Trade war. With have gone protests hong kongs legislature over the bill and trump raising rhetoric on tariffs. At least gdp with fewer options if he does not meet with them, perhaps more tariffs according to present trump and if the case as well, he risks losing credibility and china as well. Kongop story today is hong where protesters are gathering this morning. Severalheard of thousands of people out there this morning, thoughts of boycotts and strikes as well. Give us a flavor of what is happening. Pretty charged atmosphere. Or the trees, you can see protesters have flooded out and in the one of the main part of hong kong and police have not enabled to push them occupiedit feels like territory that happened five years ago. People thought the failure of the on brother revolution, but the spirit of opposition has been crushed with at least 240,000 people out on the street. As one milliony here. The beginning of 66 hours, a bill that has concerned so many a firehere, leading to were between the independent legal system and the one that is much more beholden to the Chinese Communist party in china. Back to you all stop back to you. Morning, we will be speaking to someone on this very issue. Lets look at the market action. You saw the hong kong dollar actually strengthened here. Take a look at what we are seeing when it comes to markets regionally. Up for tenthsit of 1 . Theres still a little bit of headline risk. We will watch how that is out, but the china open could get interesting given the rally we saw yesterday. ,ake a look at the cross assets watching some of these moves when it comes to the euro dollar, trumps tweets claiming the euroalking about devalued against the dollar. Of yields heading lower when it comes to treasuries. Saw morelide as we pressure for opec to extend and before we go, heres how the market opened in china. Flat when it much comes to u. S. Futures in china, slightly south around eight worth of 1 . Here, 692ing strength 25. It will be interesting to see what the market says today. No lie in the sand. Bemixed signals, it will interesting to big into that. Lets get back to present trump. The u. S. President says he is personally delaying a trade deal with china and says he has no interest in an agreement until thatng accepts the terms it abandoned last month. Right now, china wants to make a deal very badly. It is me that is holding up the deal. Joining us now, kevin with the markets. Hong kong seems to be caught in the crossfires. What you see is the risk when it comes to the longterm process x . Prospects . Rm this status allows hong kong relatively free from and for no restrictions example, a student can get their visa no problem, no travel now whenons, but youre talking about trade war, a new cold war between the u. S. And china and the latest move to arrangement with the mainland. Investors are worried. What is the impact on business . We saw one developer pullout of a bid. Is this the beginning you think . It will be a very important step towards the end of the two systems. Again, hong kong has been doing. Reat very much built on having the rule of law and also a set of standards with the rest of the world. All of these things are gradually fading, then obviously we are concerned hong kong will likegrading and cities these kindnnot enjoy of [inaudible] we have seen the hong kong dollar rising since early january. Does the authority have the capacity to defend the peg . I would not have any doubts i am more concerned that in the process that will lead to a very severe contraction of hong kong dollar liquidity. While we should worry about contraction liquidity and unfortunately, we have the banks led to aong have chinese conference for example. They could face a lot of liquidity issues. Bringing you back to the trump comments ahead of the g20 meeting, you talked about the new cold war we could be looking at. Assess theway to broader Economic Impact where we end up with a cold war well beyond . Is that possible at this stage . I guess it would be very difficult. There are so many variables. We are going to see a trade deal very soon. That could take one or two years or many more years until the china feels a threat to the national security. Again, it depends on many variables. Also, it depends on what kind of policy china will choose. It depends on how they choose, depending on different policy choices and we may have a different endgame scenarios. We were talking to charlene chinaday about what steps can do and she said at the time, they could not cut rates. It seems the narrative has shifted a lot. We are on a Holding Pattern for now. Does that mean rate cuts are coming for china . Fed goesly, if the ahead to deliver rate cuts next for ithat will open up to follow. Seen monitorsy similar in china. They have been reluctant to cut rates mainly because of the money output. I think investors in general are very concerned about potential money outflows that could create an issue but will go back in 2015. Kevin, stay with us. A look at the first word news, we have jessica summers joining. President trump has a new to his attack on the fed, saying Interest Rates are too high and currencies have an unfair advantage over the dollar will stop he really against tightening, saying they dont have a clue. The president s comments comes a week before the fed comes washington to discuss the future of Monetary Policy. Market as aling car cooling economy cap buyers out of the showrooms. Similar declines in both march and april. Seen saleser vw has fall. , Global Carbon emissions jumped the most the most in seven years, indicating the world is falling behind pledges to combat climate change. It rose at the fastest pace this decade. China and india and the u. S. Are responsible for two thirds of an almost a person increase in consumption. Global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. Still ahead, insights on how the trade wars affecting the economy. Yuan,t, we focus on the stronger than expected. We discuss if it will make a more robust defense. This is bloomberg. You are watching Bloomberg Markets china open. For the rmb. Ix currently, it is trading slightly stronger, almost 2 10 2 10 two cents stronger. Lets bring back kevin. In terms of how we read the pboc conversationd a where he seemed to suggest he was relatively relaxed about the currency breaking through and then we had the strongerthanexpected fix yesterday. What is that tell you about travel currency . Theyre obviously to opinions right now, one to savor a break of seven. No more decisions here and the Monetary Policy cannot be too loose. It may be need to be quite tight overall. That is one scenario. , that wouldenario create the adjustment to offset tariffs, but that would oftainly open up a lot monetary stimulus, so that is important, but then, theres we shouldinion that ,e worried about if it breaks the dollar debt taken by china less a theyre more or currency peg. Something like 3. 5. Rillion has been raised if it goes beyond seven, then i think that could check a lot of panic. You are suggesting [inaudible] i dont have that specific idea. That the totalus to 2al debt is close trillion. 3 trillionbe up to 3. 5 trillion stop trillion. [no audio] there are options for them to come up with more stimulus and infrastructure and the housing again,for example, but the policy has to be a loser. Come to more out cuts or bond issues. Instantly put a lot of pressure. It would go back to the same tolerate toll they go beyond . That is the first question we have to ask ourselves. Local governments have already been struggling. You think the latest measure offset that . Deficit has to be [inaudible] more bond issues. End, italian Monetary Policy has to be conducive. When do you expect it to impact the data and should we start pricing that . The fiscal stimulus has been going on for more than a year and early this year in january saw the credit creation. Why is that . China has already taken on a lot of steps and we are all saying that it is high as 300 . 5 ,interest rate cost is then that means the country has. O pay 15 of gdp , it means the data so high has to cover more and more stimulus. Moreanks for joining us coming out of china. Just want to flag some lines coming through here, the latest out of hong kong, the protests happening. Very close to the Business District and where lawmakers are going to be eating meeting to discuss the amendments to the exhibition bill. These are live pictures we are seeing right now, several thousand them straight out and we will continue our coverage. And andget commentary we will have more on the hong kong issue. This is bloomberg. Just want to update you on the protests, they have resumed daysces, so this is amid that we will talk about the feeding this law. You see the crowds getting bigger. Lets do a countdown of markets. We are seeing hang seng down about 186 points here at the getgo. We just dealing with not a lot of conviction, still waiting on any direction from the fed as well. We are pretty much flat. Seems like we are losing momentum. Yesterday, they came to infrastructure, hang seng down. A brief drop when it comes to the dollar china, still hovering around 69227 and we are counting down to the release of the data, expecting the prices given what we are seeing with the african swine flu. Well see how the impact of lower commodities could play out with the open coming up next. This is bloomberg. You are watching Bloomberg Markets china open. Of course, still following the top story in hong kong with demonstrators blocking here in the district ahead of this extradition bill. Day we have first heard of several thousand people already staging protest and strikes as well and trying to at least make any sort of amendment or get hong kong to backtrack on this vote, so lots going on. Over in the mainland, sayingng the comments, he is hoping to sit down with president xi to resolve the issue, but nonetheless, he said he is prepared to deal with additional tariffs. Amid just get back to the hong line forets, cpi and the month of may, that is an increase from the previous month, no big surprise given the pickups and also vegetable prices rising pretty cheaply. 0. 6 , 0. 9 , we have had weaker commodity prices, but it does raise the question about for profits and that specter of the we doion is still there have protests continuing and in terms of companies as well, a number closing shop. Rightongs down almost 1 across the board and we can check in and digest these with our guests. We are down just about 4 10 of 1 . Also, want to bring in the head of china equity research. Initial take on the Inflation Numbers here . No surprises. I think we are seeing impacts of the trade war on inflation. All, there is an inflationary impact because of. He two academics epidemics indirectly a result of the trade war and so having prices drive up in the shortterm, but then, the other is deflationary. It will take some and to show up on prices there is a more Lasting Impact in general. Prices at around 0. 6 , does it mean anything to you when it comes to profits . It might be for the second quarter. People might hold up a little. Urther we have to see if it is more shortterm or longterm. Yesterday, we saw almost an energy back into the markets that shows the trading volume. For a couple weeks now, we have been trading below 15 day averages. We saw that big cop on the stimulus. Are the animal spirits back . Is ae market at the moment type of war. Last time we talked about the clear policy and was very it would push the economy in a downward trend, so that is deathly a big plus, but on top, pressurety would bring. Market volatility is probably still more in the near term. Im wondering on it comes to the ppi prices, we talk about whether this crisis could impact Monetary Policy if we do see a spike of inflation as well, what does what do they do about a question mark what do they do about it . In theory know, but in practice yes. Macon actually affect expectations and that is something people have to manage, so that becomes a force, then it will no longer be a supply shock. Tighten aave to little bit for further stimulus. In terms of the potential stimulus response, where should investors be positioning in terms of sectors on the market . I know you Like Health Care and education, is there still an opportunity to get in at this point. Product third broadly speaking, and upgrade to a longterm trend, maybe the next 10 years, so we are not going to change that some dairy nearterm. On the other term, it is quite a contrary. We are seeing Domestic Companies , reevaluate the supply chain dedicated andmore the key component supplies to wee it more inhouse, so substitutionimport the biggest thing to happen in the next decade, so for us, broadly speaking from that space, as you mentioned, education, health care, food and beverage and also the smartphone factory upgrades. Inflows,ms of foreign we have seen six great days. How much of a guide should those flows be for investors looking at those opportunities . The asian market, currently 10 . We have seen outflows back in april, may when the markets rallied and now, i think they are coming to a more comfortable level. The longterm is intact for. Hina volatilitys,et the adaptation has not been is the, so i guess it pace and timing. Also want to think thank kevin life kevin. President trump says he is personally partially delaying a trade deal with china. He also claimed a secret deal with mexico will come into effect when he wants a deal when he wants it to. He failed to offer any details. Mexico denies any secret accord. The Eu Commission president says they must abandon any idea of new talks, adding that the u. K. Must be respected by all. The front runner has launched his leadership can pay campaign, vowing he would make exit happen with or without a deal. Opec and the allies are facing a gridlock of went to hold the next meeting. The gathering has been scheduled for next month, but three weeks ago, russia sought to change the date. The organization has been unable to reach a consensus. Decide whetherto to extend production cuts in the second half of the year. Global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. We just wanted to check in on the auto stocks to give you an idea on the stories playing out. We had the data points yesterday. 12 straight months of falling sales, so looking at how some of the stocks are playing out. Byd. On the board for coming up, making they moved out of china. We have seen how some of the Biggest Tech Companies are looking at alternatives. This is bloomberg. Welcome back. You are watching Bloomberg Markets china open. Anmps tariffs are taking effect on china, google moving out of that hardware elsewhere in apple has a backup if things spiral out of hand. Peter, what is apples plan . This came as a bit of a surprise, the trade war has been raging for a while and apple is one of the companies that looks like it could get squeezed because of this. United states is a very important market. Donald trump was imposing tariffs on a variety of things. It looked like apple could be next. The happened yesterday is biggest supplier of iphones to apple said they had Production Capacity outside of china to be able to do meat meet demand. Apple sells about 50 million iphones in the u. S. , so they are saying if needed, if the trade tensions get worse, they would be able to ship some of the shift the out and phones to the united states. They are still many other iphones made within china that could be sold elsewhere. About wasdid not talk going tohat was increase their costs substantially and made it clear that apple so are has not asked asked for any production shift. On high talkard about moving factories out of china. Where else does it have factories . Company. An enormous they also have tariffs out there. They make some of the latest ones there will stop latest iphones there. On a high is a very controversial factory being. Uilt the operator of japans most popular messaging platform [no audio] they expect business to break even in one to two years. We have to [inaudible] it does not take so much time. As a business, how important is it to break the dominance of the main revenue stream. , for years investments. So the next three to four years. You are not looking at profitability. And isecured the users [inaudible] fast we cann how secure the users. Japan will be the entry point . Yes. Simultaneously. The payment in taiwan, we proceed simultaneously. What is your number one priority . Rentech is the number one priority. In what area . Taiwan is the number one area. Japan and taiwan is to provide the services. The circumstances different. Are not thewe dominant service, we see a huge opportunity. Was been speaking exclusively. Coming up, we go back to our reporter on the ground. This is bloomberg. You are watching Bloomberg Markets china open. [no audio] if postpone the announcement of a new laptop scheduled for launch at the 2019 trade show in shanghai. As huawei being blocked and processes from intel will from intel. Dominique willhn be asked to explain whether the partnership can survive following the upset of Carlos Ghosns arrest. Would bed merger unhappy with the alliance. Uber says melbourne will join with a deal ats the melbourne airport. It will be able to carry for passengers and hand luggage. [no audio] the french luxury label. Potential investors may consider an idea in paris among several other options. Lets take a look at the market share. We are seeing equity markets in the red, not exactly a whole lot of positive news, President Trump saying he is holding off on the deal with china, so we are seeing it down after we saw a pretty big day yesterday given the local mashers measures to boost infrastructure. The construction stocks, if we can bring them up as well. Stocks. Atching the auto after we saw auto stocks fall 12 straight months and we are 3 . Ng it down we have the infrastructure stocks as well, actually upgrading the likes of china watch somentinue to optical acles opticals. Lets get back to our senior reporter. He joins us on the lineup. What is the latest . There are thousands of protesters here. Distance, i can see the road has been occupied by the protesters. I should imagine the government is pretty concerned to see an occupation going on, but the police are holding back and i police, people also pushing up against with no sign of confrontation. Although earlier, we did see sprayed withrs some type of pepper. It looks like a Significant Police presence. What is the process . Expecting to see within the council today . Within an hour, they will have the second reading of the also, underbill and one Million People according to organizers last sunday which is still a lot. Concern that the bill, once it has been enacted will tear down the firewall between the independent judiciary and a legal system in china which is more but holding here to the Chinese Communist party and if you dont have the area between the british economy was and it back in 1987, that is the main concern here. We heard the u. S. Talking about concerns for the extradition bill. What else is the community seeing . Been leading in this area and saying they were concerned that the bill would damage the high degree of economy that has been promised andy freedoms we have been seeing here and the freedoms we have been seeing here. Support comingen from the European Union and other countries. David, we will come back to you soon. We keep a close eye on events down there. This is bloomberg. Almost 10 00 a. M. In hong kong. This is Bloomberg Markets. Thousands of protesters before a bill goes before lawmakers. We are live this hour. President trump claiming total control of tariffs. It all adds pressure to the markets, asiapacific equities snapped three days of gains. Outside the window here. We had demonstrations here. Was, speak come markets generally speaking, a mixed bag. Momentum. Of lost the it is interesting you talk about the crowds out there. They blocked a lot of arteries and later major roadblocks. Here is your function here and what we are seeing when it comes to risk. Not a whole lot, especially for hong kong. We did get the Inflation Numbers coming out of china. It was no surprise we saw prices. Ising over 2 that is the highest we have seen since february of 2018, so how do they deal with the supply shocks at a time when growth is slowing down. We just saw auto sales fall for a 12 straight month. Down, but the csi falling after after the biggest rally since january. That should be able to boost infrastructure growth investment. It has been pretty much a mixed bag, the dollar going here and there, President Trump talking about the euro being undervalued, so that sent nerves when it comes to be euro bulls out there. Highest since january, despite the protests. The dollar china also pretty resilient. We did see another stronger fix. They are in some ways suggesting a defense here to guard the seven as well. The a look when it comes to whole stimulus play. We saw a big day for construction stocks. Bowman upgrading a lot of names been interesting because we have seen the Companies Really fall off a is one standard deviation lower than the average. A key question, can you actually buy on some of the stocks given what we see four and perception and could that reverse . Lets get to the first word news. Has a nudet trump his attack on the feds, saying to rates are high saying the rates are too high. He railed against tightening, tweeting that Jerome Powell and colleagues do not have a clue. Comes a week before the fed is to come to washington to discuss monetary policies. The trade war and cooling economy cap buyers out of the showroom. Of suvs and minivans fell last month following similar declines in march and april. Despite has hit local brands and productive in particular. Says globalort Carbon Emissions jumped the most in seven years, indicating the world is falling behind on tackling climate change. The annual survey found it rose the fastest this decade. And u. S. Dia responsible for almost two thirds of the consumption. Beingservative fighting warned there is no chance of renegotiating brexit. They said it must abandon any idea to talk, adding that the all. Must be respected by global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. Demonstrators in hong kong blocked one of the main arteries as they protest against extradition legislation by lawmakers. Uslets go to david joining on the line. Tell us what you are seeing. The covereding on where in about one hour, they are going to start reading the opposition here in hong kong. Lot and from what i can see, they have moved out of warranty main arterial numeral moved out of one of the main arterial roads. This time around, what they are concerned about is the extradition terry down a and in doing so, a high when the autonomy former british economy was handed back to china. At the moment, no confrontation come although a lot of coronation among protesters. Thank you very much, outside the hong kong council. Welcome to the program allen. The governments moves . Loads of people do not. Why do you question mark it is the right thing to do for hong kong. With 20g has a treaty countries around the world and this was really initiated by the chief executive who fell we had from hong kong and that escalated the whole thing. It has unfortunately, it is the right thing to do for hong kong, but i think the government is quite weak and explaining the bill to the people. The bill has been changed many times. Have the business sector sat with the secretary of security and cut nine items from atee to send, making it murder, robbery, all crimes. Last thing we want is it to for people that have committed the crime. 99 of the people it doesnt affect. Most of the people who most of the people who most of the people have not read the bill. You hill you hear many opinions. As soon as you are china, everybody worries about it. In effect, it is the right thing, but the way the government when about selling it to the public was wrong and i think that is what has caused people to come into the street and the chief executive who is was theirng, this initiative. You mentioned about being a safe haven. Tenet still be a safe haven to exposingss if you are the judicial system and china as well . Day think at the end of the , it is like the highspeed rail to make it convenient for people of hong kong and then you have chinese immigration sidebyside. They want against china or yelling china will arrest me and i just came from china yesterday. I can tell you, it is a pleasure and nobody says a word about it, but before you have the people out there you have and a lot of voices saying you cannot trust it. Because of the way it is being handled at the moment, i would take some more time and try to make the people understand what is really in the bill and how it can protect hong kongand i still think hong , all the things that have made hong kong begin with to china, all those things i think will continue once this is over. People will go back and understand this is not something that will change hong kong dramatically. What people perceive does not actually what is in the legislation. The perception is that hong kongs autonomy is getting chipped away. Case, the in that say is goingle away. The last thing that china wants is the firewall to be eroded. People. S 1. 4 billion they need hong kong to be one country, the way it has always been. People around the world recognize the system and security, so i dont believe they want to destroy the firewall and especially with the trade war going on, this is the ,ast thing i think china wants people processing and saying hong kong is out of control. Great, the timing is not but at the end of the day, their aim is to keep hong kong that to systems and not 1. 5 systems. We are known as the city of. Rotesters we have the freedom of speech to say what you want. It is safe and you look around. He world i believe those values will kong. Fo hong hong kong. [no audio] i understand with the protesters are worried about, but from what i can see, there is a whole other thing. Gethina really wants to legal orey can come in not legal, they can do something. May also suspects, except once or twice when they have some things. Speech a fews months ago and they were as probably all of those prochina. Thatuge protest, is corrosion fora freedom to speak . Country whenery you have a threat to your security, when you talk about independence, you have young people and making hong kong independent. That destabilizes the country. Fcc, which imhe a member, you wanted to talk. Bout independent hong kong up to a point, you can have freedom of speech, but every country and every city has law in order. In this case once that was overcome of things continued. Stick with us. We will have more after this short break. You can get a full commentary analysis on bloomberg expert editors and get an update. We will talk more about the developments on Bloomberg Markets asia. One of the most vocal opponents of the confidential extradition bill controversial extradition bill. Why some think it is bad for business. [inaudible] only sure thing for the china equity market. This is bloomberg. Says he is personally delaying a trade deal returnsna until beijing to terms negotiated earlier this year. China is an amazing competitor and china wants to make a deal badly. It is me that is holding up the deal. Us, all with representative of hong kong to the apex advisor. War, it seemsde e President Trump is back backed him into a corner. President trump on a daily so i think when they meet the end of the month, i think that basically, they both know they need to find some way forward. Trump keeps saying the tariffs earned so much money and i was in the business for 35 years. U. S. The consumer of the it is not china that pays tariffs. Chinak from both sides, in the long run will come out stronger. I think china realizes the weakness they have in computer chips and in other things they buy. Neednk they realize they to step up to the plate, especially with 5g and ai. China leads the world in technology or will. I think in the long run, there is positive lining. I think china relies they cannot just depend. The world for the last number of years everyone was globalization is good for the world. I believe that going forward, but you have a president who does not believe that and i think he doesnt understand how good it is. The u. S. Economy is good with andrest rates coming down it proves its popularity even more, but i think in the long run, the u. S. Will get damaged in the world will get damaged. We had a report a few days ago that if the trade war continues for another nine months, you are looking at a recession. Really avoid this protest around the trade side of things. He u. S. May target hong kong therefore, treat hong kong the same way and that would be a body blow. It definitely would be. For hong disaster kong, but we would have to start all over again and that would not good be that would not be good for hong kong or the u. S. The world needs a hong kong because of the market size of china. To be able to trust doing business out of china. Not come, that does about and by the end of the day, i think there will be a settlement in this trade war because you have so many u. S. Affectss that it really the 14 4 billion people china is a huge market. The farmers in the u. S. Are suffering. Im wondering if you are concerned that when could be caught in the crosshairs . Do you think theres any risk you could got you could not get it renewed . Anything is possible obviously, but from what i believe, china will not upset the macau rule of the way things are going. I think there might be some changes to the criteria of all the operators, not just win or sands or anyone else, but i think in general, im pretty confident there will be a pastor. Concessions will get renewed for everyone with some conditions. Do you have any backup plans if things get worse . Theres always back up plans for sure. No one knows what the government are talking about today. Still ahead, wrapping up day e3 at the e3 gaming it gaming expo in l. A. This is bloomberg. You are watching Bloomberg Markets, some live pictures out protestersu see blocking major arteries of road this morning. We heard already of some local companies allowing their employees to come out and protest and strike and a lot of them are Flexible Work hours. It seems like there are several thousands of people out there this morning ahead of the hearing stop hearing. Former firm of the royal navy in hong kong when it was british territory. Lets have a look at the market woes and see if the mood has indeed infiltrated. Hang seng down over 1 now. Down, juston the way movers,ter some of the nintendo down after delaying the release of animal crossing. Many states [inaudible] even if it does get permission from the regulator for that combination. Over 2 there. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Its 10 29 a. M. In hong kong and 10 29 p. M. In new york. Im jessica summers with first word headlines. President trump delaying a trade deal with china. He says he has no interest in an agreement until beijing accepts the terms washington says it abandoned last month. He also claims a secret deal with mexico will come into effect when he wants 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. Opec and its allies are facing gridlock over when to hold their next meeting. A gathering in vienna has been scheduled for this month, but three weeks ago, russia sought to change the date. Since then, the rest of the organization has been unable to reach a consensus. Some delegates say iran is driving the opposition. Opec is trying to decide whether to extend production cuts into the second half of the year. Hong kong is bracing for more mass protests. That is as its controversial extradition bill goes before lawmakers. Thousands of people gathered overnight outside the Legislative Council and some local Companies Said they would suspend work and allow staff to join demonstrations. The Hong Kong Association and student associations are urging members to join protests. The chinese owner of the waldorfastoria aims to sell luxury condos of the hotel later this year and is scouring the globe for buyers. For years after snapping up the offerf, they are ready to 375 highpriced apartments, betting the hotels cachet can decide a stagnant market. The condos range from studios to five bedrooms. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Summers. Ca this is bloomberg. Thank you. Lets check in with our own markets and action with our reporter. Yvonne you have been watching just kind of the overnight session. S p 500 index pretty much flat. Em stocks having a field day. Has it changed at all . I think theres more upside for emerging markets. It is a surely it is easy if you look at whats going on in the credit markets. On global em b. I. Threats has tightened and the threat competition is likely to continue, especially as the fed cuts rates. The em stocks have bounced double from may 2018 versus ftx. The comfort of the dovish policy that the fed and other banks provide will continue to ease in credit conditions. I think em stocks will still remain in a good position. Rishaad about three weeks ago, the g20 leaders made a meeting taking place in osaka and every tweet was aimed at donald trump. Theres volatility. China of course as well. The context is there is no major breakthrough on the trade front, but i think in case there is even a small deal it can be reached, then what is really helping volatility is the central bank polities policies. As long as we have these in place, i think the volatility will remain contained. Bloombergsk you, e. M. Live reporter. We are following this and other stories on the bloomberg at mliv. You can find out what is affecting your investments. Rishaad we were talking about volatility. With ron have a chat william, from rw market advisory as a principal strategist. Lets have a look at what is happening with volatility and give us an idea of this chart you want to talk about, which is all to do with the calm before the storm. Lets kick off with that. The fear index. It has been in its comfort zone for many years. We had a reawakening of volatility last year. That still remains. Now it is elevated above a new floor at 15. This means it is actually reshaping a new market regime, hence the versions we keep on seeing. Also, a new investor risk rishaad where is the mean, though . The floor, where we could see is the base of the channel, the mean is around the 22 or 23 mark. That blue channel on the chart. Yvonne basically when we were talking about the rallies in the snp up until around yesterday, can it stay that elevated even when markets are still real leading rallying . Basically, yes. What this shows is this is likely to be a debt cut bounce on the s p 500, also because of seasonal trends and ongoing lack of liquidity from early this year as supported by some investment takes banks. The path of least resistance is now what . Are likely to have more nonconsensus surprises, particularly in this negative seasonality period from may onwards. I know this did not work so well year, for some that should have been a good month turned out to be the worst in many years, but it has been a blast from the past. This past may was the worst since the 1960s. That is for now silenced the whole bullish melt up scenario. We need to be more riskaverse for further downside risk. Looking at the seasonality chart yvonne we will bring it up now, if we can. Lets talk a little bit more about what you have been forecasting. Rishaad there we go. Here we have it basically on the bloomberg function. Markets,the cycles and the annual seasonality chart. It shows a probabilistic chart of a good path and potentially ugly. Blue,od is the 2017 in and yellow, that is the ugly 2018 scenario we just saw. The average is somewhere in between. Look for continued negative seasonality into august and the biggest onset will be q3 september and october. Sell in mayishaad and go away and come back on labor day . Yes, exactly. The most reliable season trends are september and october. It will workthink better because it hasnt in the past year. Theres a little bit of mean aversion in the market. Also from a big cycle perspective, i look at competent cycles together. That is suggesting a downturn for the next year. Demonstrators are likely having risk asset performances. This bringsuppose us to the u. S. China dance. With thethat play out socalled ashares hshares, the hang seng china index, the correlation between that and the s p 500 . For the past year, that correlation and dance was in a straight line, and it was part of the growth story. Rishaad then we saw this divergence. Yes, that continues. That is part of the growth breakdown story on tech stocks, this continuing trade tension between the u. S. And china. Whats interesting is the china rotation. Now china is leading the u. S. According to this chart. You can see the blue line breaking down from the white line early on, giving signal there was vulnerability in the market. That ended up being the canary in the coal mine, china breaking down those stocks last year. Rishaad where we were in december, in other words. Exactly. That lead rotation continues. Although we are having a bit of a bounce now, the technicals and the correlations suggest rishaad and this is the correlation chart underneath . It is. It suggests correlations here and in general suggesting we rotate lower. Yvonne i think a lot of guests that i talk to that are not technicians like yourself say, you know what . Technical analysis doesnt matter because the sentiment is just so dour when it comes to the u. S. And china that it is hard to look at moving averages. You look a little bit more about this in the next chart about the trade war sentiment. How do you think that will play out amidst technicals you are seeing . Technical allowances analysis is always at the heart of markets. I would say now more than ever since volatility has reawoken, much of us are sitting in uncertain waters trying to work out what the next move is. That is when it really becomes strong. Here and now, whats interesting is the year to date record gains on china reversed. You can see that on this monthly chart. This is a candlestick chart. All that shows you is the sentiment interim. We can see a reversal in play. We need to watch the 12 month if that breaks, and it would be bearish for the 2017 lows, and then for people looking for longterm targets, 2000 would be an important psychological level. Technicians do look at sentiment, and i do know bloomberg for example has measured the number of times trade war has appeared in chinese media. That spiked to record highs last month. Although trade war sentiment has been the best for a long time in the markets climbed, it didnt last month, according to bloomberg surveys. I think it is starting to break the ice now. G20 will be key. Rishaad very quickly, all the charts you look at, what sort of picture is being painted right now . I know it is tough, but give us a brief overview of what you think is going to happen in various asset classes. Very quickly, volatility continues. That will create a selective market where we will need to look for more riskaverse safe haven trades. We may see a revisit of the old highs on western equity markets, but i dont feel that is sustainable. The risk reward is too poor, late cycle in terms of this longterm cycle i look at. That is suggesting a turn down into next year. Many of the economic figures, including the yield curve inversion, is suggesting 12 to 18 month pressure in the market, and it ties in with technicals. Rishaad thank you. Do stay with us. We have a rather highstakes battle of the charts a little later. Yvonne im seeking revenge. Because ive lost twice. [laughter] to take onm going our analysis guru and take her crown. Anyway, more serious matters of course. Yvonne the latest on whats going on in hong kong. These protests have been starting in the last couple hours or so. We have learned from local reports here and cable tv saying that Hong Kong Police are using protesters. On some we havent gotten ahead count of how many people are out there, but you can see the sheer numbers of people that have taken over and occupied some of the major arteries and roads in hong kong. It brings us back to a lot of the pictures we saw back in the occupy hong kong protests where some of the key roads around the admiralty area just outside where the lawmakers will be meeting to discuss the amendment to the bill. There are a couple days before they have to make that vote. We have a lot more on the way when Bloomberg Markets asia returns. Rishaad we are back with Bloomberg Markets as we look at the business flash headlines. Activist written investors having to oppose United Technology takeover of raytheon saying the deal lacks strategic sense. He says it will hinder the United Aerospace business. Written to united Ceo Greg Hayes to confirm he will be opposing this merger. Yvonne chineseyvonne can gloss conglomerate both on international wants to shake sprawling operations. Labelwned luxury french lanvin and hopes to raise more than 100 million and started gauging interest from potential investors and might consider an ipo in paris among options. Rishaad an Alliance Back of the stoplight back in the spotlight for a general meeting. The chairman will be asked to explain whether the partnership after the arrest and the failed closure. About we have to talk gadgets. The e3 gaming expo in los angeles. Ed ludlow says fresh hardware is conspicuous by its absence. Reporter lack of console announcements has put streaming Services Front and center at e3. Google got a head start by putting a 10 a month fee on their service, which was announced earlier this year. Then microsoft upped the ante on tuesday, telling bloomberg that a portion of their x Cloud Streaming Service will be given to users free where they can stream video games from their existing console at home to their device on the go. Ubisoft also got in on the after announcing a 15 a month pc streaming service that will give video gamers access to 100 titles a month in unlimited access. Fans at e3 wanted to know about the next generation of consoles, but there was little to go on. Microsoft gave limited details about its nextgeneration console, codename project scarlet. They say it will be its fastest ever. Sony, the Market Leader in consoles, wasnt even present at e3. In fact, they missed e3 for the first time in 24 years. The other big question for the 70,000 or so fans gathered at e3 is what the next big videogame title will be. It was polish developer cd project that saw headlines when they unveiled key reeves is one of the main characters in cyberpunk 2077. I caught up with the ceo earlier to explain how kiana reeves will help drive preorders for the game. The reaction is great. Very happy with the preorder numbers. At the same time, we always want to remain as humble as possible because we have to ship the game. When gamers have it in their hands, they will see how they like it and how it plays. Reporter the global video games market is expected to drive sales of almost 150 billion. That is according to data by Bloomberg Intelligence p the biggest market is china in terms of revenue and videogame players. The industry is facing two challenges in the market. The first is new regulation from chinas videogame regulators set in april, and the effects of that are unknown, but the ination is that response, developers will have to invest more and spend more time to meet those regulations. The other one is trade wars between the u. S. And china. Earlier, we spoke to Take Two Interactive ceo who says he is still positive about the videogames Games Industry and china. We think theres a great Market Opportunity in china and we are hopeful trade talks will be resolved amicably, positively in a way thats beneficial for the overall entertainment business. Reporter Bloomberg Intelligence says western Game Developers have a lot to gain from the trade war. Their argument is that if the u. S. Makes breakthroughs when it comes to ip protection and how u. S. Companies visit and operate in china, than what we could see his video Game Developers relying less on local partners and being able to operate more freely in the Chinese Marketplace. What we heard from executives here at e3 is that for now, they are happy to rely on local partners to get into the Chinese Market and help grow their name and brand in that market. Ed ludlow, Bloomberg News at e3 in los angeles. Yvonne take a look at some movers here in the Hong Kong Market amid these protests. We are seeing large hong kong names in particular leading the decline here today. Hsbc down by 1 . Hang seng bank also down 2 . We are watching tech stocks as well. Sunny optical getting a price target cut from city. They are saying amidst the huawei fallout, any obstacle could be a victim, citing risks from the u. S. Ban. Optical tech down more than 6 here today. Aspect, they are hong kong players, are they not . Tencent one of the huge Mainland China companies as well. Looking at whats going on, the big stories as thousands of protesters want to once again converging on admiralty, blocking roads and traffic, which some have said is similar to the 2014 occupy protests. This is just a few of the people gathering. Legislation is expected to pass that would the first time allow extradition of people here to Mainland China. This is something we had the earlier of a group saying the same thing. Yvonne we were supposed to hear from carrie lam, she usually has the q and a, but we have learned that has been rescheduled. It was originally around 11 00 local time. We have yet to hear about when the next q and as going to be amidst what we are seeing here this morning. We will bring you the latest when it comes in. Coming up, a battle royale. Yours truly, your anchors here on Bloomberg Markets asia go chart to chart. We will bring back ron william. This is bloomberg. Rishaad its that time. It is battle of the charts. A bit of a twist. Yvonne and myself pitting our charts against each other. We have our guest analyst who will choose the best chart. May the best woman win. Yvonne yes. Thanks. I encourage the support. Viewers can access our charts on the function featured at the bottom of your screen. As you mention, ladies first . [laughter] lets bring up my chart. Ron, you were talking about how it looks dire for the s p, but perhaps this indicator shows there is a reason to buy beyond the fact that the fed could potentially be cutting rates. We actually have been seeing momentum building in the last couple days or so and now we have seen the indicator, that moving average convergence over the divergence. That actually crossed and now we are getting above zero here. Shortterm Trading Tools some say could give the equity bulls reading room. Take us back to the midmay highs of 2892, the level people are watching now. Perhaps a reason to buy the dip. Boom. [laughter] rishaad ok. I right yvonne i sold it. Rishaad my chart looks at the vix and what could happen with volatility. We are living in all times because we have the s p moving to the upside in blue and at the same time, volatility going up. The bottom shows how many shorts there are here. The idea here is that it is ifdictive in the sense that the equity markets keep going to big covering leads dips in the vix shortterm. Thats all im going to say and i will keep it very short. What are your thoughts . Was great inchart that it included the vix, which is a personal favorite, but more specifically and objectively, the use of liquidity is key. Both on the s p and fix. It shows pricing rishaad and it has the short position here that need to be covered at some state as well. And the mac d chart is key. The s p which a lot of people are watching. If we hold above that, that will be the caveat. Yvonne you are being very fair. Who wins . [laughter] [laughter] on the vix char and liquidity measures, rishaad. Yvonne i knew this is where it was going. Rishaad it was very close. Yvonne i cant even look at him. [laughter] overad fun and games with. Lets get to the job at hand. G tv is the destination to look at those charts. Save them for future analysis as well. Lets get to whats going on on the streets of hong kong. Thousands of people taking to the streets and blocking major arterial roads in the admiralty, next to the Business District. Yvonne we have heard some reports that police had to use pepper spray and some instances to try and contain the crowds. We will bring you the latest here. Plenty more to come in the next hour of Bloomberg Markets asia. Keep it here. This is bloomberg. Vonnie im vonnie quinn in new york in for emily chang. This is bloomberg technology. Coming up in the next hour, President Trump says he is the obstacle holding up a trade deal with china. Meantime, apple is already coming up with a contingency plan to move out of china. And the congress probe into big tech kicks off with how the likes of google and facebook are challenging the news industry. We speak to a
comparemela.com © 2020. All Rights Reserved.