Criticism and says he will finish the job. Jay powell is losing patience rallied for at third day while the dollar fell. Asian markets looks set to ask and the gains. Facebook aims to liberalize International Payments with a new digital coin. We hear from Sheryl Sandberg. As we look at the market close in the u. S. , the bond market is where we saw so much action. Looking to the two year treasury note, reflecting jay powell and the individual forecast showing whether they expect to hold her cut rates confirmed what markets have been betting on. The 2year note had a drop of 12 basis points. That is a big move for a piece of paper. Stocks pretty much expecting the fed would be somewhat dovish. You can see some nice gains across the board. The s p 500 near an alltime high. Futures ago the reporting a little bit negative. Look at this green, seems to be growing by the moment. Im wondering, as you look at the asian markets, are we starting to see this optimism . Sophie we are ready to track that rally following the feds dovish stance which could open the door for policy easing. We will in more when they decide on rates today. Plus we have r. B. I. Minutes on tap. In wellington we have kiwi shares continuing to check higher. We have the kiwi dollar on the front foot, jumping as much as. 3 after gdp growth beat estimates. Holding near a fiveyear low which could leave the door open to cut rates again. The kiwi benchmark extending the rally for eight straight sessions hinting at gains as pricing intensifies which has pushed yields to threeyear lows. Back above 54 after reports showing tiger u. S. Supplies and opec agreeing to an early meeting to discuss output cuts and the offshore yuan extending for a third session. Paul all right. Thanks very much. Lets check in with su keenan. Start with the senate. It will vote thursday on a resolution to have arms sales to saudi arabia and other middle eastern countries, in other words, cut them in half. Members of both parties have criticize President Trump for pushing and a billion dollar midl with saudi arabia a anger over the killing of journalist qamar show the jamal. Shouldwn princes role be investigated. Smoking no socalled gun or conclusion about guilt, but there is highlevel saudi liability. He was killed in an stumble last october. U. S. Navy has presented what is it says is evidence in the attack on oil tankers in the strata for moves. It says it has recovered a magnet used to a crowd attach a mine to one of the tankers, which will look similar to mines in a run. The navy offered no evidence about a second alleged attack on the same day. The inquiry into the downing of a Malaysian Airlines flight five years ago has identified four people responsible for shooting down the aircraft. 300 people died when it crashed and investigators are blaming ukrainianians and a citizen. An International Arrest warrant will be issued and Court Proceedings will begin in march. Global news 24 hours a day on and on tictoc on twitter. I am su keenan. This is bloomberg. The top story is the Federal ReserveHolding Rates Steady talking of uncertainty and some members seeing a cut on the horizon. They are not said ready yet and as always it is going to depend on the data. The cross currency is a given. We have our tools. React to anything in principle that could undermine our achievement of our goals, maximum employment and stable prices. Kathleen we are going to show it on the screen because it is the individual forecast on the open market committee. What is important, it is a march meeting. Everybody thought they would see no rate moves, they did not know. What a big difference looking at the plots today. There is a large number that is not sure what theyre going to do. Look at the people who expect a inbasis point cut or 50 2019. Almost half. A big change. What does this mean . Joining us now is the former philadelphia fred president. Great to have you on the show. What do you make of this change . It is complicated. I would love to see the dots matched up as we tried to argue when we introduce the dot plot. We dont have that information. It is hard to make out. It is a split view on the committee. I think while but his vision to do nothing the decision to do nothing was clear, i dont know how you can do other than stand pat, the message Going Forward is confusing. I am not sure jay was as clear on that. Lack of pin that clarity for us. He did say in reference to the dots, even the people who did tendut their dor for a cut to be looking in that direction. Where was and she clear . Where wasnt she clear . To be committee needs clear on the conditions and the circumstances under which a rate cut would be warranted. I think they talk a lot about the Downside Risk and most of the Downside Risks are due to the uncertainty of policy. Mostly trade policy. We have seen over the last six ,onths trade policy go from theres going to be a deal between china and the United States. On and off again. React to twitter comments and day to day policy negotiations to conduct Monetary Policy. That is a mistake. It should not be drawn into that. Economy isthe u. S. Doing well. The stock market is near an alltime high. The labor market is strong. Inflation rates low. Maybe too low for some. Economic growth is still above trend. Economy,rket, the people seem to be worried about the prospects of what happened to trade negotiations and World Economic growth. Im concerned about that too. It is not there yet. Week to week negotiations and noise and news is not the information under which the fed ought to be reacting. I am concerned jays comment mightthe role of the fed derail the economy. I think that is dangerous. It puts an onus on the fed, youve heard me talk about the hubris and expectations of the of ourving all challenges. We are slipping into that mode again. That is very dangerous. Way paul i want to explore that idea. T is very popular recessions are caused by the fed. You are saying that is too much to expect. Right . It is too much to expect to clean up everybodys mess. They cant do it. Negotiations between europe and the u. S. Or china, what have you, collapse, and play, and thento effect on the u. S. Is reduced through lack of exports, Monetary Policy is not going to offset that problem. That is a policy problem that is not suitable to being offset by Monetary Policy and for people to believe the fed can do that is an exaggeration of what the fed o is capable of doing. The fed needs to be humble about what it can and cant do rather than take the responsibility for the effects of all sorts of policies and what happens in the ecb or the bank of japan, china, whatever. That is putting them in a bad spot and a risky spot. Charles, is there a broader policy problem around inflation as well . Our previous guests thinks the target range is unreasonable. Jay powell double down his commitment to it today. Do you think there needs to be a rethink on realistic targets . Two t for the last 10 years weve had inflationhings, between one and a half and 2 . People are distressed because it is not exactly 2 . That does not bother me. Any country would be happy to and two and a half percent as an outcome. Having said that, the people areocating higher inflation operating on premises that are dangerous. First of all, higher inflation rates bears no cost over the longterm. Inflation, higher inflation bears a cost. It is not free. They have to offset with the belief somehow that means they can engage in stabilization policy. Maybe, maybe not. The second problem is related to that. Over 10 years, people have complained the fed has not been able to get inflation to the 2 target. What makes them think the fed can get to 4 . I dont know. They dont know how to get it to 2 . To the extent there needs to be a rethink of inflation, it has to be, whether the tools the fed has used and the combination of targetsd interestrate and now a system that pays changes thereserves transmission mechanism. Whether the tools need to be rethought to achieve the inflation rates they want. They dont have those tools hitting a higher target is not going to do any good. Kathleen charlie, to what weets, is Donald Trumps t statements, remarks to reporters, jay powell, i dont want him there. How much does that complicate the feds decisionmaking . Every be clear, president has tried to influence the fed. Having president s influence the fed is not a new phenomenon. What seems to be new is the president s willingness to do so publicly. And do so quite publicly and frequently the last six months. I think that is wrong. It is not good policy because the that does is it makes fed in a position where it is dammed if itdoes, doesnt. It makes them difficult to make their case regardless of the political pressure. And then it puts them in a position if they had to cut rates everybody would have said, ok, the fed is caving in to the president. Or even worse, the market. Neither of those are good places for the fed to be. Kathleen thank you so much. Im glad you are in the right place with us today to talk about these issues. That is charles plosser. Lets look at the economic. Mpact joining us is the global strategist founder. You ar were listening to charlie plosser. He doesnt think they need to cut rates right now. They are taking on too much, especially with inflation. As i listen to you and paul theing to charlie plosser, points that came back is the assumption he seems to make the fed is independent. We have seen time and time again the fed follows the market, 2019, the in 2018 and fed raised rates four times without any sign of inflation, andeased it in december threatened to increase to more times. There was no basis for that. Well before the march statement, s showing no cuts. The next move would be a cut because the fed is not going to do it. If the fed remains hawkish, the stock market would plummet and the fed will follow. Once again, what is going to happen . More cuts. Nothing to do with the dot plots. It depends on what the market dictates. That is the feds problem. President trump was prescient in the fed would not listen. We he says he was right and were wrong. The other point is they are talking in terms of inflation after 10 years. They realize it is going to rise slowly. Has it taken 10 years to get that realization . Ae problem the fed has is loss of credibility. That is why they are going to have less impact on the market and they are going to be following the market unless something changes quickly. Paul all right. Komal is staying with us. More from him in a moment. Guest from the city office. He will discuss the impact of the fed policy in asia. Kathleen and mitt romney is pushing President Trump not to go easy on huawei. Tarifthis is bloomberg. Paul lets get back to los angeles and komal. Thanks first thing with us. You are making a point about the independence of the fed. I want to get your thoughts on the effectiveness of the fed. Interestinge very remarks, including this one. Efforts to stimulate growth referred to as pushing on a string. Is that where we are now with Monetary Policy easing . A timelyk yours is question. We are very much in that position. What i meant to say was the fed is much more effective if it wishes to be in crushing inflation. The case of what paul volcker did in 1988 with skyhigh Interest Rates, which crushed caused ad essentially recession. Inflation was conquered by the time the Reagan Administration continued. The first time. The difference now is the growth is slowing, inflation is low and you cant just push money into the system to cause Economic Growth and inflation to rise just as you did in the other direction, making growth to come down. That is the point of that note. World, theround the European Central bank and the bank of japan, they are both positioned if they need to to do more, cut negative rates further, i more bonds. Is it something about the world . What has changed to bet rates are low and inflation does arise the growth is not bad if you look at japan and the u. S. . That is a great question. What has changed is the way in which the global Central Banks reacted to the 2008 financial crisis. If you go back and see how we reacted to the Great Depression and what changed after 1939 when the economy came back, we had access world demand which came from the second world war, demand for armaments and labor, which was a structural change. That is what got us out of the Great Depression. It was not monetary changes or increasing Interest Rates one way or the other. By contrast in the aftermath of 2008 we have a quintuplets playing of the Balance Sheet. We have the ecb which increased the Balance Sheet substantially. The bank of japan has 100 of japans gdp and mario draghi is going to leave office october 31 without ever raising interest aboutand also talking further stimulus before he leaves office. Hat is a change we had a structural problem of increasing employment, providing skill and education. We tried to do it through monetary means. The best example is the comparison with 2003 when germany, the sick man of europe, brought that to great health because of what the chancellor did. Clarify. I want to you are saying fiscal policy. The government needs to take steps. That is what people say when they look at europe and japan and other countries. Fiscal, with a special note involving structural changes. ,hey need to involve education vocational training. That is the german example from 2003. Pouring cash through Monetary Policy or fiscal policy. Employment tax credit would work. Paul all right. , a bloombergar opinion columnist. Thanks for joining us. There is more to come on daybreak asia. Stay with us. This is bloomberg. Quick check of the business headlines. Airbus is back at the Paris Air Show with new orders for its latest plane. Includinght customers an indianirlines and budget carrier. That takes overall demand above 200. It has a greater range than the boeing 737 max and can connect destinations that have not been seen as cost effective. Kathleen Harley Davidson plans a local Chinese Company to develop models that will launch by the end of next year and which may be offered in thailand and indonesia. They have been forced to look abroad as part of a plan to sidestep tariffs. Paul elon musk is putting a new spin on henry fords model line. The customer can have any color as long as it is black. Starting next month it will cost a thousand dollars to have a black, blue, or silver tesla. President trump calls on congress to ratify the new nafta after mexico signs off on the agreement. The latest from washington next. This is bloomberg. The latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. We start in the u. K. With a race for prime minister. It looks unbeatable in the race to succeed theresa may as the u. K. Prime minister. The latest conservative vote pushes him further ahead of his rivals. The candidates left standing in the race will face a vote from the partys grassroots members. Johnson says the u. K. Is leaving the European Union with or without a deal. On to the u. S. , the Federal Reserve left rates on hold indicating an increasing readiness to cut for the first time in more than a decade. Jay powell talked about uncertainty and race to the case for action to bolster the economy. He also made reference to being patient on borrowing costs and is forecasting a bigger mess on the 2 inflation target this year. We are committed to our symmetric 2 inflation objective and are aware weakness could precipitate a difficult downward drift. The trade representative says he will speak to his at the g20. Terparts the talks are being touted as a possible catalyst to revive trade negotiations. And meansways Committee Say we are clearly talking. Weare going to meet and, have the same objective that you and the other members have, if we can resolve these issues in a that improves this relationship and preserves the competitive advantage of the United States, we have an obligation to do that. News 24 hours a day powered by 2700 generalist journalists and analysts. Im su keenan. This is bloomberg. Paul lets check on some stocks to watch in asia and get over to sophie in hong kong. Sophie in tokyo we are watching , in opposition to electing its chairman. And a news report the Industry Association is considering punishing him over in information leak. Estimates,n beat marking its return to growth amid a transition to cloudbased computing. Semiconductors are on watch after a fell 20 year on year in may and regional chip stocks will be in focus as apple has asked suppliers to shift from china. Mitt romney is trying to prevent President Trump from doing what many in Congress Fear he plans to, go easy on huawei is part of a trade deal. He estimated that she has submitted an amendment to an act and we will get details from a reporter. How far can romney actually go to keep huawei on a blacklist . Congress does have tools at its disposal. Historically congress has been, has not had an appetite to go after the president. Amendment would layout conditions to remove while way from a blacklist. It remains to be seen if the house would even go along with it. Other senators have been critical over his handling of huawei. At the same time he describes them of a National Security threat, he has considered including them in the trade deal. We have had a tweet from President Trump. He is congratulating the mexican president for ratifying the u. S. Deal and saying it is time for congress to do the same. Why hasnt congress ratified it yet . Several democrats in the house have said they have concerns and they want to see changes negotiated on certain key areas like drug pricing, enforcement, labor. They have working groups. The white house has called for a vote before august saying the votes are there in the house to pass this. The democrats have played down that timeline without shutting the door on it. He is testifying that willing to engage the democrats and some kind of agreement could be reached. Whether a vote is a minute remains to be seen. Besides appeared to be engaging. Kathleen heres another factor, Silicon Valley is heading back to washington. Officials are set to testify next week. What is this about . Is part of has, this a broader trend in congress with concerns over these tech giants. This hearing will be over concerns about terrorist content on social media. Officials from twitter and google will testify. Lawmakers have concerns over their ability to self moderate content. Broadert is part of a trend over everything from privacy to the size of these tech giants. The hearings could be interesting and indicative of what could come in the future. Greg sullivan, thanks for joining us. A story we mentioned yesterday, facebooks foray into digital payments. Their biggest growth project in years. Regulators in washington and europe are voicing concerns. Facebooks off rating officer Sheryl Sandberg outlined the next steps. When you think about m a, instagram is so big, but when we bought it, it had 13 employees. I remember when the announcement happened. Some of the bank said we are here to do your integration work. We gave them a badge and a computer. We are good. And so we will see what happens with m a. The market. N a lot of the acquisitions were not big at the time. They have become platforms we know well. Just to be topical, im sure in the you know crypto audience. Im not banking on everyone having used it. The libra announcement. What will it do for those in the audience . How will advertisers use it . Have not launched anything. We have done an announcement. We are far away from advertisers using it. Let me talk about it. We are a technology company. We want to bring everyone along. Marks vision was a voice around the world. Ae idea you could give people voice, there are 4 billion people dont have access to the internet. That is something we have worked on. There are a billion people in the world who are not connected to a financial system. A dollar, if you have you have nowhere to keep it that is secure. That is bad for everyone. There are 100 million women in the world who are sending remittance payments home. Most of them are leaving their homes, working, so they can send money back to their families and they are pink huge fees. We want technology to help everyone. What we announced yesterday is a based insociation geneva. We have 27 partners. We have paypal, mastercard, vodafone, spotify, uber and lyft , ngos and nonprofits. We would like to help there be a Global Cryptocurrency that is inclusive. We are a long way from launch. Regulators have concerns. We have work to do. This was an announcement of what we would like to do. This. Not going to run it will be an association. So your Immediate Response to the regulatory scrutiny, weve had maxine waters, speaking about how it should be halted. Mark carney saying the door is open. The mines are open. How do you feel about the initial response . We announced this early. All we have is a white paper. We know we have people to work with. This is a heavy lee regulated space. We need to meet with people. That is what we are doing. What a terrific conversation, Sheryl Sandberg speaking exclusively to caroline hyde. A discussion on the Federal Reserve and the impact of its policy on asia. This is bloomberg. This is daybreak asia. Im kathleen hays. Paul i am paul allen in sydney. Jumped after sales topped expectations and return to growth. 11nue rose more than 1 to billion, slightly ahead of forecast. Profits were also ahead of estimates. Oracle is a beating in the cloud space and amassed microsoft. Kathleen digging deep to compete with huawei, planning and expansion of its chinese Retail Network over three years. We are told it will spend the money on growing Distribution Channels and rewards programs to its partners and employees. The move comes amid expectations offer more in china after being blacklisted in the u. S. Slack. 26 a share for that is in line with the average price of transactions. Slack is choosing to trade shares directly on the exchange. It will make its debut later on thursday. Kathleen some interesting breaking news where the head of the bank of korea said the open Market Community needs to be more dovish than expected. He may find that to be good news. If he needs to cut rates, that would make it easier, some might say. He also says to respond appropriately to economic conditions. Apparently he says he is patting the fed on the back. Hes talking about the global economy, which korea has seen the trade war hitting their exports so hard. Very interesting comments from a korean newspaper talking about the fed decision today. I suspect a lot of central bankers are talking about it. Steve schwarzman says next years g20 will be important working toward a resolution of the trade war. President oomberg trumps tariffs are a negotiating tool. What the president is looking for, and i am not his spokesman, but basically the equivalent in terms of open market and tariffs and trade. Entrenchot a desire to the United States in some way. It should be fair competition. That areese issues , if youed as tactics will, are done to bring people to the table so you can get equal. The bestproducts win, price wins, if the u. S. Loses, they lose. If they win, that is good. I dont think there is another agenda. Evolution as developed Market Countries get to parity. Ok, ok. I dont mean to interrupt. People dont know you have given to m. I. T. , others in america, oxford, you have donated money toward the education of china. You are a great listener of leadership of china. What are you hearing from the leadership of china as they go to g20 and deal with this president . What is the new wants you can give us . You can give us . Somewhat are impenetrable. The negotiations were stopped by the chinese side. Each of the countries, as you have seen, and we have all seen, seems to be bifurcating. Going to their corners and scaring the Business Community and creating an adversarial situation. That will continue unless it is changed by the president s. The meeting in japan is important because they have the expectations,et disappeared. But in termsan be together of a framework, the trade negotiators can go back to work and get something done. Paul that is steve schwarzman. More to come on daybreak asia. This is bloomberg. The kiwi dollar jumped after the Economic Growth rate held at a fiveyear low. Lets go to tracy withers. What happened . Is there some fluke in the numbers . What happened . Tracy there was some data from last year which question the 2. 5al rate up from 2. 3 to percent, which is reasonable. It is still at a five year low. The construction sector was very strong. There was Concern Services was week which reflected lower and the from tourists, Housing Market and real estate industry. Household spending was soft as well. Analysts are looking at that wasng the topline number good, as expected. Maybe there is concern moving forward. Like anven this looks outlier, is it unlikely to move the needle next week in terms of whether it cuts or not . Decision isweeks expected to be no change. The economists here are looking Monetary Policy which is when the bank does it analysis of the economy. That is due in august. The chances of a rate cut following from may are strong, about 85 . Chance inother november. Again economists are certain if the bank does not go in august it will go in november. It is still in the cards after today. All right, tracy withers, thanks for joining us. Things of course leading on hold. In australia we have rba cuts priced in. And a number of economists are arguing for a cash rate of half a percent or lower. Lets see if the fed forces the rbas hand. They may not need to cut. Steve goldman joins us now. Under what circumstances will the rba not cut . It depends on how far we are through the housing cycle and how the jobs story continues to hold up or not. In my mind, it has held up remarkably well through the global downturn. The Housing Market has fallen. We are closer to the bottom because of the changes in macro policy. The rba said they were going to cut. I just dont think they need to cut as far as 50 basis points. They could do one more. Unless you see a downturn in the materialet, or a downturn in housing, they can afford to stay on hold. We have seen some aggressive commentary. Economistsd other starting to seeing from the same song sheet. It is the law of diminishing returns. There are a lot of Lessons Learned from what happens when rates get cut too low. You have the unintended risk, you have a squeeze of margins, which you see in europe is causing a banking problem. To the extent they can afford to hold off cutting too quickly, they would like to. I dont see the evidence in a deterioration in growth, the Housing Market, or jobs, that forces them to go that far from the data we have seen. Paul i want to draw your attention to a chart, talks about the region. This is real rates. , to whatf australia extent do you see fed policy forcing the hands of the other Central Banks . Rates are pretty low. That story is a global phenomenon. Areurns out these economies not immune to that lower rate cycle. Raterns out in low environments in the u. S. , that is positive for emergingmarket asia. I would view that as longerterm positive. It is a reason why asian equity and bond markets continue to do well. If rates stay low because inflation is low, and because growth is not that strong, how long do emerging markets in asia continue to gain . Is it a currency play . What are you focused on . View, emerging economies that will do well in this type of environment would have learned lessons from past economic crises. Those are the ones that are running trade surpluses, budget surpluses, reserves stockpiled. In times of volatility, it is the ones that did not learn those lessons that will not perform well. From is a difference markets that have learned that lesson versus those that havent. Youve got to look at the fiscally prudent economies in asia to make money. Kathleen breaking news on the bloomberg, President Trump believes he of the authority to replace the jay powell, the chair of the Federal Reserve. Ou have to have cause the fed has to do something dramatic. Is, we dont know what President Trump, what is your reaction . Does this hurt markets . I think the fed has a lot of credibility with the jay powell. It is shocking you would want to make the political argument to remove him. I hope for the sake of the economy it does not happen. Guests, komal of srikumar, becoming concerned about the independence of the fed. Does that weigh on your mind . It does. If you look at the reasons the fed exists, it is to prevent banking crises and act as a shock absorber to the political moves and the fiscal policy moves of the government. You want an independent body to do that. Goldman, thanks very much for joining us. Bloomberg subscribers can catch of the forum in sydney. You can get a live go on the terminal and you will find diary entries as well as some of the events you might have missed. This is bloomberg. Coming up, we will be david about the opportunities in global markets. Strategyead of asia joins us to talk about the decisions we are expecting out central bank. The market open his next as well. 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. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Good morning. Asias major markets are about to open for trade. Good evening. Im kathleen hays. I am Sophie Kamaruddin. Welcome to daybreak asia. Our top stories this thursday. The law is clear i have a fouryear term and i intend to serve it. Jay powell rebuffs white house criticism and says he will finish the job. President trump says he has the power to fire the fed chair. Boosting its domestic network. Heads to historic talks in north korea. Lets get straight to the market action. What is going on . Taking a look at what is happening with the kospi first stop, off 0. 1 . Reaction tohe boks the fed decision. The governors saying it was more dovish than expected. We are checking in in tokyo markets as well. We are seeing relief there from the nikkei 225. We do have yields continuing to slide. Checking in on the mood in sydney, looking a little changed. As we focus on what the r. B. I. May do. Weking little changed as look for a fresh record high. A move toward lower rates, that will likely support equities. That could see a push toward 7000. Swinging to the downside. Losing about 0. 1 in new zealand. The kiwi is jumping. Yields slipping further, record lows. A fiveyeartay at low. Are going to hear from the Central Banks of taiwan and the philippines today. Lets take a look a look at nomura. Marginally higher. After governance tweaks, prompting opposition. Is maintaining its stance. Reports nomura could be punished over that breach. Thank you very much. Lets get the first word news spirit we start with the senate vote. It will be in resolutions to cut in half arms sales to saudi arabia and other middle eastern countries. Agreementws an between democratic and republican leaders. President trump has been criticized for pushing ahead with a 8 million deal. The United Nations inquiry into saysi journalist has the crown princes potential role should be investigated ever there is no socalled smoking gun, but it does say quote there is credible evidence of highlevel saudi liability including the crown french prince. The u. S. Navy has presented what it says is evidence of irans involvement of attacks on the oil tankers. It has recovered a mine recovered from one of the takers. They stopped short of directly blaming iran and offered no evidence for attacks on a second tinker. The inquiry into the downing of hascond malaysian plane resulted in four people being identified as responsible. Almost 300 people died when the boeing triple seven crashed. International arrest warrants will occur next week. Global news, 24 hours a day, powered by more than 27 journalists 2700 journalists and analysts. This is bloomberg. Reserve signaling it is ready to lower Interest Rates for the First Time Since 2000 eight. However, not yet. The inflation forecast substantially for the year. Our cross editing manager joins us. You have covered the world but you spent many years focused on the Federal Reserve. What do you make of this decision . Is the signal from markets about how they are receiving this . One of the main takeaways is chairman powell has learned to communicate effectively to the markets. Last year, there was disappointment in the stock when chairman powell said we are a long way from neutral. There was further disappointment later in the year when he said the policy of running down the Balance Sheet was in autopilot. There was no bux ability or responsiveness. Failing to recognize signs of a slowdown in the economy. This time around, it was something of a masterful performance. The Federal Reserve chairman was able to communicate the fed is ready for flexibility, to ease. But he did not box himself in. Indication they are going to be cutting. But clearly opened the door to it. A couple of things that probably helped with regard to the market reaction. The fact that there was dissent in favor of cutting rates. It shows where the center of gravity is heading. From a signaling standpoint, it might not be unhelpful to chairman powell there was dissent in favor of easing. Have dot plots indicating eight of the officials making the forecast anticipate cutting rates this year. You take it altogether, you have the dissent, the indication a number of policymakers are seeing a rate cut later this year. Chairman powell saying we will move. Appropriate to sustain the expansion. It was enough to assure there was no market disappointment up until now. What about inflation . Tohas been cut from 1. 8 1. 5 . Reiterating his commitment to keeping it within that window. Fed yokedtent is the to this target . Chairman powell has not indicated any kind of signal he is handcuffed by these forecasts. One of the key points in the press briefing was he recognizes when you do need to act, you have to do so decisively. An boat was Something Like ounce of prevention is worth a pound of care. If they do see the risks mounting, the suggestion is they will not hesitate to move. You are going to love this. The 10 year benchmark, u. S. Treasury note yield has been dropped. It is so funny to me. This morning, i was talking to people. We are so close to 2 . It is going to take nothing to go through. Handle, we are not in a great recession, what is that telling us . It is telling us people are outlook forubdued inflation. They are anticipating lowering Interest Rates. They do not see the tariff war between the u. S. And china as significantly pushing up the longerterm rate of inflation and eroding those returns . We were having this debate internally on the team when we were writing the view of someone seeing yields higher by the end of this year. Without a sea change in expectations for the Federal Reserve from easing to tightening, it is hard to see when this bond rally is going to shift to a selloff. Got to see more inflation, stronger growth. Anotherke the focus to benchmark 10 year. 0. 15 healed. Closer to the bottom of the range. Japan, wrapping up a meeting and a couple of hours. What is going to come out of that. Signal or say . Da for the bank of japan, they will be happy the fed was not more dovish. The u. S. Central bank has not boxed them in. Thehe yen had sword against dollar, there would be more pressure on the governor to signal the bank of japan is prepared to move in and easing direction. More thaned not doing the market expected, he has a bit of a free hand. My expectation is he is going to telegraph. The bank of japan will act as needed. Rates at low levels, negative on the policy rate. They will continue to be datadependent at this point. All right, Bloomberg News asia. Us. K you for joining we are looking ahead to centralbank decisions today. Not just japan, indonesia. All expected to hold. Opinions of cuts in the philippines. Lets start off with indonesia. We have been talking about indonesian cuts for a while but it has not happened. Written e a unwritten mandate for what they call stability. Seniortime you speak to officials, it seems like you are a lecture on stability. Are worried about is if Interest Rates cut and cut significantly, that will weaken the currency. You are correct, we have been talking about a cut for some time. It keeps never happening. Ck in the facade. We will see what happens. I would be surprised if think indonesia did something today. There is this concern about the rupiah. The philippines, already dovish. What do you think is going to happen . They are already dovish. I was at the central bank. I had a few minutes with the governor afterwards. He left no doubt about what was the driver and the driver was the Federal Reserve. So much aboutr chinas expanding influence. Basically, weas are in a dollar zone. It was clear from that statement and the commentaries there is more where that came from. What we are going to see today is a reflection of that. Thank you so much. Still head on the show, we will how theg a law more on fed will affect southeast banks Southeast Asian banks. Onee will discuss what wealth manager is doing. This is bloomberg. We are firmly committed to our 2 inflation objective. Weakness thathat persists in a healthy economy could precipitate a downward drift. The Community Needs to be clear on what are the conditions and the circumstances under which a rate cut would be warranted. You are going to have a few more rate cuts. It depends on what the market dictates the fed should do. That, i think is the feds problem. In a sense, President Trump was rate hikesaying the were excessive. They would never say that to you. In wealthring management asia apostasy. If. S a matter of when, not what is the fed waiting for . That is a very interesting statement. Not driven by the domestic outlook so much. It seems the fed does not want to reessential weight data. What prevented them from acting is domestically things are Still Holding pretty well. The concern was rising at the global level. The global growth, the trade tension which went from china to could europe potentially be affected at some point . The domestic element is strong. We see this in a variety of countries. China and part of asia. It is still preventing more dovish measures at this point. Fairly profound effect on the treasuries markets. 174 right now. How low do you see those yields sinking . It was interesting, there was not so much mention of inflation. Eight. S the it was about the shortterm outlook. Potential insurance. Aich are there to address kind of shortterm weakness. We have seen that back in 1995 and again in 1998. These, the inflation context is deteriorating. The deflation risk is still very much there. Should see rates continue to go down. Year end target at 2. 5. The 2 levelaround until we get more clarity. Mention thel did breakevens which have declined substantially. The fed did have to cut its forecast for the year. They are acknowledging that. This environment, and if the trade war does not get resolved anytime soon, the week this starts showing up in u. S. Data, where does the 10year go . What is the low during the financial crisis . Potentially you are right. In this go lower decline in inflation expectations. Rateagain, the potential cut coming is not so much addressing that context. What we need to see, probably what the fed is waiting for, fiscal measures. Worldwide, are we going to see government stepping in and implementing measures to support the economy . The full answer is not just going to be monetary, it is in. He fiscal side if you look at the neutral rate down, u. S. , being revised Interest Rates are set to remain low in the foreseeable future. If you want to see a return, there are not many Asset Classes that provide you that kind of return. Both the bonds and equities are there to provide you with average yield which makes it 34 . Low inflation, dovish monetary policies, are positive to the emerging world in general and asia in particular. Thank you very much for joining us this morning. Pushing for stronger renault and nissan. Its get a closer look at this with our conglomerate editor. How much is at stake here . Deal at is a great stake for both sides. Rons case, he mac is going to be talking about defending french jobs. Part of the goal of her nolt renault is to keep car making jobs. That is evolving now. It is possible that could be threatened by changes in the alliance. Be carlospic will ghosn. When these men met, that was deathly on the agenda. Macron saying he has been very vigilant. Aid possible side for abes side, the government of japan does not have a direct role in nissan. For the japanese side, they will want to make sure the alliance arrangements remain fair. The japanese of side are protected. Are we seeing them move closer together or further apart . There has been a daily drip of leaks. You have the french government. Nissan. The executives. It does appear they have had some breakthroughs moving closer together. Saying nissanorts has expected accepted the idea. That is a very important point that could bring them closer together. Easier forakes it the alliance to revisit the possible merger. That fell apart in part because of nissans role. It turned out they werent so sure about going ahead. Fiat walking away from the table. Could bring that reconfiguration back into play. Certainly fiat would seem to be very open to that. We will see what happens next. We are going to take a quick check of business flash headlines. Oracle jumped. They are trying to maintain their Customer Base as they compete with rivals in the cloud. Xiaomi is digging deep to compete with huawei. We are told they will spend Distribution Channels. S comes amid the New York Stock Exchange set a skipping the traditional ipo route to go public. Trading directly on the exchange instead. Keep it right here. This is bloomberg. This is bloomberg. Asia. Is daybreak President Trump says he has the authority to replace jay powell. But is he can do this not planning to at the moment. Itte house lawyers concluded would be too risky. He remains in the job and said he has no intention of leaving. He told the house ways and Means Committee the goal remains the same. Forhe u. K. And the race prime minister. Boris johnson looks unbeatable in the race to succeed theresa may. Duemore ballots are thursday. The two will candidates left standing will face a vote form grassroots members. Johnson says the u. K. Is leaving the European Union with or without a deal. Google workers and shareholders used the annual meeting to protest a range of issues including rights for contractors. Management being asked to scrap agreements from executives who harassed staff. Day,l news, 24 hours a powered by more than 2700 journalists and analysts. I am su keenan. This is bloomberg. Thank you for that. Time for a market check. Asian stocks are looking mixed. The asian benchmark barely higher. Stocks are under pressure and wellington. In the afx two hundred stalling the korean one at a high. Korean won at a high. Checking in on bonds. Evenng aussie yields lower. The u. S. 10 year yield has fallen below 2 . Futures climbing to a july, 2016 high. Gold holding onto gains. Highs,hing three year gold could be headed for a gain. Stocks. Eck in rio tinto falling after calling its annual guidance. This as a negative. Caltech, falling for the most and 30 years. Over and tokyo, rising the most andecember after encouraging sign of change, a growth oriented strategy. Jongunnping and kim are expected to meet behind closed doors. It is the first such a visit in 14 years by a chinese president. Join us is gk lee. Expectations for this visit . There are many voices that are quite optimistic. The first leader could bring him denuclearization talks. There are skeptics saying this is an effort to send a message to donald trump, saying china is the one that has a broader influence over the trade talks. Xi jinping say in his oped ahead of this visit . Koreas propaganda published xi jinping an oped saying this is going to be the new chapter of a new era. Really highlighted the strategic friendship between north korea and china, using the word strategic shows not only they are going to focus on this traditional friendship but using it to approach global affairs. Showing china does support north korea. When you look at the implications, these are not the best of buddies. You wonder when you have the war. And china in a trade how does this play out . Show northications korea is turning to china to be , wherease person previously, it was south korea. To the north korea u. S. First summit. Many analysts say north korea liftingrning sanctions that could be hurting the economy. Bloomberg News Reporter g haley and soul. A former republican contender mitt romney is trying to prevent President Trump from using huawei as a tool in trade talks. How is he going about it . Onlytt romney is not the congressman with these concerns. Some advisors suggested they should be treated as two separate issues. He submitted an amendment to the National Defense authorization act. This list which means American Companies have to get a special license to sell components. They have to not engage in violations of the u. S. Or United Nations sanctions. Not engage in intellectual property theft. Another condition is huawei needs to be deemed not a threat the american toll Communication System or the system of its allies. Officials have been saying for years there are in arm of the Chinese Government and they have been engaged in spying activities, and mitt romney and thiss want to make sure National Security issue does not become a bargaining chip in the trade negotiations. What is the latest in the u. S. Charges regarding sanctions against iran . Interestinguite an legal case. Prosecutors are saying some of deemed too used are risky. Lawyers tor the know, they are going to have to go through legal steps to get there. The core issue is the United States sees huawei as close to government. They have to safeguard some of this information while also making sure the defendant has enough information to defend themselves properly. Manyey have already seen setbacks from the u. S. Government. Heard the founder become outspoken about some of the negative impacts. Ofcould cause a revenue loss 30 billion. The export curbs could cut into the lead over rivals. Thank you so very much. Our china correspondent joining us from beijing. Next, how the global slowdown may affect decisions in the philippines and indonesia. The head of agent strategy joins us next. This is bloomberg. Markets on the move after the Federal Reserve policy meeting. Note down below 1. 9 9 . We have not seen that since 2016. How low can it go . Seems like a couple of years ago . Hovering above 3 . The 10 year jgb yield down. Japan, wrapping up a meeting and a couple of hours. Is 0. 2. Heading lower. Look at the yen. Volatility, but definitely a level they cannot like to see. The tougher it is to boost growth and inflation. Look atoing to take a the fed. Turn to those asian Central Banks. Most aggressive Interest Rate hikers time to reverse course. The bank of indonesia expected to reverse course. Head of asian the strategy in singapore. A lot to look at after that fed decision. Lets start with the bank of indonesia. They would like to cut their key rates. At the same time, they have a currency question. What do you see there . The last time they had a meeting, they were of the view the bias is neutral. At this point, despite the race isthe bottom, the fact external stability remains the focus. That mean for their economy . What does that mean moving ahead . Despite the basis hike, the truth is the transmission of these hikes has been very minimal to indonesia. Effect has not really been felt as much. Was raise thedid , it madech it was assets more attractive. In 2018. Inflows bank of indonesia engaging in other measures . Not necessarily. The return of of the risk the Southeast Asian currencies have been somewhat it has not been as volatile as the north asian currencies. We have a chart here to illustrate this. The best you can say about this, the cpi is the green bars. You can say, i guess it worked. Oppositeare in the situation. The Philippine Central Bank has been really reactive. Whenever it increases, above their target, they have a tendency to overreact. Reason why it should go up further. There is space for the central bank to cut further. From thee a bias Central Bank Governor foreign easing. When you have a lot of the there isanks cutting, a lot of space for the Philippine Central Bank to continue. Making it clear the last few times, that is the direction he is heading from. Budget the philippines was very delayed and that may have dragged on. Is that all it is . Or the Central Bank Concern there is something going on . The real slow down was due to the delay in the budget. The philippine Growth Drivers have been firing on all cylinders. Except when the budget was delayed. Hitlingering effects really the investment growth in the philippines. Consumption remains stable. Or at least a very big buffer. Hit as trade has taken a the rest of the region has taken a hit. There is a lot a buffer of growth in the philippines. However, with a delay, the target. Is below their there would also be some delay in the private investment. Controls thebank u. S. China trade war and some of the slowdown we have seen in china. How do you expect that to play out . Coaxial you have some optimism again. Unfortunately, there have been so many head fakes in the last few months, it is difficult to get really excited. Even with the optimism, the fact is the pmi and the Industrial Production in the region has been slowing down. Without a real improvement in the pmi and the Industrial Production, even with the Central Banks cutting, i dont see any upside as far as the regional assets are concerned. All right, thank you so much. Puttingasia strategy, other big centralbank meetings and focus. You can get a roundup of the stories you need to know to get your day going. Bloomberg subscribers, go on your terminal. You can customize your settings so you only get news on the assets and industries you really care about. A quick check of the latest business flash headlines. Has new orders for its long haul plane. It has eight customers including a 50 plane order from American Airlines and more from indigo. Demand aboveer 200. It has a greater range than the boeing max. Harley davidson plans to live up sales by working with a local company to raise its appeal. They signed a deal to develop two models which will launch by the end of the year. Forced abroad due to way shifting u. S. Market. Musk putting a new twist on the line, the customer can have any model as long as it is black. It will cost extra to have a black, blue, or silver tesla. 1500 if you like pearl white. If you are concerned about air quality and climate change, we have some good news. Bloombergs latest report says in the next 30 years, the world moredecarbonized and use renewables. The head of analysis joins us from singapore. What are the key messages for investors from your report . The first thing i would highlight is the global power system is changing. In 13rs need to put trillion of capital. Thegnificant amount of money needs to be invested in asiapacific. It is driven by china, the biggest market in the world. And india, the second largest power market. Along with the fact southeast 153, demand will almost be percent of demands today. These are essentially engines of the growth. The second thing to highlight, Renewable Energy is going growing quickly and becoming cheap. Global population lives in areas where solar and wind are the cheapest today. We expect 50 of generation globally to come from Renewable Energy. Wind, mentioned solar, and batteries. Which ones stand to lose . Coal is the biggest loser in longterm. Tlook expect it despite the fact that it is still growing in asia. We see modest investments in Nuclear Power generation. Does the trade war have much of an impact . In your outlook . Saying tradegin by is not a oneway street. Shipped across as energy. Energy consumers could benefit from local solar parts that could be produced in asia, particularly china. That said, trade war is a reality. We see trade of certain commodities is getting disrupted. Comes import has almost to a halt in the last few months. To take upt going further because of the duties china has imposed. Thank you very much. Energy head ofew analysis. Lets take it to set Sophie Kamaruddin and hong kong. Lets look at bond markets. Chinese bondspect to jump in on this rally. Yield as. S. 10 year well as rates falling. At what is going on elsewhere. Bonds jumping ahead of decisions there. Bank decisional on tap, holding for a 12 straight meeting. Jumped 2 index wednesday. That is a look at some of the action we are expecting wednesday. This is bloomberg. Omberg. David was it the hardest job you ever had . It was very hard but very meaningful. Not very enjoyable. David your family was a bluecollar family. Very bluecollar. My dad was a world war ii vet. David you were in combat. Did you expect that you would survive . Its a lot of shooting and bombs and whatnot. We are a means. Marines. The president feels very strongly that his tweeting goes around the press. Will you fix your type lease . David people wouldnt recognize me if my tie was fixed