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tv   Bloomberg Daybreak Asia  Bloomberg  April 8, 2019 7:00pm-9:00pm EDT

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haidi: a very good morning. away from hour the open. ramy: i am ramy inocencio. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: out of stories this tuesday. flying on friendly skies. washington turns up the heat on trade. since its highest levels mid-november. libya.g flares in
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75 billion and counting. aramco prepares for its debut bond sale. ramy: let's get a quick reminder onhow u.s. stocks ended monday. it was a mixed picture. for the dow, we were looking at two individual stocks that took the whole entire index down. su keenan talk about that a little bit more. the s&p 500 up three points. this makes it an eight day trading street. let's flip up the board because i want to dive into the s&p with the function on our bloomberg terminal. this is the health of the s&p's sectors. these were the three best-performing sectors. energy of course. we have been talking about it
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for the past few days or so. oil on the boil because of what is happening in the libya conflict. the forces heading to tripoli. on the flipside, utilities and real estate on the down. let's get it over to you. sophie. take a look at the asian markets. sophie: the yen is holding steady. investors are not seen taking aggressive positions. on u.s. proposing tariffs e.u. products. the euro is under pressure, trading and at the lowest level since 2017. we do have, flipping the board, this rally we see in asian seen today'save event at $4 trillion to the original benchmark.
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there are signs that they are -- a quick check on oil prices. we have wti holding that the above 64. there is geopolitical risk. saudi arabia's energy minister saying a kingdom does not plan to deepen cuts. haidi. haidi: first word news with jessica summers in new york. jessica: oil is extending its games. ins.ts game flights were suspended after a plane from an easter based basedrd open -- eastern- warlord opened fire. there can be no military solution in libya. the trump administration is ramping up pressure on iran, labeling the guard as a organization.
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it is an unprecedented move and make itpt a backlash to harder for u.s. officials to work with allies in the region. it places the guard in the same category as al qaeda and the so-called islamic state. a u.s. judge has barred the trump administration from people to wait for years. the ruling is the latest setback for the president as he attempts to curb immigration. his policies have been repeatedly stymied by judges since he took office. says the u.s. is fallen can take no more migrants. u.k. lawmakers have voted to prevent a new deal brexit as pressure builds to delay the upcoming divorce. the vote comes as e.u. are said to be close. compromise is building between france, which is skeptical about
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extending the u.k.'s membership, and other leaders who think theresa may should have one year to push a deal through parliament. into an election with leading parties neck-and-neck in the polls. benjaminister netanyahu is facing a tough race and says if he is reelected, he sovereigntyisraeli to other parts of the west bank. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. ramy: thank you very much. the chinese premier will hold talks with top e.u. officials and tuesday at the annual summit. they meet amid mounting concern about beijing's trade practices. now forenzie joins us more. what can we expect out of this meeting in terms of real concrete detail and any emotions
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that might be floating out there? tom: there will certainly be some emotions. there were thorny issues that the two sides will have to tackle. it is expected to be a three-hour meeting between li keqiang and jean-claude juncker and then the e.u. head as well, mr. donald tusk. they are expected to sit down in brussels for these talks. it is an annual summit. they are expected to talk about the trade practices amid increasing concerns around the fact that this is not a level playing field from the e.u.'s perspective. the reverse is not always the case in china. that is causing those in europe to ramp up the pressure on their chinese counterparts. they are concerned about the glacial pace of negotiations that have been going on since 2013.
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they want to get progress on that. they want to get some clarity about the belt and road initiative. there are divisions within europe itself. others like the french and germans concerned about what the belt and road initiative actually entails. premier li keqiang saying he unity,he chinese backed trying to ease some of these concerns. a joint statement on the back of this meeting, that will show that progress has been made. there is no certainty we will get to that point. haidi: do we expect that awkward issue or run waterway, the five g technology, to come into these issue around waterway, ei, the 5g- huaw
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technology, to come into these talks? to deal question of how with china's largest tech company in europe is being wrestled with at the member state level but also at the european commission level. europe and the european commission have not banned saidi but they have european member states have the jurisdiction and the right to judge just how far to go and size letting huawei into their systems. the u.s. says his company is dangerous and its infrastructure can be used for spying attacks. premier li keqiang no doubt pushing for some clarity, particularly from the germans and french as to how they deal with this major technology company. they are expected to talk about the wto. for them been pressure to work on reforming the wto to
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make it worth it. we heard from e.u. officials that they will be pushing china on human rights abuses. there are up to one million if not more held in reeducation camps. that is an issue that is likely to be brought up as well by e.u. officials during these meetings. mackenzie in beijing with the latest. washington is turning up the heat on trade, proposing tariffs on airbus to counter e.u. subsidies. derek, give us some context. this comes out a time when boeing could use all the help it could get. in terms of the grievances against airbus, it goes back a number of years. >> it does, and this is breaking news on your bloomberg terminal. the u.s. has proposed some $11 billion worth of tariffs
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countermeasures that would hit a whole line of european products from french local for two roquefort two british stilton cheese. british stilton cheese. long-distance a350 off the ground. come outs supposed to in summer with an arbitration ruling on exactly what the amount of the subsidies might be. the u.s. is planning to trim their list to fit that. in the meantime, there are talks that the u.s. is hoping to conclude to settle here. if not, this is a clear warning shot that the u.s. stands ready to go with tariffs on airbus equipment. there is no question. a very delicate moment for boeing all around the world. this is a move that could help playmaker andgest
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forced some additional difficulties on to, its chief competitor. ramy: when with these tariffs start to apply? is there anything that the e.u. could do in the meantime? >> is is a multi-month process. the total amount is going to be subject to whatever the wto sort of decides. that is the indication we have gotten from robert lighthizer in a statement. we are going to have to wait until summer to see exactly what the total amount is that the u.s. is preparing $11 billion. that is the american estimate of how much this is. take this for the threat that it is intended, i think i would say. there is clear language in the u.s. statement we received that they are looking to talks, and
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so you can take threats of what we will do if talks fail to mean that there is additional pressure on any talks that may be ongoing as to a resolution to the very long -- i think more than a decade now -- tariff dispute. haidi: it is interesting. there was a time a few months ago that we thought it seemed like washington was trying to wrap up its grievances on other trade funds to focus on that set of china-u.s. talks. now it seems we have made threats against the e.u. as well as threats against mexico rising. all of the issues fighting the trade wars on various fronts again. >> i think the fight to make america great again never quite top, does it? the u.s. has been very clear that the trump administration in particular, that it's views trade imbalances is a problem. this is an administration that hardecided to make a very
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line on these sort of things ahead of what invariably becomes a negotiated process. you are seeing that play out with china and mexico. as well with canada. you see the maneuvering where stiff measures get announced as preliminary measures and then the u.s. says come talk. let's see what we want to do. example of that. this is a very severe example of that, one which would have major implications for trade, particularly in the era space moment. memorable moment for boeing. haidi: der fog bank in singapore ank.erek wallb we will get an exclusive interview with the new york times ceo to discuss a paper's strategy and growth -- the
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paper's strategy and growth in asia. ramy: there is a large storm brewing in china. we will speak with a guest on his outlook in the region, next. this is bloomberg. ♪
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haidi: i am haidi stroud-watts in sydney. ramy: i am ramy inocencio in new york, and you are watching "daybreak asia." a down day for the dow. extend itsaged to longest rally to eight days and counting. big companies dominated the news for sure. energy stocks advance as oil hit a five month high. su keenan joins us now. what was the most interesting part of the day today? it was very low volume. at the way theok market ended. again, we did have a mixed close, but the s&p was a big
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gain. a bit of a weaker dollar. oil with strong. futures, not much happening going forward, but let's go into some of the big movers of the day. big way. ge, down in a the same analysts who had predicted the downturn of this manufacturing giant, renewed his bearish call and that knocks the legs out of those who had hoped for a strong turnaround. experience more fallout. cutting production of the model by 19%. they are cutting production before they come out with this software fix for it so it raises questions about whether they will be making a lot more of these planes. a holdings company up after hours as well. many companies are thought to possibly bid as they put .hemselves up for auction
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we are about to kick off earnings for some of the big banks starting on friday with jpmorgan chase and wells fargo. 11% and down about change and that is much more than the s&p during this time so many will be looking for these say something positive. if they do not move the group higher, that will be a predictor which way the market goes from here. boostingdge funds are bullish bets on oil before the libya crisis seemed to worsen to supply.ew risk this is as we see u.s. active rigs jump as well. su: the real story short-term is bullish. you can see the big jump. you did have some of the hedge funds take that long positions.
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again, it just adds to concerns about supply. so can the oil is on a tear, the crude mood for now is bullish even though we are seeing a bit of an up tick in u.s. production. ramy: saudi aramco has received billion for its debut bond sale. that deal is one of the most anticipated of the year, showing investor hunger for high-quality credit. was the termfrenzy i have seen bandied about. would you say similar? dan: absolutely. certainly since the administration push chairman powell. this completely is consistent with the hunger we
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see across corporate mortgage markets. ramy: a lot of folks are optimistic about this. if there was one negative investors should know before they get ahead of themselves, what might that be? dan: markets generally? ramy: just with aramco. dan: certainly when you look at the amount of cash flow reduced by that business, it is one of the most free cash flow generative enterprises to ever exist. haidi: are we still in this long, lonely universe you warned about late last year where we see investors resuming this belief that the goldilocks scenario will continue to play out? dan: we have seen nothing but that. it has been straight out since mid-december. and across all tradable yield markets, we have seen nothing but it's. with -- but bids.
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we thought we might see rational markets, but we have seen several instances where that threat has returned. to throw offthat and see investors come right back in. we are still not believers whatsoever. what is most striking to you out of your recent look across asia at the moment? you about china and india. he points out all of the structural and systemic issues we have been accustomed to when it comes to china. is the risk reward there yet? dan: not even close. with china becoming ever closer to becoming a net debtor versus a net creditor nation, there is no system of records for creditors to speak of. lending on the part of the chinese banks and a tremendous amount of capital chasing yield
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in what is a new unsecured bond market that has really only been created to my sickly in the last 10 years. id not see a whole lot that is right with it. we see a lot of things coming down the pike that will be exciting for us as people who chase distortions caused by extremes in markets. in india, we have been involved for a long time. new insolvency law is interesting. it is a first test of really whether a system of records that is understandable on which markets can bet is out there. it seems to be holding, but we would say, as a general matter in distress credit markets in india, when you kind of hedge the returns available back to , you are several hundred basis points away from being an adequate level of compensation for the risk you are taking. ramy: you were quite bullish in
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southeast asia. tell me more about this. dan: when we are bullish, it does not necessarily mean we are bullish on an area. it means we are bullish on an opportunity. in southeast asia, a number of institutions came in who decided to move out. we have recently been buyers of nonperforming loans in some of those countries from banks that have decided to kind of close up shop and move away. we think there is an active kind of think tank driven credit there arere where already extremes showing up at where we see opportunities to do some very interesting kind of new origination business in specialty finance markets, but we think it is quite an interesting area. ramy: what are some of the spots you would say? in the past, we talked about indonesia as being a good spot to go.
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agree with that and if we could push forward, where would we say? we have some in the near-term indonesian election. there are specific non-indonesian financial institutions and we see opportunities to be a solution provider, if you will. there are special lending opportunities in that market. singapore is increasingly an interesting market. philippines is a little bit too small for us to focus much on. malaysia think you also be early. there seems to be some early stirrings of distress. the more interesting opportunity is in australia and new zealand. we have seen the makings of annually early stage banking crisis through the combination of an over buoyant mortgage market as well as a series of regrettable interactions between the big four banks and some of their customers who have seen congressional hearings and other
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issues that have resulted in a market pullback. that has created opportunities in commercial real estate lending, specialty finance, and aspects of corporate lending that are available. all ofzealand, you have that added to the fact that they are trying to materially raise the amount of capital banks have to reserve against their obligations. given the main banks are owned by the main australian bank, it is not like there will be ready capital available to fill that hole. potentially see assets coming out of the banks in the near future. haidi: do you have an investable a macro view on turkey contrasted to last year? dan: as a general manager, we don't have a macro view on anything. we want to be as uncorrelated to that as possible. there have been instances where we looked at turkey as an opportunity.
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iny do make us interested the fact that i have had colleagues visiting recently. at the relative amount of uncertainty there in the relatively smaller size of the investable market for folks who are special situation credit investors and you compare that could be in greece and italy, it does not make a ton of relative sense to be spending a lot of extra bandwidth and turkey right now. haidi: always -- in turkey right now. haidi: dan. we are getting lines crossing the bloomberg regarding the murder of journalist khashoggi. the government indicting 16 individuals. six months since that occurred. this is a public designation of 16 saudi individuals under the
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department of state regulations according to secretary of state mike pompeo, publicly designated the following individuals for the murder of jamal khashoggi about six months ago. we are looking at china or restrictions on some of these individuals as well as other restrictions. the section actually have to do with significant corruption or gross violations of human rights. we will get you more details on that as we get them. let's get you a quick check of the latest business flash headlines. staff leaving. fore is better news the brokerage at home. softbank has named nomura for a lead underwriter. number will get -- numerous will mura will get 30%. ramy: larry fink delivered his annual amount to shareholders, saying he wants to make the firm
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into one of the leading asset managers in china. asia is expected to drive 50% of the organic growth and assets under management over the next five years. plenty more to come. this is bloomberg. ♪
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jessica: i am jessica summers with the first word headlines. indian prime minister narendra modi is planning to spend $1.5 trillion on infrastructure as he launches his party's election manifesto. they plan to double rural incomes, improve share from manufacturing, and boost exports. india's farmers were a key bloc in the election with the conference party promising to write off loans across the country. ismer indonesian general -- dismissing independent opinion
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polls and claiming he is on course to win next week's election. he has a double-digit lead. his team says he would take more than 60% of the vote if an election were held today. polls suggest 10% of indonesia's 193 million eligible voters are undecided. a chinese woman who breached security at president trump's mar-a-lago resort in florida will be held in jail until next week when her hearing will resume. she was arrested on march 30 for illegally entering the resort and lying to a security service agent. her lawyer says there are innocent explanations. prosecutors say she may be formally indicted this week. received hisas first salary payment since resuming the ceo role for years ago. a filing shows he pocketed 100 100, a modest sum that -- $.40 -- 140 cents.
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they say it is testament to his commitment to the platform's potential. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. thank you very much. let's check in on the markets now. sophie kamaruddin, what are you looking at? sophie: asian futures are pointing to slight gains. in wellington, we are seeing the nzx 50 losing ground, up by .1% and headed for a fifth they are losses. investors are likely not to take aggressive positions. taiwanese inflation and australian home loans among the key releases. we have the aussie dollar holding above 71 while bond yields are rising slightly. we have a pickup seen in
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february home loans data. get a read from the anz. data point to consider. i want to highlight the slide in offshore yuan's volatility. we are seeing swings falling to flow.onth low as -- the u.s.-china trade truths enters a fourth month. saudi aramco has received orders where 70 by billion dollars of it -- $75 billion by its bond sale. it shows investor hunger for high-quality credit after major investors briefly shone the kingdom after the killing of jamal khashoggi. , these levels of
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demand we are seeing are extraordinary. tracy: indeed. is still building and we have seen it grow significantly larger in just the past few hours, up from $60 billion worth of orders to $75 billion. this comes amid a hot market for credit in general but also rampant demand for emerging-market debt in particular. all of that demand means we might see saudi aramco raise the overall size of the deal when it prices today. we had been discussing something bonds10 billion worth of sold. we are looking at at least $15 billion and that demand is also feeding and pricing. ramy: what does this mean for the kingdom? of course, this is not just a capital market story. this is also a geopolitical story coming hot on the heels of the murder of the journalist khashoggi, and what saudi is -- is sort of has
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redemption through the debt market. they were able to sell a sovereign bond. i think it was late last year or early this year. but this is the first time saudi aramco is going to be telling in the international capital market. not only are they going to achieve sort of a boost potentially for their reputation, they are going to be able to say the khashoggi killing does not matter for our finances. mohammad bin salman and will get -- mohammad bin salman will get extra money. politics and geopolitics will always remain a risk in this kind of deal. we are seeing the designation of individuals by the u.s. for the khashoggi murder. i am wondering what other risk factors investors should be looking at at the moment.
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tracy: there is no default risk. saudi aramco is one of the most profitable companies in the world and it also has significant cash flow. that said, there are some risks investors should be aware of, one of which is just the degree to which the company is actually kingdom of with the saudi arabia. aramco is almost synonymous with modern saudi, as we know it. it is often thought of as the golden goose for the kingdom, right? it is the thing that lays the that allows them to finance significant programs. ,hen he first announced plans we had a bunch of saudi commentators on twitter that were tweeting mohammed had sold the chicken, the saudi equivalent of the golden goose. that gives you an idea of how important it is to the kingdom. were to arabia
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experience significant social or financial stress, it can go cap -- still tap aramco. that is something investors should definitely be aware of. the other thing is pricing. at the moment, the yield on the 10 year portion of this deal is coming. the yield is 125 basis points over a equivalent u.s. treasuries, three point of and 3.74% on the saudi sovereign. 3.75% versus three point 74% 3.74% saudi sovereign -- on the saudi sovereign. investors are going to ask themselves why am i not getting yield pickup for a company that is 100% state-owned? ramy: we are waiting for those droprs to drop the -- for sure. tracy alloway in hong kong. khalid al-falih spoke
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exclusively to bloomberg at the first gulf intelligence saudi arabia forum that was in riyadh. it is ongoing. i think the deal will close on wednesday, so i am advised not to comment on it, but i think the press report and the analysts and investors have been extremely impressed by what they have seen. this is no surprise to us. we have been saying for years that saudi aramco is not only the largest but the best quality company that exists on the planet, and i say that from every angle. nine terms of the resources that the company has access to, not in terms of its operation, but also its environmental stewardship and its technological prowess in terms of the indigenous technologies it provides. resources, aman
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company led and operated by saudi's. a predominantly saudi board that has always taken the right decisions and the value is out there for the to see. --hope closing of this deal this was successful and we are all speculating how successful it will be, will it be a curtain raiser to coming back to the bond market again? >> i think aramco will establish a permanent presence in the capital markets that will help and capital estimates. i can assure you that in a couple of years, you are going to have your choice between investing your big savings from working for bloomberg and aramco
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commercialares papers. we will have all the tools at disposal. i think in terms of paying the , it is going deal and the prospectus for the investors, it is not the primary reason. for accessingn the bond market. it is a tool the company needs to have and we need to just have some debt on instruments on our balance sheet. >> that establishes a very clear yield curve so to speak. let's move on from the bonds. who is right? just how strong has the demand than? -- been?
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where is the bulk of the demand? >> it is dynamic. the books have not been closed. >> it is north of 30? >> i believe so. i am not part of the roadshow, but it is solvay. i think just be patient, wait a couple of days. and on wednesday, we'll all know. ramy: that was khalid al-falih speaking to manus cranny at the first gulf intelligence saudi arabia energy form in riyadh. bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. of next, we are speaking exclusively to mark thompson about the paper's strategy in asia. this is bloomberg. ♪
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ramy: welcome back. i am ramy inocencio in new york. haidi: i am haidi stroud-watts in sydney. you are watching "daybreak asia ." president trump rarely passes up hisopportunity to bash opponents, including repeatedly calling the new york times failing. the subscriptions actually are rising. exclusively from hong kong is the new york times ceo. how does this factor into hitting the target market? it is a politically charged environment that is just in heated in this part of the world given we have had an election year five number of key countries coming up. an election year in key countries coming up.
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>> it is important and covering news and it is potentially a great target market. we believe we can get many more subscribers and readers as well. particularng kong in as part of our global operation. they keep the news going just like with bloomberg. they are editing the news and in charge of the entire digital news report. some of the markets in asia, like indonesia and the philippines, you see some of the highest take-up of tech and app consumption. how does that, you know, determine your strategy in some of these emerging-markets? mark: our thesis is that there search for social
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media to distribute our journalism and make it discoverable by consumers. there is not a long heritage of use. it is great for building an audience. are very clear about our thesis which is we want people to come to our mobile web. it is jumbled up with everyone else's. we would like to habituate them to getting much of what they want in terms of the news knowing from us and exactly where it is coming from, what its providences. we would say also was the guarantee that it can be relied upon. , how doe country, china you deal with that, especially with censorship? mark: around the world, there are many countries where we deal with censorship. globally, the censorship and the harassment of journalists is a
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growing issue. toortunately, the risk journalists and the difficulty of citizens getting accurate impartial news is growing in many countries. properly. cover china we want to cover issues of politics and human rights and the amazing tech revolution happening and life in china for its people. we are patient. chinese authorities are famously patient. we believe china is going to be for decades toy come and we are in it for the long haul. our services are significantly blocked in china at the moment, but we are continuing to cover china as well as we can. we are doing some great work covering that country, and we also want to continue to seek to free to usernalism in china. in the united nations
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universal declaration of human rights and its guarantees about press freedom regardless. government, the chinese have signed up to the universal declaration, and we hope that sooner or later, that declaration will be honored. ramy: 1.3 billion people and counting for china. are you saying to us that you are happy and willing to take this high ground, moral high ground, and block off subscription growth in that country, and what would it take between china and the you are times -- to gain access the new york times to gain access -- between china and the new york times to gain access? mark: we will not do that in any market in the world. we believe in freedom of press. we believe in journalism delivered to the world without fear or favor independent of government. not hostile.
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but objective about what is going on in every country. that is what we apply in the united states. famously, we have an administration washington which does not like the new york times of all. we want to do it everywhere including china. we will never compromise those principles just to gain a few subscribers. haidi: arguably, some of the attacks from the president have done the new york times more good than bad, right? after 2020, if the political environment changes, if the administration changes, do you see that growth as being sustainable? does it change your strategy at all? mark: my view is we should regard mr. trump's election and the current political climate in the u.s. as a symptom of profound disruptions, the shifting balance of economic and geopolitical power from west to east.
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mass migration of human people. climate change. inre is a whole list of ways which our countries are in this prevent period of change. i will not see any likelihood that the overall news cycle is going to reduce. last month, we had to bring enormous -- two enormous stores, the terrible shooting in christchurch, new zealand, and the crash of the 737 any he appeared. ethiopia. ramy: i am a subscriber to the new york times, so journalism and his allies. don't forget our interactive tv function tv . , you can watch us live and dive into any of the securities or bloomberg functions we talk about. you can just see our past interview with the new york times ceo. you can become part of the
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conversation as well by sending us instant messages during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ . this is bloomberg. ♪
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ramy: let's do a quick check of the latest business flash headlines. tesla has followed up a disappointing deliveries report like cutting more sales jobs across the u.s. as it continues to pare back personnel and move the ordering process online. staff have been let go in chicago, new york, and tampa. tesla declined to say where they fell and how many people have been effective. the company wants to save money as it ramps up production. rish is acquisitions after the acquisition of monsanto. it is eliminating 12,000 positions around the world after
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the deal. cuts in its german home market and costlyensitive as labor protection is strong. haidi: with the touch of a nap app, you can take off. all you need is a smart phone. bloomberg technology's emily chang tracks some startups trying to shake up the skies. emily: imagine you want to take a quick flight for business. instead of navigating huge terminal support a crowded commercial airline, you can opt for the private flight experience with the touch of a nap. black art -- an app. a flock of companies are pushing the industry forward. >> we think of ourselves in the same game as the on-demand transportation companies like uber, like lyft. we are a little bit further. black emily: it offers flights
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in small aircraft. emily: the company offers flights in small aircraft. highly underutilized asset and it is an expensive asset. when you can actually start to advertise the cost basis and enable a lot of pilots who want to fly a tremendous amount more, you create increasing adoption. a silicon valley unicorn value that $1.5 billion advertises semiprivate flying with not so private fares. the company pairs passengers together offering flights between short range destinations. other private aviation companies offer a private flight experience by putting passengers on empty legs of private jets.
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>> a lot of technology minded people who think that with the right algorithm, you can make money from the inefficiencies and private aviation. >> you have big players in the industry. for all intents and purposes, they are operating airline. emily: like delta offering full priced private flights as well as discounted empty leg flights. technology the component of the non-aviation crowd. this is not to say this is not a business that can grow by leaps and bounds. it is just that i think today, we have not seen the regulatory regime keep up with a lot of the tech innovation. emily: the faa guidance for been bidsht sharing -- for flight sharing. faa regulations.
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the charter flight industry in the u.s. has grown by 2.6% in the last five years to reach revenue of $25 billion, and tech startups want a slice of that market. emily chang, bloomberg, san francisco. stuff, takinging advantage of inefficiencies in the sky. japan,review the open in south korea, and australia. sophie kamaruddin. sophie: futures hinting at slight gains in sydney and seoul. it is building a stake in the company. counter move after a offer. they have been appointed the lead underwriter for softbank's mega bonsai. -- on sale. the japanese government may vending machines.
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watch her reaction in stocks like japan -- watch for reaction in stocks like japan. plenty ahead on "daybreak asia." this is bloomberg. ♪
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>> a very good morning to you. major asian markets have just opened for trade. good evening. ." welcome to "daybreak asia >> our top stories. flying unfriendly skies. turning up the heat on trade proposing tariffs on airbus. oil is at its highest level since november. citing libya and the u.s.
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ratcheting up pressure on iran. >> we look at the big numbers piling up as aramco prepares for its bond sale. market action. on my monitor, i am seeing red and greens. >> mostly red after u.s. docs clocked a day gains. little enthusiasm. japanese stocks up 0.2%. off 0.2%. stocks are under pressure dropping on the nikkei. let us change the board to check in on the kospi opening slightly higher after a slight gain on monday. could be on track to match the best winning streak since august. the korean wan is firming up
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just slightly after reaching the 1144 handle on monday. slipping to it an 18 month low. we are seeing the loss ease somewhat. looking into the mood in australia. opening with little change. to the downside though as the aussie dollar is under pressure will bond yields are rising ahead of february home loan data. checking in on stocks in wellington. swinging to gains. up 0.1%, looking to snap a four-day decline. looking to gain momentum. the 1900oving towards level. the kiwi dollar is holding steady. i: thank you. here is jessica summers. >> the trump administration is putting pressure on its leading
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arab ally designating a group of saudi individuals linked to the murder of jamal khashoggi. 16 people are named by the state department. taking them an eligible for travel to the united states. to list includes a former a the crown prince mohammed. oil is extending its gains as fighting continues to live -- continues in libya. all flights were suspended at the only functioning airport. after a warlord opened fire. the united nations condemns the latest fire. -- latest fighting. u.k. lawmakers have voted to prevent a no deal brexit as pressure builds to delay the upcoming divorce. the vote came as eu leaders said to be close to an agreement on delay i had of a critical meeting on wednesday in
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brussels. a compromise is building with france which is skeptical about extending the uk's membership. modindian prime minister $1.5 trillion on infrastructure. double localses to income by 2022. and boost exports. the farmers are a key block and the election but the opposition promising to write off loans across the country. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am jessica summers and this is bloomberg. >> washington is turning the heat up on trade proposing tariffs on airbus to counter eu subsidiary -- subsidies.
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what do we know about the proposal right now? putting out a list of about $11 billion worth the lead headline of those is airbus planes. although this is a broad list that also includes things like wine and french roquefort cheese is in things like that. a broad group of banks. is putting out this preliminary list and response to what they say has been decades of airbus subsidies. on their planes including subsidies that help airbus get brand-new planes off the ground. this is a long-running dispute between airbus and boeing. the u.s.'s number one playmaker. the u.s. says this is enough of that. the wto is going to make an estimate of how much the damages
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may or may not be theoretically by sometime this summer. maybe and of summer. the u.s. is going to take that as the overall amount it is done rightbut it has now is put out a list of $11 billion worth of products it is ready to go with as proposed countervailing duty targets. it is interesting. it comes at a time when boeing could probably use a bit of a helping hand. the u.s. is being criticized for its government schemes and subsidies for its home planing -- for its home playmaker. -- planemaker. >> the list of grievances between boeing and airbus is very long and takes more time than we have in the entire program to delineate. i won't get into all of that except to say it is a very long list.
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you are exactly right. this list -- think of it as a preliminary list. this is something where the u.s. is saying, this is our target. if you are thinking towards other u.s. lines of attack on trade and you are thinking towards china specifically, remember that the u.s. put out lists of a lot of things for targets and eventually the u.s. and china got around a table which is where they are now, in talks. the u.s. is in a statement announcing the sending out a signal saying they are willing to talk to europe on these subsidy issues to try to work all of this out. this is very preliminary. i am taking this as that it seems was intended. >> what i'm gathering is the word brinksmanship or some like degree -- light degree of brinksmanship is what the u.s. is doing to try to get eu and
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airbus to the table. what would be some common ground? prettygrand canyon is a first attraction because everyone loves -- tourist attraction because everyone loves cliffs. this happen a lot of times. asking everyone to come to the table. we are seeing it happen once again. rest assured, this is one of has a lot ofhat potential global market impact. it is also something that frankly is coming at a fragile time for boeing which is seeing one of its newest planes grounded worldwide. in response to the two crashes. this could not come at a better time for boeing even though it is a long simmering dispute. >> thank you. derek from singapore.
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taking a look at what is moving markets as trading begins here in asia. we are joined by mark. with oil hitting a five-month high, taking a look at what dollar investors are doing -- is there conviction there? >> we have seen previous periods where oil prices have been extremely strong pushing the u.s. dollar much lower. that does not seem to be happening this time around. since december brent crude is up more than 40% from the december those and yet the bloomberg dollar index is down less than 1% over the same verio. we are not seeing the same effect on the dollar this time around. there are a few reasons. one does simply the fact that the u.s. dollar short-term yields are much higher than they were in previous cycles. it is quite expensive to be short the u.s. dollar unless you really believe there is serious downside. i just heard erik talking about
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the potential tariffs against the european union. all of this of course is going to be negative for the euro as well which on the flipside is positive for the u.s. dollar. even more reason not to be too negative on the u.s. dollar at this time. it could also be that people just think that with brent crude prices around $70, it will invite more people who are marginal producers to crank up their oil production. maybe people do not see oil prices staying up for very long and they think it is worth taking the risk. it is not sustainable. no need to trade the dollar accordingly. quite a few things are going on. people in the dollar camp may not see any reason to get too bearish right now. catalystsere not many to speak out today. we did not get much out of the u.s.-china trade talks last week
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as well. do you see that happening in asia? what catalysts are people hearing for -- gearing up? takes on new meaning because wednesday is huge for global markets. an ecb meeting. american pmi. a fed decision. and a huge meeting in europe between leaders in europe on what they are going to do in terms of helping the u.k. out with brexit. major events coming up in the for-48 hours. it is reasonable that people may want to take a backseat while they digest all of these things coming up. saudi aramcohuge bond offering as well to be digested by the market and the latest threat for tariffs have added a spin. we could hear more on what the ecb thinks in terms of slowing economies in europe and what they are going to do to help out. we may get a major decision on
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how the europeans are going to help out or not the u.k. in terms of getting brexit down. cpiif we get a benign number out of the united states, that will also help the fed remain on positive or a lot longer. significant things are coming up and investors may decide to wait a little bit longer. >> very busy and to the week. cranfield forark setting up the trading day. you can get more on all of the trading day's action on the blood -- on the bloomberg. you can get a market run down in just one click. is can find out exactly what affecting your investments right now. let us head to hong kong and take a look at some of the early movers. starwant to highlight entertainment, jumping as much as 4.8% on the back of an afr report that wind resorts made a
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confidential takeover proposal for a which was rebuffed after crown rejected that. and star entertainment are the only casino operates there. sonyng at the board for jumping over 7%. the most in more than a year. a reuters report said that another company is looking to add to its stake in sony. the back ofsors on that report saying that if sony shares rally strongly today, they do not plan to miss another opportunity to short the name. we are seeing some reaction to that reuters report on third point looking to build its stake in sony. >> sophie with the early market movers.
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75 million and counting. saudi aramco says there is a massive demand for its debut bond sale. we will run through the numbers later in the show. edge next, as trade talks towards a conclusion, we will talk about the outcome on shipping. that is an exclusive coming up. this is bloomberg. ♪
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>> welcome back. this is "daybreak asia." i am remy inocencio in new york. >> global trade growth is growing. uncertainty to the container industry. aersk. joining us now out of singapore is soren toft. the executive vice president and chief operating officer at maersk line.
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great to have you with us. volumes areade going to be affected given that we have the wto downgrading its assessment of what global trade will come in in the next few months. as we come closer to a resolution on the u.s.-china trade dispute, will it make meaningful impact in the years to come? thank you for having me and thank you for allowing us to speak on a subject dear to our hearts. concernedwe are a bit over the development in the trade tensions. if we continue to see the present restrictions, we are forecasting something from 0.2 percent up to 0.5%, we are hoping for a resolution. we believe it will have a positive impact on trade. we have seen in the first slowingthis year, trade
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down. of course also on the back of an unusually strong quarter of imports from asia to the united states. >> even if you factor in an arguably markets have factored trade resolution between beijing and washington, you still have the structural slowdown that china is going through. also have brexit and a steep slow down out of europe. are these concerns in terms of how damaging these factors could be for global trade volumes? soren: they are concerns. taking ae probably slightly more conservative view to trade growth. we are forecasting between 1% and 3%. taking our own medicine and message to make sure that we are disciplined when it comes to capacity growth. we are focused on our own transformation. we are offering basic
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transportation solutions. and also offering a wide array of solutions to our customers. >> in terms of where you see the most potential growth, are there areas that look more optimistic to you? sure, we arefor seeing some growth coming in southeast asian countries. not necessarily growth coming from china. because these economies are becoming more competitive. we expect to see and hope to see a better rebound and a strong rebound in latin america following some of the governmental changes particularly in brazil. with an oil price that is stronger and more stable, we also expect to see a decent growth in africa. >> we have also seen, at least in the short term, job recovery when it comes to freight rates. whenthat be sustainable
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you talk about the issue of capacity? overcapacity is something the issue has struggled with. is that something that has been adequately addressed? stopped have long ago forecasting freight rates because i seem not to be able to get that very right. we are focused on the structures of the industry. the industry has consolidated a lot in the last 2-3 years. we are seeing a more modest supply growth in the years to come. we in is important that the container sector focus on the services we offer -- so we get out of the commoditized industry that we are in. and respond to the customer needs. getting a wide array of services. that is the core of the transformation at marriage -- maersk line. we are expanding the portfolio of services into logistic services and digital services.
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an uptick we have seen in that industry in the last year. >> perhaps what is being overlooked is the lead up to the maritime regulations. how do you expect these regulations when they are implemented, to affect your bottom line and capacity as well as cost? this is a significant change. one of the largest changes in in thet 2-3 decades shipping sector. the container sector alone will see cost increases to the tune of $15 billion. something we should not shoulder alone and should not. we have advised our customers that we expect to be able to pass on these cost increases. these changes are good for the environment. something that we here at maersk line fully support. it does not mean it will become
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easy. we need to be transparent and clear with our customers regarding what the changes will entail. we are also working on making sure that compliance and leveling of the playing field is something that happens after 2020. we help the regulations will be effective. and we really anticipate that follow players will this which will be good for the industry. >> what preparations are underway at maersk line to prepare for 2020? soren: we have made sure that we can have sufficient amounts of compliant fuel. we have made some agreements, one in the u.s. and one in europe. we hope to include one or two more. we have also prepared all of our ships so they are ready to take the compliant feel which means segregated tanks, and the way that the logistics are worked
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out. we have also worked very hard with customers trying to explain the changes we are going to say. those are some of the steps we have taken to make sure that we are well prepared for what we believe is a very important deadline for the shipping industry. toft, a memberen andhe executive board executive vice president joining us from maersk line. thank you for being with us. breaking news across the bloomberg terminal with crown. crown shares. we said they were temporarily halted. confirming confidential talks with wynn on a potential offer. it contemplates an implied value of $14.75 a share. aty are currently trading over $11 per share. are at as talks
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preliminary stage and there has been no agreement set whatsoever but the crown board says it has not considered its most recent proposal from wynn. and there is no certainty that the talks they had just said were happening would result in a transaction. and crown seeking the current proposal contemplates a 50% cash shares.stake in wynn plenty more to come on "daybreak asia." this is bloomberg. ♪
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>> this is "daybreak asia." >> let us do a quick check on the latest business flash headlines. mcdonald, numerous chief risk officer is said to be part of the group leaving. better news for the brokerage at
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home. bloomberg has learned that softbank has named nomura as lead underwriter for what made the japan's biggest bond sale ever. nomura will get 30% of the issue. $4.5 billion. >> larry fink has delivered his annual note to shareholders. that it presents an enormous growth opportunity for black rock. and it could get 50%. pinterest is seeking as much as $1.2 billion in an ipo that could value the company below what it reached in its last private valuation. it is offering 75 million shares which if ultimately priced on top of the range would value
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pinterest at $9 million. its total valuation was above $12 billion. coming up, oil futures are spark -- are spiking on geopolitical risks. this is bloomberg. ♪
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>> this is "daybreak asia." i am jessica summers. the u.s. is proposing to head to airbus with tariffs in a countermeasure to what it calls harm. this comes nearly 15 years after washington first complaint to the wto that airbus was benefiting from billions of dollars in illegal subsidies. a counter sue from the eu said more than 300 million dollars in tax incentives offered by the u.s. to boeing were unlawful. a u.s. judge has barred the trump administration from forcing central americans seeking asylum to wait in mexico for months or years while their
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applications are being processed. this is the latest setback for the president as he attempts to curb immigration. his policies have been stymied by judges since taking office. he says the u.s. can no more absorb migrants. the trump administration is ramping up the pressure on iran. unprecedenteds an move against a foreign government and it may prompt a backlash making it harder for the u.s. to work with allies in the region. it places the guard in the same category as al qaeda and the islamic state. and a former general is dismissing independent opinion polls as he is claiming he is on course to win next week's election. the president is shown with a double-digit lead. he says he would take more than 60% of the boat if an election was held today.
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of indonesia's0% eligible voters are undecided. a chinese woman who breached security at president trump's resort in florida will be held in jail until next week when her bail hearing will be resumed. arrested march 30 for illegally entering the resort and lying to a secret service agent. her lawyer says there are innocent explanations for the allegations against her. what she may be formally indicted this week. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am jessica summers. this is bloomberg. >> thank you. let us take a look at the asian markets shaping up this morning. >> kicking off with crown resorts which has resumed trade in sydney. 21% to a much as
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september high after confirming it is in preliminary talks with wynn resorts for a cash and share takeover offer. values crown at nearly 10 million australian dollars. crown says there is no certainty that the deal will be reached. the share price jumping to 14 aussie dollars. at 12 sincesitting february. other members of note. star entertainment jumping in tandem with crown resorts given the focus on the australian casino space. in tokyo, sony jumping the most since november to may 17 on a reuters report that a hedge fund is building a stake in the company. expandingyer sanbio gains after jumping 17% on monday after one of its there pies received a fast track. a downside in sydney.
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muted gains elsewhere. the cost marginally higher but the korean wan is gaining ground firming up after slipping to an 18 month low on monday amid dividend repatriation issues. over to saudi aramco. as we have been reporting, it has received orders worth $75 billion for its debut bond sale. it is one of the most anticipated sales of the year. especially after major investors briefly shunned the kingdom after the killing of journalist, jamal khashoggi. talk to us about the demand. it is soaring. >> still soaring. the order book is still building. it was 60 billion when i woke up and now we are reporting more than 75 billion. feeding into expect pricing. saudi aramco is rated as a single a but looks like it is
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trading closer to a aa status all because of demand. 105expected pickup of about basis points for the 10 year portion over up with my treasuries putting the yield at about 3.75%. is versus the 3.74% currently on offer for the 10 year saudi sovereign. a tiny bit of pickup for buying saudi aramco versus the saudi sovereign. that is something that is very unusual in the capital market. >> what is the implications then for the kingdom? discussing this all morning given that we also had news that the u.s. has 16 saudi's on a blacklist related to the murder of jamal khashoggi, the journalist who was killed late last year. there is clearly risk factors
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for investors. geopolitical controversy. when it comes to what saudi arabia is getting out of the deal, redemption through the capital markets. if you cannot get the international community to forgive you for a major scandal late last year, you can still send a message through the international capital market, even though you are not sanctioning our behavior politically come you are still willing to take our money. it looks like that is what saudi is doing here. they are also raising money to finance the crown prince's extensive social plans for the kingdom. they sold international bonds earlier this year. ofs comes hot on the heels that. this strong demand for the saudi aramco deal is pulling the entire saudi curve down. saudi sovereign yields and saudi quasi-sovereign yields all coming down ahead of this expected mega bond deal.
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this optimism, i have to ask especially for investors, is there any risk out there then? >> it is not like a normal credit. there is little, in fact almost no default risk. saudi aramco is the most profitable company in the world. it also has an insane amount of cash flow. the risk factor comes through its relationship with the kingdom of saudi arabia. saudi aramco is almost synonymous with the modern history of saudi arabia as we know it and that means that historically, it has been the golden goose that the kingdom is its to tap to finance extensive social programs whenever it needs extra money. the risk factors for the saudi aramco business model relates to the taxation that the kingdom can level on the company. if saudi arabia ever came under
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significant stress, social or financial, you might expect the kingdom to increase taxes on saudi aramco and that could potentially affect cash flow. it comes down to pricing. we have the initial price guidance. some say when we get the final guidance today, it may price inside the sovereign yields. highly unusual. for investors, they will have to look at that and say, what am i getting here. -- getting here? why am i getting less of a yield output? >> an extraordinary phenomenon. tracy alloway with the latest on's debut bond we are awaiting pricing coming later today. oil futures continue to rise. the highest level in five months when it comes to west texas. conflicts from iran to
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increasing tensions with libya taking crude look like a pretty strong bet at the moment. and the trade tensions between the u.s. and china also providing a bit of support. justin is joining us now. let us start off with a chart to ofustrate the resilience wti. a week of gains. we are seeing strength in brent as well. looking at the lack of price action come is their conviction in the rally? >> it seems to be supported by a lot of small, one-off events. it seems to lack of conviction. in this market, we have seen better news on trade resolutions. and discussions around the shocking events coming out of libya. it also suggests you should take care. >> and in the background, you
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still have oil rigs active. u.s. shale side of things going to come back? >> you have to remember that u.s. shale production reached 12 million barrels a day. the potential is still there for further left. around to andues the transport of oil -- the bottom line is that u.s. oil continues to surprise to the upside. are allowingices the curve which stimulates further production. i would be very cautious about that. "caution" as we go into my caution as well as the bloomberg terminal -- the bullishness happening with net
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wti, at their highest since october to the 18. to what degree do you think this will be at an acceptable point? will we see some pullback? especially with what is happening in libya? >> this is an interesting one. you are quite right. highlighting that we are reaching the point that they are at a very extended long position there. the longs are being generated by the fact that there is a forward long as well. the cash flow generates the increase in supply. this lengthening out of the longs makes me cautious about the fact that we could be that we couldnt be going through a time where there has been a lot of worries about global growth in global trade and they are settling down now.
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still aeality, there is lot of tension. especially when you think about the nexus between u.s. and chinese growth. we are on a long path. >> back to libya if you don't mind. , some say he is the warlord there, on the doorsteps of tripoli. talking about the export for the oil basin there. it would not be so bad if he took this over because he would still need the funds there. what exports still be impacted? is there a risk people should be worried about? >> the main risk is the damage to the terminal by the government leaving. right, people -- if he takes over the port, quite rightly he will try to continue the supply. the question people are asking
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is will he be able to do that? will the infrastructure be damaged as he tries to take possession? damage to theis infrastructure, it will likely be a short-term event. run, there a short is an opportunity to create an upside surprise. >> over to iron ore and the question of whether the supply going aory for that is little longer. to $100. that was just yesterday. iniron ore on the seas transit are low so we are looking at, rather than a previous look at $60 a ton, we are looking at $100 over the next three months. >> does that make sense to you? >> i would be cautious.
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were going to take a risk, i would be comfortable with the idea that you mice he a short run up to iron ore. withu were pointing out what is going on in china and the steel mills, the increasing use of alternative materials. even though they are putting in some packages in china this year, it will not create the same growth in chinese steel that we saw previously. are havingzilians supply issues and australians with the cyclones. with crises rising to these -- i would say it is possible that iron or in the short run, 3-4 months, could be keened but i would not be
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putting a large bid out on. a short supply shock. wheree gone from a time we have underestimated the value and the impact. now, we had the fuller story. we are reaching the point where the the enthusiasm could be taken to heart. far.uld be taken too we have seen the price of imported oil get more expensive -- get more expensive. us not all pointing to being far off. smirk with a measured view on what is happening with oil and iron ore. up next, no no deal. the lawmakers not wanting u.k. to leave the eu without a deal in place. uses her efforts
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to buy more time. this is bloomberg. ♪
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>> welcome back. u.k. lawmakers have voted to prevent a no deal brexit as pressure rises to delay the upcoming divorce. you can make is heading to berlin and paris on tuesday. let us bring in senior international editor, jodi schneider. was ao deal brexit vote formality for theresa may, wasn't it? she is nowause without the extension. what kind of extension, what kind of deal can she get from the eu given that the april 12 deadline, everyone agrees that the u.k. was --does not want to leave on that date? she will be meeting in coordination meetings happening in brussels.
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she will be meeting with the german chancellor merkel and the french president, macron, and then there will be a summit later this week with all 27 remaining eu countries are about what kind of offer they are going to extend to the u.k. meanwhile, some in her own party is trying to throw her overboard while this is all happening. that is the conversation right now, it is all about the extension. andhat kind of extension the terms within that could be offered to may? >> that is the question on the table. it is about timing. they are talking about it being longer a long period, a period, what we are hearing now is from june 30 of this year perhaps as long as april 1 of 2020. and the terms are also a real issue. while at this .1 of the things the countries are talking about
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andhat theresa may parliament would agree not to disrupt the eu in any way which would mean they would have to vote in next month's european parliament elections including france -- some, including france, want tougher restrictions. that there would not be a disruption of the eu by the u.k. a delicate process. all member countries have to agree at the summit later this week on what the offer will be. >> more to come on the brexit saga. ahead to come on "daybreak asia." this is bloomberg. ♪
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>> welcome back. a quick check of the latest business flash headlines. tesla has followed up a report bying delivery cutting more sales jobs across the u.s. as it continues to pare back personnel and move the ordering process online. staff had been let go in chicago, new york, and tampa. the cuts butfirmed declined to say where they fell and how many people have been affected. the company wants to save money as it ramps up production. er is set to cut
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positions in germany, 12,000 positions around the world. 10% of its workforce. and to raise profitability after the $63 billion deal. cuts in the german home market made proof sensitive and costly as labor is strong. credit squeeze investors -- credit suisse investors -- and unjustified pay rise for the ceo. activist shareholder lewis concern questions behind the thery hike -- he oversaw first annual profit in the past four years and his compensation to $12.7 million. >> take a look at one of the biggest movers in the aussie session. brown shares are surging, the most since december 2000 eight. over to the present. after the company reemerged from
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a trading hold after confirming it was in talks with wynn resorts regarding a possible takeover. crown has said that there is no certainty that the deal would be done at all but there is a 26% premium. we have all of the details. that thisheard rumors was going to happen and we just have had confirmation 20 minutes ago. why resorts is in talks to crown resorts. the deal values the australian casino company at 9.99 million australi australian dollars. it values crown at $14.75 a share. >> that is an attractive premium.
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no confirmation this will go ahead. >> they have said talks are preliminary. there is no guarantee the deal will go through. it is very preliminary at this stage so we will have to wait and see. >> there are increasing segment inn that terms of perhaps an argument for a bit of consolidation across the sector. >> after that question, it would be hard to look at that more closely. something we are keeping an eye on going forward. >> looking at some of the synergies. especially as we see star rallying today. bracket we sawe with crown resorts after they had confirmed they were in talks with wynn resorts for a potential takeover deal. look at how crown is performing. there was a temporary trading
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hold. , about 21%a jump when it comes to trading in crown. the biggest jump since december 2008. >> looking at what else is moving in the markets. bringing in sophie kamaruddin from hong kong. >> glory, a vending machine producer. jumping on a government --ouncement that japan's that specific japanese yen notes will be used. 116% surge. flipping the board, chinese carriers slumping on monday --.r di we are also keeping an eye on gre electric.
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worth $6.4 could be billion. >> let us check futures trading as we head to the top of the hour. u.s. futures are looking just about flat. just under the flat line. taking a look to futures. futures, up about 0.2%. from "daybreak asia." our markets coverage continues as we look to the start of trading in hong kong and shenzhen. this is bloomberg. ♪
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beijing in. in singapore. welcome to the china open. >> we are counting down to the markets. >> story today, have a look at the markets. the warning that global threats are growing, goldman sachs urging investors to hinge. shareses are storing -- are soaring at the talks of wind being a $7 billion takeover.


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