To deal with china and struck a secret accord with mexico. A backup plan for apple. Foxconn says it has iphone capacity outside china if the trade war forces a new strategy. Shery lets get you started with a quick check of the markets close on tuesday session in the u. S. Stocks fluctuated between gains and losses to end the day in the red. We saw the s p 500 being pulled down by industrial bonds, which were some big gainers. Consumer stocks lifting the index, but not enough to put it in the green. Now holding the longest winning streak since april. The nasdaq also and the dow really unchanged at the close. \ soph . Sophie after the biggest three day game in january, futures are mixed. Kiwi stocks are opening lower, but in sydney, stocks could have gains at 11 year highs. Foxconn said there is capacity to make iphones inside of china. Tokyo electron joints companies that will not supply to chinese clients that are blacklisted by the u. S. The 12th monthly drop in chinese car sales. Teslas annual Shareholder Meeting is underway. Checking in on the agenda. South korean jobless numbers in one hour. We will get japanese machine orders and indian cpi and factory output. May Producer Price data is expected from china. Cpi may have fallen in light of Commodity Prices over the month of may, with iron ore the exception. Iron ore back above 100 a ton, surging on bets that chinese stimulus measures. That will boost sentiment. Paul thanks. Lets get the first word news with jessica summers. Jessica hong kong is bracing for more mass protests in the controversial extradition bill goes before lawmakers. Thousands of people gathered overnight outside the Legislative Council. Some local Companies Said they would suspend work and allow staff to joined them astray should. The Hong Kong Union administration is holding desk urging members to join the protest. President trump has renewed his attack on the fed. He said Interest Rates are too high and that youre and other currencies have an unfair advantage over the dollar. He railed against tightening saying Jerome Powell and his colleagues do not have a clue. The president s comments, week before the fed meets in washington to discuss the future of u. S. Monetary policy. Marketinas stalling car extended its lump for its 12 month as the trade war and the cooling economy kept buyers out of the showroom. Sales of sedans, suvs and minivans fell more than 12 to 1. 6 million last month following similar declines in march and april. It hit local brands, although Market Leader vw is also seen sales fall. Globalew report says Carbon Emissions jumped the most in seven years in 2018, indicating the world is falling behind on pledges to tackle climate change. The annual bp survey found Energy Demand last year rose at the fastest pace this decade. That is even though Economic Growth weakened. China, india and the u. S. Are responsible for two thirds of the almost 3 increase in consumption. Global news 20 for hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. Im jessica summers. This is bloomberg. Shery thank you. President trump says he is personally holding the reins on trade deals, claiming he is delaying an agreement with china and struck a secret accord with mexico. The latest lines out of washington with joe. Really putting president xi jinping in a rough spot. Do we know at this point what President Trump game is here . Joe he seems to be wanting to put additional pressure on the chinese ahead of the g20 meeting at the end of this month. He has gone back and forth somewhat. You remember that the u. S. Has blamed china for the collapse of the trade talks and now trump says he is holding this up. And wont go through with bringing a deal with china unless he gets what he wants. He did not specify there were any new demands or what old demands have not been met, but this is the u. S. Officials are downplaying the idea there will be any deal anytime soon and they dont expect any meeting between trump and xi jinping at the g20 will result in some sort of breakthrough. So far, the u. S. Says they are expecting the meeting to take place, but typical that nothing has been fully confirmed and probably will not be until closer to the meeting. At this point, it seems to be public targeting by the president rather than some sort of strategic policy. Paul how about President Trump out in the trade front . The president telling reporters he had a secret pact with mexico. Does anybody know anything about the secret pact . Joe it does not appear that nothing publicly the white house is being very cagey about this. Mexican Officials Say there are some standards to determine whether or not the measures they are taking are working, but there is no sign there is some Side Agreement that will be triggered should they not be working. Mexico says they are willing to continue to tweak things, to try to stop the flow of migrants through their country to the sayingrder, but trump is that there is a super deal he will reveal at some later date. He is sticking with that. There has been no hints from any other administration officials. It is not exactly clear what is going on here. The Mexican Government says there is no specific agreement on, for instance, purchases of agricultural goods. They say those probably will increase given the u. S. Embassy, the new trade deal among the u. S. Canada and mexico and the lifting of the threat of tariffs, but nothing concrete. K,ul all right, joe sobcyz thank you for watching that for us. President trumps demands that president xi jinping meets him at the end of the month leaves the chinese leader with a dilemma that could shape his beluga future. Tom mackenzie has the story in beijing. Why could this be an issue for president xi . Tom president xi is the most powerful leader, by most estimates, since mao zedong. This demand by President Trump to meet him at the g20 or face tariffs of 25 or potentially more on 300 billion worth of chinese goods, again, puts president xi between a rock and a hard place. Because if he accepts, he risks losing Political Capital in china. Even though he is a very powerful leader here in historical standards, he does have a Political Base he has to appeal to. A conservative base particularly. If he declines the meeting, he will have to face the economic consequences potentially of a prolonged trade war through 2020 and the damage that does across the chinese economy. That will be down to him. Even if he gets into a room, the strategy that trump in the white house have taken, this whole of government approach, actions against huawei, other Chinese Companies as well as arms sales to taiwan and even talk about human rights issues, that potentially makes it very difficult for xi to compromise even if you get into the meeting room with President Trump at the g20. Shery exactly. A very unconventional approach especially after that 90 day truce that President Trump and president xi jinping brokered last year. Has been broken with more tariffs. Do chinese officials have faith in the negotiating process . Sense whenthere is a you speak to officials of negotiation fatigue. They feel like they have been through but through the ringer in terms of the stocks. That is why you have heard in the last few weeks officials coming out and highlighting three key points. The pboc government did this again, saying if we want to get a deal between the u. S. And china, the couple of issues the chinese u. S. Needs to address. They have to remove tariffs. They have to remove the demand of agricultural purchases reasonable. G and it has to be a twosided deal. Conscious of the data. You saw that in terms of the import numbers, industrial profits looking weaker. Most economists expect if you get tariffs on all chinese goods, it could reduce gdp. They do have the economic incentive to strike a deal but the wiggle room is very light. The g20 is one of the last opportunities to get these talks back on track in terms of the u. S. China conversation. Paul thanks, tom. Bloombergs china correspondent tom mackenzie. Still to come, a plan b for making iphones outside china, according to manufacturer. We will have more on how the apple supplier intends to keep the u. S. Stock if the trade war intensifies. Shery next, joined by oliver portia to appear into the increasingly murky global market. This is bloomberg. Shery i am shery ahn in new york. Paul i am paul allen in sydney and you are watching daybreak australia. Lets get more on the u. S. Market close, President Trump latest Terror Threat against china offset some of the optimism we saw from last weeks resolution on potential tariffs for mexico. The dow broke five days of gains. Su is here with more. Su an end of the recent winning streak, a continuation of uncertainty. Many strategists say it could be range bound. You can see over the past five days, very strong market coming out of what have been a lot of uncertainty. 5 gain for the s p in five days. You did not see that optimism in this latest special. Lets get right to the market snapshot where you can see some of the tech stocks we are looking at stocks right here. We can go back and look at the market snapshot but beyond meet was up 87 in the prior to sessions and more than 500 since the ipu table debut. A lot analysts concerned that this meet this company would reflect a big shift in consumer space to a more vegan like food is perhaps overvalued. Moving higher on analyst upgrade. Advanced micro devices has a new chip. Nothing greatest reception. Tesla, a bit of optimism that head of the shareholders meeting. Lets take a look at the snapshot and take a look at the futures that are pretty flat moving forward. Stocks slightly higher. This is a day that was not quite as rock n roll as many investors have been used to. Shery also for oil, not a lot as we have seen in the past. What happened . Su a lot of investors getting ready for the regular supply data. Some concern we are starting to see a buildup. Lets take a look at the fiveday chart and you will notice the five days but we ended close so that 53 mark. At the big picture, we are down almost 18 since the april peak. A lot of concern about the china trade, the demand story, slowing growth. Morgan stanley and citi warning of a slowdown in trading and bank fees on top of everything else. Shery thank you so much for the snapshot of the markets. Joining us now for Market Analysis is Bruderman Asset Management chief market try to just oliver pursche. Great having you with us. You wrote in your notes what a difference a month can make. So optimistic about the economic outlook. Right now, does not seem great, especially when you look at the trade headlines. Isnt at least comforting to you that it seems Central Banks will still have our backs . Oliver it is to a certain extent, however there is so much Monetary Policy can do. We have to know Monetary Policy lags. If the fed were to lower rates in july as some expect and we dont think they will that quickly but if they were, it is still six to nine months before that actually starts impacting real Economic Activity. It may read may well be too late for a recession. That is not the end of the world. There are many other factors that are contriving that the end of the day, if the trade war continues, if brexit becomes messier, if there is a greater slowdown in chinese Economic Activity and a greater slowdown in u. S. Economic activity, then the fed can lower rates at once. We are going to be in a recession. Shery our going to be holding within a range for the next few months as we head towards the g20 . If we dont see a resolution on trade, then what happens . Do we just a put . Oliver i think it relatively stays and abroad trained trading range. I dont think you get the full 2000 points over the last month and a half. At the end of the day, the best thing the market has going for it so far is corporate earnings. They continue to be robust. At the end of the day, stocks trade on a multiple of corporate earnings. As long as those stay robust or continued belief that they can stay robust, things should stay range bound. The geopolitical pressures would put downward pressure for the idea it will be strong will keep. T updated it is not unreasonable. Paul on the subject of earnings, lets jump into the bloomberg and take a look at this chart. Citigroups global earnings revision index. It does not look too good. It is heavily into negative territory. In terms of earnings, is the trade war starting to weigh on things globally and in that contact, perhaps overvalued . Oliver it could be and time will tell. Estimates that they are low for first turning First Quarter earnings compared to First Quarter 2018 ended up being just shy of a half a percent yearoveryear viewed they came in much better than expected. Sales numbers came in at a robust 5. 8 for the quarter. That is a rise year over year. Right now, we are looking at a flat Second Quarter but we will see what happens. That is the dilemma for investors and market strategists like myself. We are at a point where we know data is deteriorating. We know the world is slowing down, but there were still enough momentum and wind behind us that can carry us through. You dont want to take any rash actions right now. The smallthe caps. The russell probably the worst performer of the day, off one third of 1 , but still up 12 on the year. Do you like the look of small caps or Something Else . Oliver in a slowing Global Economy like we have where there is so much uncertainty, we prefer to focus on largecap companies. We are looking for companies that have very strong balance sheets, taking market share away from the competitors, increasing profit margins. When there is an absence of growth or a scarcity of growth, investors have historically been willing to pay up for growth. If you can find those companies early, you tend to weather the storm better. We prefer largecap over smallcap. Shery we saw the Small Business survey this morning. When it came to job openings, that is still at a record high. This really take away a little bit of that bad jobs report we saw last week . Oliver it does. After we spoke to clients, we were meant to them the trend of jobs is still very strong. You cannot look at one single month and say it is over. You have to look at it on trend in the trend continues to be strong. Small Business Optimism did not surprise us. We think people jumped the gun in terms of thinking the data came in weak in may. As we talked about, back in april, things were looking pretty strong. First week of may, data was strong. You are not necessarily looking at the data in such my new show as we are or bloomberg users are. Odds are between may 1 and june 1, nothing has really changed in your business. Shery we will see how it holds up. We continue to see the trade negotiations. Thank you for that. Oliver pursche, Bruderman Asset Management chief market strategist. You can get a roundup of the stories need to know in todays edition of daybreak. Bloombergs of drivers go on your terminal. It is available on mobile on the bloomberg anywhere app. You can customize your settings so you get the news on the industries and assets you care about. This is bloomberg. Paul i am paul allen in sydney. Shery i am shery ahn in new york. Lets get a quick check of the latest business flash headlines. Activist investor bill ackman is bowing to oppose United Technologies takeover of raytheon, saying the idea makes less strategic sense and will hinder the Aerospace Business and will be funded by a share issue at the time the stock is trading at a discount. He has written to united Ceo Greg Hayes to express his concerns and confirm he will oppose the deal. Paul nine u. S. States and washington, d. C. Are suing to block tmobiles takeover of sprint on antitrust grounds, claiming it will raise prices for consumers by 4. 5 billion a year. It puts pressure on the Justice Department as it decides on the merger of the two carriers. Both stocks felt in new york. The widest in almost a month. Back the nissan alliances in the spotlight when shareholders meet for the annual meeting. The german will be asked to explain whether the partnership can survive following the upset caused by Carlos Ghosns arrest and nissans growing unhappiness with the alliance terms. Paul worsening u. S. China trade war could mean trouble for consumer products. But, apple has a backup plan in place. Bloomberg Technology Editor joins us from san francisco. B toair, what is plan the trade war get out of hand . Alistair foxconn is a major partner of apple. An executive was talking to an event yesterday about how they could move any of the Assembly Activities of iphones bound for the u. S. , they could move that from china to taiwan or other areas they already operate in. This executive was pretty sanguine about that challenge. Other people we have spoken to said it depends how much they want to do. If it is final assembly, that might be possible. That really shows some of the flex ability of the global to supply chain we have. Shery they are testing the series in india. What is the potential for this country . Alistair in india, this was a related issue. Over a year ago now, the Indian Government basically said to apple that yeah, you can set up Retail Stores and sell iphones but you have to make the phones in india. With the help of foxconn and other partners, apple has started to do that. It is this issue of final assembly. You may make a lot of the components in countries all over the world but you bring them into china, you have a factory where it is assembled into an actual iphone and sold in the country. The ability to do that in taiwan instead of china might be possible too. Paul what would this mean for the price of the product . Is there a risk that consumers could end up paying more . Alistair we spoke to one analyst who was pointing out that part of the reason why india is not a Technology Manufacturing powerhouse is the fact china has really nailed that protest. They have a very complex supply chain that comes in and out of the country already. They have mastered the art of producing not just final assembly simple stuff but producing complex devices. It would obviously be very disruptive and it could need iphone prices do go up. Paulshery thank you so much. Next on daybreak australia, elon musk says its financially insane to buy anything besides an electric car. We will head stateside to bring you all the latest on the ongoing tesla Shareholder Meeting. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Paul 8 30 a. M. Wednesday morning in sydney. The market open 90 minutes away. A quarter of 1 for futures after a tentative session on wall street. We ended up where we started. Im paul allen. Shery im shery ahn new york. You are watching daybreak australia. Lets get the first word news with jessica summers. Hesica President Trump says is personally delaying a trade deal with china. He says he has no interest in an agreement until beijing except the terms that washington says it abandon last month. He also claimed a secret deal of mexico will come into effect when he wanted to. He brandished a paper claiming it is part of a more lengthy agreement but failed to offer any other details. Mexico denies any secret accord. Fighting forive the u. K. Prime minister are being warned there is no chance of renegotiating brexit. Jeanclaude juncker says they must abandon any idea of new talks, adding the deal struck with the u. K. Must be respected by all. Boris johnson has launched his campaign, valley he will make brexit happen on october 31 with or without a deal. And opec and its allies are facing gridlock over when to hold their next meeting. They gathering in vienna has been scheduled for this month but three weeks ago, russia changed the day. The organization has been unable to reach a consensus. Some delegates are seeing a wrong for the opposition. Opec is trying to decide whether to extend production cuts into the second half of the year. And the chinese owner of the waldorfastoria aims to sell luxury condos in the hotel later this year and scouring the globe for buyers. Four years after stepping up the waldorf, they are ready to offer 375 highpriced apartments. Anbang will try to find buyers. The condos range from studios to five bedrooms. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. Im jessica summers. This is bloomberg. Shery thank you. Australian futures pointing to further gains. Sophie . Are watching iron ore miners and city will be boosted by prospects of chinese steel demand being supported by stimulus which helps push iron ore prices back above 100 overnight. Little highlight some notes. Star entertainment has been cut to hold and raised to buy as morningstar after the stocks tank the most since 2011 on sluggish domestic revenue growth. The outlook we saw back in february which indicated positive revenue trends. While agl energy is under scrutiny for its renewed bid, the company has been upgraded to hold at morningstar as it opens its books. A quick check on the aussie dollar which is looking little changed this morning as we wait on commentary from rba officials and chinese inflation data. Rbanot expect much from the after the recent rate cut from the rba. We will get more on Consumer Confidence this morning. Paul thanks. Lets get more on what we should be watching as trading gets underway. We are joined by adam haigh. Bond markets saying it is pretty much a done deal on rate cuts. Equity markets agree . Think it was summed up pretty well by one of our guests we had on bloomberg tv, michael purves. He essentially said markets are taunting the fed. That sums it up because we have this big grind low in bond yields around the world and that is of course coincided with the loosening of financial conditions in the u. S. If the fed does not follow through with a cut anytime soon, it begs the question as to whether markets are kind of keeping up that respect for the central bank and whether that kind of loss of faith might kind of enter markets. Equities at this point, we had a nice run higher. We had positive news on mexico trade over the weekend. We ended those five days now with decent gains in the u. S. , ended with little change. It looks like a mixed start for asia today. That is what you would expect after a decent little rally in equities. Those rate cuts being baked into prices at the moment. We need more incrementally positive news to get equities pushing. They over in japan, usually sleepy bond market waking up. The increase in volatility and how long will it last . Adam yeah, not often a place of action, the japanese Government Bond market. As you have seen 10 year jgb yields inching lower, we have had that big spike in volatility in fixed income markets in japan. That white line in this chart on your gtd Library Shows you how much of an increase we have seen in the past few weeks. The blue line is that continuing decrease in yields in japan, but really, it has challenged the notion that the boj will be on hold and brought back into the discussion around whether the boj will have to work to loosen policy, well have to cut rates at some point over the next six to 12 months. That has really brought some light back to the very ordinarily sleepy market. Paul Bloomberg Global markets editor adam haigh, thank you for joining us. You can check out our large the bloomberg terminal. Shery lets turn to tesla, rallying after hours as elon musk faces shareholders at the annual general meeting. With the stock down 35 for the year and concerned about the pace of vehicle delivery top of the agenda, musk is doing everything he can to soothe investors. David, is it working or is it the fact it sold so much this year that it does not take that long for the stock to rally . David a bit of both. One of the first things he said was it is not a demand problem for the model 3. That is one of the main things that had driven the shares down. Several analysts driving the stock down. Morgan stanley painting a very dire downside of 10 a share because there may be tamped down demand for the model 3 and electric cars. We are seeing that is not the case. He indicated in presentations that they had long supply lines, cars going to china, europe. Now demand is fine and they have a decent shot at a record in the Second Quarter for sales. That is what is really driving and investors are saying maybe there is not a problem with sales. He had some other good news in terms of getting the factory going in china that would have boost sales. They have other vehicles like the pickup truck and semitruck underway. All of this is what investors want to hear from tesla but mostly for the shares right now, it is model 3 demand according to elon musk being pretty strong and possibly hitting a record this quarter. Paul these typically events were elon musk will outline sometimes very optimistic plans for the future. Have we heard anything like that were expecting to . Elon, with the lon you have to look at everything with a lot of qualifiers on it. He did say one of the bigger issues they have is whether or not they can get enough battery cells and battery packs made. It is dependent on that. The even jokes they might have to go into the mining business so they can make enough batteries. That got some laughs but that does tell you he does not have all of this ironed out to get all of the plans in place for investors right now. This is elon musk we are talking about. Always hopeful upside and have to wait and see if the company can come through. Was Bloomberg NewsDetroit Bureau chief david welsh. Thank you for joining us. The operator of japans most popular messaging platform has been investing heavily in Financial Services in the face of a stagnating user base. Line now expects the fin tech business to breakeven and want to two years. The ceo spoke exclusively to bloomberg in tokyo about when line should become operational. We have to prepare to acquire the license and we have to comply with every nation. I think it does not take so much time. Are expecting 2020. As a business, how important is it to break the dominance of your main revenue stream and that is advertising . Profit on the company until after the year. Ofs year, we need a kind full Year Investment to establish new domain. You are in a period of investment for the next three to four years. Potentially until 2022, you are not looking at profitability. It depends how fast we secure users. Make, bee can profitable in one year or two years and achieve the breakeven point. It depends on how fast we can secure users. Japan is going to be the entry point . Yes. Then, taiwan and thailand o r all simultaneously . In the case of taiwan, we are already going in taiwan. We proceed simultaneously. Maybe taiwan bank will be launched earlier, maybe not. What is your number one priority right now . What is your number one focus . Shortterm view what area . There are multiple facets . Japan and taiwan are the first priorities. Because we have the specific plan to be the dominant player. One country, we need to expand our service into other countries. , the firstaiwan countries to provide the kind of service. Indonesia, the circumstance is different. Even though we are not the dominant player and investment service, we see a huge opportunity. Shery that was the line coceo speaking exclusively to Stephen Engle in tokyo. Coming up next, trumps latest weed attack on the fed sends the euro and other currencies devalued against the dollar. More on europe and the prospects just ahead. This is bloomberg. Paul i am paul allen in sydney. Shery im shery ahn in new york. A story we are watching closely, hong kong bracing for strikes and further protests amid an escalating standoff over a controversial bill would allow extradition to Mainland China. Thousands of people gathered outside the Legislative Council as lawmakers get set to gather around 11 p. M. Local time for a general meeting before changes imposed. A law that would allow extradition for the first time to Mainland China. You are taking a look at live pictures from hong kong. I remember back in 2014, i was there among the protesters. The government resisted the prodemocracy protests. We are now going to see how this unfolds. Hong kong with 30 countries and jurisdictions and only nine have established similar agreements with Mainland China so this could have big implications. Some huge differences between hong kong and Mainland China. One, hong kong does not have capital punishment. China is the worlds leading executioner in 2018. Willese protests go on, we see how this unfolds in the coming days and weeks and perhaps even months as it happened in 2014. Paul you mentioned that the government there hung tough a few years ago. Pretty likely the same will happen this time, the bill likely to pass. The oppositions best hope to slow things down but lots of amendments. Strikes are not something you often see in hong kong. Local companies are allowing loss of hours for employees who want to participate in the protest. Golden Financial Holdings dropping its successful bid for 1. 4 billion parcel of land, citing a social and economic instability and the possibility that that could have a negative impact on hong kongs commercial property market. Shery we will bring you live updates on how that unfolds throughout the day, the week. If you want to get more on this vtory, you can also go to tb. Watch analysis and commentary from experts. Paul lets get a quick check of the latest business flash headlines. Tesla shares rising as elon musk talked up the companys forecast in california. He says there is no demand problem and sales have so far exceeded production. He also says tesla could be set for a record Second Quarter with up to 100,000 deliveries. Shares have fallen more than a third this year on melting concerns on the carmakers operation. Shery apple top iphone supplier in asia says there is a backup plan if the trade war spirals out of hand. It has enough capacity outside china to make the devices if unitsary, even if foxconn build most iphones right now on the chinese mainland. Hon hai says it will provide full support of apple decides and must alter its production plan in the face of escalation trade war. Paul uber says melbourne will join dallas and l. A. As trials for the ridesharing personal flights. The plan will be announced later wednesday at the elevate conference in washington and comes after deals were agreed. Ubers aircraft will be flown by a pilot, powered by electricity, and will be able to carry four passengers and hand luggage. President trump is again calling for a weaker dollar taking aim at the euro, as he describes as being devalued, putting the u. S. At a disadvantage. He tweeted another round of criticism at the Federal Reserve. We will discuss this with our economist at aef think tank focused on central banking and Economic Policy based in london but now joining us from singapore. Lets start with President Trumps latest remarks on the fed. The fed always says it remains data dependent, but what are the risks connected with this inland endless needling of the fed by President Trump . Good to speak with you today. I think Central Bank Dependence is something Central Banks have thought for very hard for over the years and we have seen it increasingly put the question created President Trumps remarks the latest round of politicians around the world that have targeted Central Banks. The fed does remain data dependent and inflation is below target but Economic Data is strong. The comments about the dollar also moving on from the next to the next type of war. We have seen trade wars, investment wars with the latest investment screening policies the u. S. Has been putting in place as well as europe but now this is moving to currency. It is not a negative sum game for currency wars when you start these policies that no one can win out of that. Paul we will get to currencies in a moment, but i want to take a look at this chart on the bloomberg if we can. We had an earlier guest saying markets almost taunting the fed into cutting rates. Stocks have already got a wic rate cut priced in while the yield curve is signaling a recession so what do you see here . Danae it is expected that there will be a cut in the rate by the Federal Reserve later this year, probably july. I think when you see President Trumps comments comparing this to what the euro is doing, you have a very different economic picture in europe. You have a very weak recovery. And you still have the European Central bank being very late in the game with quantitive easing. They are in a different place, talking down the euro and having policies for a weaker euro is a very different place in the cycle to the u. S. At think that is motivating the different policies we are seeing. Euro also a target to the as the weaker currency. We are seeing trumps previous comments on china. Germany may be up next. A country that has a huge the latest resurgence we published today is looking at the date International Investment positions a different countries. Germany is the world secondbiggest creditor after japan having overtaken china with foreign assets of 2. 3 trillion compared to 1. 7 trillion for china. Germany maybe next in President Trumps target list. Shery if you take a look at the oecd purchasing power model, he is not that wrong. The euro seems to be down 22 against the dollar or undervalued by 22 against the u. S. Dollar. Is there a risk this trade war could morph into a currency war . Danae i think there is a risk it will turn into a currency war in terms of the feds actions and comments. Motivated by the state of the itnomy, by inflation rate has a very strict mandate. Overvaluation or undervaluation of other currencies is not the primary concern. Shery are you concerned about the dovish turn of Central Banks worldwide . We have seen the boe trying to resist and warned of potential Interest Rate hikes. Who is right in this environment . Its economy has different factors, different places in the recovery. We have seen a more dovish turn given that world Economic Growth is slowing somewhat, it is something that is welcome. Central banks have seen as the only game in town moving in this environment. We have seen fiscal space in many places around the world very constrained. The u. S. Has been an exception where we saw fiscal boost. That is fading out. Asetary policy is being less the only policy tool that policymakers have, in the euro area as well. Even though we have some countries that have fiscal space, we are not seeing it take place very much. Danae, thankht, you for joining us. Much more ahead on daybreak australia. This is bloomberg. Shery the e3 game expo kicks off in los angeles and matthew counterman is there. What is the focus this year . Matthew the big focus this year is actually next year because next year is when we expect new consoles from sony and microsoft and that will be a big deal. Unfortunately, that means this year is a buildup. We have interesting new games from the likes of square enix. The focus is on new platforms next year and the advent of cloudbased streaming. Paul did we hear anything about some of those really big names . Listening to the taketwo interactive ceo, hoping on some word from grand theft auto vi, but we did not hear it . Matthew they were probably wait a few more years for grand theft auto vi. That will probably come for the next in console. They have borderlands 3 coming out. Rockstar just released Red Dead Redemption 2. That company is in a good position. They have some of the best intellectual property in the industry. As you think about the way the industry is shifting towards new platforms, new opportunities beyond consuls and pc, the key content will be king. Taketwo has some of the best. No matter where they decide to go with it, they are wellpositioned for a Sustainable Future growth. And partly for investors, driving a lot of cash flow. Shery have we sent any impact from the ongoing trade war, tech rivalry between the u. S. And china . Matthew actually, it is interesting for games because most western Game Companies have essentially been locked out of china. The only way for them to operate in china is for them to up partner with local companies. They give intellectual property to tencent. If everything goes to plan for the u. S. Administration and they can force china to open up to enforce better intellectual Property Rights and allow Foreign Companies to get local Publishing Rights , that means they can go indirectly instead of having to give up half of economics or more to a local partner. Western companies, taketwo and ubisoft can go directly into china. Not only get all the economics but a relationship with the gamer. Shery we have to leave it there but thank you so much from bloomberg intelligence. Plenty more in the next hour of daybreak asia. We will speak to the American Chamber of commerce in japan. Trade talks between washington and tokyo. That is it from daybreak australia. This is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. 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Paul our top stories this wednesday, President Trump claims total control of tariffs. He says he is personally china and deal with has struck a sec