made the threat last week but acted sincenot
then. he says he is pleased with steps mexico is taking but affirmed he is willing to close the border if he has to. auto sales in the u.s. fell, a sign the economy is touching the brakes. most saw declining demand. released results only on a quarterly basis and says sales slug. -- slugged. the long-awaited trial of the malaysian prime minister begins wednesday. there is a long list of charges. he will face 42 counts of corruption and money laundering read it will shed a light on the complex transactions that have of to the disappearance
money. i am jessica summers. this is bloomberg. >> thank you. the imf and the world trade organization are increasingly as a mystic about global growth, warning momentum has been lost. global growth projections to the lowest in three years, citing the impact protectionism. christine lagarde saying the global economy is in a precarious situation. she is not expecting a recession, but there are global headwinds. the fed taking its foot off the thepedal, but there is also
trade war that does not have a resolution just yet. speaking at the u.s. chamber of commerce, she says the global economy has weakened since the last update. she says it is not all bad out there. we do not see a recession in the near term. growthct some pickup in the second half of 2019 and into 2020. so you see now what i mean by unsettled. the global economy is at a delicate moment. >> in a panel discussion at the chamber, she characterized the slowdown as a synchronized the celebration. in january, the imf lowered its outlook for this year.
>> we are starting to see some signs of stabilization. >> it is a good sign for the global economy some of the indicators have been more positive than expected. that will be a good litmus test of the stimulus, whether it has put a bottom to the slowing back of the chinese economy. ,e heard an interview statistics and analysis. risks of asset bubbles are rising because of the stimulus that the authorities have put into the economy. all those cuts. cutting reserve
ratios when the economy is already stabilized can push inflation higher and guard a large amount of funding. --ays concerned about the >> all right. here in australia, the prime minister is hoping tax cuts will help sway disgruntled voters. projected the first return to surplus in more than a decade read it should hand more ammunition ahead of the vote, expected in may. let's get over to canberra. paul allen in the nation's capital. we could talk about the assumptions the budget relies on. the point is, it is going to be in active. >> that is the key thing.
there is the business of an election to get out of the way. it is quite possible. that aside, the treasurer did announce to parliament the country will return to surplus. rapturous applause when he announced australia was back in black. back in black next year. 7.1 percent surplus will not be until 2020. it does contain tax relief. very much an election-year budget. >> will it be enough to buy some votes from a? -- for may? >> that is the key question.
a classic election promise to read you are going to get a tax break every the opposition labor party is promising similar measures. the government counting on voters having forgotten. the memory of that dysfunction has gone. there are other things the government can't control. delivering a theoretical surplus down the track. we heard steve talk about the imf eat any delicate space. reserve bank's is aware of. something even the treasurer is aware of. >> the fundamentals of the australian economy are sound. there are genuine and clear risks emerging at home and abroad. housing market
has cooled. credit growth has. the fullet to see impact of flood and drought on the economy. >> we do have one more piece of news. the announcement of the election date. likely to be maybe 11th. that is when voters are going to get to have their say. >> thank you so much for that. paul allen in canberra. there is a growing global thirst for passive funds. with the dowetf's jones ceo later. seeingnext guest is value in equities over fixed income. we will be asking why he thinks that way. this is bloomberg. mberg.
we are seeing increasing evidence of the global economy increasing with the wto more pessimistic about growth. let's see where to look for value. great to have you with us. thesewe are seeing external vulnerabilities coming from abroad, for the u.s. investor, does it make sense to invest more locally, domestically focused companies? >> that is where the juice has been. u.s. markets have quit dribbled over the past decade, where is markets outside have doubled. a valuere looking for play, better aversion potential exists outside the u.s.. it is a difficult thing for some of our clients to swallow. they see the headlines, they see brexit. the headlines are freaky.
underneath, you mentioned christina lagarde. our belief, which corresponds with what she said, you are seeing a china led bottoming in global growth. we think that is going to be good for global stocks. >> let me bring up this golden cross. average rose above -- could we have more room for upside? or is the data to mixed? wax it sounds more pleasant than a death cross. riverfront technicians have looked. they have relatively mixed historical values. it is something people like to talk about on these types of shows. more than it is an ironclad bullish sign.
we do see some overhead resistance. the market has failed, about six times in the roughly six months or sue -- so. still-term, we are relatively constructive. >> you are constructive, the caveat being what happens to the u.s. dollar. which has behaved counterintuitively. since the fed conducted its pivot grid you think we will see some dollar weakness? >> i hope so. i think riverfront is a little contrary and. we wrote a piece where we posited despite what may happen, we believe the u.s. dollar is close to a structural peak. at some point, that is going to manifest itself. we believe that is going to be good for international markets. you are going to get, if we are right, some direct benefits.
also, some indirect. that will indicate the world is a little bit more sanguine about growth outside the u.s.. that should be good for international equities. >> the problem being if we see a lack of resolution. the macromes to picture. you are going to see the dollar, the best out of a bad bunch. >> the dollar has acted as a risk off currency. a safe haven. the u.s. has been the best house in the neighborhood economically and that has been troop the last five or six years. foreign currency markets trade off of what is going to happen in the future, not just current fundamentals. long-term on many
metrics is overvalued. it is hard to imagine the economy getting dramatically better. >> what happens if central banks continue to cut? cause a negative loop for emerging markets? >> that has been a game plan. ae temper tantrum, that was dramatic time. we do think e.m.'s in general are in a little bit better shape than in prior crisis times. bottoming andwth china engaging not just in monetary stimulus but fiscal stimulus, some of the positive growth tailwinds that can be someated can help offset of this. >> given the positive economic data, could they roll back monetary easing? are there concerns that could hit the markets?
>> i do think the pboc is sensitive to not doing what they did coming out of the financial crisis. i think they are being prudent focusing on fiscal stimulus. they need tax cuts. consumers need tax cuts. i think they are being prudent. i think they are trying to walk that tight rope. let's not understood newly. is in aese economy delicate position. with growth at its lowest addition. >> thank you for your time. investment strategist. you can get a roundup of the stories you need to get your day going. bloomberg subscribers, also available on mobile. you can customize your setting so you only get your news that you need -- care about.
>> this is daybreak asia. york.m shery ahn in new japanese auto stocks in the u.s. rose after the latest car sales numbers came out for march. that doesn't necessarily mean the numbers were good. explainncion is here to what happened. >> it is all about expectations. were a contraction. the fact that they beat those shrinking numbers is the reason we saw that positive on the screen. let's walk you through the numbers we do have. toyota, honda, and the sun. all a beat. for minust call was
five. honda in the positive. literally positive. estimate,e the basically flat. nissan, better than expected. is saying, make no mistake, there are negatives we have to contend with. tax reformom the initiative wearing off. she says, it is a reality check. growth up 1.5%. in three years, according to a bloomberg survey. the fed, on hold. rates low forst people who want to buy cars. there could be a floor when it comes to sedans. of more thanise 5%. they say this could be a shift in what is happening. chart to showre
you. across the board, we see volume percentage changing in the negative. from a year ago. >> what about growth in electric vehicles? >> they are saying by the year 2033, there will be an where electrict engines will take over internal combustion engines. ford is trying to be one of the leaders. it will be a bigger and bigger part of the lineup. >> we think by the middle of the next decade, 50% of the vehicles will be electrified to some degree. probably in 2025, in the order of 20% will be full battery electric. off of what the chair of --
let's show you what is happening in the regions around the world. it will be taking up about a 20% share of the market. we can see by 2022, it will be at its maximum. start to slide a little bit more. 23% byt the world, up to the same year. a little bit of growth in japan as well as india. not so much korea. stagnant is the u.s. at 20%. inocencio. let's get a check of business flash headlines. like rock looking for growth as it launches an overhaul of management. most of the company's revenue
originates in the u.s.. the ceo is keen to strengthen ties abroad. they manage $6 trillion and assets. toe said to be near a deal install a new ceo. they are close to hiring a tennessee authority boss. they collapsed amid billions of dollars of potential liabilities linked to devastating wildfires which may have been sparked i power equipment. -- dollar clearing services to iranian clients in violation of sanctions. it would cost the italian lender about $909 but avoid criminal prosecution. it would be one of the largest ever for sanctions busting. the u.k. prime minister appealed .o her greatest political enemy
this is daybreak asia. here are the first word headlines. the imf and wto are increasingly pessimistic about mobile growth. christine lagarde says the economy has weekend but recession is not likely. projectionsgrowth to the lowest in three years. setting the rising impact of technician and the trade war. whose companies have fallen behind may be able to breathe a bit easier.
the top court has overturned a directive that tightened rules for debt settlements. owners will have more room to negotiate loan repayments, even after they become overdue. they have the worst bad loan ratio of the top 10 economies. the veteran algerian president has finally stepped down, leaving the role after the head of the army said he should go without delay. he had been in power for 20 years. if the departure will be enough to calm demonstrators. demands have widened to include the removal of the entire ruling elite. visitingan sachs ceo saudi arabia, the first head of a global u.s. bank to have gone to the kingdom since the for furor over jamal
hkashoggi. global news, 24 hours a day. powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. >> let's take a look at how we are trading in the aussie session. thestors digesting implications of the budget overnight. we are seeing reaction when it comes to some of the retail and consumer oriented stocks. construction stocks, giving that impetus was part of the budget. straight session. not much of a reaction to the bank ofr the reserve australia holding policy steady. a bit of a down picture in new
zealand. dollar trading at 6752, a little bit softer. brexit saga continues and has taken a dramatic turn with theresa may turning to her sworn political enemies for support. unable to persuade tories, she forge anmy corbyn to acceptable deal. kathleen hays is watching this. could we finally see an agreement being passed? >> that is certainly the hope. if you have to think there is one person who is her political enemy, it is jeremy corbyn. after a seven hour meeting with , she realizeders she needed to extend the deadline.
extend this whole process to get past the april 12 deadline. she came out of the building and here's what she said. >> i am taking action to break the logjam. i'm offering to sit down with the leader of the opposition and agree to a plan we would both stick to to ensure we leave the european union and we do so with a deal. >> she is turning now to what everyone is expecting. the cross party plan. plan to get ant then that would go to parliament for approval. theresa may would take it to the leader summit. that is the optimistic view. have -- legislation
would follow to allow the u.k. to avoid the eu. this is very important. you have until may 22 to have a deal, a deal we could sign off on. no one wants that. >> what is the reaction we have had from jeremy corbyn? >> he said he would be happy to meet for the talks. they recognize they had made a move. a raise the issue of no-confidence vote. righthold in reserve our to bring a move of no-confidence. time will tell on that. our response is to make sure we do not crash out.
does indeed command support. majority support across the country. >> things like a customs union may not sit well with hard brexiteers. meaning we may have to her at her word when she says you need national unity, move this forward. we will see if jeremy corbyn signs on as well. >> what is next for the entire cast? the u.k. parliament not to mention the european union. >> what is next for brexit? there is going to be a vote in the house of commons to prevent a no deal brexit. we would hope they could agree on that. said she still wants to put her deal to a fourth vote. the responses from the eu are varied. the dutch prime minister said it looks more and more like a no
deal brexit is a probability. mr. mccrone from france saying -- mr. macron saying they cannot be hostage. everyone waiting to see if the cross party movement will work. economics editor. nothing really surprises us. prime minister in washington. both sides trying to keep up the momentum. let's take a look at how far apart they are. rosenberger, hillary advisers foreign-policy for the presidential campaign. it is almost reassuring they are taking their time. we know perhaps it means they could get a more meaningful, sustainable deal. >> it is important we recognize
the complexity of the issues. the implications, not just for the u.s. but our allies. i think it is important there is time being taken. having some sort of sustainable deal that gets at some of the underlying structural issues would be extremely important. tariffs hasus on seems to be at times, would not lead to the kind of deal not in favor of the u.s.. >> i want to throw up this chart. the level of policy uncertainty. it is not just in the u.s. and china. it has surged in that . it is pretty high. talking about the u.s. were in fact europe. the problem with the u.s. and
china, this is the great strategic competition of our time. these are not issues you can resolve with a quick face -- fix. >> i it is important point. the focus in the u.s. china relationship has been on this narrow trade dimension. in reality, i think the challenges we face from beijing as we have seen increased assertiveness, they are complex and abroad. go beyond the economic relationship. the relationship is getting more challenging. a coworker so china. interest in chinese communist party of exerting influence. as we see the development of technological, technological
developments including tools that enable increased authoritarianism, apparently externally as well. >> given the pushback not only on waterway but other tech issues, how likely is it china will be able to achieve the made in china 25 -- 2025 policy by 2025. >> it is an ambitious target. has organized a lot of effort with chinese enterprises, chinese companies, chinese state organs. in approach aimed at achieving what she has set out. it is ambitious. there's going to be significant pushback from washington. hopefully from our allies and australia. leader on thein a question.
i think we need to take seriously xi jinping's technological ambitions and whether or not they are able to meet the targets. i think the technological challenges are going to be significant. they require the u.s. and our allies to step up not just how pushback about our own capabilities. that is going to be an important element insuring we are able to deal with the challenges. >> that idea of leaving the theum speaks to the idea u.s. has vacated its pivot to asia. we saw that with the davos speech. we know what happened after that. isn't that a point. it is difficult for these economies like australia to know what side to be on.
it is not certain where the loyalty is lies. think this administration has been clear on its commitment to the region. if i were an government right now, i would be executing a strategy much more focused on multilateralism, working with our allies and partners. ensuring we are not leaving a vacuum. is going toe china present over the next several we have to be forward leaning. working with our partners and allies. in europe as well. i spent a lot of time in central and eastern europe where china is making an assertive push to read vacuum is the worst thing we can be doing. we have to be present and forward leaning. that cannot just be in the
military and security dimension. it has to be using all the tools of american power. the core values that drive our democracies are really at stake. if we look at some of the trendlines. they are clear what problems are dealt with. coming up next, investors hungry for passive funds. japanese investors gobbling them up a faster than anyone else. we will discuss what is driving that. next. this is bloomberg.
global thirst for passive funds, especially in japan. the market for etf's and exchange traded products has 27%. that outpaces growth in the asia-pacific. joining us now exclusively from s&p dowhe ceo of the jones induces. -- indices. what are the opportunities in japan? speak forbers themselves. etf's are growing as a asset class. in japan, the growth is faster. the real story is not just etf's. of passiverowth investing. -- does itmatter matter they are doubling of the
growth of the markets? >> they are the biggest buyer in japan. it is a local story. if you look at the growth of , it is beyond what the boj is able to do. people are looking at the getting exposure to markets. >> i wonder if you can give us -- what kind of waiting you are -- three phases, inclusion of the shares. it is a testament to open up the
chinese market. trying to reflect what is the available opportunity for global investors? up, youts in china open are going to see more inclusion products.ual they will give global investors the opportunity to invest in the china growth story. >> is there an openness to increasing the pace to how quickly those inclusions happen given the success of the china inclusion story so far? >> the measured pace we have announced, i can't imagine they are going to decide to change that. it is a function of making sure the markets continue to expand and access for foreign investors. you don't want to shock the system. our role is to measure the markets. as excess becomes easier, we are
going to reflect that. >> what are the big growth markets this year? world,way we look at the it is more of a strategic story. clearly in terms of short-term performance, markets not so much what we do. you are seeing it now with flows coming back into these products. more from a at it geographic standpoint, the u.s. market continues to be quite strong. we are happy to see the growth coming across the board. ask are we going to see consolidation in the etf market? help players will not survive?
something,that is that etf product providers, we certainly see there are a lot of players out there. you probably have a little bit too much in terms of product that is available. models of the various product providers are going to dictate how much consolidation will take place. with there's too much choice, sometimes it gets confusing for investors. >> thank you so much for joining us. the dow jones indices. if you missed part of this interview, tv is your function. past interviews. us diving through the securities. conversation. the bloombergr subscribers only. this is bloomberg. ♪
getting further developments on lionnvestigation into the air crash. we are hearing a faulty sensor has been linked to the deadly crash last october. -- just before the tragedy, according to investigators. they are looking into the work of florida repair shop had previously performed. the so-called angle of attack sensor. that is according to briefing documents. we do know erroneous signals triggered the nose dive action.
there is no indication that that did maintenance on the ethiopian air device. more details on that to become available. the national transportation safety commission seeking information from that repair station. >> let's get a check of the latest business flash headlines. stevewere allegations wynn sexually harassed women. statesort will guide the gaming commission as he decides whether to revoke the license. he stepped down a year ago. any of his
relationships were nonconsensual. ford is warning it will review its investment plans in the event of a no deal brexit. it says tariffs and border checks could disrupt the business. the announcement comes as the a range ofnched electric vehicles including passenger cars. express renewing its partnership for 11 years. partner.the largest 8% of spending on the card read 20% on the loans. delta will continue to allow membership rewards to transfer into the skymiles program. former prime minister of malaysia faces the first of
the state fundin at the center of a scandal that has an snared goldman sachs. he is facing seven of 42 charges of corruption and embezzlement. what is the latest on this one? >> there is anticipation and scrutiny ahead of this trial. it has been 10 years to a day since he was sworn in. today, finally 2:00 p.m., the court. held at the high after being delayed from february. it will focus on allegations funds, supporting a quick recap. withing -- being charged
criminal breach of trust. three counts of money laundering. funds allegedly transferred. as if convicted of one of the seven charges, he could face fines of 20 years. he has pleaded not guilty. this is just the first day of the trial, with additional dates to be confirmed. be a judicial review. nonetheless, a busy stretch ahead. scheduled,trial is facing to five charges related. a third is slated for july.
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haidi: them haidi stroud-watts in sydney. asia's major markets have opened for trade. shery: good evening from bloomberg's world headquarters, i'm shery ahn. welcome to "bloomberg daybreak: asia." --"daybreak: asia." haidi: our top stories, asian-pacific markets facing a weak start after the rally starts in wall street. recent gains in tokyo. a cfl official is raising red flags in beijing. stimulusovernment
raises risky things. the gathering -- the and if and the wto flashing forecast, increasingly pessimistic when it comes to global growth. shery: let's see how we are gettingwith asia, underway this wednesday to japan seeing gains of 2/10 of 1%. we have seen the nikkei unchanged in the last couple of sessions. that is the japanese yen was range bound after three sessions of losses. unchanged at the moment, we do have more positive sentiment spreading throughout australia. for seven consecutive sessions. it is up for 4/10 of 1%. the longest winning streak since october. when it comes to the kospi, unchanged at the start of trade an we see the korean you after the slowdown in relation
raised the idea of a rate cut. talking about australia, look at that. the aussie dollar standing at 70 u.s. census down 2/10 of 1%. now at around the two-week low against the dollar after the rba cut rates steady. the government presented the election budget full of tax cuts. let's get to first word news with jessica summers. thanks, shery. theresa may is turning to the opposition in a last-ditch attempt to find a brexit deal acceptable to parliament. she wants jeremy corbyn to work with her to break the deadlock and prevent the country crashing out of the eu without an agreement. her appeal opens the way to a softer form of brexit potential he the country inside the customs union and even the single market. >> i am taking action to break the lock to jam. i am offering to sit down with the leader of the opposition and try to agree a plan, that we will both stick to to ensure
that we leave the european union and we do so with a deal. >> being prepared for no deal does not mean that there will be no disruption. not everything will be smooth. there will be problems. we are prepared that all unforeseen problems should be manageable under eu signs. jessica: top republican mitch mcconnell is morning -- warning president trump's threat to close the border with mexico would have "a potentially catastrophic economic impact on the u.s." the president made his threat last week but has not acted. issays he is pleased mexico taking steps to stop migrants moving north but reaffirms he is ready to close the border if he has to. a faulty airspeed sensor on the lion air 737 max 8 lane linked to october's fatal crash has been repaired in a facility before the flight.
indonesian and u.s. investigators have examined the work. out on the sensor by a repair shop in florida. erroneous data from the sensor is thought to have triggered the dive that ended with a plane crashing into the java sea. the long-awaited trial of former malaysian prime minister against later wednesday and there is a long list of charges linked to the missing money scandal. he will face 42 counts of corruption and money laundering. lightse will also shine a on the complex transactions that have led to the disappearance of at least $4.5 billion. he denies any wrongdoing. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jessica summers. this is bloomberg. a former senior pboc official is warning government
stimulus to support the economy is raising the risk of bubbles. he adds to the escalating debate about whether china's growth slowdown has bottomed out. our correspondent stephen engle joins us for a closer look. who is winning the debate right now? en: i think that is to be defeated. that has been a a lot of stimulus -- targeted stimulus in the chinese economy to weather the storm that has been caused by the global trade war with the united states mostly. and the banks have been ordered to cut their reserve ratio requirements repeatedly. we have forecasted for another three cuts later this year from the banks and the pboc to do the reserve ratio requirement cuts. there has been a lot of stimulus and we have seen the latest economic data that monthly indicators have shown at least january andranted, february are aberrations because of the lunar new year distortions, but we have seen what has been described as a bottoming out of the growth decline we have seen. shouldat mean they
change policy or change courses right now? we have this official from the former pboc economics and data anddivision, analysis division, giving an interview to a local media saying that too much stimulus will lead to asset bubbles. that is what he is seeing. he told the economic information daily that the risks of asset bubbles in china are rising. reserve ratios when the economy is already stabilized can push inflation higher and guide large amounts of funding to the property markets. that is always a concern of the chinese officials with the property market being quite shaky if risky assets are going into the property market, the could be destabilizing and could lead to a rise in inflation. haidi: we also have the imf and
wto with warnings about global growth, largely on account of the trade war diminishing trade volumes globally. the should be a big concern for policymakers in beijing. stephen: absolutely. the imf gave its most recent update in january. from thements christine lagarde and washington, d.c. speech indicating that the global economy has lost momentum even from january. keep in mind, in january that was a downgrade from an earlier downgrade that we got three months prior. potentially, we could get another downgrade in global growth outlook coming on april, i believe it is nice, yes come april 9 come a new forecast is coming from the imf. we are inlagarde says a precarious position in the global economy. lowered theanuary growth projection to 3.5% for this year, 3.6% in 2020. now she is indicating that while
not in recession, we could be seeing lower numbers going forward in the new outlook. here's what she had to say. >> we do not see a recession in the near term. some pickupexpect in growth in the second half of 2019, and into 2020. so you see what i mean by unsettled. and indeed, the global economy is at a delicate moment. stephen: delicate moment indeed, including the wto saying they are slashing the global growth outlook on trade to 2.6% for world merchandise trade growth. that would be the lowest level in three years. haidi: all right, stephen engle there with pretty dire predictions from the wto and the imf overnight. let's look at what will be moving markets in terms of these predictions we are hearing from global institutions, more global
headwinds of growth to come. asian trading getting underway. in muted start when it comes to tokyo and seoul. let's get it over to singapore, joined by mark cranfield. what kind of a reaction do we expect to get from those latest mornings -- warnings from the imf and wto? mark: as you say, it is a muted start. the china market have not opened yet we get -- we will get a better picture as they trade in a few hours. when you have a major inanization like the imf particular, wto, people may not take it so seriously but if the imf or to downgrade, that would be a concern for people in global markets. throwing up this dichotomy where we have had a good start to the year even though the imf did a downgrade right at the beginning of the year and they may do another next week.
you how much the global economy now is depending on the china stimulus to work. do not see the china data really improving during the second quarter, people couldn't start to get quite thanks d about the performance of global equities. you have global equities going up even though the economy appears to be going the other way. the china stimulus has to work. we need to see an improvement in the numbers coming out across asia as well because china will feed into what the rest of asia is doing. so much now is dependent upon the u.s. and china getting a trade deal and the global economy starting to come out of this slight downturn. it is an interesting situation. if the numbers don't come through in the second and third quarter, global equity markets will start to look very expensive. questioningwill be whether or not they were right to be so bullish on the outlook at the beginning of this year. is a: how strong a signal fact that we got wti above $62 a barrel now? a lot of it is being
attributed to a supply constraints of coming from russia reducing output, venezuela curtailed, and even lower production in the united states. it seems to be more a supply issue rather than demand issue. so far, markets are taking it relatively calmly. the most interesting thing is the less bond market which is going sideways at the moment, does not seem to be concerned about higher oil prices. if these cutbacks were to create a spike into wti to $70 apparel -- a barrel, we could see a nasty reaction in u.s. treasuries. if that were to happen, that could filter through. everyone is keeping called. i guess we are thinking that this will blow over quickly because supply is a difficult thing to keep under wraps for a long time. if we see a spike in oil from here, it could turn bond markets and maybe equities as well. the worst may be yet to come.
at the moment, no one is too worried yet. haidi: bloomberg live strategist mark cranfield joining us out of singapore. you can get the latest on the trading action in our markets live blog on the bloomberg. you can get a market rundown in one click and leave commentary and analysis -- an analysis can you can see what is investing -- affecting your investments. still ahead, malaysia is looking to strengthen ties with u.s. business. we will speak to the international trade and industry minister later this hour. shery: global growth concerns and trade uncertainty continues to be key market theme. we will discuss the outlook with blackrock ceo in a moment. this is bloomberg. ♪ ♪
stroud-watts in sydney. a double lamia for global growth. the imf managing director warned of the global economy has lost momentum since the beginning of the year. we will turn to the rock head of fact of investments for asia-pacific and the cio for emerging markets. great to have you. i want to start off with this chart which plainly paints a more depressed picture for global growth expectation since the start of this year. the cuts we have seen to 2019 growth forecast have gained traction. followed by the asia-pacific region developed markets, and finally we know in europe, things have been dire, particularly as we have powerhouses like germany seeing a slowdown. where do you find opportunities as an investor in this late stage of the cycle where we are seeing expectations of low is
not potentially stagnant growth for the rest of the year? belinda: thank you so much. thank you for having me. this is the thing we introduced at the end of 2018. we expected to see slower growth globally. we think that will continue. changed significantly since the end of last year is a more dovish tone by most of the central banks. this is not only the fed. as well.ging markets as a result, this gives a backdrop which is much more attractive for risk assets. we think this is a very attractive trade going into q2. seey: at the same time, we stabilization out of the china slowdown story. when itthe outlook comes to emerging markets, particularly as there seems to be a deal of uncertainty as to where fed policy and whether u.s. dollar goes for the rest of the year? belinda: china is absolutely
pivotal. we know it started to introduce monetary and fiscal stimulus in the summer last year. we are starting to see that coming through. i think that has a huge impact on the economy globally, but also how it plays into market prices as well as geopolitical risk. provide ans does environment which is attractive for emerging markets. we have seen spectacular returns to these risk assets in the first quarter. we don't think we will see a repeat of that going forward. but it is still attractive. i would call out one other statistic which i think it's fascinating, which is global trends are underway to emerging markets them they were six months ago. despite the fact that we have seen this rally in emerging markets, as well as 10 weeks of consecutive flows from global investors, i think it is still fascinating that they are chasing something they are not able to catch up. trade needse, this to be quartered. -- caught up.
shery: when we are talking about china, we have seen stronger economic data, including the manufacturing pmi's we got this week. i wonder if you are concerned that this perhaps put future fiscal monetary policies on the line, given policymakers have been trying to deleverage and contain financial risks? belinda: yeah, that is absolutely right. this last weekend, the pmi print was larger than consents -- consensus. we are seeing that in the moves we have seen. in terms of reform, we will see a change of direction from the chinese government and policymakers. last year we saw a focus on deleveraging and on the environment and supply-side reform. potentially that moves to progress in terms of opening up capital markets and all of that is very good for our global investors. i think it is more of a shift and identifying trades we think are beneficial within that. shery: after all of these
investors turned dovish, we've seen volatility continuing to fall. volatility has been on the decline according to this chart, whether it is the equity markets, bond markets. how concerned should we be that market complacency will creep back in as we also see asset valuations continue to rise? tilt is a more dovish definitely pro-risk assets. that is why we see a decline in volatility. but also the geopolitical landscape is less concerning than it was last year. the we should not be complacent. i think one of the risks we have seen, a significant repricing of the trade risk that was evident between the u.s. and china. the markets are expecting some sort of agreement. and it is not just buy lottery with china. it is other governments as well. should we see that come back, given the risk has been so this could cause
concern and we may expect to see volatility again. shery: thank you so much for your time. black rock head active investments for asia-pacific. you can see today's edition of daybreak him a bloomberg subscribers good to dayb on your terminals, also available on mobile in the bloomberg anywhere app. you can customize your settings so you get the news on the industries and assets you care about. this is bloomberg. ♪ this is bloomberg. ♪
shery: this is "daybreak: asia." i'm shery ahn. i'm haidi stroud-watts in sydney. we have learned of the development of the investigation into the deadly twin accidents involving the boeing 737 max 8 aircraft. deadlys to do i'm haidi with te lion aircraft in indonesia last october. our reporter alan levin joins us on the phone from washington. what do we know so far, it seems
like the focus is not just covering the integral design behind the plane and its components, but also the maintenance procedures and maintenance partners that are involved? >> that's right. there is a sensor located on that wasl of aircraft malfunctioning on the indonesian flight. it is what triggered this boeing safety system that has been such a focus of the investigation. what we are reporting today is had this particular sensor been worked on at a u.s. repair station. was installed on the indonesian playing the day -- plain thecident day before the accident and it was malfunctioning. investigators are trying to determine what kind of foreclosed on on it at this station that could be related to why it was malfunctioning. shery: that repair station,
extra aerospace, certified by the u.s. faa. this puts the focus back on u.s. regulators. not so much regulators, but certainly introduces a new player in this investigation. a lot of the focus has been on boeing. company,ave another the actions of which will be looked at as part of this indonesian investigation. arepany,we know that the indons using the u.s. national transportation safety board to conduct investigative work in the u.s. we know they have been inquiring of this company as well. haidi: we know that there is no such a gem that the same maintenance shop did any maintenance in relation to the ethiopian jet device. in terms of what comes next in this investigation, what comes next for boeing, we know they need more time to get the software fixed. alan: that's right.
boeing had been hopeful that they could finish the software fixed by the end of last week. that did not happen. yesterday, they announced they needed more time. it was more complex than they realized. i think the broader point to make about our story tonight is that these accidents are really complex. errors and/or factors that led to these accidents are very long. and each one itself is pretty complex. i think it is going to take quite a while to sort this out. shery: thank you so much for that. alan levin, bloomberg news safety reporter joining us on the phone. the frexit sadr has taken a dramatic turn with theresa may turning to her sworn political enemies for support, unable to
persuade them. she wants labour leader jeremy corbyn to help her forge an acceptable deal. our global economics and policy editors kathleen hays is in washington. please cross party plans work? kathleen: it remains to be seen. after having her own deal voted down and members of parliament not being able to come up with anything they can vote on collectively, she has to move ahead. she holds up with her cabinet ministers for seven hours today, hammering out what they could make -- what they could do next. they even made sure a cabinet ministers had to stay in the room without their cell phones. ton theresa may came out make this important announcement, nothing had been tweeted in advance. here is what she said. break taking action to the logjam. i am offering to sit down with the leader of the opposition and try to agree a plan that we would both stick to to ensure that we leave the european union and that we do so with a deal. basically, it looks like a softer brexit may be
staying in the customs union, the part -- the cross party plan involved theresa may and jeremy corbyn coming up with their own plan. if that doesn't work, they will have to go back to the house of commons, let them vote on various measures, and that may, if you get past, her optimistic view is somehow they will get that done in time to leave the eu. there are a lot of if's there. haidi: what has been the reaction from jeremy corbyn? kathleen: says he would be happy to meet with her. cross party talks have not gotten far in the past. people are wondering if they will push for a second referendum? let's bear in mind that he called for potentially a new confidence vote today. he is talking positively about working with theresa may. nothing definite is on the table yet. these kinds of things have not gone far in the past. and a lot of people are skeptical. there are those come and if you read the u.k. papers, who are skeptical of jeremy corbyn's willingness to put the interest of getting a deal passed through
♪ it is 11:30 in sydney. a live shot of sydney harbour appeare. shaping up to be a beautiful autumn day in sydney. when itide trading comes to sydney stocks, 0.5%. after a tax-cut-heavy budget unveiled yesterday's session, we are looking at muted gains. this is what we are seeing when it comes to trade numbers. imports falling 1%. exports unchanged.
balanceuary trade revised to a $4.35 billion surplus. retail sales coming in. .gain of 0.8% we were expecting 0.3%. the january number is gain,ointing, hardly any 0.1%, so the pickup of 0.8% in retail sales comforting for the relying onicymakers greater consumer spending to come through despite that wealth affect the in the property market, but the trade balance number at 4.8 aliens dollars in -- billion dollars in surplus. exports essentially unchanged. a positive reading on retail sales. let's look at asian markets.
waningseeing the rally of little bit. every sector in the green except for retail and consumer stocks. 0.3%.kkei 225 higher by we are seeing a loss of momentum when it comes to trading in seoul, korea. concerns when it comes to global growth. warnings over the deterioration in global trade conditions from the wto and the imf overnight. let's get you caught up to date with the first word headlines. the imf and wto are pessimistic about global growth. they warn momentum has been lost since the start of the year. christine lagarde says the economy has weakened since the last forecast, but recession is not likely in the near term.
the wto slashed its growth projection to the lowest in three years, citing rising protectionism and the trade more. companiestycoon whose have fallen behind on low payments -- loan payments can breathe easier. result, business owners at risk of bankruptcy will have more room to negotiate even after they become overdue. india has the worst bad loan ratio of the top 10 economies. veteran of jerry and president -- algerian president has stepped down, leaving after the head of the army said he should go without delay. he had been in power for 20 years. he wanted a new five-year term. it is not known if it will be demonstrators.
solomonsachs ceo david is visiting saudi arabia, the first head of a global u.s. bank known to have gone to the kingdom since the international furor over the murder of jamal khashoggi last year. wall street figures have softened their stance to saudi arabia, which has recently offered some of the world's largest transactions. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. scott morrison is hoping the tax cuts announced tuesday will help sway disgruntled voters in the upcoming election. ae government projected shouldsurplus, which offer more ammunition ahead of the vote in may. let's cross over to paul allen in cambria.
that all of this effort poured into this budget turns out to be pointless? >> it is correct. there is a strong possibility. the budget was unveiled last night. it may never get enacted. passed,asures will be but the bulk of it will not be put to a vote, although it was still read to the house last night. let's have a listen. is back in the black and australia is back on track. [applause] >> here, here. >> for the first time in 12 years, our nation is again paying its own way. we have made real progress, but
we know the job is not done. >> back in black not 100% correct. deficit, $4.2 a million. to1 billion surplus for 2019 2020. the government sees surpluses continuing to build to $15 billion in 2021 and 2022. there is a tax break for middle income earners of up to $1080. these tax breaks will reach 12 million australians. is an irrelevant conversation. is this budget enough to give them a chance? >> that's right. we will have to wait and see.
the opposition labor party is promising exactly the same thing, so the government counting that voters will look and the utter dysfunction focus on a return to surplus. there are risks. it hasn't happened yet. there are variables. we have been hearing the imf describes the state of the global economy has delicate. the reserve bank in the treasurer .2 falling house prices in australia and the effect on consumer consumption. to go beforeng way that surpluses realize. first, we have to get that election out of the way. we should have a date announced soon. the country probably going to 18,polls on may 11 or may
then we will know whether the budget will get in acted or not. haidi: let the campaigning began. japanese auto stocks in the u.s. rose after car sales numbers came out for march. that does not mean the date it was any good. investors continuing to go over those numbers. tour yet a flat at the moment. just some mild gains for honda and nissan. we go to those numbers. >> we see some echo from what happened and u.s. trading for american depository receipts for those companies. as you imply, it is all about expectations. there were contractions for most companies that we were looking at. let's bring that up on the screen. toyota, honda, and nissan, those were a beat, but foretell yoda
and nissan -- four three yoda and nissan,- toyota those were still contractions. about beating expectations. across all brands, gmc, cadillac. this continues the narrative of pessimism with regards to the u.s. market, especially when it comes to light vehicles. analyst points out that u.s. economic growth is only 1.5% in the first quarter, the slowest pace in the past three years. there is some positivity looking ahead. this year come up by 6% for those interest rates. 5% last year, 4% the year before
also some negativity when it comes to tax reform. euphoria, the sugar rush we have been seeing has petered out. in terms of what is happening for the major big trucks, the sedans, there is also some negativity. let's bring this up. , and nissan are all negative. those have been positive for the past several years. by 1.2% in thep u.s. session because of pickups. haidi: another key sector is electric vehicles. >> electric vehicles continue to be the buzzword. we willg to bloomberg, see this inflection point between internal combustion engines falling below the number of sales out there when it comes to ev's.
ford,teresting thing for the chair of europe says it will continue to be bigger and bigger. >> we think by the middle of the next decade that it will be 50% sold will be electric to some degree. 2025, something on order of 20% will be full battery electric vehicles. 2025, right about here. 2019 is this year. you're looking at market share by region for new tv sales -- ev sales. europe is about a 20% market share. that does not change much, in addition to the u.s., which is also 20%. blue is china. by 2022, 50 5% of global sales, but that will fall away. taking a look at purple, japan, starting to grow, but there is
not so much major growth. similar case for india in orange , the rest of the world in green, 23% in the next 20 years. haidi: thank you with the latest on the auto sector. coming up next, the former malaysian prime minister heads to court to face charges of corruption linked to 1mdb. this is bloomberg. ♪
has sparked embezzlement and money laundering investigations across 10 countries. it started in 2009 by the government, the funds initiatives included buying privately owned plants and planning a new district and kuala lumpur. it proved better at borrowing and attracting investment, finding itself $12 billion in debt. investigators have been trying to find out how money flowed through and around the fund and into personal accounts. the u.s. justice department says $4.5 billion went through fraudulent shell companies. this was say $7 billion passed through 1mdb and one of its units. the charges are breach of trust and money laundering. the former prime minister denies any wrongdoing. goldman sachs is facing criminal charges, with prosecutors
seeking fines of $3 billion. militimalaysia alleges they misrepresented the funds. the nice that and says it will vigorously defend itself. a fugitive is in hiding, accused of leading a channeled money into personal accounts. some of that money is thought to be kickbacks to officials. he has been charged in absentia with money laundering as they look to expose his assets, including a luxury yacht. haidi: what are we expecting ahead of today's trial? flutie be taking the stand? -- will he be taking the stand? >> the former prime minister
could take the stand if the determines there is a case. today's trial will focus on allegations linked to oversight by a former unit of 1mdb. hasformer prime minister been charged with three counts of criminal breach of trust, one count of abuse of power to commit bribery, and three counts of money laundering. allegedly transferred to his personal think account. that is just a fraction of the billions allegedly embezzled from one in the db -- 1mdb. he could face fines and jail time of up to 20 years. he has treated not guilty to all charges. the first dayst with additional dates yet to be
confirmed. prepare forey will judicial review against the decision to lift the state order which delayed this trial from starting in february. the second trial has been scheduled, where the former prime minister will face 25 charges. thank you for that. joining us in new york is the malaysian minister of international trade and industry. great to have you with us. welcome to bloomberg. we had seen this week these massive outflows of capital from malaysia. the stock market has been one of the biggest losers in asia. maliciousas it hurt image of credibility around the world? >> our fundamentals are strong. around many ways and strategies to ensure we can
overcome these challenges we are facing. with the leadership of our prime minister, he has been engaging ,any nations, as well as china america, and our neighbors all over asean. we believe we will be up to overcome all the challenges we face today. haidi: you are meeting with business groups and companies as well. who are you meeting with and what do you expect to take home. yesterday we had the opportunity to meet with the secretary trade and the secretary of commerce, wilbur ross, and robert lighthizer. -americane asean business council and the u.s. chambers of commerce. we have been meeting a lot of companies that have party invested into malaysia, like honeywell and others. we believe we will have more investments coming from america,
knowing full well that they understand our fundamentals and understand we are very serious in rebuilding back our nation and all the opportunities to be had in malaysia. haidi: can you tell us more about what deals may have been what are the negotiations might be underway into this existing relationships? >> we are already in talks with many companies. just now i had a meeting with a large company that is expanding further in malaysia. the investments that have already signed on to our being added up even more than ever before. we are confident that many more will come in. many more have extended their interests. haidi: you have suggested the u.s. and china should focus on striking a trade deal out of a
sense of global responsibility. seen as one economy that could benefit from u.s.-china trade tensions. we have seen a recovery on volumes and values. do expected to be sustained? with manyovery comes challenges, from negative perception of the 1mdb saga as mentioned, as well as what has happened with the current political situation just before we took over. america areina and concerned, i have stated the government's position is we would like them to find a solution between them, because it affects everyone all over the world. the success of america and china supportause of the many by nations big and small. >> how does malaysia position
itself when it comes to issues huawei.ile way -- while >> the position taken by america is only known to them. we are trading well with our friends in china. it is a non-issue for us. if there are concerns, we will act on it. as of today, there are no issues in malaysia. >> malaysia is one of a handful of countries that have signed the comprehensive progressive agreement, but yet to ratify it. when do you expect to do it? are you leaning more towards a china-led rcep. >> it was signed sometime in 2018 by the previous regime. our prime minister has made it clear he would like to ensure that whatever terms there are
will benefit us, as well as fair to us. we have policies that are different from the previous government. time.ill come in we are not in a hurry to do it at the moment. , it is not chinese-led. -led. asean there are 16 of us that go through this together to ensure we will be able to have a strong economic cooperation within the , china and india as well. as far as we are concerned, it is not chinese-led. i would like to make that clear. i was asked the same recently. an asean-led agreement. >> thank you very much.
haidi: a quick check of the business flash headlines. resorts hitt wynn allocations that steve wynn sexual harassed women. will guide to gaming decision as it decides whether to revoke the license. steve wynn stepped down following reports he section harassed employees. he denies any relationships were nonconsensual. will review its investment plans in the u.k. in the event of a new deal brexit. it says tariffs and border checks would disrupt the business, prompting series questions about the long-term future in the u.k. it came as the company launched a range of electric vehicles, including passenger cars and commercial fans. >> american express is renewing its partnership with alta for --
delta for 11 years. delta is the largest co-brand partner, representing 8% of spending on the card, and more than 20% of loans. amex membership rewards to transfer into its skymiles loyalty program. >> our market coverage continues as we look ahead to the start of trading hong kong, shanghai, and shenzhen. standby. the china open is next. this is bloomberg. ♪
♪ it is 9:00 a.m. in bank beijing. david: we are counting down to the opening of trade. trade talks moved to washington amid talk the sides are moving closer. china is armed with a list of concessions. yvonne: clouds gathering, the wto and imf are increasingly pessimistic about global growth. david: the one in db scandal -- 1mdb scandal heads to court, inin