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tv   Bloomberg Daybreak Asia  Bloomberg  July 10, 2019 7:00pm-9:00pm EDT

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paul: good morning. we are under one hour away from the australian market open. shery: good evening. sophie: welcome to "daybreak asia." paul: our top stories, got down to a cut. the fed is ready to lower rates for the first time in a decade as the global slowdown overshadows a strong u.s. jobs market. pressure on paris. washington launches an investigation into plans to tax
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big tech which could mean tariffs on french goods and services. and the u.s. has just weeks to -- the task is proven near impossible. impossible.ear shery: equity markets near record highs with the s&p 500 at one point top and 3000 for the first time ever. industrialsnd weighing on the index. the focus was entirely on chairman powell's testimony in congress which suggested a july rate cut was on the table. not to mention we got the minutes from the june meeting. that also showed a dovish turn. followed that was factored into the markets in this session. of course we are not done yet. chair powell testifying again in congress tomorrow at the senate banking committee this time on thursday. and we also have the ecb minutes
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out not to mention u.s. inflation numbers. for the time being, asia futures -- s&p futures holding study. let's get a check of how markets in asia are shaping up. sophie: this thursday asian stocks are eyeing modest gains after a move higher for u.s. stocks. broadly holding gains against the dollar on the fed's easing signal. chipmakers remain on watch. the foreign told pompeo japan's exports will be negatively impacted the global trade order. i want to highlight one stock moving in new york. deutsche bank sliding 2.7% after a wall street journal report that the u.s. is investigating the bank on whether it violated anti-money laundering laws with malaysia's 1mbd. i want to share this chart which showcases the advance in aussie shares as depicted in the bottom panel. this would push the market cap
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closer to $2 trillion. it already surpassed 12 month target. could this mean analysts are behind org they see the rally eventually flatlining? about 2% off an all-time high. paul: let's check in on the first word word news. >> the woman expected to be the next eu commission president says he hopes the u.k. will stay in the bloc. ursula vonda land told lawmakers if brexit happens it must be on the best possible terms. she also said the u.k. should be allowed to delay the date again if necessary, saying the economic and political consequences of a no deal divorce would be cottage traffic for all sides. the trump administration has rebuffed in its attempts to ramp up pressure on iran. wednesday's meeting of the international atomic energy agency saw the eu, russia, and china pushback at washington,
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saying the u.s. is saber rattling in the middle east. trump warned new sanctions against iran, claiming they had been enriching uranium for some time. the british ambassador to the u.s. has quit after leaked criticisms about the trump administration sparked fury in washington. boris johnson did not offer his support. kim said the white house was dysfunctional and in chaos, causing president trump to say he would not deal with him anymore. johnson declined to back him and would not commit to keeping him in his job. hong kong's leading broadcaster is under attack for allegedly pro-china bias in its coverage of the league -- the recent street protests. it is accused of favoring beijing, with people urging companies to pull commercials. afterst one has done so what it called a review of its
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advertising budget. the channel insists it is always neutral and objective. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. doubt afterowell no three hours of testimony to congress. the fed is gearing up to cut its key rate for the first time since 2008. this, in the face of a cooling global economy and persistently low u.s. inflation. kathleen hays is here with a recap of this remark. mr. powell was pretty worried about the state of the u.s. economy. kathleen: he is certainly worried something could happen because of what is happening globally. the trade war continues. he is saying they are slowing global growth. we have certainly seen that in parts of asia. inflation below target. and he says since the june meeting, manufacturing trade and
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investment are all looking weaker. when it comes to the question everyone has been wondering, people in the markets have been asking, economists have been asking, rep presented if carolyn maloney of new york asked what we all wanted to hear. >> did the june jobs report change your outlook of whether a reduction in interest rates is appropriate in the near term? >> the straight answer to your question is no. the bottom line for me is that the uncertainties around global growth and trade continue to weigh on the outlook. in addition, inflation continues to be muted. those things are still in place. kathleen: you might be saying wait a minute, he is talking about a strong labor market, economy holding up well. why are you still worried about inflation? don't we have a hot labor market? here is how he answered that. >> 3.7% is a low unemployment rate, but to call some thing hot you need to see some heat. while we hear lots of reports of
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labor, of companies having a hard time finding qualified labor, nonetheless we do not see wages responding. i do not really see that as a current issue. kathleen: i love that. for something to be hot, you have to have heat. powell also saying the link between inflation and unemployment is like a themepark. metaphors,rms of maybe it is time to pull the plug on the ailing phillips curve. how about reaction from traders and economists? is everybody on board with this? kathleen: they are in agreement that it looks like a 25 basis point rate cut is coming. in terms of the more aggressive move, morgan stanley and ubs still call for that, although barclays pulled back to 25 basis points. jay powell stuck to general references about how strong the data is and global forces. he did not really answer the question. in terms of being on board,
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mccarthy is not. he says he expected this from powell at the rate cut is not needed. it will accomplish little more than pleasing the markets and giving donald trump more to tweet about. jim bullard speaking after jay powell, he said you need to cut the rate in july as an insurance move. to show you are serious about boosting inflation. he said he would not prejudge the meeting. i think what he is trying to say is everyone will go in with their points. seems pretty clear the majority is leaning more towards a cut. shery: let's turn to the june meeting. it seems the general tone from chair powell was backed by those minutes. kathleen: absolutely. the thing about the fed minutes is they have certain kind of fed speak words like many. when the fed says many members, you have to listen because what many members saw was stronger as localincreasing
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risks increase too. several alsonutes, saw, several is not as many as many. push possible shocks, echoing what jim bullard said. i am sure it will be a big debate given that mr. powell put his imprint on this now, many people think he has been pretty good at marshaling census. another reason why people are looking for a 25 basis point cut in about three weeks. paul: all right. you for hays, thank interpreting the language of the federal reserve. our next guest says investors must turn their focus to how powell positions the rate cuts. let's bring in rob. looks like july cuts are pretty much now baked in. fore is also the potential
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50 basis points by the end of the year. do you see that being credible? rob: i think it is credible but i do not think that is the most important question. i think it is more about the accommodation they have pledged and if there is any hesitation or doubt they would cut. they have a great jobs report on friday that could have been a scapegoat for delaying any kind of cut. the message the markets are taking is there will be a cut, whether it is 25 or 50, i think that will be risk assets. paul: the fed also talks about being data dependent. if you look at yale -- u.s. data, inflation notwithstanding it is not bad. it also means global data as well. how severely is the global growth picture clouding the fed's outlook? rob: outside of inflation that is definitely the concern. you look at inflation u.s., not awful, still not hitting the 2% target, but the fed is in a much better spot than looking at economies like europe and japan. they have a lot more inflation
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than we have here -- deflation than we have here. shery: we are seeing more and more companies in the u.s. downgrading profit outlooks. is this something we should be concerned about, that tells us something about the u.s. economy, or are these companies just trying to lower the bar going into earnings season? rob: i would say it is a latter. we get this question a lot from clients. we cracked 3000 on the snb -- s&p. would say about earnings revisions, 80% of companies that have revised this year, they have revised down. this upcoming earnings season which is about to kick off next week, companies do have lower rates and that could be a bullish thing and the markets should go higher. shery: about breaking that 3000
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level, we were not able to close above it but what does that tell us about future resistance levels. are we through that? can we get past that at closing levels in the future anytime soon? big, round number so people focus on that. but what we found is as you breakthrough new highs it is a bullish signal, not a reason to think we would drop down because we have never been this high. a positive breakout and closing above that 3000 level on the s&p would be constructive. that is why we think investors should stay invested. paul: i want to get your thoughts on corporate debt. you say there is a lot of it, but the cost of servicing it is very low. now with this 25 basis point likely coming, the cost of servicing will get even lower. do you see corporate debt continuing to balloon from here? rob: yes. i think it continues to balloon
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in the sense that issuance could keep going up, as it should. it makes sense for companies to refinance and issue new debt and capitalize to get what is coming from the fed, which is lower rates. even though the debt level is high, as long as the cost to service debt stays minimal we do not think there is a crisis. this is reflective and spreads for investment bonds and high-yield bonds. it is one of the diverging things we have noticed about the treasury market, which is pricing in a lot more of a slowdown. the high-yield market actually indicates it and spreads are contained under 400 basis points. paul: just want to get your thoughts as well on the idea of fed independence. this was a question that came up a lot during jay powell's testimony. he did suggest that he is entitled to a four-year term. he intends to serve it. are you concerned about potential risk of president trump deciding to try and test that law? rob: yeah.
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i think whether the law is changed or not, the toothpaste is out of the tube. by just commenting in general and having politics get involved, everyone will look at the fed and their decisions as being politicized. if they cut, people will say it is because donald trump got in and talked them into a cut. if they don't, they will say they are trying to prove independence. is now and thet topic of conversation and people will always doubt that. that is something they will have to keep having to deal with. shery: conversation revolving the strength of the u.s. dollar, we have seen not only president trump talking about the strength, but also presidential candidates talking about managing the currency. rob: yes. the dollar has been strengthening, and that is a headwind for our exporters. the thing to focus on is if at the end of the month we get a cut, depending on how they
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position that can't, whether it will be insurance, or the start of a cycle, a lot of folks think that will weaken the dollar. we would argue that the dollar might stay strong because you consider what challenges the ecb and the bank of japan have infighting inflation. if we are cutting, outside of inflation in the u.s. the other issue is global slowdown, which means those central banks will have to be cutting rates as well and bringing accommodation. we still think the u.s. is the best house on the block. today in the testimony chair powell was also asked about facebook's new asset, the digital currency libra. he was talking about some of the concerns, whether it is privacy, money laundering and so forth. what are the factors -- sectors which could get hit most by regulations, especially heading into a presidential election year? rob: not specifically related to libra but regulation of health
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care has been a sector that continues to be faced with people taking swipes at it politically. that said, i think you get a big discount in health care. you have to balance out what the rhetoric is that you see on the news versus what actually legislation is happening. in our view, health care might trade at a steeper discount than warranted because it does not seem like legislation will come through that matches the fiery tone of a lot of politicians. shery: thank you so much for joining us, rob. we will have live coverage of fed chair jerome powell's testimony before the senate banking committee. powell will read a prepared statement intake questions from committee members. you can also get more on the fed's policy direction in today's addition of daybreak. bloomberg could -- subscribers go to your terminals. also available on mobile on our
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app. federalill ahead, u.s. agencies are racing to rip out chinese-made surveillance cameras. but it is proving to be an impossible task. we will look at the size of the problem. shery: and washington opened an investigation into french plans to tax giants. more details, next. this is bloomberg. ♪
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paul: the white house will investigate a french plan to impose taxes on technology companies, they move that has been a prelude to new u.s. tariffs under the tongue -- trump demonstration -- administration. how likely is that this investigation will wind up leading to tariffs? >> if history is a guide this section 301 investigation the trump administration launched
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today, it was the same type of investigation that led to the tariffs on china over its ip practices. that is not to say the commerce department which is conducting this investigation would come up with the same conclusions and recommendations and ultimately trump would advocate for tariffs , but it definitely puts pressure on france right now. the timing of it is something to mention. is setw, france's senate to vote on this legislation, on digital tax. then the french president would need to approve it but the timing seems to be not a coincidence. shery: does it make sense to use 301 for a digital service tax? also, isn't france part of the european union? can the president just apply tariffs on france alone? sarah: a lot of times we have questioned whether trump has the authority to do x, y , and z.
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france is part of the eu so perhaps -- this is all speculation -- but if trump went forward with a tariff he could hit a wine which is a big export to the u.s. that is all speculation. trick theperhaps a administration could use if they really want to crack down on france. shery: we still have the china-u.s. trade tensions. tough to keep us. thank you so much. have justal agencies five weeks now to rip out banned chinese-made surveillance cameras but the task is proving near impossible. remain inof devices place despite a ban imposed by congress last year. let's bring in our tech reporter. let's start with these companies. who are they and why are authorities so worried? olivia: they are global market
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leaders in video surveillance. these cameras are in hundreds of countries around the world. they use artificial intelligence the power advanced facial recognition software, 3d people counting, and have the ability to produce sharp images and rain, fog, or total darkness. the controversy stems from the fact that hikvision is owned and controlled by the chinese government. and if you years ago a duhua device was found to have a backdoor which allowed people to take information off of it. in addition to that, both these companies have been involved in mass surveillance in china. the reason why this is concerning to america is these come -- cameras are everywhere here. bans, technology -- banks, technology companies, hospitals, federal agencies.
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haidi: so there is definitely -- paul: so there is definitely some motivation. it is due to take effect in five weeks. how hard will it be to remove the devices in that amount of time? olivia: it will be near impossible. that comes down to the fact that the sheer number is insurmountable. in addition to that there are two other layers of complexity. we have a complicated supply chain where you have u.s. manufacturers who are able to buy these chinese cameras, rebrand them or relabel them, bring them into the u.s. and sell them as their own. that effectively means when you walk into your local bodega or a parking lot or at your local bank you might see a camera with inanasonic label on it, but reality it is a chinese device in disguise. in addition to that, these federal agencies who are tasked with implementing this ban, the
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majority of them do not have the software available to know what devices they are actually running on their networks. they don't know how many cameras there are or where they are. that means they will have to remove these cameras manually one by one. shery: that is so scary, especially when you consider these two companies control one third of the market for video surveillance. thank you so much, olivia. plenty more to come. this is bloomberg. ♪
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paul: i am paul allen in sydney. shery: i am shery ahn in new york. let's check the latest business flash headlines. deutsche bank's head of fixed income has assured staff their jobs are safe amid the bank's sweeping cuts of 18,000 positions around the world. move tod the bank's
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resize debt trading operations will not lead to dismissals. they had announced plans to quit equity sales and trading as part of the ceo's far-reaching overhaul. takeover of flip cart is said to pay off in unexpected ways because one of the little loan units has emerged as one of india's top startups. $1ne pay is spinning off billion of fundraising and evaluation of up to $10 billion. transactions have quadrupled over the past year. shery: american airlines is the king of cancellations. the wall street journal says the carrier cuts 7500 flights in june, 4% of scheduled operations. that is 18 times higher than delta and well beyond jetblue and united. they had been hit by the 737 max
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8 grounding and is embroiled in lawsuits with unions. toing up, beijing looks tighter waters. we will discuss the south china sea next. this is bloomberg. ♪ is is bloomberg. ♪ xfinity mobile is a wireless network
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shery: -- >> fed chairman jerome powell has made it clear he is preparing to cut rates for the first time in a decade due to the slowing global economy and stable labor markets at home. he told congress plenty of data supports the view that manufacturing trade and investment are all weak around the world and u.s. wages are not stoking inflation. they expect to -- the u.s. is said to investigate france's planned tax on big tech , which could possibly mean the u.s. has retaliatory tariffs. robert lighthizer will have a
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year to decide if a digital levy would hurt u.s. firms and outlined any tariff reactions. the u.s. has lobbied aggressively to stop eu nations tax and companies like facebook and google. new orleans is facing a double flood threat with the mississippi river at its highest level in 90 years. floodwaters are approaching the city from the midwest which has suffered months of heavy rain. at the same time a storm in the gulf may hit. the combination means the river could reach its all-time highest level recorded in 1922. u.s. senator is seeking to punish saudia labia -- saudi arabia for the death of jamal khashoggi could deny visas for members of the saudi royal family. legislation would bar senior figures from the u.s. if the measure becomes law. it is designed to put pressure on crown prince mohammed
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although he would not personally be denied a visa. his has of state and the saudi ambassador would be exempt. online casinos employing thousands of workers are set to surpass call centers as top users of commercial properties. they are expected to take up about 480,000 square meters of office space by the end of the year. 30,000 more than the next sector. online casinos are expanding rapidly in select locations faster than call centers. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's get you across a story we have been tracking. budweiser is inviting its hong kong ipo towards the lower end of the range. 40 to 47 hong kong dollars.
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there is a report that the offering is oversubscribed by 3.7 times. just to reconfirm that line, budweiser guiding the price towards the lower end of the range. let's get to hong kong now for what else to watch in the markets this morning. sophie: switching our focus to japan, we are watching tukey a. climb to 3.4% overnight on a gaming company unveiling the switch like. less than the0 original console and launch september 20. rebounded on optimism a cheaper switch, a stronger pipeline of games, and potential china entry will overcome last year's missteps. there will not be a significant change to overall shipments. view formco is also in
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a surprise choice. smart, expects volatile trade. .ikely to fall japanese retailers are in the spotlight. beating the highest estimates. they missed the lowest estimate and announced a stock split. they also said they are in talks with the national retailer. reports of harassment of fishing boats and disputed areas of the south china sea are on the rise. as beijing looks to tighten his grip over waters that carry trillions of dollars of trade every year. let's take a look closer at this. tensions in the region have been brewing for years. what is the situation now in the
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south china sea? john: we have a variety of nations who see these areas as theirs, but china is exerting its authority in this area with coast guard patrols, hit-and-run tactics. there have been collisions, incidents, and the fishermen are worried about their catches. they see china as pushing into territory which should be open for them to catch fish. china dealingis with these issues? these as itses waters and territorial claims and they are exerting their authority in the region. but it is a difficult balance for china because they have various relations with some of these nations. whether it is the philippines or indonesia or vietnam. they have to be mindful of that. for china, they see this as rightfully theirs. ofe estimates are it is 1/10
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the fishing stock in the world. it is a major area. rights that would be involved in this. there is fishing, minnow, territory. a lot at stake. shery: how are the governments in southeast asia responding? jon: it depends on the government. you have some things like the philippine were president duterte has a relatively good relationship with chinese president xi jinping. his government is caught in the middle because you have serious incidents with philippine fishing boats which have ignited public backlash to what many people in the philippines see as chinese strong-arm tactics. whereas indonesia is more aggressive and vietnam is pushing hard. it really depends on the relations these nations have with china as to the reaction they are giving beijing. you. jon, thank
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still to come, washington is softening its rhetoric on trade as talks resume with beijing. where things go from here. this is bloomberg. ♪ ♪
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paul: i am paul allen in sydney. shery: i am shery ahn in new york. washington is softening rhetoric on issues ranging from huawei's fate to further tariffs. let's get to our chinese correspondent in beijing with our next guest. i am in beijing for the national committee on u.s. china relations. dialog where they bring economists from around the world and business leaders to discuss pressing economic issues.
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thank you for joining us. you are the former u.s. assistant secretary for asia and he spent 20 years at the treasury department where you were negotiating macroeconomic and reform openings with the chinese government. model continues to be a pressing issue in trade negotiations. how much improvement have you seen? robert: there have been big changes over the years and china is a lot different than it was when i started. the thing that concerns people in the u.s. now, particularly in the policy community, is china is, in part, turning back from the economic reforms and increased marketization of the past towards more state control of economic sectors and greater importance. selina: do you think these trade negotiations can reverse some of those trends back to where you think they were before? robert: no, but i think the
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recent shift in the emphasis of chinese policy is something that enters the trade negotiations and particularly influences the u.s. view of china. they are real issues that we face, they are difficult issues. in a sense the issues are about industrial policy, about subsidization of domestic -- also about the range of practices to acquire technology. selina: talk to me about the context. why do you see them as being so difficult? are you optimistic that we are moving in the right direction towards a deal? robert: the reason they are difficult is there are really not international rules on policy, subsidization of domestic industry, and on the range of practices for acquiring these. when there are no rules it is hard to get the country you are complaining about, in this case
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the u.s. complaining about limits inagree to exchange for some agreement on acceptable policy. i think that is what makes the negotiations so difficult. selina: what would you advise the u.s. negotiators to do differently? robert: i think the way to reach a solution or an agreement is to really back away from the extreme positions on both sides. the u.s. nice would knowledge -- acknowledge -- the u.s. needs to acknowledge china has the right to move up the value chain and raise domestic incomes. china needs to acknowledge there are certain practices and andidization of acquisition technologies that are unfair and illegitimate and should be ruled out. that still -- selina: we are seeing recent
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data on china from industrial output showing weakness in the economy. how much of that are you attribute into the trade war and our stimulus measures enough to offset that? robert: initially it was almost entirely chinese attempts to deal with excess debt in the financial system, the process of deleveraging the chinese economy. i think there is more effective from the trade conflict now largely through uncertainty about how it is going to end up, where the profitable areas for investment are. that is worldwide. selina: china has this rapidly aging population. does that coupled with the current economic picture mean there is more of a chance it will hit that middle income trap and not reach the high income level status? robert: i think that is indicative of the problems china faces and the leadership is aware of that.
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to get beyond the middle income trap you have to move up to a new set of indices, to higher productivity industries. that has been difficult for many countries. i put the chances china succeeds as quite high. selina: even despite some of the technology exports, the backlash against huawei, you think they can still reach that? robert: i think so. selina: despite the interconnectedness, many are arguing this is just the beginning of a global decoupling. do you agree with that and see a clear path to reverse that trend? robert: we have gone through a integrationcreased of global economies. in particular the development of international value change, where they were produced in stages in a bunch of countries. i think that probably has peaked and maybe gone too far so there is a pullback generally because
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of the risks of natural disasters, like the tsunami in japan. it has also been affected by the trade conflict, and the desire of the u.s. to have a u.s. economy that is less dependent on china. selina: you are former the treasury representative in japan and we are following the dispute between japan and south korea, which could impact all kind of production from iphones to laptops. how do you see this impacting the u.s. and china? robert: the u.s. position has always been that it is important for japan and korea to reach amicable agreements on the issues that divide them and to work together with the united states on major global issues. i no longer- we, work for the government. the u.s. government has been very careful not to take positions on particular size. selina: trump has called china a
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currency manipulator as one of his key strategies. given beijing's emphasis on's two -- financial stability, what do you see as the future direction of the rmb? interest ina has avoiding a depreciation of the renminbi that creates the expectation of further depreciation and the movement of capital out of the country. i think it is very unlikely that china would weaponize the exchange rate in the context of a trade conflict. up renminbi exchange will go and down with a lot of things including the state of negotiations between china and the u.s. that is normal. selina: we just heard from jerome powell that manufacturing trade and investment are all weak around the world. do you see that weakness spreading to the u.s., which thus far has remained relatively strong? robert: the united states has had the benefit of a huge
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stimulus from fiscal policy, from tax policy, expenditure policy, and a time very late in the cycle. that is pushing activity in a lot of areas in the u.s. so far u.s. manufacturing has been relatively strong although that is slowing as well. so the u.s. is not immune. selina: thank you so much for your time. fascinating conversation. back to you, paul. paul: that was selina wang speaking to robert dohner. we will bring you more views on trade from beijing throughout the morning. hills, speak with carla national committee on u.s. china relations president, and managing director -- functionget our tv where you can watch us live and catch up on past interviews and dive into any of the securities or bloomberg functions we talk
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about. you can also be part of the conversation by sending us instant messages during our shows. this is all for bloomberg subscribers only. this is bloomberg. ♪
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shery: this is "daybreak asia." i'm shery on the new york. paul: and i am paul allen in sydney. hong kong game developer is teaming up with amazon for a new lord of the rings videogame which will be free to play online multiplayer. they will handle targeting in asia and china and taiwan and amazon will cover the rest of the world. amazon studios is also working on a lord of the rings tv show in an effort to boost interest in its prime streaming service. shery: this year's likely biggest ipo price is later
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thursday was sources saying the institutional order book is at least 1.5 times covered. the retail order book is at least three times covered. budweiser brewing will list in hong kong after shares expected to beat uber's earlier this year. likely to value the operation at $64 billion u.s. paul: wynn resorts announced plans for a $2 billion expansion of properties in macau which include a theater and museum. the complex will be next on the cotai strip and will feature two hotels, interactive sculptures, gardens, and performance space. it is expected to begin in 2021 with a grand opening three years later. shery: nintendo unveiled a new cheaper version of its switch gaming console. the device that helped fuel a rebound in the stock this year. let's get more details from tom in tokyo.
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there are very high expectations for this console but will it really expand the switch's market at this point? tom: yeah, this is basically a way of making the switch and switch light in particular more appealing, more colors, a cheaper price point. nintendo really wants the switch to do better. people have looked at this as this is the successor device to the very popular wii. very groundbreaking device. thereere is a lot to say, is a lot of appeal for the switch. it is something that you can use on multiple devices. tv, pc, handheld. the light is just for handheld. there is a lot of optimism that because nintendo has a stronger lineup of games, it is cutting the price, china is also a new market they want to penetrate. there is a lot of optimism and
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that is driving the shares. the question that analysts are asking is whether cutting the price will be enough. overall, there has been general disappointment with the amount of interest in the switch, and whether that has been able to core,intendo go beyond a hard-core gaming core of users. just one time after another they have come out with projections which have left analysts somewhat disappointed with their projections for how the switch is going to do. does the cut in price, will that be enough? you really have to back that with killer titles and excitement around the device. is this prescott going to offer at least some optimism after muted financial forecasts the company gave back in april? about mean, the thing
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some of these japanese companies is they give these conservative estimates, projections. what the market really wants to see his see them bust through that. you have a price cut like this, it makes you wonder whether they are optimistic or whether they have seen the kinds of sales of the switch light that they would like to see. so, it is really going to have to bring in more users and generate excitement around the switch line. it is very much, there is a big question mark around that right now. paul: all right, tom. thank you for joining us. just ahead of going public in may, uber announced it was when it -- receiving $1 billion of investment from softbank, toyota, and the japanese automaker. the unit at $7.25
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billion. how long will it be before uber 's right sailing service is completely autonomous? we sat down with the ceo to discuss this. >> no drivers. 15 plus years. around robots replacing humans. life isthe reality of the better thing than humans alone and robots alone are humans and robots working together. robots are very well designed for replacing repetitive, predictable behaviors. most of driving is not repetitive or predictable, but a subset is. one, we are going to be incredibly careful and make sure safety absolutely comes first. but we are building our driverless program -- and we are working with third parties as well -- within a context of the
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network. in d.c., our data scientists know what are the 1% ebs trips in d.c. it may be avoid a roundabout, avoid a left turn, stay away from f -- airports. there are a set of routes that are incredibly easy to drive. as far as our driverless program, we will get the machines to do the simple stuff, then we will have the humans to the difficult stuff. the two will coexist for 10 to 15 years, for a long time, versus the drama. >> your 15 year answer was intended to mean no drivers at all but you expect to have some autonomous vehicles in a year or two or three or four? >> i think within the next five years. driverless media -- vehicles in the market in a limited way. >> you spun off the autonomous
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part of your company into a separate company. why? >> we created a separate company where we were able to bring in some investors and partners. oem and we is a huge have a terrific, partnership with toyota. strong in manufacturing kits and sensors and other parts of the car. bringing them in was about building these autonomous in very largeale numbers. softbank as at in financial partner as well. shery: blue brings conversation with the uber ceo. we are seeing kiwi stocks rally we2% following a saw on wall street after the fed
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chair powell's commentary. sydney futures down .1%. asx200 near record highs. coming up, we are speaking to fidelity international. this is bloomberg. ♪ is bloomberg. ♪ i don't know why i didn't get screened a long time ago.
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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. >> i'm paul allen in sydney. asia's major markets are about to open for trade. shery: good evening, i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top stories this thursday, countdown to a cut. the fed is ready to lower rates for the first time in a decade as the global slowdown overshadows the strong u.s. job market. investors like that prospect. asian markets are set to follow wall street modestly higher.
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the dollar weakens. shery: president trump softens in his china rhetoric as trade talks get on track. we are live in beijing as business leaders discuss where we go from here. let's get straight to the market action with sophie. japan, south korea and australia back online. sophie: in asia, little on the eco-agenda. asian units ipo pricing next thursday is a key thing. it was on the lower end of the range. shares moving higher. the nikkei 225 up by .10%. the yen is stronger for a second day amid strong dollar weakness. around 107. pricing for fed rate cuts unlikely to change, even if u.s. cpi turn out to be better. on the cosby this thursday, we have the index gaining.
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trade tensions with japan show no signs of letting up. isance minister hong said it hard to see how much impact there will be on gdp bird we got a week reading on imports. ship segments tumbled by 25%. so far today. sounds of the equator. asx 100 is higher here. just about 2% away from a new record high. the aussie and kiwi dollars are holding onto gains. extending gains for a second session. paul: let's check in on the first word news with ritika gupta. >> lawmakers have voted to reform the pension system, it may promise major savings and finally establish a minimum retirement age. it still faces legislative hurdles before becoming law. it is seen as a significant achievement, as 4 previous administration have tried and
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failed to enact major reform. in u.s. justice department is investigating deutsche bank for corruption and anti-money-laundering laws in his work for one mdb. the wall street journal says the investigation is being helped by former goldman sachs executive tim leistner, who pleaded guilty to crimes connected to one mdb last year. deutsche bank says it has cooperated fully. new orleans is facing a double flood threat with the mississippi river it at its highest level in 90 years. floodwaters are approaching from the midwest, which has suffered months of heavy rain. at the same time, a storm in the gulf may hit, 14 years after the city was devastated by hurricane katrina. it means the river can reach its highest level recorded in 1922. u.s. senators seeking to punish saudi arabia for the death of can deny visas to members of the saudi royal
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family. the legislation would bar them from the u.s. is the measure becomes law. it is designed to put pressure on the crown prince, although he would not be denied a visa, since as of the state and the saudi ambassador would be exempt. is under attack for inegedly china -- pro-china its recent street protests. they are accused of favoring the campaign, urging average are still pull their commercial. the threat has withdrawn from pbb after what it called a review of the advertising budget. the channel insists it is objective. global news, 24 hours a day, on air and at tictoc on twitter, powered my more than 127 journalists and analysts in more than 120 countries. this is bloomberg. shery: to our top story. jay powell left no doubt after three hours of testimony to congress.
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gearing up to cut its key rate for the first time since 2008. this in the face of a cooling global economy and persistently low u.s. inflation. our global an economics and policy editor is with us. he's gerried about the risks to the economy. kathleen: from overseas, a trade war, that creates uncertainty and tension that can spill over into the u.s. economy. those are the kinds of things he put in his remarks in answers to questions, prepared remarks, he spoke to the house financial services committee. compared to where the fed saw the economy at the june meeting, manufacturing, trade, and investment have all weakened since. big it comes to the question for investors and economists about what the economy will do next, we asked the question everybody wanted to hear. here's what jay powell said.
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>> did the june jobs report change your outlook on whether a reduction in interest rates is appropriate in the near term? >> a straight answer to your question is no. kathleen: let's hear the rest of what he said. >> the bottom line, for me, is the uncertainty around global growth and trade continues to weigh on the outlook. in addition, inflation continues to be muted. those things are still in place. global economy, the recent u.s. economy. didn't he also say, it was looking pretty solid, the consumer has come back? are you worried a tight labor market and boost inflation? he had an answer to that. a three persimmon percent is low unemployment rate. to call something hot, you need to see heat. what we hear a lot of reports of companies having a hard time finding qualified labor, we
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don't see wages really responding. i don't see that as a current issue. >> the fed is in the middle of a big monetary policy frameworks. a lot of congresspeople picked up on what's wrong with inflation, why isn't it rising. he admitted things have changed. instead of having a phillips curve, where low unemployment boost inflation, the link between inflation and unemployment is a faint heartbeat. paul: how about the reaction from traders and economists? keepowell dovish enough to them alive? kathleen: that is a good question. the consensus, which had shifted after the june jobs report, after the st. louis fed told us he was not in favor of a 50 basis point cut, 25 basis point has been where most people have been. after the testimony, morgan stanley and ups are calling for a visit -- 50 basis point cut.
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powell is dovish. barclays cut it to 25 basis points at the end of the month. powell has asked about this. he gave general references to things like strong data and how much the risks materialize. don't think the cut was needed. the only thing they think it will do is satiate the market's desire for more rate cuts and give donald trump more things to read about. jim bullard speaking today. they should cut in july. he will have the outcomes of his numbers, but he thinks an insurance cut is needed to make sure that the risks materialize. there is a buffer already. there is an insurance thing you don't want to use. that's his logic for the fed moving. paul: global economics and policy editor, kathleen hays. thank you very much. what does the likely fed cut and global money mean for investors?
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ands get over to hong kong fidelity international investment director catherine young. to cut almost said no rates by 25 basis points in july. if we look at the reaction, korea seems to be its own thing, here in australia and on the nikkei, the reaction seems to be shrugging of the shoulders. was this priced in? >> a lot of it was priced in. there is a big focus on the ongoing trade negotiations and whether there will be a final resolution. from our perspective, the relationship between the u.s. and china has changed. there's more competition between these nations. in the next couple of years, you will see volatility in the markets. companies on both sides fighting for their market share in various markets. that's because of the trade issue. concerns about visibility for
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corporate. you are seeing tilling and furling. investors are not sure what to do. trade,losely linked to as well. if we can the get this chart, it shows analysts in asia cutting their expectations for asian earnings results. the u.s.. what is your outlook for equities in the region, despite the fed moving to an easier policy? >> in terms of if we look at at thewhen we look growth momentum, we will probably see a more obvious slowdown in the third-quarter. perhaps the market has not factored this in. it goes back to the visibility. if corporate's don't feel confident, they are unlikely to reinvest. this could have a knock on effect in terms of consumption. when we look at the easing policy out of china that occurred last year, fiscal and
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monetary, it has not seen a pickup in growth. if investors focus on that, you can see more volatility in this part of the year. shery: we are seeing ego data out of china. not too positive. the latest was ppi numbers. in this chart showing that we have gone to the producer price in the slowest to the weakest. if we look at this chart, we see that when pbi slides, we have seen the pboc take action with their benchmark lending rates. they have been cut in 2015. they haven't moved since. deflation setting in, will the pboc react? wouldn't it lift the market? >> from a monetary policy perspective, when we look at cuts, it is probably not enough. it is really a focus on the fiscal measures that can be taken.
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having said this, we don't want to see the big flooding of liquidity that we saw in the market, like in 2008. the current administration has maintained their messaging has been about tweaking the economy. we did have the outstanding debt issue, the result of the large stimulus plan many years ago. this is why investors are rushing towards the teddy bear names. the names you want to hug. high quality, low volatility names. they are becoming very crowded trades. that is an indication of another downturn, because you see so much consensus in these particular names. shery: we haven't seen yet, when it comes to the chinese consumers, inflation hitting them. we saw ppi stabilizing in the latest numbers, despite port prices. would you be able to talk more about the consumer story in china when you make these investment bets? >> the consumer story in china is still a very attractive
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long-term structural story. the issue when we look at china is the competition is so fierce, so intense, whether it is service related. there is a big idea the rural chinese consumers will be in the next leg up of the market. that? going to tap into alibaba is looking at this space. they have the logistics. it is about companies that and inown the ecosystem terms of market share, can maintain that market share. otherwise, it is intense, in terms of the competition. paul: i want you to explain to us before we wrap up, one of your contrarian calls. you are adding to your tech positions, why? >> in terms of technology, it is not so far the well-known names in china, it is more the hardware.
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when we look at the supply chain, even the zero countries been efficient from it, the vietnamese ports are now at capacity. they don't have the scalability that chinese manufacturers have. when we look at china's share, it is really hard to shift. current valuations of these names are looking attractive at this point. shery: despite the fact that they can get caught up in trade tensions not only between the u.s. and china, but also between japan and south korea? namesot of these hardware associated with trade related names have a big book of business, in terms of auto books coming from china. surveillance cameras, the policy,n of the city's local governments increasing the cameras in the city. a lot of revenue derives from the domestic economy itself. shery: thank you so much for joining us.
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fidelity international investment director, catherine young. live coverage of jerome powell's testimony before the senate banking committee. he will read a prepared statement and take questions from committee members. let's turn to sophie in hong kong for a check of early stock movers. this thursday. see nintendo shares rising as much as 4.1% this morning in tokyo. in october high after they unveiled the switch light, that will retail for $100 less than the original console and be launched on september 20. extending their rebound, an early expected start positive for year and demand. an asian operator is falling after first quarter's missed the lowest estimates. downgrading the stock to neutral and lowering price target. healy us is sliding. they announced they would sell up to 2.8 million shares in
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convertible bonds overseas. part of the proceeds will go to developing the pipeline, including the acquisitions. funds will develop the d.c. fund. and eng more he is falling by as much as 11.6%, extending its drop for the seventh straight session. the stock will not be added to the nikkei 225, with bombing" being that candidate. shery: still ahead, travel platform flukes. expanding from asia into europe. we speak to cofounder eric knox. paul: up next, we returned to beijing ahead of the national u.s. china relations annual offer good meeting with economists and business leaders, where they gather to discuss pressing issues facing both countries. this is bloomberg. ♪
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is "daybreak: asia."
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i'm paul allen in sydney. shery: i'm shery on in new york. beijing is hosting discussions among economists and business leaders from both china and the u.s. on the escalating trade war. selina wang is there for us. i'm here in beijing ahead of this offer record dialogue posted by the national committee relations.na i'm excited to be joined by carla hill, former u.s. trade representative, and former secretary of housing and urban development. tariffs on hundreds of billions of dollars of goods still remain. on one hand, it is hard to accept a deal without the removal, by the u.s. does not want to remove them until they see reforms. how do talks move ahead? >> i think they are going to have to sit down and talk about how they move forward. i can understand both sides.
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there has been commitments that haven't been followed through. the u.s. is very skittish about lifting all the sanctions for past wrongs and not have anything to talk about. they can do it in stages. >> you successfully negotiated with the chinese. enforcement has been an issue. what have you found to be the best method to hold countries accountable? >> holding trust is the most important element. i can remember negotiating with the vice premier, and governor jo was the second on her delegation. we understood on each side of the table what the economics and political limitations were. we developed a market opening, the first with china. this was in 1992. 10 years later, when china was
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seeking to get into the world trade organization, i called the trade-off is to ask if china abided to its tariff commitment. to a line item, the answer was yes. i think building the trust -- i still have stayed in touch with the vice premier. >> you have great relations with edrmer people you negotiat with. the relationship with trump has seem to have fallen off the wayside. >> i would recommend our leaders have regular meetings, not just once every other year, but regular, to talk about progress. >> how much
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have heading into the 2020 elections? you have farmers, some of his base really suffering from these tariffs. >> i'm not sure the american public understands the cost of tariffs to the full extent, but i'm sure the president understands this should be a temporary situation and the faster we can lift these tariffs , the better off it is for both sides. >> trump opted for the bilateral approach, rather than work with other countries with similar complaints. do you see this approach changing if a democrat is elected? >> it certainly makes a difference. with europe,hands canada, japan, south korea, and china to say when you joined the world trade organization, you agree to national treatment. those have in violated in the following 8 or 9 fashions. we need those six to tell us what will be done, when we can be done, we want a blueprint for the improvement. china would have agreed. it could not have turned its back on that economies that
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represented over 50% of global gdp. been put has now on the u.s. draft list. china is making its own. do you see restrictions expanding, or more chances to roll back? >> it is very tough. our market has been globalized. the technology is moving ahead rapidly. we are going to have to work out a mechanism for dealing with this. i have always hoped the 2 largest economies would become best friends and we would be able to solve issues and confront the global economy together. much better than standing alone. >> do you see the's export restrictions having a deeper impact on the structure of global trade, even more than tariffs? >> i don't want to mix security with trade, but it is getting mixed. the problem is trade officials are probably not sufficiently
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briefed on what the security options are. the security folks may not be fully aware of the impediments in trade. that is something we will have to address going forward. >> thank you so much for your time ahead of a busy day of discussions. back to you. that's china correspondent selina wang speaking to former u.s. trade representative carla hills. of the get a roundup stories you need to know to get your day going on this edition of "daybreak." it onerg subscribers get the terminals. it's also available on bloomberg mobile. customize your settings to get news on the industries and assets you care about. this is bloomberg. ♪
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paul: let's get a quick check of the latest business flash headlines. amazon is flirting with a valuation of $1 trillion after posting is longest winning streak since passing that mark in september. seven consecutive days of gains have boosted amazon's market value to $993 billion. a gain of less than 1% would push the market cap back above the 10 figure mark. microsoft is the only company with a $1 trillion value. shery: walmart's takeover of india's e-commerce pioneer is expected to pay off in other ways. one of the little-known units has emerged as one of india's top startups. digital payment, business a is heading off, targeting $1 billion of one raising at about $10 billion. volume transactions have quadrupled over the past year. priceab inbev ergs will the ipo at the low end of its market range. software 1.6 billion shares and 47 hong kong
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dollars. it's likely to be the biggest hong kong ipo of the year. it is expected to value the unit at $64 billion. plenty more to come on "daybreak: asia." this is bloomberg. ♪
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ritika: this is "daybreak: asia." the woman expected to be the next eu commission president hopes the u.k. will stay in the block after all. if it does happen, it must be on the best possible terms. she said the u.k. should be allowed to delay the data again if necessary, adding the economic and political consequences of a no deal divorce would be catastrophic for all sides. the trump administration has been rebuffed in its attempt to put pressure on iran. the meeting of the international atomic energy agency is how the eu, russia, and china pushed
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back at washington, blaming the u.s. president trump warned of new sanctions against iran, claiming the islamic republic has been enriching uranium for some time. the u.s. is said to investigate the tax on big tech, which can mean the u.s. imposing retaliatory tariffs. robert lighthizer will have a year to decide if the levy would hurt u.s. firms and outline any tariff reaction. the u.s. has lobbied to stop eu nations tacking the revenue of companies such as facebook and google. the ambassador to the u.s. has quit after his leak coincidence incomments sparked fury washington, and boris johnson did not offer support. he wrote the white house is dysfunctional and in chaos, causing president trump to say he would not deal with him any longer. johnson declined to back track, and would not commit to keeping him in his job.
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u.s. senators seeking to punish saudi arabia for the death of jamal khashoggi and its wider human rights record can deny members to the -- passports to the senate -- visas to the members of the u.s. saudi royal family. it is designed to put pressure on the crown prince, although he would not personally be denied a visa, since heads of state and the saudi ambassador would be exempt. global news, 24 hours a day, on air and at the top on twitter, powered by monday 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thanks very much. let's check in on the markets with sophie kamaruddin. sophie: we see a move higher across assets. stocks being led by the cospi. another soft read on the exports and the ongoing traits bet. chipmakers are leading, up nearly 3%.
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the target was raised on a shifting strategy to deal with the export curves. the korean won is jumping nearly .5%. the face of a weaker greenback. traders are positioning for further decline. three rate cuts from the fed by year's end. the euro is stronger. the nikkei 225 is adding .10%. the topics is helping its three-day decline. over in sydney, asx 200 has climbed above 6700 points, closer to a record high. we are watching bandai namco in tokyo. this stock is set to surge after it was selected to replace toyota, a surprise, given that there was another likely candidate. they fell 11.6%. shery: let's now turn to travel. hong kong-based startup that helps with bookings and
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information, they have investors including goldman sachs and softbank vision fund. it aims to attract more users in the u.s. and europe while maintaining growth momentum in asia. joining us from hong kong for an exclusive interview is the cofounder and coo. he is is in town for the rise conference. great to have you. we continue to see the biggest headlines around the world being trade tensions, whether it's the u.s. and china, or japan and south korea. as this had an impact on your business, whether it comes on any change in tourism behavior? especially in hong kong, with the mass protests. >> thanks for having me. we have seen some impact from the long-haul travel. the good thing for a child company having a global network, we will see travel shifting their behavior but her to sing booking patterns. in china, we see them going to
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southeast asia, especially thailand. with korea and japan, vietnam is becoming more popular. to thek they are moving southeast asia region. hong kong protests, we have not seen much of an impact. it has been well-received in southeast asia and probably. we see travelers coming. shery: are you seeing any decrease or any impact on number of travelers? >> not exactly. tovelers are still very keen explore. partly because asia is still emerging markets. southeast asia is really striking its purpose with outbound travel. 135 million have gone out. we see strong momentum. the momentum is definitely being concentrated more within the regional travel, within the asia-pacific.
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expanding looking at into more countries? >> absolutely. we started with in hong kong and grew in asia-pacific. since last year, we expanded into europe and the u.s. we are seeing strong momentum between aipac and europe, and vice versa. running into the tokyo olympics in 2020, we will see more people traveling from the west, especially japan. than you have raised more half $1 billion in five financing rounds. do you have plans for more? is in the middle of fundraising as we grow, especially into a global player. most important, going to users and services. this year, we plan to double down in aipac, especially in japan.
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the tokyo olympics coming up, there is much more that we can do. at the same time, we see great opportunity in the global markets, including europe and u.s. since our expansion, we have a team of about 60 people, and plan to expand to over 100 people. shery: do your plans include acquisitions? >> we are opportunistic for the acquisitions, both from upstream and the traffic perspective. for the time being, strong momentum continues with our regional expansion. .e put more within our own team right now, we have about 1200 people across the world in 20 offices, mostly in aipac, but expanding to the u.s. and europe. shery: you see a lot of success in your mobile first strategy. any ideas for a new product or anything we should be watching when it comes to klook? >> es.
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we have gotten strong momentum growth on mobile. traveled looking for spontaneous type of bookings. we're the only ones to power information so that you are able to book instantly to the attractions or participate an experience right away. momentumw, we see working with our partners. digitize shangri-la to their hotel concierge so they are better able to serve customers, as well as allowing customers a much wider choice as they come into their destination. paul: you said before there might be plans for an ipo in the medium-term. can you define what you mean? what is the timeline? funding now, with the done over the last few years,
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over $500 million, we are well-funded. for the moment, there is no immediate plans. however, we are opportunistic. be aware of the opportunity for the ipo and raising more funding. in the meantime, private investment will be our top priority. klook coo and cofounder, thank you very much. don't forget tv . catchn watch us live and up on past interviews, as well as any of the securities or bloomberg functions we talk about. you can become part of the conversation. send us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪
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shery: this is "daybreak: asia." i'm shery ahn in new york. paul: i'm paul allen in sydney.
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taking further steps to open up its $44 trillion financial sector are to the world, having announced earlier plans to remove limits on a shift in the bank, and scrap size requirements for firms that are onshore. let's go to rich beijing and our china correspondent, selina wang. selina: i'm here at the off the record i'll of hosted by the national committee on u.s./china relations. i'm with the managing director of cicc, and vice president of economics. we havet 18 months, seen reforms made by the chinese government to open the financial sector, scrapping ownership limits on local banks. how do you see this impacting you? how the you foresee the competition playing out? >> we are the first joint venture investment bank. we started in the 90's, 1995.
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we -- i think we are the most important china-based international company. we have been covered with major, international banks. goldman sachs and others. we are in the chinese clients, international clients. the way we have been facing competition, working with collaborators, our clients, we are confident that we can do well in this new way of china opening up a new reform. selina: we've heard a lot of criticism from ceos about the pace of this reform. do you think these changes are happening fast enough? i know you speak with chinese regulators, as well. >> some of the clients want to push you faster opening up. the chineseeve
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economy is getting ready to push for a major around of faster opening. most recently, the chinese prime minister made this announcement in a way that china would have its reform in one year complete. by the end of 2020 instead of 24 s 2021. i think we have seen action. we are happy that reform is opening up. selina: how do you see the opening up of china's markets including the bond investment markets impacting investors? will the medium-term, i see that we have had more inflows into china, especially as msci gradually raises rates on china. 5, 10, 15, 20%. year,k by the end of the
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we are going to see an additional $80 billion into the equities. there's also a lot of international investors into china. bump in the about a international space, the chinese bond is probably more interactive. just came back from attending the high-level conference, the interest rate is more or less zero. in the u.s., somewhere around 2%. in china, the rate is much higher. i also believe that given the other major central banks, and the federal reserve, the ecb, the federal reserve getting ready to cut interest rates. the ecb getting ready to do some further easing. i think in a way that the renminbi is standing in a good
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position. that would make the chinese bond more attractive. shery: can china's monetary policy in the midst of the global news we have seen, maybe the ecb, the fed easing rates? how do you see the pboc responding? been --hina, they have on one hand, continuing to push for deleveraging. using monetary policy, financial facilitate the financial sector to deleveraging. that is one policy line. stability., also, the supported rules. changingn light of the global environment, the federal reserve getting ready to cut interest rates, also the ecb. i would not be surprised the
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next president of the ecb will continue pushing for more easing, probably even more than the current president. a new prime minister not only for china, but for the whole emerging-market central banks. you have to go out with the global yuan. selina: chinese officials continue downplaying the further aggressive easing and stimulus. how do you think the economy has responded so far? 2 policyaid, there are lines. they are always a trade-off. hand, china is pushing for deleveraging, instead of policies. including a steady monetary policy. monetary policy, like other policies, always needs to take into consideration the changing global yuan.
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it means the other major central banks are getting ready to ease. that creates new conditions. selina: after a terrible 2018, chinese markets have improved. what do you see as the equity catalyst? q1 this year, the chinese equity market had a meaningful rally. towards the end of the second quarter, there was moderation in that area, and some correction. summertime, the market is always well. as the fed is getting ready to i think the rates, global environment for equity markets will improve. that will also help the emerging markets space. i believe it will also provide support for the chinese equity market. selina: we have been watching the launch of the china tech
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board. how important is it to building china's tech industry? are you worried it can be sucking liquidity from other markets? >> the shanghai tech board is very important. it is the major milestone in china's equity market. -- a newreason i think board is going to provide a new platform to raise capital and do reform. i think it is more important than equity
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potential summer hits that may have come to the rescue have been canceled with no explanation. let's cross to dave mccombs. is this a temporary dip, or new reality for china's movie business? >> this can well be a new normal for the industry. it is under a lot of pressure. it is not just -- this year they have been hit hard by the censorship. there was a chilling industry, the tax evasion scandal. a lot of investors backing films in this kind of market. going ahead, there's also all kinds of competition.
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you have a lot of streaming, competition coming in. video games. there's a new reality globally for the movie business, which is that they do have these in home, video on demand competitors. it is very tough going with that. it can be that the go-go years are done for china's film industry. since 2011, box offices china.led in and that is huge growth. it seems those days can be passed. let's not forget what william goldman famously said, nobody knows anything about the movie business. that is certainly true. you have a situation where another blockbuster hit is always just around the corner. it can at least change the annual total and you can see some growth in the box office. that given these trends, it is clear that you will not see the kind of 20% and double-digit increases every
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year people have been expecting in china. shery: given those increases, people are expecting china to overtake the u.s. as the world's biggest movie market. will that still happen? >> that is in doubt. not only has it been the first half. box office is down 3.6%. the summer hits that could rescue the year are not forthcoming. there's been censorship, big potential hits. it does not look good for china overtaking. keep in mind, at the same time, the u.s. box office is down even more. it was down 10% in the first half. ironically enough, there can be a case where china box office does overtake u.s. this year, but it would be because the u.s. declined even more. shery: thank you so much, our asia conglomerates editor. let's get a quick check of the latest business flash headlines.
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deutsche bank head of fixed income has a short staff that their jobs are safe. sweeping cuts of 18,000 positions around the world. told the banks moved to resize in debt trading operations and it will not lead to a dismissal. one day earlier, they announced to quit equity sales and trading as part of the ceo's overhaul. paul: hong kong game developer valerio is teaming up with amazon for a new "lord of the rings" video games, that will be free to play. they will handle marketing and operations in china and taiwan. amazon will cover the rest of the world. amazon studios is also working on a "lord of the rings" tv series in an effort to boost interest in its prime membership streaming service. shery: american airlines is the king of cancellations, according to the wall street journal. it says the carrier cut 7.5 thousand fight in june. 4% of it scheduled for
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operations. long beyond the jetblue and united. americans hit by the 737 max 8 rounding and has embroiled in a lawsuit against mechanic unions, accusing them of slowing work. theets across asia in green. let's get a preview of what to watch. sophie: let's get a quick check on interbank rates. one month rate falling to a ,hree-week low below 2.5% accompanied by softening of the hong kong dollar. it is the worst. set to snap a four-day decline. given the dollar interbank rates remain at premium. that spread is anticipated to shrink further as tightness in the cash market eases more as a large ipo. price this is set to thursday. a quick mention of stocks to watch. .hinese airlines go positive accelerating to more than 12% in 2019.
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goldman raised air china and china eastern to buy, with valuations looking attractive. morgan stanley has cut future line development to equal wait for the price tag at 1175. this in the wake of the arrest of the company's chairman. over the past year, up about 8.3%. paul: thanks very much. we do see markets higher at the moment in australia. we are up by about a quarter of 1%. kospi leading the way. that is it from "daybreak: asia." our markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. bloomberg markets the china open is next. this is bloomberg. ♪
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dara: -- public, itr did go did go down by 11%. >> i love how this interview is starting. >> how long will it be where there is no driver's? then robotsr thing alone or humanz alone is robots and humans working together. >> someone asked you to interview as the ceo of uber? at first, i said, no way. mepeople would not recognize if my tie was fixed.

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