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tv   Bloomberg Daybreak Asia  Bloomberg  July 11, 2019 7:00pm-9:00pm EDT

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paul: good morning we are under an hour away from the global opening. ♪ yousef: jerome -- paul: jerome powell confirm saying it is at a good rate and he has the tools to keep it there. president trump turns up the heat on china as trade talks get back on track.
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investors await the final pricing for the asia operation. they hope the chinese market will help drive down debt. shery: let's get you started with the quick check of the markets. close of the thursday session. reaching record highs with the doubt surpassing 27,000. s&p 500 very close to the 3000 level. we have financials and industrials leading the gains. we got the tweet earlier in the session from president trump saying china is letting us down. bit.took markets a little they were able to recover as we are focused on chair powell's second day of testimony talking about the fed having room to ease and ties between the unemployment rate and inflation. yields have 10 year
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reaching one month high as we got u.s. inflation numbers coming in the hotter than expected. this friday we are facing a modest retreat in asian stocks after a two day gain. .hares flipping at the closing chinese trade headlines the agenda which comes after trump complained. malaysia,e gdp plus japan, and india. theill be watching for japan-south korea talks on export curves. japan said on thursday it expects -- doesn't expect any sales to be hurt. the hong kong ipo of its asian is 11local reports a it times oversubscribed with 44 billion hong kong dollars worth of price lockup. let's get a quick check on bond markets. 10 year yield adjusting as much as 10 basis points.
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and jcp features having a further retreat. one contrarian from franklin templeton said treasuries can jump 3% to year end. paul: let's check in on the first word news. >> fed chairman jerome powell has reiterated that policymakers have room to cut rates. a link between inflation and unemployment has been broken. on the second day of testimony he stressed the u.s. economy is in good shape and the fed will use our tools to keep it there. they say at least a quarter-point cut in rate. central banks around the world are seeing weakness everywhere and they are also providing more accommodation. we have signaled we are open to doing that. you are seeing that in the curve.
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you are seeing that embedded in the united states interest rate curve. >> house speaker nancy pelosi says she is committed to raising the debt ceiling. saying there must be no doubt about the credit of the usa. theral funding expires on first, steven mnuchin says he wants congress to increase the bar before the six-week reset on july 26. a powerful weather system in the gulf of mexico may put 70% of u.s. lng exports at risk. tropical storm barry is churning towards louisiana threatening facilities. surgedn lng exports have with the three plants coming online since december. people living on the coast are bracing for potentially the biggest storm since hurricane katrina. president trump has abandoned
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his quest for a citizenship question on the u.s. census. he will now seek the information through other means. cities, counties, states, and immigrants rights groups challenge it, saying it could stop them from responding. the latest opec forecast says the oil market faces longer and tougher challenges. it estimates it is producing -- barrels$1 million more than will be needed next year. they say it will grow more than twice the anticipated global demand. day onnews 24 hours a air and on tictoc on twitter. powered by more than 27 hundred journalists and analysts in 120 countries. this is bloomberg. today,to our top story
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president trump is renewing his attack on china. just as talks get back on track and beijing prepares to release trade figures. he is complaining china has enlisted american farm products. editor sarahade mcgregor and our china correspondent selena wang are watching this hour. president trump claimed this was a big win for him. we are not seeing china by more, they are buying less, if anything. trump-xi meeting we didn't get a lot of details. one of the things he told us was that china had apparently agreed to buying more agricultural goods. that is sort of the smallest point that the trump administration is trying to deal with right now. things like state subsidies, the harder issues.
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this would be a win for farmers. that is a politically sensitive group for trump as he heads into reelection campaign. as you mentioned, the data shows dipped -- prices have purchases have dipped since the meeting. we have trump questioning himself whether china is committed to the purchases. shery: every time president trump has been very optimistic about progress in the trade talks, the response from china has been pretty measured. what are they saying about the agriculture goods? we are hearing some misalignment. on the china side we are hearing they claim they didn't make any specific commitments and that this is contingent on how the talks progressed. bloomberg reported several weeks ago they were considering this as a goodwill measure. are alsome time we hearing from the ministry of commerce here in beijing that talks will restart.
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but on the basis of mutual equality and respect. the assumption is that when trump makes tweets like this it thousand help that cause that china is hoping for to be on this level playing field. despite some of these early indications that the phone calls are starting and negotiations may continue, there is a lot of pessimism here. they really see both of these conditions of the countries hardening. brokeally after talks down and they are still on disagreement about who walked back on terms, why they broke down. agricultural purchases only being one of them. there is still tariff enforcement, huawei, and nobody will see how it law -- lasting deal can be made on this point. paul: we are awaiting some hard data out of china. fair to say we are not expecting great things really, are we? economists are expecting
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a pretty bleak picture with the decline in imports and exports. that will reflect the tariffs as well as weaker domestic and global economy. on the imports front that is expected to be down because many imports are used in the manufactured exports. on that side it has been very weak from early indications. fellxport orders component in june from the month before. weak external demand. we saw the pmi's of china's main training part -- trading partners fall. wepite the temporary uptick, did see that increase. the expectation is that would only be temporary as temp these -- companies front load before the arrival of new tariffs. the expectation is it will be weak all around. paul: just wanted to check in on the western front.
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taken another step towards taxing facebook and google, what could that mean for transatlantic relations? sarah: yesterday we had the big news that the trump administration was planning on opening an investigation into the digital tax on companies that would hurt the facebook and google of the world. today, france's senate passed that. the french president is expected to pass that. that would make france the first eu country but definitely not the last to pass this law. countries like the u.k., czech republic, all looking at this. the big concern is the idea that they will have double taxation. if you're based in the u.s. you are paying corporate tax and then you will have to pay more tax on your revenue across the other parts of the world. have back to the trump
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administration investigation, in this case they definitely seem to want some action. paul: bloomberg senior trade editor seen them -- sarah mcgregor and china correspondent selena wang. asia couldtations in price its hong kong ipo towards the low end of the market range. is there demand in the public market? shery: next, jay powell amplifies his rate cut signal, suggesting there is room to ease. this is bloomberg. ♪
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asia" this is "daybreak i'm shery ahn in new york. paul: jay powell continue to
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push the case for a rate cut during the second day of testimony on capitol hill. are we seeing other bond investors are starting to push back? kathleen hays the story. let's start with jay powell. he didn't really deviate at all from the message that a rate cut is coming. kathleen: the door is as wide open as ever. jay powell spoke to the he is concerned about a global growth slowdown. in large part because of uncertainty caused by the trade war. the link between unemployment and inflation appears to be broken. all these different factors, particularly around interest rates and expectations, maybe the fed has inadvertently kept policy too tight. >> the neutral interest rate is
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lower than we thought. i think we are learning the natural rate of unemployment is lower than we thought. monetary policy hasn't been as accommodating. we are learning all of those things. at the end of the day there has to be a connection. low unemployment will drive wages up and they will drive inflation. we haven't reached that point. of then: this is one linchpins for jay powell's arguments. cutting interest rates in july could be warranted. the fed president, john williams in a speech said the argument for easy policy has strengthened. again, backing up the fed chair. two other fed bank presidents indicate they are not as ready to cut as powell appears to be. not as much consensus around this as we think? kathleen: so many people said there will be a debate on july 30 and 31st. a lot of people are assuming
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powell has the consensus. the president of richmond said speaking at the rocky mount conference, a mixed view of the economy. he told reporters that he doesn't think there is a need for the fed to step on the gas. askedn michael mccabe about the message from jay powell's testimony. he said he thinks the message really hasn't changed from the message we got in june. let's listen. >> he said the same thing yesterday that he has been saying for the last month. guidancehave forward anymore on the memo. we are watching very carefully what is happening in the data. atare looking very much upside risk and downside risk. at this point we are little more tilted to the downside. kathleen: the president of atlanta also spoke today. he is skeptical of the need for july rate cuts. he thinks inflation numbers
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aren't as weak as have been saying. this comes after the cpi was stronger than people were looking for in june. shery: you see the fed chair powell turning more dovish and you get these numbers. kathleen: the monthly number was up 0.3%. this is very important. you see the year-over-year turquoise line. it is down to 1.6. the core cpi is the one that jumped to 2.1%. you have a very divergent picture. the stage forset a really terrible 30 year bond option. investors are just uncertain and don't want to load up on more 30 year papers. the price anden what it looked like and the actual price coming out.
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thise are saying maybe week, they are starting to hedge their bets on inflation. , our: thank you so much global economics and policy editor. capitalus now is kramer research cio, hilary kramer. we are talking about inflation. or strong.ery high it is still higher than was expected. we still haven't seen any run through because of the tariffs that were already imposed. the president not too happy with china. accelerate more than we expect? hilary: yes, if we have inflation like that it is a real problem for the federal reserve. their biggest concern is inflation. int is what the big elephant the room is. if you really think about it, it
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isn't being discussed. we have full employment right now. the jobs report came out better than we thought. powell had to quickly jump to a reason why we had to cut rates. it is a global slowdown, it has to do with tariff concerns. shery: where do you see inflation going and what is your expectations? hilary: i think we could go to 2.5% or 3%. rates, the fed can cut nine. that is still a moving target and i think what we all is see the main reason the fed is cutting rates is it would be too expensive to pay back all the debt. all is why we keep hearing of these excuses as to why we
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have to have these cuts. said, as long as we see rates low, what does it mean for me as an investor. that is my job. they should be investing in the financials. they are doing much better as the curb is deepening. the sort of expectation that this is where we are going and maybe a lot of this is built in. could goachs certainly back to the 200 $75 all-time high. see my favorite bank, fhp, which is first hawaiian, bond.ave a for -- 4.1% they are not so sensitive to rates. they really kind of own the market. as long as there is a lot of money cheap there will be a lot
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of borrowing on the commercial side and the individual side. expect these big investment banks to do great. wants to makeone their money. paul: if we look ahead to the fair to season, it is say that the expectations for the coming quarter are not particularly fantastic. i'm getting the message that you need to be very selective going ahead in 2019. hilary: we have to be selective and look at credit losses. what are the credit losses these banks are experiencing? also, what are their opinions of the economy? i want to know what jamie dimon has to say about the economy and i find there is a lot of depth to that kind of guidance that we get in the macro picture. we have to be careful here. as long as the curve is
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steepening, which is why financials were there today. we saw utilities tank. they are a bond substitute. now the expectation is that we are going to see rates go higher. look at what is happening with the 10 year. there are specific places. the question about being selective is a very good point. take a look at retail, for example. everyone is crowding into walmart. which is trading at 23 times years earning. you could own a company like big , a diversified, low price, markdown retailer trading around seven or eight times. name of the the game. there are great opportunities.
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you have to be careful when you see companies like procter & gamble or general mills. 52 week high, no. you have to wait for some of these to come down. of these are very price sensitive, commodity driven companies. it is all about being sensitive and careful. also trying to look for pockets of opportunity. facebook always seems to pull it out of a hat, maybe you want to be in some of these new ipo's. the nasdaq stocks or tech. i love chewy. the pet food online company. retailer but online really giving a run for their money to amazon. it is a stock pickers market. going forward you will not make
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it by being in nasdaq. paul: we will have to leave it there. thanks for joining us this morning. perimeter -- kramer capital research. daybreak,ition of bloomberg subscribers go to the terminal, also available on mobile and the bloomberg anywhere app. customize your settings so you are only getting views -- news you care about. this is bloomberg. ♪
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check let's get a quick of the business flash headlines. delta is boosting its profit forecast with lower fuel costs allow it to command higher fares. $7.25 perects to earn share above the initial forecast. ae increased estimate comes
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day after rival american boosted its own outlook, citing the same market trends. paul: worldwide shipments of personal computers raise 1.5% in the second quarter, lifted by businesses upgrading. the number oneto spot despite the ongoing trade war. more pcs and taking one quarter of the global market. shery: nike is going ahead with the new factory in phoenix despite local opposition to its decision to allow its controversial sneakers. it will generate 500 full-time jobs and investment of $180 million. the stake commerce authority welcome the move in contrast to previous caused by the governor. it pulled it-- so-called betsy ross sneakers. paul: coming up next, it is
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counting on demand from chinese as it prepares for the year's biggest ipo. we will expend how we grew into a blockbuster deal. this is bloomberg. ♪rg. ♪
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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. constitution to make kim jong-un officially head of state, adding the title represents the country to the latest duties he or is he had that she already has as chairman of the political party. they say it could help normalize relations with other world leaders. collection of titles is seen as evidence that he has founded off any potential internal threats. france is pushing ahead with a plan to tax big tech. they passed a bill to impose a 3% levy on global tech companies
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which have more than $800 billion in worldwide revenue, and digital sales of $30 million inside france. washington says it is examining the tax to see if it targets you --e companies, and as hinted has hinted at tariffs in the retaliation. >> we can and we should solve our differences without threats. france is a sovereign state. it will make its own decisions and carry on making its own decisions. fullina is throwing its support behind embattled hong kong leader carrie lam after she -- after protesters vowed to continue protests. she says the mainland trusts her to a quote "govern effectively in accordance to the law," china believes the hong kong police are capable of protecting public, and met violent protests were the result of foreign forces storing up unrest. president trump has abandoned questionpt to insert a on citizenship into next year's u.s. census after being defeated
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in the supreme court, and will now seek information through other means. immigrant rights groups challenge the administration over the citizenship question, saying it could force immigrants and noncitizens and stop them from responding. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am basically good for -- i am -- gupta. this is bloomberg. ♪ paul: a check on the markets now. new zealand has been trading for about 90 minutes, coming off earlier declines, now off a 10th of 1%. features in australia. lower by 4/10 of 1%. nikkei futures. , kospi futures also pointing lower as well,. it looks like a fairly soft and asia. week here in let's get more on what we should be watching as we went up for the final trading day of the
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week, and get over to bloomberg's global markets editor, adam haigh. anything coming up that could move the dial in what has been a fairly lackluster and to the week? have china trade data which could give clues to investors about pboc policies throughout the remainder of the year, and any remaining fallout from u.s.-china trade tensions. but really, it is a holding pattern until next week where the earnings picture becomes front and center especially in u.s.. and also in the the earnings story and the downgrades we have been seeing, that ongoing trend lower for expectations, for earnings, becoming even more tested, given the policy framework in the u.s. is so uncertain. even though do july cap is priced that the july cut is priced into the markets. the onus now is being put back
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on companies to provide investors with some of the fundamentals as to how, the business is developing as the trade war continues, and how they look forward to the next 6-12 months in this ongoing deterioration we are seeing in global growth. whether it is a real underpinning to the revenue we have seen in valuations with equities, how they have expanded significantly in the first part of 2019. and whether we can expect something similar to happen in the presumably continuing, looser policy from global central banks. shery: at them, we numbers out of the u.s., june cpi numbers coming in hotter than expected. but one macro fund is still expecting three cuts in 2019. why is he so sure this will pan out? adam: i think this speaks to the uncertainty that markets have on fed policy going forward. july cut isthat
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reasonably well priced into markets at this point, but there is uncertainty as to what happens in the ensuing months. whether you do indeed get an aggressive move lower. ,learly, as this chart shows the positioning from speculators in the market is still pretty strong. the folks over at that research company say there are clear, the fed that bonds, and through its cuts of 75 basis points or so over the next six months, continues to store up for the problems for next year and going into 2020. the fragility of the u.s. the getsomy really exposed later on in the cycle and that is how they are seeing things play out. into amately leads them made to duration, not too far to on the bond curve, wanted position on the 3-5-year exposure of u.s. debt. shery: adam haigh, thank you. .hery:
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the world's largest brewer is expected to set the ipo price for its asia business and is on track to be the biggest public debut this year. sophie kamaruddin has more in hong kong. the company has dampened pricing.ons around what is the latest read on investor appetite, sophie? sophie: as we know, there books were open early into the roadshow, and it is being reported that the retail trench is now 11 times covered with about $44 hong kong billion dollars. so perhaps we could expect pricing in the $40 per share zone, below the market range. paul: sophie -- isry: even if the ipo price in the lower end, it would still be the biggest in the world this year. it is expected to use
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the proceeds to lessen the debt. the deal is viewed as a credit positive event. theling the net debt after acquisition, that levels have remained stubbornly high as times.4.6 but with the at the oh exercise, that could help management hit their medium-term leverage goal 2020, which by the way the company had said was not contingent on the listing of its asian unit. inclusive of the asian sale proceeds. , abn amro calculates the company could reduce leverage to 2019, enough for the company to avoid downgrades by credit agencies which currently have them on negative watch. paul: the cash raised from all of this could also be used for m&a. are there any potential markets of interest for this company?
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sophie: the fast-growing asian market is enticing. market share in the region for this company is up 13% half its global share,. we could see a revival in deal flow. ab inbev ceo has said japan and southwest asia will be open to many opportunities in high-growth markets like china, who have great remember potential. plus, the company will want to bolster its foothold against rival heineken, but keep in mind, the key target is a de-leveraging. there may be little scope for a cash-based mergers & acquisitions, paul. much.sophie, thanks very coming up, president trump accuses china of not keeping its g20 promises could. this put trade talks that risks? this is bloomberg. ♪
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paul: this is "daybreak asia." i am paul allen in sydney. shery: and i am shery and in new york. we will get insight on how china's economy is faring during the trade war with trade data coming out on friday. one analyst tells us he is confident china is doing what it can to support better quality growth. >> the government is doing a lot to improve the polity of the growth and to take care of the people. china is investing more in the green economy. in renewable energy. in china is doing more to take care of the low income people, low income areas. because, you see, some people say, china is the beneficiary of globalization. no wonder you embrace globalization. but some other countries have suffered set next. this is certainly unfair. china, see, even in
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growth does not mean the same thing for everyone. domesticlly, the policy should take care of those people who may not be so fortunate to take advantage of the vast wealth. this is what jenna is doing to improve the equity, the social equity is important. haslinda: we have a prolonged u.s.-china trade war. what do you deal as the chances of a deal, and also, what compromises can the two sides make to make a deal? >> i think the chinese did not talk about the trade, it is a dispute. [laughter] dispute. now, since i am in the international institution, i am no longer part of the chinese government, i look at this think,ment, but i also
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like you could see recently after the meeting between president xi jinping and president trump that both sides need to sit down and talk, because only by working out differences, trying to understand each other better, and trying to look at the issues from the perspective of the other side, publicly it could be better for them to understand what are the real issues, where you should compromise. leastople believe, at there are a lot of chinese who believe cooperation and coordination with bring the situation best bring a win-win situation to both countries. so i remain optimistic. i know there will be differences between the two countries with very different historical and social backgrounds. ,ut over the last four decades i will say, there are lots of positive things between the
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united states when they work together. shery: that was the president of the asian infrastructure investment bank. you can watch that interview in full and the conversation with liqun airing at 2:30 in the afternoon in sydney. we will also bring you an exquisite interview with indonesia's minister of development and planning later on this morning. it will tell us how southeast asia's largest economy is faring amid the trade war. shery: thanks. our next guest says of the trade war is accelerating shift in supply chains across asia and vietnam could enjoy some long-term benefits. joining us from hong kong is chris rogers, research analyst at angie lau think, is up -- at panjiva inc.. thank you for joining us. we are just wondering, what evidence have you seen so far of vietnam benefiting from the trade war?
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chris: good morning. what we have seen from the u.s. import data both in terms of the seaborne shipments information asilable on our platform well as microeconomics of districts is that vietnam has been seeing an increasing exports of around 25%-30% per month so far this year. it has really come at the expense of exports from china. dollar for dollar analysis, you looked at 400 different products and found that vietnam was accounting for around a have to three-quarters -- one half to three quarters of the switch from china. it is really gaining. quite significantly. i think the other big piece of evidence we have seen is that the prime minister of the nm is actually worried about the rising trade surplus that vietnam has with the united states, so this is moving into the political realm as well as the economic and supply chain realms. paul: you listed phones,
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furniture, electrical cables, some of the things vietnam is picking up from the board left by china. but he also mentioned the trade surplus, if it continues to build, how long will it be before vietnam and's up in the sights of the u.s. government? chris: it could be quite soon. we have seen president trump already communicate admittedly via twitter rather than via1 policy that he does consider vietnam to be one of the unfair parties dealing with the united states. that change around could happen at any time. we have seen the president can be quite mercurial in terms of calling for tariffs to be imposed. it could be as soon as the end of this year. i think certainly one of the markers to watch is the trade war with china, if it doesn't make progress, this is a president who has to show success in his trade negotiations. so if talks don't work with
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china, vietnam could be next in the crosshairs. i think the other data points to watch are the overall u.s. china deficit, this is very much the president's key metric to judge whether his trade policies are working or not. when you look at the trade increases have seen, and we have seen the trade deficit under the president is nearly one quarter higher than it was under the one ofus administration -- the biggest contributors to that has been vietnam. so the economy is very much benefiting from the increase in exports but it could come back and bite them, as soon as the end of this year. shery: we have already been hearing about the u.s. imposing tariffs of more than 400% when it comes to the imports from vietnam. but of course, vietnam is not the only target. we have seen president trump well.g about india as how successful has india been. in taking some of the market share when it comes to the supply chain movement? chris: india has not really been
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as successful as vietnam, malaysia and the philippines. i think one of the reasons for that that the indian economy is very much more domestic-focused rather than export-focused. we have seen isolated benefits, for example, exports of iphone xr starting in india. but those are going to europe rather than the united states. so india's exports are growing, but not to the u.s.. one of the challenges prime minister modi faces after the elections is performing trade policy to be more open. so far we have had things like the "make in india" transitions which have drawn the ire not just of the united states but of government. . india wants to join the regional comprehensive economic partnerships, the rcep, that is being negotiated at the moment. they would open up china, japan, south korea, but so far, india
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has not been a big beneficiary that. switching away from and we have seen most companies who have talked about switching out of china, talked about switching more towards taiwan. the latest being nintendo, the videogame manufacturer, who were looking to shift their production partly to china. i think the diversification of supply chains, when we look across the economy with our research, what we are seeing is companies not just going to one country, instead, we are going to have stuff that goes to the u.s. market no longer come from china, and exports from china going to europe and all the rest of the world. shery: interesting that you mentioned the momentum on rcep, especially after we saw the u.s. withdrawing from the tpp and momentum.ment losing does it make a difference for companies when it comes to make decisions on their supply chains? chris: i think it does. i don't envy any of the ceos on your shows when they are asked,
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what are you going to do about the trade war and about changing supply-chain conditions globally? because there is so much that is in flux at the moment. rcep is proving to be very slow. we don't just have the kind of oll to think about, we have that japan and south korea issued to think about and they have been having challenges as well. i think each company is looking do.t what they are going to i think the winners will be the company's who take a proactive stance and aim to accelerate their existing plans, rather than those who are waiting to see what happens. shery: accelerate diversification efforts. chris rogers, research analyst supplynjiva inc, the chain research unit at s&p global market intelligence. plenty more ahead on "daybreak asia." this is bloomberg. ♪
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asia." is is "daybreak i am paul allen in sydney. shery: and i am shery ahn in new york. this company is taking a hit from the japan-south korea trade dispute. the company's earnings missed estimates in part due to the tensions. but the cfo says the impact will be short-term. let's get the details from burke japan and korea editor that from our bloomberg japan and korea editor. how does the company characterize this dispute? >> basically, he said the impact on that they were seeing some impact from the dispute, but that it was likely to be short-term and that they remain committed to the korean market. he was repeatedly asked what he thought about the dispute but unsurprisingly, he refrained from commenting further on the dispute itself, given that it is a government to government issue. paul: we are seeing a corporate impact on other sectors
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as well? kazunori: aside from the companies directly involved in production and the receiving end , the impact has been limited so far. very close to nothing so far. the companies that have exposure to the korean markets, consumer companies or for example, the travel agents, have basically said there hasn't been any drop. but they are still monitoring the situation. obviously, if things heat up, it would not be surprising to see an impact. but again, it really depends on the development of the boycott. paul: alright, bloomberg japan editor,, managing thank you for joining us. let's get a check on the bloomberg business flash headlines. air china is strengthening ties with airbus, buying 21 buddy
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jets to be delivered over the next three years. the deal is another coup for airbus in china after the president xi jinping see -- sealed a deal for 300 airplanes during his trip to paris in march. shery: tencent was a bigger slice of the smartphone profit hike. it is rushing suppliers to boost the cut of revenue in games sold platforms. the social media giant is seeking as much as 70% of the sales generated from the games up from 50%. they would bring it in from what is sees from apple's ios store and google play. paul: interesting news for basketball fans, 22% stake in the nba's oklahoma city thunder is up for grabs. we are told the sale will be managed by a boutique investment
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bank. the stake has been held by the estates of the chesapeake energy co-founder aubrey mcclendon, who died in a car crash three is ago. we are told the franchise is worth more than $1.5 billion, according to forbes. am a south korea and australia come back online at the top of the show. let's preview the market open. sophie: appetite is petering out, and stocks could stop a five-week run unless the mood shifts. trade tensions are back. ahead on the menu. on the eco-agenda, industrial output from malaysia and japan, plus singaporean gdp and retail sales. and later today from india, we get inflation and factory out what along with earnings from infosys. the rally also losing steam with aussie and kyrie jumping early in the session, tracking the overnight jump we saw in treasuries that moved the 10-year rate toward 250 basis points after a hotter than
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forecast u.s. inflation report. one contrary is an analyst at franklin templeton, she is forecasting 3% at your end. but with a potential start of an easing cycle this july, citibank aspects that could drive yields lower. citibank is forecasting three rate cuts this year from the fed. paul: all right, thanks very much, sophie. plenty more to come on the next hour of "daybreak asia." singapore's economic data may be down, forecasts show gdp growth may have slowed in the second quarter. we get a look at the data at the top of the hour with reaction from the currency as well. we also bring you up-to-date with the latest news and a check on the markets as we count down to the opens in japan, south korea, and here in australia. features currently pointing somewhat weaker. stay with us. this is bloomberg. ♪ wanna take your xfi to the next level?
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paul: good morning. asia's major targets are about to open for trade. shery: and good from new york. sophie: welcome to daybreak: asia. ♪ paul: this friday, jerome powell says the u.s. economy is in a good place and has room to cut breaks. however, some top officials do not agree. trump turns up the heat on china just as trade talks get back on track.
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he accuses china of reneging on promises made during the g20. hopes the chinese market will help cut down debt. shery: breaking news out of singapore, year on year, the economy grew in the second quarter 0.1%. this is a big slowdown from the previous order growth of 1.2%. putmates of analysts have growth at 1.1% year on year and we are now seeing it only grew 0.1%. when it comes to the quarter on quarter annualized rate by the economy -- the economy contracted 3.4% instead of a slight growth. it is also a contraction, the sharpest contraction in seven years when it comes to the quarter on quarter numbers. we are seeing weakness in the manufacturing sector, which contracted 3.8% on a year on
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year basis. this has been exacerbated by out engineering in the clusters, according to singapore. there has been positive growth in construction and service industries but not enough for gdp numbers to be more positive. we are expecting the monetary authority of singapore to have an october review. in the meantime, the authority and trade ministry have been reviewing the 1.5 percent to and we arerecast seeing the growth rate has slowed to 0.1%, which is a huge miss and slow- down. with a reaction to the numbers. on j.d. bees we have a 10
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year yield and we are seeing a move in u.s. yields this morning overnight when it hit 215 basis points. , the kospi opening. the korean won is trading against the u.s. dollar. -- we are seeing yields on the move. ozzie jumping 10 basis points. the singapore dollar is on the move after the gdp numbers. you have std trading below. a little pop against the greenback.
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discuss the gdp report julie mccully. mccully. -- wretched set of numbers. the sharpest contraction and about seven years according to the quarter on quarter seasonally adjusted rate. his construction a bright spot? -- is construction a bright spot? what is your take away? >> it was a surprisingly weak data point. economy is deeply in credit for the original supply chain. 6% of imports are goods. it is adversely impacted by global demand weakness, ongoing downturnsions, and the
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in global electronics cycle, which in turn reflects weakness ad demand in china as well is longer replacement cycle. this trend is reflected in the manufacturing sector weakness. paul: a very sharp contraction this quarter. pute get another, it would singapore into a technical recession. what do you think are the odds for that? in one of the omens for the areal economy -- and what the omens for the global economy? >> if they see another contraction we will likely see fiscal and monetary stimulus. singapore is in a reasonably good spot to stimulate the economy, if needed. shery: what are you expecting
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from the monitory authority when they have their october review? wait untill likely october. it is not that far away and it is good to see what the federal reserve does in the u.s.. we have seen a shift across asia pacific that central banks have moved to a monetary easing place, so i would not be surprised if that happened in singapore, as well. shery: and this has a lot to do with what is happening in china. we are expecting trade numbers any time now. what are we expecting a terms of their export numbers as we continue to see this weakness around their neighboring countries? see furtherikely softness in china's export numbers, even a contraction in the u.s. dollar terms. the export sector in china, like
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in similar, is adversely impacted by trade tensions with the united states. if you look at the data in detail, china's exports to the but are week -- weak exports to the rest of the world have done much better. -- a lot over the past year or so. paul: you mentioned the monitory authority of singapore has capacity to ease. what about china? we are expecting great things for the trade numbers, the gdp potentially next week as well. what sort of stimulus do you expect to see coming from the pboc? will lowerthey requirement ratios further and we will see further targeted stimulus that promotes lending to certain areas of the economy. and we will likely see stimulus
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as well. so i think even though the chinese economy is under downward pressure, the government will stay committed to fiscal growth target between 6% and 6.5% and stimulus economy accordingly to keep growth down around those numbers. paul: thank you so much for a roughus to go over set of gdp numbers out of singapore. let's get to first word news with red cut in new york. policymakers have room to cut -- onat the link between a second day of congressional testimony, it was stressed the u.s. economy is in good shape and the fed will use tools to keep it there. investors fully expect a
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quarter-point cut and rates at the next meeting at the end of the month. >> central banks around the world are seeing weakness everywhere, and also providing more accommodation. we have singled -- signaled we are open to doing that, and you ,re seeing that in the curve embedded in the united states interest rate curve. >> trump has abandoned his attempt to insert a question on citizenship in the 2020 census after being beaten in the supreme court. he will now seek the information through other means. are challenging the administration over the citizenship questions. trump: i am here to say we are not backing down in our effort to determine the citizenship status of the united states population. i stand before you to outlined
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new steps my administration has taken to ensure that citizenship is counted so that we know how many citizens we have in the united states. makes sense. nancy pelosi says she is committed to raising the u.s. debt ceiling, saying there must be no doubt about the credit of the usa. federal funding expires october 1 and treasury secretary steven mnuchin has said he wants congress to increase the bar before the six-week recess july 26. the policy center says there is a significant risk. a powerful weather system in the put exportsco may at risk. tropical storm barry is turning and exportsiana, have surged as new terminals start up. people living on the coast are
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bracing for potentially the biggest storm since hurricane katrina. china is showing support behind carrie lam as protesters vowed to continue protesting. -- one competition says german said china believes hong kong police aren't capable of protecting the public and violent protests are flaring up unrest. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: still ahead, a be asia unit is poised to go public in hong kong. tracyl ask tracy coup -- ku how budweiser would fare in a
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chinese market. this is bloomberg. ♪
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shery: this is daybreak asia. a quick check of how the asian markets are performing early. new zealand is looking flat. nikkei is also looking flat. in australia, we have trading for 15 minutes. the asx up 4/10 of 1%. the kospi is flat and south korea. it looks like a quiet end of the week. let's get over to sophie in hong kong. sophie: not looking quiet when it comes to tokyo. losses rising 4.5% after first quarter earnings beat estimates as food sales climbed at
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convenience stores. downside, electric sliding this morning by as much as 5.2% amid estimates. orders tumbled 17% year on year as the company faced difficult conditions as orders from china fell 22% on a yearly basis. fast retailing is leading this morning. weakness in japan overshadowing a strong showing in overseas markets, particularly china. the cfo saying they expect sales to be hurt from cuts from south korea. shery: let's talk about the spat between south korea and japan. officials from the two countries are especially -- expected to hold talks friday.
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tensions have not been this bad in decades. there seems to be no easy way out. japanpan governor -- reporter joins us. is adamant that restrictions are nonnegotiable. so what can we expect from these discussions? what japanexactly has made very clear. the trade minister last week said when we can have low level official talks on this issue, but we are not negotiating, we are just going to explain the extra hoops you will have to jump through in order to import these materials. or putas restrict did extra controls on exports of particular materials and are saying they will remove south korea from a white list of countries that are considered safe and not to be connected to weapons proliferation. side wantsh korean
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these measures to be reversed and we can expect a tense meeting. paul: given the uncompromising stance, what are the chances in the coming weeks? >> in the near term, the chances are small. if you look at prime minister shinzo abe in japan, he is coming into another house election in a week and pull -- polls show that the public is behind him, including on measures of exports. and as for president moon and south korea, his presidential bid was partly based on pushing japan to really take a more contrite attitude over what is done -- what it has done during the colonial times in korea. so it would not be in his sister -- in his interest to take this
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on the line. and america is not playing the strong role it has in the past. in the past, you have seen public high-level officials telling japan and south korea they have to work together. with the trump administration, we have not seen that happen. so there is no impetus toward a resolution at this point. from: we keep hearing local south korea media saying the u.s. is offering have loyal -- high-level talks on trade. we do not know what that means. ,ould we see the u.s. traditionally, they have played a mediator role, will they come in and help out? >> it could possibly happen, but what we have seen is the trump administration has not taken the same attitude toward this that previous american administrations have. treated allies as
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important as in the past. so whether this will become a high level issue for the u.s. remains to be seen. the points ofand, japanese are making is these trade restrictions are perhaps not as disruptive as they been made out to be by some people. if south korean companies jump through the hoops, they should not have a problem, if they are legitimate companies importing with substances they have always imported. government reporter, thank you for joining us. you can get a write up of the stories you need to know to get your day going in today's edition of daybreak. subscribers go to tv on the terminals. and you can customize settings so you are only getting news on the stories you care about. this is bloomberg. ♪
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asia.this is daybreak i am paul allen in sydney. shery: let's get a quick check of the business headlines. worldwide shipments of personal computers rose 1.5% in the second quarter, lifted by businesses upgrading to the latest windows software. shipping 16% more pcs. --earcher gardner says volkswagen is expanding the alliance between two forms earlier this year. will fold their aia self-driving intelligence into the company.
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delta is boosting their public forecast, supporting travel demand, lower fuel costs, and committing higher fares. turnare now expected to $7.25 per share. the increased estimate comes one day after rival american boosted their own outlook, citing the same market trends. paul: nike is going ahead with a new factory in phoenix, despite local opposition from its decision to withdraw. the project will generate 500 full-time jobs. nike had pulled their so called ross sneakers. shery: and trump is tweeting at the moment, talking about facebook's upcoming
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cryptocurrency libra, saying, i am not a big fan of bitcoin and other crypto currencies. can facilitate unlawful behavior, including drug trade and other illegal activity. he says libra will have little dependability. this is interesting because it comes at a time where chair powell was asked several times during his hearing yesterday and he hadbout libra, and also talked about serious concerns about privacy, money laundering, consumer protection, and financial stability. we will see how facebook reacts in trading tomorrow. anl: indonesia's develop minister has answered at the rising global protectionism and u.s. china trade war. to them atr spoke
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the annual meeting and luxembourg. year, theve for this 5.3ection might be cut from two 5.1 or 5.2. but probably not higher than what we had last year, which was 5.7%. for next year, initially we are thinking 5.5%, but i believe we still have a couple months to come up with a better estimation for next year. 5.3% to say between 5.5% could be a possibility for next year. for this year, 5.1 to 5.2 is doable. >> what would you like see from bank indonesia to help boost
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growth? on the currency as their first priority. and i believe they have done something to give some kind of stimulus to the economy, aside from cutting the rate. probably, for the rest of this year, they might do rate reduction, as long as the global condition and federal resolve doing what they have done, so far, by stop increasing the rates. ? >> what do you view is the biggest risk for the indonesian economy? is it still the u.s. china trade war? >> i would not say the trade war is the biggest one, it is in the
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short-term, but medium to is more trying to read -- relocate investment in china to other parts of asia, including indonesia. based on our dependence to natural resources. havee last 10 years, we lain so much on natural resources. most of the time, it has been in our favor. but in the last few years, it is not in our favor. that is why i balance becomes a surplus. we shouldive years, reduce the dependence on natural into more of a role in the manufacturing sector. speak coming up, we will with a fund manager who was up
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113% in the first half of this year. his winning trades, that is next. this is bloomberg. ♪ ♪
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>> this is daybreak asia. singapore's economy contracted sharply in the second quarter as exports continue to shrink amid global slowdowns. in 3.4% that with a growth forecast of half of 1%. the reliance on trade makes it vulnerable to the tariff war's and deceleration in world growth. trump has abandon his attempts thenclude a question on citizenship in next year's u.s. census after being defeated in the supreme court. he will now seek the information through other means.
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immigrants rights groups challenged the administration over the citizenship question, saying it could stop immigrants from responding. trump: i am here to say we are not backing down in our effort to determine the citizenship, the status of the united states population. i stand before you to outline new steps my administration is taking to ensure that citizenship is counted, so that we know how many citizens we have in the united states. makes sense. >> france is refusing to bow to u.s. pressure and is pushing ahead with a plan to tax on big tech. a 3% levy on global tech companies, more than $800 million in world revenue and digital sales of $30 million in france. washington says it is examining and has hinted at tariffs in retaliation. should solve our
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differences without threats. france is a sovereign state and will make its own decision and carry on making its own decisions. >> the latest opec forecast for 2020 says the oil market faces longer challenges. they are producing half $1 million a day more than will be needed next year as the concert -- as the surge of u.s. shale threatens another purchase. korea has revised the constitution to make kim jong-un officially had a state, adding the title represents the country to the list of duties he has as chairman of the commitment. this gives new legal foundation and could help normalize relations with other world leaders. his growing collections of titles is seen as evidence that he has fended off any potential
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internal threat. haveean companies apologized after a rocket carrying equipment to the uae fell into orbit. smoothly but suffered a major anonymously several minutes -- major anomaly several minutes later. they are looking at the data and will open up an independent inquiry. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thank you. let's check at what is happening in the markets with songs -- with sophie in hong kong. sophie: apac bonds are falling. jumping and yields stocks.t -- and modest
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kospi treading water, up 1/10 of 1%. we have talks with japan regarding export groups. nikkei 225 has points to losses of earnings. check out the mov function on the terminal. call electric sliding after a tumble and orders drag on earnings. they are seen as a bellwether for japan and gives us a taste of a potential deployment analysts are expecting. bearishestors turning on japanese stocks, including blackrock.
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shery: our next guest is up more than 100% in the first half of the year. one of his winning trades, long treasuries over the past eight months. he is calling the 10 year yield nearly 1% -- 1.6% by year end. .his is august li glad to have you with us. we have seen yields spike with higher than numbers. tell us a little bit about your rationale behind expecting lower yields. seen many central banks in the world that mr. wiggling --further further weakening of the global economy. i believe the trade war between u.s. and china is a big factor and there is a lot of uncertainty where to economies
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that are very much intertwined, like siamese twins joined at the hip, and they started to hurt each other and there would be many unforeseen consequences. this has worried a lot of governments and central banks. therefore, we say the world is going to go softer in the coming years. financial conditions do not yet seem to be at levels where they would weigh on growth. this is when uncertainties are higher. persistent and higher in terms of absolute levels. allocated in anticipation of volatility. this has been proven in a couple
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months. octoberly in september, 2018. has come asing well. it has been able to carry us. paul: your positioning and large part has been betting against the feds. where do you see the fed heading next and will you continue betting against the fed? fundamentals have converged. the market has realized fundamentals are converging with the markets and we see that definitely, the fed is going to be more careful and more aligned with the markets. we will continue to position ourselves with the fundamentals, as always.
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that is where we are at the moment. paul: i am not sure if your strategy hinges on a resolution or not to the trade dispute between the u.s. and china. are sufficiently diversified across global basicallyo we have concentration limit. each country combination is only 10%. so overall, we are sufficiently diversified. definitely, there would be some effect if there is a breakdown of talks, there would be short-term negativity to overcome, but we are well diversified for the future. paul: what is your outlook for growth in china?
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we had some disappointing dmi. the outlook for trading later today does not look particularly good. what you expect to see happen? >> china, fundamentally speaking, is still quite strong. if the fed proceeds with the rate cuts, it will give ample ammunition for chinese policymakers to basically respond to any shots that may occur in the economy. there will be definitely some things in the short-term, but over the long term, fundamentals will dictate the course of the market. shery: august, thank you so much for your time today. from turn to the coverage idaho. with nedr caught up siegel to find out if he was involved in today's social media summit. >> we spoke a lot of time
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speaking with governor -- government officials all over the world to make sure they know how important the health of twitter is to us. that did not include being involved today. >> the numbers get spliced and diced different ways. the numbers have been fairly flat compared to where they were in 2017. but you talk about them being more valuable today. what does that mean? >> with a service like twitter, personalized, social, real-time, if you are only getting people who use the service once a month, you are not delivering value. onld like to measure value whether people use the service every day. bowlat is monetized the daily active -- monetized active daily users. that has grown between 9% and
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14% in each of the last nine quarters. >> how do you create that? fairly of myself as a average twitter user. how do you keep people on the site for longer, so you have the more valuable attention? >> keeping people on the site for a long time is not something we think about. we think about helping you find the things you are looking for quickly. we want you to come for all the things you may care about. the topics, events, politics, news, entertainment, something happening in your neighborhood. if we can help you find it quickly, you will come back the next time there is something you care about. reporter: talk about the health of the conversations. issues is the platform itself is very hands-off. you want people to say what they want to say. at the same time, we are in a
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moment where the social media industry needs to be more responsible for content. nefarious things are appearing on sites. need toou balance the be hands-off with the need to be responsible? importantis the most part of our company. so we have teams working hard to make sure policies are clear and products support policies and there were people behind the product to help in more difficult situations. we want people to trust the information they see on twitter. that willely believe be a growth factor for us. if you come to twitter and have a healthy interaction, you are more likely to come back. reporter: that sounds great, but how do you do it without editorializing? >> we eliminate spamming, suspicious behavior. areforms are accounts that
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amplifying things that are not true. if we can remove those accounts, that is an important part of us making sure the right information is getting to people. a great thing about twitter is it is a public service. just about everything that happens can be seen by everybody else. so we can correct itself. people can see things on twitter that may be true and they can offer their perspective and correct them if they do not believe they are true. reporter: truth is subjective. some people see one thing is true, another person sees it as false. so at what level do you intercede versus staying out of it? >> we want to have clear policies people understand. we want to make sure people do not do things on twitter that make people feel unsafe off of twitter. if somebody says something untrue, that causes harm, but it is removed.
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but we also want to allow people to observe the debate, whether it is between two individuals who care passionately about the draft or about politics. news over the troubles of the thomas crook group andhomas cook of 750ver an injection million british pounds. become thell majority holder of the operating division and a minority stake. they are in talks with thomas cook. come, and asian unit has place to go public in hong kong. one analyst will tell us why she
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thinks the company will pop 10%. this is bloomberg. ♪
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shery: this is daybreak asia. i am shery young in new york. paul: i am paul allen in sydney. the asia are waiting units on track to be the largest mover this year. is tracy ku.p you are obviously optimistic about the prospects of trading. why is that? quite optimistic but still concerned as there is .ecently a flood -- fluctuation
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the final price might be a little lower than what the market expected before. paul: are you concerned by the amount of debt? >> sorry? aboutare you concerned the amount of debt the company will be carrying? shery: the debt levels. we are talking about $112 billion when it comes to company the --pecially after they acquired sab miller. are you worried about the money they owe? we can --lly, because we are optimistic about the goal in the future.
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we are sure we can get the money back. shery: what about the beer market in general? we are seeing the company do this because they are optimistic about the asian market. what are your views about the beer market in asia, especially china? is the biggest market like globally and shared like like,d lake in china, there is like a major trend. market recently, they are being driven by asp likeh and we can see customers are buying more expensive beer instead of cheap ones. so we are quite optimistic about
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the consumption of grade. like,other reason is actually, beer consumption in only is quite low so it is appeared --018, as as compared to other companies. shery: how does your company compared to other beer makers out there? heineken, and other local beers? -- we can see alreadysources beer has [indiscernible] historicalk at share, weke market
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market up takes the in premium categories and 2013,ed to around 40% in the market share has like increased. when we look at a competitor like china resources beer, we can see their market share has lowered during 2017 to 2018. so we are quite optimistic about oasis. so we expect it will continue to gain the market share. shery: tracy, thank you so much for that. if you missed any part of that conversation, tv is your function. you can watch past interviews, and become part
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of the conversation by sending us instant messages during the shows. this is for bloomberg subscribers only. check it out on tv . this is bloomberg. ♪
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paul: let's get a quick check of the latest business headlines. fast retailing is doing better in china than at home in japan,
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calling at $692 million but missing the average estimate by almost $30 million. sales growth in china soared by double digit. the budget gu brand performed well profits more than doubling. stock has surged more than 20% this year against a fine percent gain. -- 5% gain. china is buying jets to be delivered over the next three years. orderent she sealed an for 300 planes during a trip to paris in march. china has traditionally kept the balance of airbus and boeing jets, but boeing is struggling after the grounding of the 737 max 8. a stake of oklahoma city thunder is up for grabs.
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by theke has been held estate of the chesapeake energy cofounder, who died in a car crash three years ago. the franchise is worth $1.5 billion, according to forbes. shery: let's look at what investors will be watching next week. we will get a massive data dump from china on monday. economists are asked acting a clear slowdown in the second quarter, with gdp at explained to percent. on tuesday, facebook will testify to congress on the future of its new cryptocurrency, libra, which has already sparked criticism from trump and concern from regulators and policymakers around the world. wednesday, we will get the mother testimony, make decisions in south korea and indonesia come on thursday, which is the day japan has set for south korea to meet their demands in a
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labor dispute. and we will get what could become the world's largest ipo this year. trading begins friday on the hong kong stock exchange. and now a preview of what to watch in markets this morning. eco-agenda, we will get a pulse check of chinese trade which measures the damage from u.s. tariffs. yearl in 1.4% year on slipping from may's gain. and the industrial outlook for malaysia, japan, and india. we are keeping an eye on moves in hong kong on the announcement a terrorism group is in talks with thomas cooper on a deal. -- thomas cook on ideal. we are keeping an eye on chinese property stocks.
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the executive sector will face short-term pressure due to financial tightening of policies. ontaipei, we are watching better than average forecast results which are boosting confident. expenseg intelligence -- expects them to remain strong. from daybreakit asia. we will look ahead to the start of trade in hong kong. shery: china open is next. this is bloomberg. ♪
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reporter: it is 9:00 a.m. in beijing. i am tom mackenzie. i am yvonne man. we are counting down to the start of trade. david: jay powell confirms the ,.s. economy is in a good place and he has room to cut rates. top fed officials don't agree. yvonne: president trump turns up the heat on china as trade talks get back on track. he is accusing beijing of reneging on promises made at the g20. tom: investors await the final pricing for budweiser's asia operation. they hope china's taste for beer will drive down debt.


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