tv Bloomberg Daybreak Asia Bloomberg June 26, 2019 7:00pm-9:00pm EDT
so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. paul: good morning, i'm paul allen in sydney. we are under an hour away from the australian market open. shery: good morning from bloomberg's global headquarters in new york. sophie: i'm sophie kamaruddin. welcome to "bloomberg markets: asia." paul: our top stories this thursday -- more tariffs, less business. president trump talks of a plan b for china. the president's current target seems to have sidestepped his blacklist. a loophole is letting huawei
receive american text. that going is backed, topping 13,000 and bringing its games t-- gains to 40%. it is 2017 all over again. shery: let's get a quick check of how markets closed wednesday session in the u.s.. equity markets started the session higher, but most momentum in the afternoon. the s&p 500 looks awaiting between gains and losses. th s&p 500e fell for a fourth consecutive session. still the tech sector was strong. chipmakers leaving the gains -- leading the gains. a philadelphia chipmaker closing at the highest level in more than a month. 1%,nasdaq gaining 3/10 of despite the fact that president trump said at one point the u.s. will one day sue google and facebook. u.s. futures at the moment not doing much. let's see how markets are
shaping up in asia. sophie: we could see another lackluster day in the making with the regional benchmark for another session. this thursdayont, we have chinese industrial profits and japanese retail sales. in the tech space, japan with a few news lines. apple plans to invest $100 million through the harvest group. it is reported apple will decrease its lcd orders from china and transfer the amount to japan display. in fiscal 2018, apple made up 56% of sales. paul: president trump is ramping up his rhetoric with china as he prepares to meet xi jinping at the g20 summit. steve is at that meeting.
what are the latest top lines? steve: the world leaders will start flying in as of today and tomorrow. keep in mind the u.s. china trade war likely to take president over everything -- precedent over everything, including the bilaterals between president xi and trump. the iran issue taking center stage as key players meet, including president putin and president erdogan of turkey. the markets are looking for some sort of troops that -- sort of truce that we got out of the last g20 meeting at buenos aires. there was a 90 day truce between president xi and trump. we are not there yet on this impasse between the u.s. and china. what we got over the last 34
hours is u.s. treasury secretary stephen mnuchin saying we are deal, howeveret a we have heard donald trump walking that back a little bit, saying maybe my plan b, connecting -- enacting an additional round of $300 billion worth of tariffs on good, my plan b, somewhat walking back what stephen mnuchin siad in being 90% there -- said in being 90% there. getting the last 10 yards to the end zone is always the most difficult. shery: when it comes to iran and others that you mentioned, they are still a ways off, especially
that the u.s. is not always in line with its allies. ofve: there will be a lot issues put forth by various leaders. analysts telling us each leader pushing their own issues more than usual this time. the chinese delegation does not want to talk about hong kong. macron, he wants to talk about climate change. the japanese want to talk about ocean plastics. there are a number of issues, but the u.s.-china trade war and iran will take center stage. donald trump will be meeting vladimir putin. iran will be high in those discussions. erdogan of turkey is a key player in the middle east. a number of different security issues with both turkey and saudi arabia. the u.s. is preparing sanctions on turkey for its purchase of russian antiaircraft missile
systems. of course the khashoggi fallout with saudi arabia is likely to be discussed. less than one week, this meeting with mohammad bin salman, one week after the senate voted to block arms sales through the kingdom. keep in mind donald trump will be meeting with a number of different world leaders. we are expecting angela merkel, narendra modi of india, shinzo abe of course, and then before flying out on saturday and meeting sunday with moon jae-in of south korea, and perhaps it is it to the -- a visit to the dmz. north korea another topic. it will be a little three or four days in the asia-pacific region. stephen will have more in-depth coverage of the g20 summit live from osaka throughout this week. do stay with bloomberg for that.
let's get the first word news. >> thousands of protesters rallied in hong kong wednesday night, keeping up the pressure on the government and on china ahead of the g20 summit this weekend. activists delivered appeals of support to local consulates, asking for backing to withdraw hong kong's controversial extradition bill. the chief executive has shelved the idea, but is refusing to formally abandon the plan. the trade war is biting especially hard on businesses in asia. companies reporting more cancellations and delays in investment than a year ago. the american chamber of commerce in singapore says 54% of companies surveyed cited. more businesses are considering moving more supply chains away from china and the united states. some american technology companies have resumed sales with huawei after finding legal
ways to work with the company, despite its inclusion on a trump administration blacklist. the loophole means they may still use overseas subsidiaries to classify their tech as foreign if less than 25% of the technology originates in america. singapore is likely to slide into recession in the next few months, as the outlook for global trade darkens. his downgrade forecast to 1.3%. the singapore government sees third-quarter growth up to 2.5%. maybank since the growth will ease the chance of any -- boris johnson seems to be softening his new deal brings it deal brexit- no
stance. he told tory party leadership that he doesn't see no deal as the end of brexit. earlier this week, johnson vowed to leave the eu this october with or without a deal. 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. paul: still ahead, that going rally- bitcoin sees a reminiscent of a past boon. shery: first, we will speak to tcw portfolio fund manager. this is bloomberg. ♪
on a: oil prices surged drop in supply, and after many swings and losses. markets higher and lose momentum toward in the afternoon. su: clearly many are looking ahead to the g20 and the weekend. they are looking forward to the fed easing and the rest of the central banks at a time when we are seeing slow and global growth. all of the weighing on the market. you will notice the dollar has studied. we saw yields on the 10 year back above 2%. check out the semiconductor index. it was on fire. let's go into the next chart in one month high. on the back of a positive
forecast, they believe growth is back in. every component of the chip index, semiconductor index up on the day. let's go into some of the big movers. facebook and google were much in the spotlight, as president trump railed on social media again, saying he thinks the u.s. should sue facebook and google, without signing why -- saying why. he said he felt social media is somehow limiting the number of people that follow him on twitter. 13%.n up their forecast was in line. they say they were starting to resume shipments to huawei, which is about 10% of their revenue. bitcoin, which has been off to the races, back near 13k.
overstock does have a platform proxy fors that is a the bitcoin rally. paul: we have been watching oil and gold closely over the past few days. they moved in different directions today. oil getting close to $60 on supply data. su: oil to a very big move. that was on the back of the latest inventory data out on wednesday. we had some indication of that last night. what we were hearing was the latest stockpile report showed a drop of 12.8 million. that is a huge decline, biggest since december 2016. we at the same time had record exports of crude, and gasoline demand on fire. all of that combining for a bullish short-term session. gold a different story. investors took some gains off the table.
strategists say this had to do with technicals and that the dollar is showing strength once again. paul: su keenan, thanks for that. it is not an easy time to be designing a market beating investment strategy, especially if you are focusing on environmental, social, and governance criteria. let's get to someone who is doing it right. this equities fund is now in the top 1% of its class year to date, and over the past three years since its inception. joseph is the fund manager. he joins us from tcw's los angeles office. you've got a rather positive outlook for stocks, don't you? you don't feel things are getting overpriced as we approach record highs? >> no, i don't think so. we look at the was stock market, multiples are low, the multiple interest rates are low.
what people are not talking about is the fact that expectations for earnings growth this and next year are very low. a couple percentage points of earnings growth. historically of the last 60 years the stock market performs best when future expectations for earnings growth are low, not high. i think the market is positioned well. people are pessimistic in general. there is lots of opportunity because of that. paul: so why is that? do you expect the fed to come to the rescue? joseph: i think the fed has made it very clear, six months it wouldn't ride to the rescue. now for whatever reason, your viewer can guess it has done a complete 180 and has been extremely accommodative and talk ed about being accommodative in the future.
the stocke risk to market will be continued trade war. fund, wecase for my will see a continued trade war with china, which will not be resolved in the near future. that is the material risk to the stock market over the next couple months, couple years as that plays out. the other thing people are not talking about is if the trade war persists, all of these companies are engaging in need chinesethat ministry of commerce approval. from my perspective, it is unlikely the chinese government will be approving these deals. engage in aey if we trade war with them? we are watching out for that. shery: let's talk about those international businesses. so far we have seen smaller companies underperformed those
biggererperforme those companies. if you continue to see these trade tensions, does this mean the trend could reverse? i think the trend will probably continue. in our fund, we are multi-cap. is the are seeing predictable growth businesses that have a lot of recurring revenue, those businesses are outperforming those who have to figure out how to deal with trade issues, with rising costs. that is why we are focused on the growth businesses that have a load of recurring revenue and don't have to deal with the complexities of the growin globl economy. i think that will persist as long as the trade war continues. shery: we have the democratic
debate happening tonight. we heard democrats talk about burning down health care costs -- bringing down health care costs. we have president trump talking about potentially suing facebook or google. never a dull moment in the stock market or political world. in an election year, health care stocks are always susceptible to the vicissitudes of the political winds. careful withe regard to health care stocks. we don't own biotech businesses because we are think they are susceptible to regulation and we don't like that they have to replace revenues every seven years when patents roll off. those businesses are trickier in an election year.
you brought up a chart minute ago on semi conductor businesses. ; dr. stocks are also in the tor stocksemiconduc are also in the crosshairs of the trade war. until it is resolved, those stocks will be challenged. we will not be participants in those businesses at this point. paul: i know you are steering clear of those stocks, but notwithstanding what you said, you find things you like in the tech sector. joseph: yes. we own predictable growth businesses like constellation software. we own microsoft, which is the seventh or third-largest position. we like simple and predictable businesses that have strong market positions. microsoft is in the process of completely changing its business, being a business very
toht to pc's to now tied recurring revenue, high-value software products. in venice -- in the next recession, it will perform much better than it has in the past. shery: thank you very much. you can get our roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers, go to dayb go on your terminals. you can customize your settings so he only get -- you only get news on the assets and industries you care about. this is bloomberg. ♪
joins me in the new york studio. this bloomberg chart showing this incredible rally we have seen in this cryptocurrency. what is this telling us? >> thank you for letting me bring one of my favorite charts to the screen. that is a breakout from last year's significant level. we have a bear market in the most widely traded places. a month ago, when we broke that level, that was an indication it was a strong. got to near 14,000. it looks to me that we should get above 20,000. the point is, it was supposed to be resistance, and it didn't work. i will give you good fundamental reasons to do that. paul: even if we get above 20,000, the question is how long we will stay there.
could we see another crash like we saw in 2017? >> yes, it is very volatile. es, we will get more volatility. what is difference is institutional, macro, and global. institutions are getting in the space. in japan, we have seen countries with negative interest rates. we have stock market volatility increasing. the macro is becoming much more attractive. it is making it more mainstream. it is good for bitcoin becoming digital gold, it is not so good for the rest of the speculative digital assets, because it will be a proper cryptocurrency. to me, it is global. shery: really painful to those people who put shorts. we are talking record numbers of shorts recently. >> i have been looking for a
good reason to get bullish. in april andshorts may, that was a good sign. bloomberg intelligence strategist. another impressive run up from bitcoin. --ivist investor kyl archon is calling for an effort to replace numbers of the board. inhas a $1.6 billion stake the shale driller and wants to give the board of directors a shakeup. blackberry plunged the most in a year after sales that its software unit slowed. a recent acquisition contributed less than expected. revenues of the first fiscal first-quarter was $247 million, up from a year earlier.
however income from the internet of things division was down $11 million from the previous quarter. shares fell the most since june last year. a dollar bond sold with $800 million, shrugging off concerns of the effect of the trade war. b aa 1 by moody's and triple b at s&p. shares plunged 30% this year in one of the worst performances on the msci china index. still to come, we look at how some u.s. companies that apparently found a legal loophole in the huawei ban . we will be live in beijing next. this is bloomberg. ♪
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to understand your best plan of action. so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. >> this is "daybreak: asia." president trump is warning he has a plan b for china, saying he will impose substantial additional tariffs on imports if there is no progress with president xi at the g20. he says his plan is to take "billions and billions of dollars and do less business with beijing." -- president president trump is praising ecb boss mario draghi, saying he should be holding the reins the fed, not jerome powell. on fox, he says he has the right
to fire the fed chief, and said policymakers blew it when they kept rates on hold. mario draghi said more stimulus could be on the way for the eurozone. president trump is lashing out as one of his seemingly favorite hobbies. he is complaining about a perceived bias against's conservative social media commentators. he says the white house should sue facebook and google, although he did not say what for. he said twitter has made it somehow harder for people to follow his tweets. iran is set to breach the terms of the iranian nuclear deal, putting pressure on powers dealing with the fallout of sanctions and fears of war in the gulf. onn will exceed stock limits uranium in the coming hours and
beyond the level of uranium it needed to make weapons grade material. rome is facing a health hazard from its garbage crisis. trash disposal is a decade-long problem. rome has had no major treatment sites the landfills shut down six years ago. the city produces 2 million tons of waste each year, but local governments have failed to solve the problem. 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. thanks very much. let's check in on markets with sophie kamaruddin. sophie: when it comes to stocks to watch in seoul, we are keeping an eye on saudi aramco's $.60 billion expansion in foil in southkorea -- oil korea to sell more crude.
in total, saudi companies cite $7 billion of mo use, including an agreement to a feasibility study and an agreement with hyundai motor on hydrogen fueled cars. bank is in talks with a taiwanese company -- shery: we have been talking about markets in asia reeling from a range of blows, the trade war, economic slowdown, and slump in forecast. leadera equities team joins us from singapore. what is fueling this investor confidence to stay in the markets? >> you would think with all of the uncertainty, people would stay away from risky assets.
in this case, the one thing people have been telling the is central banks have become more dovish. fedhave said -- have the removing the word patient. closer to home, we have australia's rba saying there is more than one cut likely. in indonesia, they have left the door open for more easing. people are saying now there is the possibility of easing coming through in monetary policy, has created a flood into capital markets. volumes --en trading paul: we have presidents trump and xi meeting this week to try and knock something out. what kind of market reaction do you expect?
exact this week is the opposite of what we haven't seen through the year -- we have been seeing through the year. in asia, trading volume has dropped. it is clear people are waiting for some information from this meeting coming up. it could go either way. if they say the meeting went well and they have made a deal, volume will erupt, markets will go crazy. on the other hand, if they don't say anything and it is a negative reaction, things will go the other way. as long as they say something, it looks like trading volume will go up as well. paul: some american technology companies have resumed sales to huawei after finding legal ways to keep working with the company despite its inclusion on a trump administration blacklist. our china correspondent selina
wang has the story in beijing. what is the apparent loophole? selina: we learned from the earnings call when the micron ceo says they started reselling some of their parts to huawei. we don't know how much of those components are being sold. there were a lot of questions from analysts on how this works. while he was very evasive, bloomberg learned through discussions with analysts about how this may have worked. essentially, if a u.s. company has an of subsidiaries -- has enough subsidiaries and ownership of entities abroad, they could classify their technology has foreign. if less than 25% of its technology originates in the u.s., it may not be subject to the ban. another company resuming sales to huawei. after this news, we saw a broad
rally across semiconductor stocks. it was seen as a relief for some of these companies. that said, it is unclear how long this loophole will last and if congress decides to change these rules. shery: do we have any idea what the broader impact will be on the tech sector, given other suppliers could follow micron's lead? >> sources told bloomberg that the white house and numbers department were -- and congress werertment these -- frustrated his company resumed sales. on the one hand, they want to abide by the rules and the united states, but on the other they don't want to be cut off from one of their largest suppliers. when weighing the costs and benefits, they may decide being
slapped on the wrist by the u.s. government doesn't outweigh the revenue potential in china. this is a very important market. that being said, the commerce department is expanding this list to more chinese entities. more companies may look to get around these rules. shery: coming up next, the host of the g20 summit will be keenly watching for any developments when world leaders gather in osaka. we will ask one of japan's global ambassadors to the u.s. what he is thinking this weekend. this is bloomberg. ♪
chicago are weaker. 1%.lightly higher 1/5 of osaka will be hosting the g20 leaders starting from today. this is "daybreak: asia." i'm paul allen in sydney. shery: i'm shery ahn in new york. the trade war will be the main focus of the g20 when the summit kicks off in japan, with the host country in its own trade talks with the u.s. administration. let's talk to a former japanese and that -- former u.s. ambassador -- what would a successful g20 look like for prime minister abe as he hosts this summit? mr. fujisaka: i think the most important thing is the security. we will have more than 30 leaders of the world in osaka
for the first time. we have not had such a big meeting ever. g20 for the8, but first time. it is not the capital as well. itself, i thiting but people'sd g20, attention is more like b20, a bilateral of 20 countries. u.s.-russia, japan-china, all of these meetings. trump's is getting more attention out of those. we look forward to seeing some progress. trend xi jinping --
the prime minister and xi jinping will be meeting today. shery: it seems president trump's strategy on asia has been focused on this china strategy. how does japan fit into the picture? mr. fujisaka: i think the most important thing is the u.s. and japan should keep alliance steadfastly so the u.s. can concentrate on china and north korean issues. it seems mr. trump has been sending some mixed messages. that concerns some of us, if i may say. paul: one of those mixed messages was the trump thought bubble, if we could call it that the u.s.-japan post-world
war ii security pact be revisited. do you think that is a bargaining chip ahead of trade discussions with japan? -- hejisaka: i don't know has been thinking about it as a bargaining chip. it is not a very good idea if so, because if you use japan's security alliances that way, the japanese have to be thinking, can we really go along that path? he isor trade talks, if thinking that white, that is not a very -- is thinking that way, that is not a very good idea. paul: if he is, that would cause shinzo abe to make japan what he would call a more normal number of the military community.
what would that mean for japan's near neighbors? mr. fujisaka: i think regional neighbors will be concerned. it would be better for both the u.s. and japan to keep this alliance. the united states can focus on other countries that are not american allies. americans trying to sell arms to japan, it is a big economic package for the united states as well. as for japan, we have been relying on the u.s. for security. thinking ite are has been a very correct way of keeping our security. as the united states is
steadfast, i think japan is ready to be that way. shery: prime minister abe has been upping japan's defense capabilities as well. do we expect this to give him more leverage when it comes to the pacifist constitution? think theka: i constitution is a different thing. japan should fortify security , maybe noty forces quickly, but too steadily we have to continue to fortify. for example, look at countries around us. china has been increasing their defense budget by more than 10% every year, while japan has been about 1% or so. our level of defense spending hasn't changed much in the last
30 years. it is a big difference between our neighbors and us, so it is a time we have to be a little bit more. -- putting a little bit more. it is a different thing from changing the constitution too. shery: let's turn to the economic side of things when it comes to that u.s.-japan relationship. how threatened is the relationship between the japan and the u.s., the political alliance? mr. fujisaka: this bilateral dialogue, negotiations with u.s. and japan is very important. we should come to an agreement sooner than later.
-- the important thing is it has to be win-win for both sides. it should not be win in agriculture, win in automobile for the united states and nothing for japan. the american side has to keep that in mind as well. paul: the long-running sore point has been the subsidies extended to farmers. is it expected to be rolled back in any meaningful way? what america has been sinking more -- thinking more is not subsidies. they would like to come into the japanese market like australians are innew zealanders, who tpp. i think the other countries of a betterbe put in
situation than u.s. farmers. that is why u.s. farmers have been worried. it is not reducing subsidies by the japanese government to japanese farmers, but they want to be on equal footing with tpp tier countries. i think in order to do so, other tpp countries have made a concession to japan. i think the u.s. has to be thinking that too. paul: ambassador, as we look ahead to the g20 meeting in osaka, what is the best case scenario from your point of view? of course people the word fighting or
protectionism -- those words -- but if the united states is not ready for that, we should expect that. we should focus more on successful bilateral dialogues, u.s.-japan, u.s.-china. maybe u.s. and china will not ife to a full agreement, but they can create a positive mood and tell the negotiators, administrators to negotiate sincerely with each other, i think that is one step forward as well. shery: ambassador, thank you so much for your time today. japan's former ambassador to the u.s., ichiro fujisaki. we are seeing retail sales here on here growing 1.2% in the month of may. when it comes to month to month
isa, growing 0.3%, which slightly less than expected, but still growing from a contraction. year on year growing 1.2%. department store and supermarket sales contracting 0.5% in the month of may. we have seen some concern spreading among consumers. we are seeing some caution ahead of the sales tax hike scheduled in october, not to mention dampening of sentiment given the ongoing trade tensions. retail sales seem to be doing fairly well, 120% -- 1.2% growth year on year. we have plenty more to come on "daybreak: asia." this is bloomberg. ♪
the boeing max has revealed new issues unrelated to the ones rounding planes around the world. the failure of a microprocessor could cause the jet to dive in a way that pilots had difficulty recovering in tests. boeing has been ordered to make changes. shery: walmart is planning to relist its japanese supermarket chain seiyu. the u.s. retailer will keep its majority stake after the listing, and has announced a business plan to offer lower prices, better products, and grow online sales. the move ends longtime speculation that walmart might sell seiyu. it has been struggling to compete with local rivals. markets in japan, south korea and australia get underway
at the top of the hour. what are you watching? sophie: a mixed cash futures trade with stocks trading higher for tokyo and seoul. overnight holding an drop as we count down to the g20. we have this morning's retail sales from japan. later china will release industrial profits. on the stock radar, we will be watching ntt data, they and others among providers targeted by hackers. others include hp and ibm. tesla is reportedly developing the means to make its own batteries in high volumes, with panasonic and lg to provide the tech going into vehicles initially. a move on a $1.1 billion deal. whirlpool has cleared the final hurdle, the ceo closing in early
paul: good morning. asia's major markets are about to open for trade. sheri: i am shery ahn. i am sophie kamaruddin. welcome to bloomberg: asia. paul: our top stories this thursday, more tariffs, less business. talks for about a plan b b for china ahead of anticipated talks. one of the target seem to have sidestepped his black list. >> calling on the g20 to back
the protest against the extradition bill. they want leaders to use their influence on beijing. the nikkei 225 adding .3 of 1% after a two-day decline. the yen holding steady era one-week low and retail sales with a 1.2% in yearly gains showing the 19th straight year on year rise. let's check in on the mood in seoul, the cost be under pressure while the korean won is gaining ground against the greenback. this morning we got the latest on manufacturing confidence. the met -- finance ministry will release sales in july. theick check on
antiquities. the aussie dollar is treading water below the 70 handle and we the index headed for a second day of losses while the keyway -- the kiwi [indiscernible] after any day advance. president trump stepped up his rhetoric against china as he prepares to meet president xi. stephen engle is in osaka. casting a long shadow over this meeting, isn't it? absolutely. that is the primary focus. on the sidelines of the g20 when president xi meets with donald trump. lots of speculation on what they can talk about. we know what they will talk about the validity can reach agreement on a path forward, that is the best case scenario. no one is expecting details of a lasting trade deal from this meeting given the impasse the
sides are in. if you look back seven months the last time the g20 met seven months ago, there was a 90 day truce announced and that gave the markets a bit of a lift and we know where it ended after 90 days or a little bit after that. talks fell apart and we are at the impasse we are at now. any kind of dialogue between the two gentlemen and any kind of path forward for dialogue to continue is a next -- a good sign but we are getting mixed signals. sources are telling bloomberg news that the u.s. may be willing to suspend the next round of threats and tariffs on $300 billion worth of chinese goods if there is progress or willingness to come back to the table. that is coming from stephen mnuchin, the u.s. treasury secretary who says perhaps we are 90% of the way there is 10% to go. donald trump and another -- in
another interview said wait a minute, we might be going toward plan b instead of lanny and plan b is his plan a and that would be to inflict those new tariffs on 300 billion dollars worth of goods. he alluded to the fact that it might be 10%. there is a lot of uncertainty and any readings we get from president xi and donald trump will be a good thing. the former ambassador to the u.s. was saying they should be called the be 20 because it is about i lateral meetings. what other conversations will there be? stephen: the be-20. the thing we have been hearing from a number of people is a lot of the world leaders are coming ,ere with their own agenda whether it is the japanese, they want to talk about ocean plastics, the french want to talk about climate change. the chinese don't want to talk
about hong kong, obviously. the trade war between china and the u.s. will be at the forefront because of the dramatic impact it is having on the global economy. toa security front we have talk about iran. donald trump will be talking with vladimir putin on friday. also talking with president modi ofand president india and the crown prince of saudi arabia. there is security issues with the middle east. preparing sanctions on turkey if it goes ahead with the purchase of russian antiaircraft missile systems. that is a contentious issue between president erdogan and trump. irannday regarding the situation imposing new sanctions on the supreme leader as well as eight no terry leaders of iran ratcheting up those tensions. a lot of world leaders concerned about the collapse of the 2015 nuclear accord with iran. many of those will -- world leaders who signed the agreement
will be here. we are hearing in a exclusive story that was out in the last hour or two that many of these world leaders will be having emergency talks to diffuse the tensions over iran. there are so many issues and guess what, donald trump on saturday flying to south korea. dmz. at the many issues here over the next four days. >> stephen engle in osaka. we will be freeing you live coverage throughout this week. do not miss that on bloomberg television. let's get the first word news. >> thousands of protesters rallied in hong kong on wednesday night keeping up the pressure on the government and china ahead of the g20 summit this weekend. activists delivered appeals asking for backing in the campaign to withdraw hong kong's
controversial extradition bill. the chief executive has shelled the idea which is refusing to abandon the plan. the trade war is biting hard on businesses operating in asia with companies reporting more delays or cancellation of investment than a year ago. the american chamber of commerce and singapore says the effect 50% of companies. they are considering moving supply chains away from china and the u.s. says singapored is likely to slide into recession and the next two months as the outlook for global trade darkens. it is downgrading forecast for growth in the city state to 1.2%, .3 lower than before. the government sees third quarter growth up 2.5%.
they will increase the chance for monetary easing in october. some american technology companies have resumed sales to huawei after finding illegal ways to keep working with the company despite its inclusion on a trump administration blacklist. the companies are based in the u.s. and may use subsidiaries to classify their tech as foreign. banay not a covered i the under current rules. johnson of the u.k. seems to be softening his no deal brexit stance saying that "a million to one chance that he would lead the u.k. into a chaotic split from the eu." he sees no deal as the end result of brexit but that is important to be prepared. early this week johnson had vowed to leave the eu in october with or without a deal. 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. this is bloomberg. paul: thank you. let's check in on some stock movers in tokyo. with sophie and hong kong. sophie: jumping as much as twice are sent as the company's future is in focus. reporting that apple plans to invest $100 million to china's harvest group and apple will decrease its orders from china and transfer them as efforts to mission against a trade fallout. apple made 61% of gdi sales. protesters in hong kong are not letting up and they are looking to leverage the g20 summit to further their cause. we will bring you the latest.
paul: this is daybreak asia. i am paul allen in sydney. shery: i am shery ahn in new york. tradeng mixed messages on heading into the g20 summit this weekend. our next guest said it has been difficult to see a face-saving agreement for the u.s. and china. let's bring in the global cio christian nolting. great to have you with us. i give her joining us. ourselves up for disappointment going into this meeting my given how much prices have rallied so far? chris: thanks having me. we should not expect too much
from the osaka meeting from my point of view. i would be surprised if we get a full-fledged agreement between the u.s. and china and if you look from trump's perspective since he has introduced higher tariffs to china and markets have gone up further, from my point of view, he is not in a hurry to come to some conclusion and can be in a wait-and-see mode. to be overly optimistic could be on the wrong side for this weekend. what should we watch out for in terms of sectors if we go into this meeting question mark we have seen upside for chipmakers. charts showing asian manufacturers have been doing well. we have seen some of these companies that supply to what we have been able to circumvent some of that blacklisting by the u.s. are there specific sectors we should watch out for? christian: we need to watch out sectorsose -- those
that are dependent on the global supply chains. that is technology and cars. there might be some conclusion, i don't think the meeting will be a big disaster but maybe it will take a longer time and i don't expect a full solution over the weekend. i would say you need to look at and from that perspective, there could be some downside risk and we advise our clients to take some profits because rockets have rallied and to recalibrate portfolios a little bit. especially if you look at countries, we should not forget the discussion on europe which could come afterwards. there is a lot of discussion on u.s. and china but china is looking into europe and their cars could be affected. countries, youof are quite optimistic about south korea even though that is one of the countries most exposed to
ill winds blowing from the trade war. why do you feel optimism there? chris: it could be said because there is open -- it is a open trade oriented country. tore is some exposure semiconductors but there is some exposure to other countries so it is not only the u.s., but south korea could be better. and southeast asia that could profit from that discussion. if you look at countries like vietnam and cambodia, that could profit. maybe if you take political issues out, and thailand. paul: you constructive on chinese equities long return but my question is how long is the longer-term because some of the guests we speak to can see the trade war dragging on for years, if not decades. last octobere said
there is an opportunity in china. iere up 26% year to date and am in the camp to say the trade war could drag on. i'm not saying for decades but it will not be a solution quickly. there is no need for the u.s. to do so and there is more positioning the u.s. and positioning toward china for the 21st century, so i can take some time. i think there could be some downside for china. china has more stimulus measures in the pocket. they can do that so if there is no solution of the weekend, there could be some downside over the next two or three months. if you would see a correction of 5% to 10%, it is rather than buying a opportunity in china. now this are seeing wayrt, several while employees have collaborated on research projects with chinese armed forces personnel over the
past decade. workers have teamed with members of various organs of the people's liberation army on at least 10 research endeavors spending artificial intelligence to radiocommunication's. they include a joint effort with the investigative branch of the central military commission to extract unclassified [indiscernible] to explore ways of collecting and analyzing satellite images and geographical coordinates. ofs according to this scoop the connection between huawei and the chinese military. huawei last month was blacklisted by the u.s. commerce department. we will have more on this story later on. let's return to chris nolting. this will not make it any much easier for both sides to reach any sort of agreement on this
g20 meeting. what happened to the market, it will we continue to see some sort of agreement and the thawing of relations on trade talks but you continue to have these tensions on other fronts like technology. chris: that will continue. for the market, it should not be too much surprised if this is continuing and the news coming out is going for that direction. the reaction is for the market also to look at central banks. the fed is watching what is happening in no soccer, what happens to the trade issues. the fed is watching inflation as something people forget to look about. expectations have come down. if there is not a solution on the weekend, i would say the rate cut from the fed for july is happening. we have seen other central banks also to jump on that wagon. -- bcb has tried to be a
frontloaded and announce the ecb is ready to do so. if we don't get a conclusion of the weekend we will say rate cuts as expected by the market area i don't think we will see so many rate cuts. the market is pricing in over the next 12 months four rate cuts, we think that is too much because we do not think it is a full-blown trade war. there will be some kind of agreement. maybe some more tariffs introduced but not a massive one. it is not an both sides' interest to have a full-blown trade war and that is why we don't think the u.s. is going into recession and we forecast two rate cuts for the market in the future. also depending on the inflation picture. usry: thank you for joining today. deutsche bank wealth management global cio christian nolting. what wayabout employees' links to the chinese military. this is bloomberg. ♪
shery: bloomberg has a scoop between employees of all hate -- huawei and the chinese military. we know that huawei has been blacklisted by the u.s. congress department. -- commerce department. where did we get the information and why is this important? this were able to call from online databases. this is information that was readily and publicly available in databases in china. it is one of those things that is hidden in plain sight. over many years, handful of embarked on huawei research projects in which they collaborated with the pla. this is important because there ,s a lot of scrutiny right now particularly in the u.s., and to what kind of relationship is thee between huawei and chinese government and in
particular, the chinese military . people are asking the question, the u.s. has alleged for a long time that huawei represents a national security threat. they are concerned about its ties to the military. they're concerned that somehow, --wei could create backdoor backdoors into important and sensitive communications networks globally, including in the u.s. over which sensitive information is traveling. it is important to point out that this was a small number, while we has a large staff, there is a small number of research projects. we have no indication these were sanctioned by huawei. while we these employees were working independently, it was research, it was employees. they do make that distinction. is important because historically, huawei has tried to send the message that there are minimal ties, minimal collaboration between huawei and
the military. they tried to l.a. -- deny that there are these close ties. ay securityto all concerns outlined by the u.s. government. of theo we have any idea nature of the research or projects the employees were working on? tom: it is radio communications, artificial intelligence, the kinds of projects that you would expect to see between highly trained engineers and the military embarking on trying to solve real world problems. between collaboration big corporations and the military all the time. think about the creation of the u.s.,et with darpa in the think about the creation of some of the biggest companies in silicon valley. this is not unprecedented. it is -- this kind of stuff goes
on all the time. i think why it is important in the case of huawei is that there is so much sensitivity and there andbeen so much rhetoric allegations on the part of the u.s. government about the potential threat posed by huawei. fight of the rhetoric from the government, we have seen that u.s. companies have been able to still sell to huawei. does this mean the political pressure will go off from here? tom cole and that is right. we have a handful of companies, micron intel, these big chipmakers in the u.s. that have found a way possibly through a loophole whereby you can sell if it is coming from a foreign subsidiary, a foreign entity that is part of the larger u.s. based business. certainly, lawmakers in the u.s. are not letting up. they are saying to donald trump don't use huawei as a bargaining chip.
keep up the pressure in this company. it still represents a threat. down at the 11th hour just say, ok, everything is fine, we will do what we have done in the past and change our rhetoric at the last minute as a bargaining chip withpresidenti -- >> icon has a $1.6 billion stake and wants to give them a shakeup. he argues the board has made mistakes and how and what caused the recent takeover of anadarko. has sold a bond with 800 million dollars shrugging off concerns about the effect of the trade war on its earnings.
over treasury -- over treasuries and rated a double a one and triple b. the listed shares have plunged 30% this year and one of the worst performances on the msci china index. users youtube is living override automated recommendations over criticism over how it suggests clips. users can tell youtube to stop suggesting comment by tapping a menu next to the recommended video. the platform having been criticized for not taking action on extreme or misleading videos because it was focused on increasing viewing time. paul: bitcoin is jumping 18% and topping at $15,000 for the first time since the start of last year. that brings the weekly gain to almost 40%. currencies climbed more than 200% since december. dramatic gains have left traders
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>> president trump is warning he has a plan b for china saying he will impose substantial additional tariffs on imports if there is no progress at the g20. he told fox's plan is to take in "billions and billions of dollars and do less and less business with beijing." contradicted comments that he is hopeful about trade talks. president trump is praising mario draghi saying he should be holding the reins at the fed, not jerome powell. speaking to fox tv he reiterated his claim he has the right to
fire the chief and claimed policymakers blow it when they kept rates on hold. the president had attacked mario draghi for signaling more stimulus could be on the way for the eurozone. iran is set to breach the terms of the 20 15 nuclear deal thursday piling pressure on european powers attempting to deal with the fallout of u.s. sanctions and fears of war in the gulf. the atomic energy agency in terror and said it will exceed the agreement limit on stocks of low grade uranium in the coming hours and may raise is rick -- .nrichment president trump is lashing out at one of his seemingly favorite hobbies. he is complaining about social media's perceived bias against conservative commentators saying sue googleent should and facebook although he did not say what for. he said social media by firms are run by democrats and twitter has made it hard for people to
follow his tweets somehow. 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. this is bloomberg. paul: thank you. time for a check of the markets with sophie kamaruddin. stocks are under pressure in that is sending the aussie tenure yield under by six basis points. we are seeing an uptick in treasury yields and the end tracking that while the u.s. dollar is steady. if you look at the breakdown for benchmarks, we are seeing energy shares gained ground despite the move lower and wti and brand earlier. taking on some stock movers this morning, i want to highlight japan as it is surging as much as 27%. the biggest jump since december. the sun news that apple could be investing $100 million in jdl a
-- gdi and cromwell. and institutional placements at 150 a share. hong kong protesters have appealed to the g20 to act on complaints about the city's asian backed government. thousands rallied continuing their calls for the chief executive to quit over her controversy all extradition bill. karen lee was up late following the protests and it was quite a sight to see all these huge crowds chanting in different in all the participants in the g20. caret: they were chanting them in the languages of many of the g 20 companies in an attempt to keep their cause in the global stage ahead of this massive platform, gold meters -- global leaders are meeting next week. we have not seen this here it many years and it is a testament
to how upset people are about this bill and how much they want this to be in the global spotlight. of the message going to be heard at the g20? karen: there is no sign as of yet. china said they do not intend to hold talks on hong kong. they said they would not allow the talks to happen meant that the g20 is an economic life form and they would be focusing on trade issues. we have seen her being adamant that she would not withdraw the extradition bill. what is next? karen: the july 1 protests following a similar route that we saw over the last couple of sundays. , we are going to be expecting hundreds of thousands of people and they are gathering in victoria park following a similar route to the historic process that brought some a people onto the streets this month. this is going to continue.
paul: karen lee in hong kong, thanks for joining us. secretary of state mike pompeo has wrapped up his trip to dia and that was a visit marked by disputes over trade, defense my and energy. let's get over to our senior international editor jodi schneider. any real progress on the issues that affect those relations? real progress and there was not expected to be much. the talks were not supposed to result in any kind of resolution. it was more a pr effort for the u.s. to, over and mike pompeo and his indian counterpart to be seen together. they did talk about the ties between the countries and there is $90 million in annual trade between the countries. this is a serious trade relationship. because of these tensions and the u.s. is continuing to make demands from india on trade and related issues, there was not
any kind of agreement on how they would go forward. seen: no wonder we have the -- india up the tariffs and the u.s. and eliminated and he is developing nation status. they gave a duty-free access to our few products. what does it mean for the u.s. and the pacific strategy it has been talking about for so long? i: there has been some odd changes in the trade relationship lately. the u.s. saying that it would and preferential treatment and india retaliated by slapping tariffs. they have pushed india to and its imports of iranian oil off -- and venezuelan oil. it imports 85% of its oil so it needs a stable source of oil. the u.s. as it will help but
making it clear that they do not want india to buy from iran. also india wants to go ahead and system, aile defense russian-made system and it is worried the u.s. will slap sanctions on and if he does that. the u.s. is not backing down. the u.s. wants india to take some steps against huawei. side of asks from the u.s. morehe promise category, general promises for their economic stabilization ties. asked of-- a lot being india at this point. paul: mike pompeo gave a speech after the meeting, he did appear to be optimistic and pessimistic when it came to giving signals about the future of that relationship, didn't he? si: he said there should be a new age of cooperation and then a tough message about their
thing not such close ties to russia and the u.s. has -- is expecting a lot of its partner for that new age of ambition. basically still demands and general promises in return but a good pr visit between the two leaders. right, jodi schneider, thanks for joining us. the currency strategist guide to the tweet -- to the g20. we will talk to sean keller. he is next. this is bloomberg. ♪
all: let's get a quick check of the latest business flash headlines. blackstone is closing on more than $12 billion for its infrastructure fund anchored by money from saudi arabia. the total will be finalized in the coming weeks and the fund will be blocked to new investors until a certain amount is to
point executors have expressed confidence that blackstone's path will reach $40 billion over the long term. tests on the boeing 737 max 8 revealed the new safety threat that appears to be unrelated to the two fatal crashes that have grounded the plane around the world. the faa found that the failure from a microprocessor could cause the jet to dive in a way that pilots had difficulty recovering during simulator tests. the issue has not [indiscernible] boeing has been ordered to make changes. the newspaper says apple will make investments through china's harvest group. screenll support the maker which has lost money for five straight years. apple accounted for almost two thirds of japan's sales last year. blackberry plunged the
most in a year after sales slowed and recent acquisitions contributed less than expected. up 16% was $247 million from a year earlier. and come from the internet of things division was down other theion -- $11 million from first quarter. shares fell the most since june last year. the u.s.-china trade war is weighing more heavily on asia-pacific businesses. a new survey by the american chamber of commerce shows more companies are delaying or canceling investment in 2019. our economics reporter joins us from singapore. what does the survey tell us about how businesses are approaching the trade war now versus the end of 2018? michelle: we have been eager to get this data because this is one of the most precise and most consistent surveys we have seen
with the business plans are around the trade war. we are seeing across the board in this survey, businesses are taking more serious consideration of these plans from planning to delay or cancel investments from taking supplies from different locations than the u.s. and china and from moving production out which is the key thing that we are after here. i do have to clarify that this is planned and not necessarily execution. there is a lot of talk from members about how in all this uncertainty, businesses have sat on their hands waiting things out hoping things will change. what we are seeing now in this latest survey versus late 2018 is they are seeing that this -- they have to settle in for the long haul and take these plans more seriously. we should see more actual execution of moving of orders, read triggering of supply chains and moving production.
we see encouraging signs from the data in that survey? michelle: i think so. the resultsed saying he was heartened by the businesseshis shows are adapting. they are seeing more serious consideration of the plans because they recognize this is not a short-term thing. -- what the markets perspective has been. he was heartened but we also saw an upbeat tone about the prospects for southeast asia more broadly. in the next six months, there are a lot of talk about is this ramping up in terms of the region having an advantage over others. almost nine in 10 said southeast asia is at least as attractive as other regions in the world versus 75% for the same question and the latest survey. eighteasons to be up especially here in southeast asia as the trade tensions whereon. paul: thank you.
that presidentws trump is meeting with china's i in osaka. president trump accused china of devaluing its currency "like a ping-pong ball." let's get some insights. from theer joins us sydney office. analogy, ise that will refer to a chart here on the bloomberg if i can. i am unable to show you that. it did show the yuan more likely to hit eight against the euro before it hits seven against the dollar. the euro has -- yuan has been strengthening against the dollar. this president trump have a
point or not? >> as far as devaluation, that is the wrong term to use when it comes to the yuan. pressure, there have been times when it has weakened notably over the past 12 months or more. theclearly with the pile -- priority is keeping china stable. levelclear that that is a they would not like to see break. thanks to the fed they should not have to worry about it in the near term. the change ofer their tune, a lot of asian currencies are firmer. that is less than an issue for policymakers. it should not be as big a deal in terms of getting a trade deal done. paul: those remarks from president trump have made some
commentators fear the trade war, it risks morphing into a broader currency war. is that a risk you see? >> you cannot rule it out. if he is still arguing that china is manipulating its currency to help exports, if that is what he thinks despite all the evidence are looking at a chart, that is a bit of a concern so close to the meeting. there has been reference to potentially some clauses on the currency side making their way into a trade deal. there was that talk a few months ago, that is going to be an awkward run. china would only sign off on something that was reasonably vague and the question is whether big will suffice for the go as far asway to that final 10% mnuchin referred to. it is not only the
president and officials trying to talk down the dollar, it is being stuck into the election cycle. we are hearing from senator elizabeth warren are posing actively managing the currency. we have the democratic debate tonight. what happens if the dollar becomes an issue going into the 2020 elections? >> it would be quite stunning for currency. have the dollar is a key focus of a presidential election. it would be unusual. you cannot rule it out. elizabeth warren has a lot of policy ideas and trade is part of that. the treasury, the fact that the treasury has not touched the dollars -- the dollar in terms of intervention for a long time. it should be clear that we had the u.s. dollar has strengthened significantly once the fed
started tightening policy ahead of the rest of the world and now it is backing off and talking about rate cuts. are we -- i would like to think it is not going to become too much of a political football, but it is one to watch because clearly, it is in the narrative that the trade deficit could be in part due to an excessively strong dollar. we are going to have a continued large trade deficit in the u.s. deep into next year. as we get closer to the election. talk about the other side of the coin, emerging market currencies. we have central bank decisions, that it is near a six-year high. saw the baht retreat but hit the six-year highs.
where are we of we do not have that much certainty on the u.s. dollar? baht is a good one to focus on. it is up this year. currency strength is an issue for thailand. they are sensitive to exports, particularly tourism and as the earlier story mentioned they would like to be perhaps one of the beneficiaries among southeast asia countries of manufacturing pushed out of china. they want to keep that advantage. for others, it is still too early to sound the all clear in terms of the impression they have had allen their currencies. indonesia would like to cut rates and defend the currency. now they are pondering about
whether they could get away with lower rates. it is across the region. that wave of strength, emerging market companies on the fed changing its view but there are limits as to how far that will go. fed islarly if the cutting rates because of a cooler global outlook than that inflow to emerging markets from equities and bonds. i have to get your views on the aussie dollar. it is a good day to do it. we have the charts on the bloomberg showing that the aussie is continuing to strengthen, made push through $.70 today. what is driving that? >> it is a little bit surprising in terms of it is happening at the same time that pricing for fed easing for 50 base cut at the july meeting has been wound up this week.
it is a good effort by the aussie. it does have the commodity prices support, not across the board, not so much a's metals but iron ore and especially when you translate it into aussie dollars. gold obviously, that surge in dollar terms, record highs, that has been helpful and the trade position is strong. overall, just the positioning has been social. the real money accounts have been hammering the aussie for several months. at some point it is enough that news priced in. the rba sounds as though they maybe august,y, most likely july. it sounds that the governor would like to hold steady for some time. that is cooling some of the aussie bearishness. paul: gold above $2000 an ounce.
down the field of 20 candidates. our chief washington correspondent is in miami. this is a crowded field. what should we be watching out for tonight? kevin: the debate is just about to get started. the crop of 10 candidates just having taken the stage. it will kick off in a few moments. ,enator elizabeth warren democrat from massachusetts is the one to watch. former viceht, president joe biden takes the stage again senator bernie sanders. there were so many candidates the democratic national committee had to divide the night into. seems to look out for, trade policy. senator warren railed against the issue of nafta. how will she positioned herself now? this is -- as president trump is renegotiating popular trade deals. and then how will they go after
that as a whole as it relates to democratic socialism? senator warren said she is a capitalist who leaves in capitalism with rules. embraced thers has label. they are saying where their campaigns will go. the bottom line, the goal for these candidates is to elevate themselves into the top tier of this race as it heads into the summer. paul: it is a crowded field. what can the candidates do or say to cut through? have viral moments and you have introductory moments. i talked to several strategists who say this is an opportunity for candidates to introduce themselves to the american people and on policy, will they not just attack president trump but will they start to take off
the political gloves and go after each other? a long night for you. we will be looking forward to anymore updates. that is it from daybreak asia. our markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shang jen. markets,for bloomberg the china open. we are seeing a hang seng futures up .6 of 1%. this is bloomberg. ♪ the latest innovation from xfinity
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david: was it the hardest job you ever had? >> it was very hard, but very meaningful. not very enjoyable. david: your family was a blue-collar family? >> very blue-collar. my dad was a world war ii vet. greatest man i ever knew. david: you were in combat, did you expect he would survive? it was dangerous? >> we were marines. david: did you ever say the president's tweets were too much? >> no. the president feels confident that his tweeting goes around the press. >> can you fix your tie, please? david: