This is what were saying when it comes to hong kong, up more than 2 at the moment. The bestints or so, rallies of the year when it comes to the hang seng. Large caps also up by close to 2 . The nikkei doing quite well, the only thing really on here that is red is the japanese yen given the risk on session we are seeing. Singapores coming online also, up more than 1. 4 . Asian currencies, were seeing quite a bit of strength, following the offshore renminbi. 689 overnight, we are hovering around 690. This is after we saw the biggest move higher for the currency since april. We will see if the trade optimism it is certainly lifting asia fx. We will see what we are seeing my comes to the overnight session. Aboutenure treasury up one basis point, but we are getting closer to the 10 . Ecb and mario draghi talking about how stimulus measures are on route, that rate cuts are still be key weapons they will be using. We are seeing the bond market continued to head lower. Hit zero foryear the first time ever. Swedish bonds also in negative territory. We are seeing some moves in asia as well with the japanese gdb negative. Australia 10year down to basis points at 135. Blackrock recently saying we could see a rate cut or multiple rate cuts from the rba. The aussie dollar could fall. Is that a typo . Also, what we are washing with fed as well. A lot of expectations that we could be hearing some type of indication, not at this meeting, but perhaps the expectations that july is giving closer to when we will see a rate cut. It used to be december, and now it is july. Meantime, su keenan joins us from new york. Su we start with japan, the countries exports falling for the six consecutive month in may. There could be it could be the impact of the prolonged trade war. Lesss andhtly forecast. Theres also a trade deficit of 4. 9 billion. Some people think that japan could contract in the Current Quarter if japan continues to show weakness. Boris johnson has increased his lead in the race to become the next u. K. Prime minister. Dominant in the latest ballot of conservative party lawmakers. , almostas 126 votes three times as many as the closest competition, runnerup foreign secretary jeremy hunt. Ducked aocked debate, leading to questions of whether he is prepared, but he attended a later debate. Washington and beijing meanwhile say President Trump and president xi will meet at the g20 next week. The white house says that you had a very good phone conversation and will hold an extended eating in a socko to discuss and oh soccer to discuss trade talks. They said they will try to resolve their differences. Trump had threatened additional tariffs xi refuses to me. Donald trump has asked white house lawyers earlier this year to explore options for demoting fed chair jay powell from the position of chairman. Told that legal officials in the administration weight the implications of removing powell from the chair and leaving him merely as a governor. Trump team concluded it would be highly questionable to fire powell without cause. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Rishaad japan seeing 10year yield drop 1. 15 , near the lower end of the bank of japans range. David we dont know what the lower end is. We know at the upper end is because we tested that, and every time we have the boj come in, but what we havent tested so far let me get that appear. Up here. Its toward the bottom end. When you compare it to how far yieldsears bund have fallen. We are now looking at a premium. 56 david Something Like that. Jgbss the question, are now cheap . Everything else is falling over jgbs. We have the Central Banks putting it in the context for us. Beelieve Kathleen Hays will joining us to talk about the jampacked agenda. Rishaad lets kick off with what happened. sthleen, mario draghi comments, what does it say for the fed . The question has to be why . Kathleen we know week before last, he already said, cop the markets attention caught the markets attention when he said there was more that he and the ecb could do by cutting further. Even buying bonds. This stepped up what he had been saying. He has been talking about additional stimulus would be required if and as Downside Risk materializes. The kind of risk he was talking about is the risk from global trade tensions. In fact, how that will feed its way to the Global Economy right into the european economy. In terms of what he is looking at, lets take a look at one of our Bloomberg Library charts. A couple of things came out in his remarks today that were very important. First of all, what is he worried about . Hes worried about inflation. As you can see from the chart, all three of the ecb main inflation measures are at best ecb a percent away from the just below 2 inflation target, and they are not even flattening out. This is one thing he is concerned about. The other thing that came up in the conversation today, it started with donald trump. After mario draghi talk about adding more stimulus potentially, the euro weekend, and donald trump said what is going on . It looks like the ecb is taking a step to weaken the euro and unfairly compete on trade with the u. S. , which provoke questions and responses from ecb economists that said they were surprised trump would have tweeted about something that the ecb does all the time. Tradented out that tensions are contributing to the uncertainty. Bottom line, in the midst of all this, the german tenyear bund reached a record low of. 29 basis points, and the french 10year went to zero for the first time. The markets certainly paying attention. David he didnt just limit the attack to the ecb, he also looked back home, nothing new. He looked at jay powell, and according to our reporting, they were looking at options, whether they were legal or not, to get him out of the chair. How do you think this will affect the smo see decisionmaking process . Kathleen exactly. This story was broken by bloomberg news, six months ago, white house sources telling us that they were looking at regal legal ramifications. Its a sixmonthold story and they wouldnt confirm. Talking in terms of demoting jay powell, if he cant i think he cant. I think they will wait for more data on the trade war impact on the economy. Last week, we saw stronger retail sales and the fed might have to boost its gdp forecast for the year. Full tilte time to go towards signaling aggressive rate cuts. On the other hand, inflation is a big deal. Looking at the Bloomberg Library, we have 2, 10, 30 year rates. Look how much they have headed down again. This is having that has to be on the fed radar screen. Another thing that would be interesting to see, to the extent that jay powell and the fed policy changes, if the data dependency shows need, will they be open to something larger . More and more bloomberg serving surveys showing that they might do a 50 point basis cut. The rebel a lot we are looking for in the jay Powell Press Conference and im sure he will be asked all of these issues in many different ways so we should get a clear sense of what hes thinking. Rishaad thank you. Kathleen hays joining us from new york. Dont miss bloombergs coverage of the fed decision. David lets bring in alex wong. Nice to see you. Fedll ask you about the later tonight. Is there anything they can say to meet the market expectations, short of saying theyre going to cut rates . What else can they say . Alex i think the market expects them to cut rates aggressively in the next year. Need to. They but i think there are some variables. Ecb with the easing again. There are some changes again. We need to see how they respond. ,f trade talks resume [indiscernible] reached, iteal is could change the scenario. Right now i think the market is discounting that they will cut rates aggressively. Appeasing be the warranted . Or with a save the firepower for another day . Alex i think they probably would save it. We have the trade talks to be resuming. If a trade deal is reached, a major factor would be removed. Rishaad but there isnt actually anything going wrong with the u. S. Economy itself, or is there . Is there actually a need, the what is dependent going on with the u. S. Economy that they need to cut rates . Or is it the perception that things could go wrong in the future that is not showing in the data . Alex we have one set of important data, and probably with think that the First QuarterEconomic Growth [indiscernible] activities are up front because of the tariff limitations. The First Quarter data is exaggerated and unusual. We will probably see a slowdown. Right now, the data is not that have one set of unemployment. The First Quarter was actually really good. My now, the evidence is not that much, but i think people expect the economy to go south very fast because of the tariff limitations. David you say in some of your research that yield place are no longer in favor. Hyper rates shift upward. What does that mean . Alex because hong kong had gone higher last week because of the surge and hibor, and we enjoyed lower ined time of hong kong, weve been trading at a discount to the u. S. Dollar. [indiscernible] remains very low the last half year. Even if the u. S. Dollar cuts a rate, we dont have room. In now, the korean yuan current yuan in hong kong is a bit high. Change in may have a risk appetite. We may need to see growth and earnings to survive the Interest Rate risk. I think people would change their appetite in hong kong. Yvonne are you saying basically that the hibor rates will stay at these levels . Some people say this is only due to quarter and, going to dividend payments, the ipo pipeline, and potentially alibaba could come in and thats why liquidity is so tight. You say this could prolong after the quarter and . End . Alex right now were not seeing too much signs of easing in the Interest Rate. We have to take into account. See probably have a percent easing and the hibor, but i dont think we will come back to the earlier level come a because the level we have seen over the last 1. 5 year is exceptionally low. Liquidity is staying in hong kong. I dont think we have that kind of special situation again. Rishaad alex, stick around if you would. Assetong, director of management for ample capital. Coming up, max relief for the troubled 737. Could it launch a recovery . David first we are hearing about cryptocurrency and the executive leading facebooks foray into digital payments. Thats next. This is bloomberg. Yvonne facebook shares erased plans company unveiled for a new cryptocurrency called libra. The move prompted cars calls for scrutiny from some lawmakers wary of the social media giant growing even bigger. Facebook spoke to us about how the currency will be regulated. The reserve is an important component of the stability of this new Digital Currency and we welcome open conversations with regulators to figure out how to drive accountability and transparency for the libra association, notably on the reserve. David you just heard from david marcus, the facebook head of this new project, calibra. Rishaad alex wong is still with us. Aside from the crypto side, i want to get markets in light of a we were talking with the federal reserve, i want to get straight to your strategy and what you like about it and how you navigate this. Sense. Since a alex in hong kong, todays not a good day to buy. [indiscernible] we can wait. I think sentiment will turn next week. Last december, we had a very shortlived recovery after the talk. I think we should be cautious. But i think we should go for insurance. Kong. N hong [indiscernible] benefit from the listings of alibaba and other Tech Companies from china. I think these are the names of people we would go in for, to own people like stable names. David how can you like Hong Kong Exchanges if you are not optimistic about the market . He said youre not buying into todays session. I wonder how those things fit together. It seems conflicting. Alex not today, because i think to die the price is a little bit pumped up. We have unusual conditions and i think we can wait. I think we would be benefiting from more listings of chinese companies. Names,ng has some growth i think it would be ok, these are the manufacturers as i said the people would like. Valuation is high, but if you look at the exchanges sector. [indiscernible] i think it could benefit sentiment as well. Rishaad disco moved to the u. S. Quickly here as well. You have three stocks you like there. Andosoft, mastercard, Dollar General. I had to look it up to my did know what it was. Yvonne the dollar store. Think they will have the highest pressure to raise their price. They are named Dollar General because they are dollar store, so they will have to give up the name. Price. Ey raise their [indiscernible] because of the price hike. Tariff will hit the price. They will have reason to raise the price and i think that will enhance later on. David you on the stoxx . These stocks . Alex yes. David coming up on the program, the need for speed. Talking 5g and ramping up the role of the overall project. This is bloomberg. Welcome back. Lets get your latest business flash headlines. Break. Eaded into the ulsteras action to governance ahead of the shareholder meeting. Affiliate tied to an information leak will use the proceeds to buy back 1. 4 billion worth of shares. It has withdrawn a proposal to nominate its chairman to keyboard rules. Shares tumbled after its first annual loss in a decade. Rishaad a big shakeup at deutsche bank. There are sweeping changes planned for management including potentially replacing the cfo. Also, the Investment Banking head good the bank expected to decide on the future of several executives, and working on a turnaround planned after breaking up with commerzbank. With a network in talks assets that tmobile and sprint are unloading. They include wireless spectrum and the boost mobile brand. For tmobile and sprint merging has not been finalized yet. Thene taking a look at markets, a lot of high when it comes to equities. The hang seng, some of the best rallies this year. Up 641 points at the get go. Trade related stocks are fueling these gains. The casinos in macau. Top five movers. Largecap of about 2 . The nikkei 225 also looking pretty good as well. 8 ical of a percent today. Falling after Mario Draghis comments. Mario draghis comments. Su imt is 10 29 sick eating with the first word headlines. We start in hong kong, where the citys leader carrie lam says her extradition bill is unlikely to progress. She apologized for her part in the controversy that triggered mass protests the past two weeks, saying she has to shoulder much of the responsibility but insisting she would not resign as chief executive. She has been under mounting pressure since sundays demonstration that organizers say drew 2 million people. Proceedl not reseed with the legislative exercise. Su opec and its allies are close to agreeing on a date for the next meeting, drawing a veil over a dispute that has raised uncertainty in the oil market. Ministers are expected to gather in vienna on july 1 and second to discuss production plans for the rest of the year. Saudi arabia wants to maintain output curves with Global Demand weakening as the World Economy slows. Russia, however, is said not to be inclined to agree. The former head of european football has been arrested in france as part of an investigation into the this vision to award the 2022 world cup to qatar. He denies any wrongdoing. Europes most senior figure on the world body that made the controversial decision. The closeddoor vote was criticized because qatar so hot that the usual july world cup will be moved to november and december. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Keenan, this is bloomberg. Investors are still welcoming the news that President Trump will meet xi jinping and osaka next month. This is a mid hope that they can get trade talks back on track. Lets get back with selina wang. What can we realistically expect for next week . The market may be getting excited a little too early. Realistically, theres not an expectation the two sides can agree on fundamental differences and come through thousands of agents of documents on the sidelines of the g20. We heard from wilbur ross recently that the most we can expect from the meeting is an agreement to restart talks, which would still be a big deal and a sign of optimism given the talks have broken down now for more than a month. The tone has shifted a little bit. It seems like the balance of power might have shifted slightly. We are hearing it was trump that initiated the phone call with xi, clearly recognizing the economic and political costs if he cant at least say he has secured a deal with china ahead of the 2020 election. We heard him at the rally saying he will walk away if theres not a good deal, and he thinks that xi is a great leader. The political wind is changing a little bit. Are getting the thinking inside the chinese administration, its probably with the state media is saying. What is the view from the editorials . Selina the phrase he used over and over your over and over again and state media is any deal needs to have mutual benefit, mutual respect, and a deal of equal footing. The view from the chinese side the chineseas not side that reneged on these deals and the u. S. Wants unreasonable demands. They want removal of tariffs, morewanted to cited, and reasonable demand around the purchase of agricultural products. From a broader sense, this is not just about trade, it is about far more fundamental concerns, and china does not want these enforcement issues to be codified into law. They are concerned about the retooling of Technology Expert controls the we are seeing hit quality huawei quite hard. This discussion on the sidelines will only scratch the surface of the water issues. Yvonne you have to put huawei into the mix. Thank you. Lets stick with them. The telco expects u. S. Sanctions to curtail its revenue by about 30 billion in the next couple of years. Is this just the tip of the iceberg . Lets bring that to the head of telco research at jefferies. He says that rising tensions mean challenging times for chinese telcos working on 5g technology. What do you make of this . Is the first time they put a dollar amount on this, where you surprised . Givethink they need to some indication to the market of what the impact will be but i also think that it could be part of chinas positioning against the upcoming trade talks. Is important part of the equation. I think china might not be willing to strike a deal without putting the company in the equation. Ban will result in a setback of chinas 5g timetable, and also the global 5g timetable. Ahead is huawei than others in terms of 5g . The second part of my question, does that fit into the idea of stopping china . Is china itself keeping china down . Edison i think it is important to know first of all, quality wei were ranked number one in chinas outdoor test last year, head of everybody. Saynt think it is easy to a are more chance to the other guys but their equipment performs better. Their prices also cheaper. The acquit meant is the equipment is cheaper and performs better. If you look at the u. S. Department of defense report on 5g, it suggests the u. S. Is very worried about the expanding 5g ecosystem of china, and they think that if all of the there all of their i Like Companies use chinese 5g, it is a threat to the u. S. Even if the u. S. Doesnt use chinese 5g. David that comes down to what you are saying in one of your reports about the huawei guy down, that the 36 billion is a bit conservative because it only assumes what . Edison i think there are a lot of moving parts. They have three main businesses. Consumer, carrier acquit meant, and corporate. Carrier equipment, and corporate. If they dont have access to google on the smart phone, it will be very difficult for anyone outside of china to buy smartphones. If you assume that the International Sales are going to disappear, that could easily be 25 billion u. S. Dollars. We also think if they cant get access to some important components from u. S. Companies it impacts the consumer. It depends on how diligent the u. S. Will enforce the export ban. I think it has a lot of gray area where you could be more relaxed, and where you can be stricter, because it applies to Countries Companies around the world. It depends on how much u. S. Technology company uses to. Roduce for huawei yvonne the chairman said in an inerview this week that longterm prospects, no way we could be beaten to death. You get the sense this is a shortterm pinch . Develops its own supply chain that they could emerge stronger and not need a dependence from the u. S. And come out bigger . Edison i think a lot of people believe that china has done a lot of r d, theyve put a lot of money funding the technology industry. I think its hard to do anything to just stop chinas progress today and they will never progress. That is not realistic. I think that you can slow down chinas progress but i think this action by the u. S. Is going r d,ompt china to increase and they are aware of the risks and thats why they will probably accelerate r d efforts so they can become more selfsufficient on technology in a shorter time. Have more r d than any other company in the field, that is one aspect. The other has to be the fallout from this, who benefits and who is actually hurt by it, not just huawei, but the collateral damage. Edison i think it is very easy to try to think, if huawei cannot supply the quitman, competitors will benefit, supply the equipment, competitors will benefit, but they have a 40 market share and the operators using their equivalent today, if they cannot awei, willes from hu they continue building a 5g . Yvonne they will still have the licenses, right . Edison but that doesnt mean they will build out to the same extent. This is true and china and also in other countries where operators are using their equipment. Will the operator management decide that because they cant supply the acquit meant, tomorrow we will switch to competitors . I dont think that is an easy decision. David does it affect the domestic buildout in china . Capex of the big three and has the build gone up . Edison the guidance is to build roughly 100,000 stations of 5g for them to conduct the trial in the second half of this year. 2019, there is no guidance. The that trade without trade conflicts, we were predicting over one million by 2021. Tions over but this puts a lot in dispute. If huawei cannot supply equipment or not to the same extent as telcos were expecting, will they switch to others . There is a big question. I dont think the telcos know the answer. Yvonne we heard china mobile awarded half of its contracts to huawei. What do you think looks better . Edison [indiscernible] a very small contract, its not representative. I think the most important thing is in terms of [indiscernible] who are going to get market share . I will be surprised if huawei continues to get 40 , 50 this year. I think they can deliver to the chinese telcos this year, but beyond 2019, what is the capability in 2020 . Will that affect the chinese telcos or other operatorss buildout plan . Yvonne you think the Chinese Telecom will benefit . Edison i think their ability to buildout could be hampered and i think unicom may be in a better position not so much because of 5g but because of the two g 2 g reforming a are doing this year. Rishaad thank you. Edison lee from jeffries. A lot more coming up. The battle of the charts will be on, were looking at Market Action as well, a day when the bowls are certainly running. This is bloomberg. Is is bloomberg. We are back with the latest business flash headlines. Test the reorganizing its operation in asia to place more emphasis on china, as it prepares to stop making cars in shanghai. Dismantling the Business Division for and favor of china, which will cover the mainland, hong kong, in macau. The share prices of tesla lost about a third of value this year. Avid google has pledged billion dollars over the next 10 years to try and fix the Affordable Housing crisis in the bay area in california. The Initiative Includes we promising 750 million worth of land for residential use, allowing the development of 15,000 homes. The rise of google and other Silicon ValleyTech Companies caused massive house Cost Increases in the area. Facebook facing pushback from u. S. Lawmakers after announcement of its cryptocurrency, they are asking the plan be put on pauls so regulars can examine it more thoroughly. They are planning to launch as early as next year. It is what is known as a stable coin, which means it would not have massive fluctuations in value and can be used for everyday transaction. And its troubled 737 max jet scored a big win at the paris air show. Iag signed a letter of intent for 200 of the single aisle max planes in the demo deal valued at 34 billion. But problems still linger. Lets get to Angus Whitley in sydney. Lets start with the good news, how significant is the deal with iag . The best possible endorsement for the grounded aircraft, it is what dreams are made of for boeing at the moment. We were not expecting this kind of order when we went into the paris air show, boeing chief executive said he was humbled and this was a chance for learning. Out of nowhere, they have this enormous deal that is rarely seen in europe. Into one of the biggest buyers of the max anywhere in the world, for a plane still grounded, still has questions hanging over it, has not been approved to fly anywhere, not least the u. S. And europe. A terrific time for boeing to get an endorsement from a respected brand but also a terrific time, if you are a betting man, to buy these plans, because you will be able to negotiate a significant discount because youre holding a lot of the power over the manufacturer. Boeing really needed in order like this. Airways hastish some iag shareholders. I have a chart showing what happened since the crash in ethiopia. This is happening, if you can see it to my dont know what is going on there we go. The blue line is boeing. Ship rate is down about 11 . There was about a 5 increase off the back of this deal. Normally with these airshows, the big deals are announced the first couple of days and weve gotten those out of the way. So what are we seeing so far . Angus the firstday was dominated by airbus, its in its own backyard. It came out with the 13 million u. S. Dollars that first day from boeing. Now they are premature at parity. Pretty much at parity. This was unexpected. Boeing also nabbed a 20 dream line order from korean airlines. It is right back in the mix. The other thing to say on the max, they are one of the main one of the main questions is whether customers will be happy to fly in the max. The airline chief executives we are spoken to in recent weeks have said one of the main challenges is convincing the public it is a safe plane. There is a lot of work to do. In that respect, it is still somewhat of a risky bet for iag, is not known how easy or difficult it will be to convince the flying public this is a safe plane. One of the safeguards perhaps built into the letter of intent for boeing is that the planes will not be delivered until the , so you have to think that perhaps this is an insurance policy on his part if things dont work out, perhaps the scope to change the dynamics of the order or reduce the order. But it was certainly great news for boeing. David thank you, Angus Whitley. Our reporter out of sydney. Of what we preview are set up for when you look at markets in india, 55 minutes away, 45 points to the upside. Agam is setting us up for today. Good morning. Good morning. Verywe are seeing is lackluster movements, volumes very low, especially on the back of the election season last month. What we are also seeing is a little bit of drying up of portfolio investors and the kind of funds we are saying. That is the case for domestic institutions as well. However, markets are looking up considering the futures is indicating an upper move and picking up cues from other asian peers. Were likely to see a strong opening today and possibly building on some amount of gains we saw in Indian Markets yesterday as well. Rishaad we often talk about side ofadow banking things in india. The majority of them are under pressure and i believe that is continuing . Agam that is true. What is going to be a big concern is the 15. 8 billion worth of bonds that will mature in the third quarter. This is at a record level, which is why there will be more concerned. A already no and already have host of shadow banks and shadow lenders under pressure. Weve seen the agencies cut the ratings on a lot of these debt instruments, and some thing that inld very well play out housing finance. Lets not forget this comes on the back of the collapse last year, and something that could bear out this year too. Yvonne thank you. Coming up, the battle is on. China credit taking on crop assets. This is bloomberg. Rishaad your back with bloomberg markets. We have our china credit team member and assets reporter, theyre going to be putting their best against each other. Can see theiewers function of the bottom of the screens right now. Lets kick things off there we go. The chart i have today is topical. Everyone is talking about what is happening in the china bank into liquidity. With one bank and how it has had a Lasting Impact on the market. The first few indications that we saw of the market was here in this chart. The white line shows borrowing the weakerome of chinese banks. One,ther line, the blue indicates the stronger ones, the aaa rated bankss borrowing costs. You can see the gap is widening, led by the increase in borrowing costs for the weaker banks. That is really where everything started. The risk aversion we are seeing in the market today. Although the pboc has announced several supportive measures, a lot of liquidity injection, statements, etc. , the borrowing costs seem quite elevated there and that would be the one to watch. The market indications we are getting so far is things are issuance for chinese banks have bounceback but lowering costs are borrowing costs are what we would need to watch. You them going to show difference between asset classes. What you can see in the chart, you have the top line, the gauge of treasury market volatility, which is the move index. A 2. 5 high. Below that, you have another gauge of oil market volatility, picking up. Vix. E bottom is the fix you can see the equity market is felt theid and hasnt effects of the yield curve inversion or potential changes to the fed policy Going Forward or tensions in the gulf of oman to the same extent of the other ones. Are still looking at Earnings Growth of about 3 this year. In otheris volatility markets, its not here at the moment. I had it at a time. There you go. David im going to get a whisper in my ear next two seconds. Rishaad it was a tie. Two tv. Emily im emily chang in San Francisco and this is bloomberg technology. Coming up in the next hour, facebooks crypto play. The tech giant unveils a new Digital Currency called libra that they hope will be used as widely as the dollar. Skeptics are speaking out. Pleasant it trump President Trump raises the stakes. President trump and xi jinping will meet at the g20 to relaunch trade talks, triggering a rally in the market