Transcripts For BLOOMBERG Bloomberg Markets Asia 20240714

The focus shifting from Central Banks back to trade ahead of the g20. President Trumps Administration up in the antiby blacklisting another five chinese tech companies. Yvonne perhaps dampening the prospects of getting any kind of deal at the g20. Seems like when it comes to the oil market this escalation of tensions with iran, it perhaps is offsetting what we saw last week on the markets. A lot of uncertainty on the geopolitical front. David on one hand you have that of grants. Terms great headline here out of bank of america. They released her latest report. G20 plus fmoc equals perhaps a good formula for ef. We are flat on the benchmark. Coming off three weeks of gains for global stocks. Four weeks of gains. Study in the treasury market. Flip the boards and look at where we are on the currency markets. Also on china. Where are we here . I am looking at a lot of the pairs. Dollar is still on the back foot. South korean yuan topping the list earlier. Looks like we will have a mediocre start to the session. You see then chinese index that has been up for three days in a row. Wechina what is important, are at the midpoint of the gap lower between april 30 and may 7 when he officially we had two tweets from donald trump. The gap right at that level. 10 year yield in china, 3. 26. Gold 14,06. Oil here as well. The dollar now giving up essentially all its gains for the year on the dollar index. The bloomberg dollar index is already down for the year. There we go. Might have weakness in the currency. Up from the recent bottom. Geopolitical zones back to the foreign. The Trump Administration says that is set to impose major new sanctions on iran monday, just days after tehran claims the downing of a u. S. Navy drone in the gulf. President trump tweeted the Islamic Republic would not be allowed to make Nuclear Weapons. Nuclear verification of their plans is not acceptable. But trump said he is willing to talk. I am not looking for war. If there is it will be obliteration like you have never seen before. But i am not looking to do that. You cannot have a Nuclear Weapon. You want to talk . Good. Otherwise you are going to have a bad economy. No preconditions. Yvonne for more on this we are joined by jody schneider, our Senior Editor here in hong kong. Downplaying the risk that things could escalate further when it comes to military action, but i have to wonder, economic sanctions, cyber attacks, does that send the right message to iran . Jody it is unclear how successful further tensions sanctions will be considering 80 of their economy has sanctions on them. But as we heard from mike pompeo, to increase that pressure so they cannot make Nuclear Weapons so they are further isolated on the world stage is the goal here. At the same time as we heard from President Trump, he said he would be willing to talk. This comes days after he called strike afteran air iran shot down that navy drone. Still a lot of details unclear about how that airstrike was called for, whether congress was consulted about it. Now they are saying sanctions is the way to go. Tom what more do we know about the statements we have had from President Trump about the drone attack . He has said he decided to call it off. Go through further economic sanctions. He did not want to hurt the iranian people. He had asked how many people would be hurt and when he was given a number of civilians he said he did not want to do that. Sides,laying from both on the one side threatening military actions, but at the same time saying he would prefer not to, he would prefer to talk. But at this point obviously no talks have been scheduled. Mike pompeo will be in the region this week talking to others about iran. David speaking of iran, what have we heard from them . Jody at this point even though President Trump is saying they want to talk, they have not said they are willing to talk. It wast we heard wordplay from the Trump Administration about talks. We heard last week they are saying they will step up nuclear ifnian enrichment projects they do not hear from European Partners in the 2015 deal that they are willing to try to help them on the trade stage international. Looks like things are not on the talks phase. David thank you so much. Joining us here on the set, senior economist and executive director. Very nice to see you. We have to talk about oil. I know you get this question a lot. What question do you get and what you tell them . Guest the question i get is what is the dynamic between the andation in the middle east the economics of oil. Mainly to the upside unless tensions decrease. And more fundamental economics of oil which i think is bearish. Still have source not really keeping place with Economic Growth with europe and possibly u. S. And china as well. Yvonne seems like with President Trump, policy tools seem to be sanctions. Does that dampen the prospect of a trade deal g20 . Guest sometimes from positions that are far apart that is where you get Movement Towards the center. I think it is very difficult to know what is going to happen at the g20 without a sense of the internal dynamics in beijing and washington. I would be prepared per surprises but i would not necessarily expect one. Tom there are some who think we are going to get back to a stage where at least we restart talks on the back of the g20. Is that enough to see the fed hold off on a july cut . Guest i think the Federal Reserve is sort of his own issue. It does play into the fed thinking, it is certainly having an effect on the u. S. Economy, may be slowing it down by 1 10 of 1 . I think the fed has bigger fish to fry, which is that inflation is still running a bit too low. There are increasing signs that Monetary Policy is too tight. Markets are income screaming for an Interest Rate cut. Points of cutsis between now and this time next year. I dont think it is the main focus for them. Tom this china have the tools and needs to weather the storm on the back of the g20 meeting . Guest i think china has substantial latitude to continue stimulating Economic Growth. I think that can come from a number of sources. The pboc can continue to reduce their reserve requirement ratio and maybe cut Interest Rates. China could also increase Government Spending or cut taxes, both of which they have been doing. Lastly china has a third weapon allow womenentially be to depreciate. Allow renminbi to depreciate. Tom stay with us. Weird get the first first word news with su keenan. Su we begin with President Trump denies ever threatening to demote Jerome Powell, but insists he has the right to do so. He repeated his longrunning criticism of the fed chief on meet the press, saying he is not happy with the way Interest Rate policy has been handled. He picked him to replace janet yellen but has repeatedly , raising rates too far and too fast. Erdoganpresident suffered a dramatic election defeat istanbul. The vote was rerun from march after the president contested a narrow loss for his ak party, but opposition candidate won again by an even bigger margin. Months of Political Uncertainty has dragged on their. They lost 10 of its value against the dollar this year. North korea released a photo of what it says is kim jongun reading a letter from President Trump. Kim would take it seriously. Mike pompeo confirms the letter was sent and said the Trump Administration is ready to restart talks. There has been little contact between the leaders since they let met in hanoi in february. In the u. K. The leading brexit supporter Boris Johnson repeated his insistence the u. K. Can and must leave the eu by the end of october. Happen ife split will he becomes conservative leader and Prime Minister. His campaign suffered a bit of a setback over the weekend after police were called to his london home friday amid reports of a heated argument with his partner. Johnson has refused to comment. 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. David we are just getting warmed up. Catch our interview with the malaysian Prime Minister. His attempts to find balance between china and the u. S. Tom we will ask the jp morgan Asset Management how the latest measures from the pboc will impact the markets. This is bloomberg. This is bloomberg. Agone just 15 minutes before the shanghai markets as well as the hong kong market. According to the fed vice chairman in an exclusive interview, there is broad agreement among policymakers for the case for more combinations has increased. Especially in the last six or eight weeks there have been elevated uncertainty about the outlook. The economy is sitting crosscurrents now. Down on Global Growth prospects. Uncertainty about International Trade. Some evidence that is weighing on sentiment. We are monitoring that closely and will act as appropriate to sustain suspension. Tom just bringing you the yuan reference rate. Today,t 6. 85 for slightly weaker than friday when it was 6. 84. Still with us is erik. Lets bring it back to the fed. I think it is fair to say you have been in a dovish camp pushing for the fed to do more. Are they still behind the curve . Erik i think there is a significant risk they are behind the curve. Certainly the fact that an with 100yield curve basis points now of rate cuts over the next year is a sign they have fallen behind. On the other hand i think it gets pretty tricky for them. The june jobs numbers could be very strong. Unemployment at 3. 6 . It will be resistant to the idea of cutting rates. I am not sure a july 31 rate cut is necessarily a done deal. It may not happen. It depends on what kind of data we see between now and then. Tom and what are the risks in terms of what we are hearing from President Trump when he lashes out at the fed over its policy . How much of a risk is that . Erik i think it makes the Central Banks job very difficult. Even if they want to cut rates, if they then cut rates it looks like they are acquiescing to pressure from the white house, which makes it looks like they are not fully independent. These kinds of attacks are making life difficult for the fed. That said im not sure if it will ultimately alter their course. The Federal Reserve at times in 2007,st like 1998, 2000, has resisted cutting Interest Rates until something dramatic happened. Only after something dramatic happened they finally started easing policy. Maybe they are doing that same thing once again. Yvonne the data justifies an aggressive easing or the fact that we have heard from the fed and the doj seems to coordinate response. At what point does it become a social selling selffulfilling prophecy and lead to a slowdown in growth . Erik the real question is what is the lag time between fed rate changes and actual economic response . Rate cuts came last week last year. Economy hasis the not yet started to respond to that but the markets are anticipating a response. They are only looking at the incoming Economic Data from june and july, they might not see a lot of reason to cut. The problem is the weight of that rate increases and the impact that will have is still in the future, and that is what the markets are anticipating. Markets historically have done a very good job of anticipating that. David what is the lag . That also goes to the yield curve conversation. If it is inverted like six 15 ago, looking for months down the road that is when a recession happens. What in your view is that time lag . Erik by my estimates about 12 to 18 months. So about 15 months is maybe the center. The fed got up to their current level of rates in december. We may not see the full impact of this until the First Quarter of 2020, give or take a quarter. That is what the markets are anticipating and nervous about. Tom you have been critical about the ecb as well, particularly in terms of negative rates and the impact on the financial sector. What else should europe be doing . Ink i think the irony here the case of the ecb look, i am all for easing Monetary Policy when there is not much inflation and growth is lagging. But there is such a thing as being harmful when you are trying to be helpful. 40 a not think that is encouraging lending. The paradox is the ecb might ease policy by raising the negative deposit rate closer to zero. Yvonne is at the same case in japan . Little to nohave tools left in their policy box. Erik yes. Of gdp,wants around 25 ecp around 40 . Japan is close to 100 . They also have negative shortterm Interest Rates. I think they are running out of room in terms of traditional and even semi nontraditional tools for stimulating growth. Yvonne yeah. David no more bullets. Yvonne erik, thank you. Kathleen hays, an exclusive interview with 12 30 a. M. Wednesday morning here in hong kong. Very dovish. He called for a 50 basis point cut. David maybe just to underscore his point, look at this bloomberg chart. Lots of data today not just in asia. Exports out of indonesia due for six or seven straight months of weakness. Ppi tracking that closely. That comes out today as well. Out of singapore. Is the function that can take you to this chart. It and hopefully you will find them useful as well. If you have an issue with them, send them in. This is bloomberg. Tom welcome back. Lets bring you a quick check of the latest business flash headlines. Fullyear cutting its forecast due to costs related to regulatory scrutiny of diesel powered vehicles. It faces extra fees of a quote, high three digit million euro amount. Daimler had targeted slightly higher earnings this year but says the additional burden hit the Second Quarter and full year supposed to be similar to this year. They are planning to raise wages. Owner will attempt to encourage top workers. Annual pay will be more than 180 thousand dollars for workers in the u. S. And europe. Salary ise retail about 80,000 last year. Softbank Group Founder says he wants to relist arm holdings within five years. Softbank bought them for 32 billion in 2016. It was the uks largest listed tech company at the time and they can be found in almost every smartphone and tablet. He has not decided where the new Public Offering will be held. David what do we have . A couple minutes to the open. First trading day of the week. It has been a decent run of gains so far for asia, for the world. E. M. s up for a fourth straight week. This is where china is. Csi 300 back close to a two month high. You notice this bit right here let me get my pen. From were your two tweets trump. That is the jumpoff point as we get underway. Have a look at where we are. Yvonne seems like there is a lot of optimism on g20 that perhaps you will get a status quo. Even though that could be the best Case Scenario or a rerun of buenos aires. What we are seeing when it comes to the hang seng, slightly down at the moment. Hshares down by 14 points. Offshore renminbi be unchanged. Sixweek low is for off share china. What a week it was last week. Up close to 5 gains for the week. We stayed around the 3000 level for some time since april. Technically speaking we are seeing decent momentum in the hshare market. Haad david shenzhen up about 4 . Ofnning to buy 80 carrefour. We will flesh out the details next. This is bloomberg. This is bloomberg. Yvonne youre watching Bloomberg Markets china open. Live pictures of shanghai at the moment. Seems like we are in a Holding Pattern when it comes to stocks with days away from g20 and the meeting between far than a trump and xi. There was plenty between President Trump and xi. There was some hope last week of a breakthrough but this morning there is escalations of tensions with iran potentially offsetting this rally. Those geopolitical risks back with questions over iran. Frankly missed mixed messages coming out of washington. You had that blacklisting of five additional chinese tech companies, then Vice President pence, his speech was held back. Mixed messages from washington. In china we have green on the board. Points. Up around two China Shanghai composite up a smidge. Not much gains so far. Some of this news around trade. Credit suisse lowering their targets for the csi 302 3600. It is currently at 2800. Ng to around sunni, we had that story about 80 chinese retailer by an stake. Investors appearing to like that move. ,he stock is up about 4. 9 suning. Than friday. Weaker this is the cnh, pretty much unchanged as yvonne was saying. Of course we has had the likes of our strategist saying maybe there is overly optimistic views on the currency given the contentions and concern around trade. On the back of what we have seen from last week. You look across different pairs, the dollar has been exactly basically given up all of its gains. Fairly more consistent compared to what we are seeing in china. Consistent with the region with equities basically pulling back. Not a lot of trading in futures at the moment. I am looking at the split. We are looking at the vast majority of the hang seng down 40 points to the downside. Still very early. Tracking which we are and oil and iron ore. Within that space you have a weak dollar and gold. What are we doing with gold right now . We should be at 14. 05. The reason i mention that is within the markets last week one of the big gainers with the gold mining stocks. Unexpectedly it was the bright spot given that push. Yvonne fortune 10 now for gold futures. Lets get to our next guest, Greater China equities portfolio manager. She joins us in hong kong. The last time we spoke was probably a couple months ago in march. You are still pretty defensive at that time. Im wondering now that we see hong kong as well the best markets, ashares 70 best week since april. Is now the time to accumulate more risk . We take within equities we took more exposure, sweeping switching out into some Consumer Discretionary since cyclical sectors. Right now we are looking into some longterm evident growth because the chinese fund is more focused on that. [indiscernible] i know it is different for stock. Generally what dividend yield do you get . Lilian about 4 . It will be a combination of equities. There are things like banks and utilities. Other sectors were stronger. Consumer safe goals. Find things. How are you positioning yourself ahead of g20 . What could be the worst Case Scenario . What could be the reward if we get some kind of deal . [indiscernible] optimism being priced in. Clue aboutve a 100 the g20 meeting. We still believe over mediumterm there will be constructive language. But we dont know. Directional agreement. To be filled in the next couple months. Trade discussion will be longer than we expected. The small caps in china did pretty well last week. Chinese index about 5 up. Regulatoryround changes around backdoor listing and restructuring. What do you think the longest term impact of those changes will be . Do you still see Small Cap Value . Valuation isld say still not really that cheap as it has always been. Going forward in terms of valuation we have to look into every single stock situation. Every stock might have their own individual story. Overall valuation, there could support. Ore regular be onle stock basis will an individual case. [indiscernible] want to get your views on the brokerages. We got news last week of state banks being encouraged to increase lending to brokerages. Is that supportive for that part of the economy, that sector . Is that something you would look to to make them more attractive, or does it expose them to further risk . Lilian i think the overall monetary movement you are undertaking over the last two weeks or so is trying to provide sufficient liquidity to the system. Just that they will not be any unintended the quiddity risks. I think there is still a mainline we want to do. In terms of overall market equality it should still remain ready ample. Meant mean it will significant monetary easing. David we are going to get an earnings season soon. Your expectations for this quarter and the full year . Lilian still Downside Risks in terms of Second Quarter revisions. Because we have seen quite a bit of pretty weak Economic Data so far. Although over the last two weeks we have seen recovery. But if we see any recovery it will be seen in early trading. So there will still be downside in terms of earnings. I think most of the pricing. August, investors could expect weak earnings. [indiscernible] have notou think we exactly priced in the fiscal policies which have been laid out . Lilian [indiscernible] we dont have full details yet. If we see any earnings, that could be one. Tom you amongst any others think there are opportunities in the Consumer Staples sector. I just wonder if there is concern around softer wages, rising unemployment, when this bet on Consumer Staples look a little less positive. I think overall it will not. What we are talking about is basically a focus on the consumer. That would not be too much affected. [indiscernible] yvonne thank you. To the first word news with su keenan. U. S. ,ts start with the which is to impose major new sanctions on iran later monday just days after the downing of a navy drone in the gulf. President trump tweeted the Islamic Republic would never be allowed to make Nuclear Weapons, and the Current International verification of tehrans plans are not acceptable. He and senior advisers also warn iran not to i am not looking for war. If there is, it will be obliteration like you have never seen before. But i am not looking to do that. You cannot have a Nuclear Weapon. You want to talk . Good. Otherwise you are going to have a bad economy for the next three years. No preconditions. Su the u. S. Outlined a potential peace plan for the middle east. 58d kushner released a billion of alan comes ahead u. S. Led seminar this week. But palestinians are boycotting say his plan has nothing to how to resolve their troubles. Australia says there are limits to how much further monetary easing can achieve. Philip lowe says the markets are already pricing in rate cuts to major economies. While the Global Economy has slowed it is still governments who consider fiscal entity for structure spending as alternatives developed measures. 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. Put five morehas chinese tech firms on a trade blacklist just days ahead of a highstakes meeting between President Trump and chinese leader xi jinping. Our chinese correspondent has the story. What do we know about this . Four firmsanies were at a Research Institution. Nationalemed a security concern because computers are concerned with Chinese Military development. This follows the blacklist huawei was put on and wish u. S. Firms have to get a license from the government to sell components to them. The presumption is those requests are not going to be approved. This complicates chances of a trade deal. It also raises concern this trade war is not just about trade, it is spiraling into a broad economic conflict in which Chinese Companies cannot get u. S. Parts. The timing is also curious in that it is not the first time, but the second time that pences speech has been delayed which is expected to be critical on chinas human rights record. Somewhat this trade deal done asap. Another is pushing for a multifaceted backlash against china. Yvonne there are a lot of questions on how huawei can fit into all that as well. The company is suing the u. S. Over the seizure of telecoms equipment. They are digging in their heels for a long fight as well. Is one of a string of issues huawei has against the u. S. And the details are that huawei said in 2017 it has shipped equipment from china to the u. S. To a lab for testing and when they try to ship it back it was held in alaska where officials were checking to make sure it was adhering to export licenses. Huawei said there were no licenses it needed to apply for at the time and it was following all the rules. Now it is stuck in this twoyear bureaucratic limbo and is still not heard a decision from the u. S. Theuawei is digging in for long run weather on the big issues or in this particular case which has been hung on for years. Tom thank you very much, selina. Coming up, the malaysian Prime Minister system with Haslinda Amin to talk about the u. S. China trade war and the impact it is having on malaysia. This is bloomberg. David welcome back. Divergence across the markets. Southeast asia in one. The philippines. The rest of the region is either down or flat. China seeing some pressure. Hong kong down. Watching the indian currency in the offshore markets. Yvonne this report from the Business Standard that the r. B. I. Deputy governor has resigned. Months beforeix the scheduled end of his term. It, he saysbehind unavoidable personal reasons. So we are seeing markets move when it comes to your offshore rupee at the moment. Dropping on that report. 69. 57. We are talking aussie now. Yvonne the trade war is a hot topic when it comes to this part of the region. The group says they are adopting a regional strategy. International correspondent joins us from bangkok. What were the teak Key Takeaways from the meeting . Thatnda one of them was this is for david they will jointly bid for the 2034 fifa world cup. Importantly,more it came up with a strategy for the indo pacific. It was a term used by trump himself. They said it will remain committed to build cooperation and trust. It also wants to continue to and madetrading rules all these antiglobalization sentiment we are seeing. Of course the u. S. China trade war has impacted asean in a big way. We have already seen how this part of the world has subsided in easing. Tom it has. Something of a tugofwar between the u. S. And china when it comes to asean nations. Do they have to make a call and choose one of these countries . Concern, that is the but not the case when it comes to malaysia. He says he does not see that happening. We are friendly with all the countries in this world. But we also believe in free speech. Need we feel a something that sounds critical of others, we should exercise free speech. And we criticize when necessary. Haslinda there has been some concern over the rise of china. Singapores Prime Minister recently had concern that at some point in time because of the u. S. China trade war, countries in Southeast Asia in particular will have to take sides. Do you see a day coming when that will happen . No, we will not take sides. We will tell them dont go to war. Thinkda but dont you countries will have to make a binary option . I think they will come to their senses. They know it is damaging to both the u. S. As well as china. I think if trump loses the next election we might have a solution. [applause] haslinda what role do you see china playing . And do you see the roles within the chinese between china and u. S. Being swamped . No. Has theknow if china ambition to be number one in the world, but china is growing ithin reach, so therefore must have a say in world affairs. Before this we only heard washington. They come up with all kinds of ideas and we are told to accept them. But china should be more democratic. They invited everybody to go to beijing and talk. Even a country with the population of only 300,000 can sit with china which has 1. 4 billion people. Ideadont like the whole of cooking something up somewhere in the west and then asking us to accept that. Haslinda the u. S. And china are equally important to him. To asean. Rock andlly between a a hard place. Yvonne thank you. You can see that in your view in full and on special program coming up on july 3 and july 4 at the times on your screen. Throws in theur towel. They had divested a fair amount of interest. We will get the details of that deal announced over the weekend that suning this is bloomberg. Welcome back. Carrefour is the latest casualty of chinas increasing drive into Online Shopping. To suning. Com. G why are they stepping out . Carrefour has been in trouble for some time and has been looking for buyers for chinese operations. To establishfirst in china in 1995. Giants took over a huge amount of Consumer Shopping in china. It has been declining for a couple years. Yvonne what do they want in this asset . A retailer that has many Stores Across china itself. It started as an electronics retailer. Trying to go into groceries and other businesses as well. Alibaba tried to build off and online retail. Leading local companies which know more about the ecommerce base and have more local ties with the logistics and deliver network which has become essential in china. But i think for carrefour it represents a disappointing end to its present time in china even though it retains a 20 stake. It is really a sign it will not be able to get much further on its own in this market. David rachel, thank you. At some movers across the markets as we wrap up this first hour. The equity markets, nothing much interesting. What is interesting is the move we are seeing up. Dollar gaining momentum against them. We heard from the r. B. I. , sure you have seen reports of the deputy might be leaving. The r. B. I. Spokesman says they are not aware of his departure. 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. Rishaad nearly 10 00 a. M. In hong kong. This is Bloomberg Markets. Yvonne iran braces for u. S. Sanctions after the downing of a navy drone. President trump insists he is not looking to go to war. David the president also says he never threatened to fire Jerome Powell despite being unhappy with the fed policy. And we hear from the malaysian Prime Minister signs the government has brought little real change. Little real change actually from friday. Gold on the way up again. Oil also getting a bit. David also watching the offshore rupee. Conflicting reports saying the deputy set to leave the r. B. I. Now saying they are not aware of him leaving. So we will check the story. Yvonne we are seeing the offshore rupee falling a bit on the confusion. Take a look at what we are seeing in terms of markets. Not seeing a lot of dimension. Still waiting nervously for the g20 just days away. We heard from the Foreign Ministry in china saying there are discussions in place for that bilateral meeting. Things at least are progressing on that front. Talked about the equity story, not that interesting. Up a tent of 1 . A share market now basically flat although we tested above the 3000 level we really have not seen since april on that trade optimism. Last week we saw the best week in terms of a rally for the asian market since april. U. S. Futures are still higher after we braced for record highs on friday. Then we pulled back on escalating tensions with iran. We talked about that on the impact of commodity markets. Dollar china slightly weakening further the renminbi. Slightly weaker for the pboc today. Dollar seems to be climbing a little bit back after erasing most of their gains for the year. Looking at the board to show you what is going on with commodities. Crude continuing to stay quite elevated. Continuing to see a bid at 14. 10. Could be dollar weakness, the fed, escalating geopolitical tensions. Steel features in china. Could be more about how it could be catching up with iron ore, that rally we saw last week. Some reports in china talking about a city extending steel curves in july. Perhaps further tightening when it comes to supply of steel. So we are seeing it up 3. 5 . Also watching the offshore rupee as we see more detail of what happened when it pams it comes to the Deputy Governor of the r. B. I. Apparently unavoidable personal reasons had him step down six months before the end of his term. Lets get the first word news. Su lets start with the governor of the reserve bank of australia. He says there are limits to how much further monetary easement can achieve. Markets aresaid the already pricing and rate cuts in major economies. While the Global Economy has slowed it is still in reasonable shape. He says governments should consider fiscal and Infrastructure Spending as alternative stimulus measures. The league read jumped after the turkish president erdogan suffered a dramatic election defeat in istanbul. The vote was rerun from march after the president contested a narrow loss for his ak party in the race for mayor. But the opposition candidate won again by an even bigger margin. Months of Political Uncertainty have dragged on the lira. It has lost about 10 of its value against the dollar this year. The u. S. Has outlined a potential peace plan for the middle east. President trumps soninlaw Jared Kushner released a 50 billion blueprint to loan the Palestinian Economy in the event of peace with israel. The plan comes ahead of a u. S. Led seminar this week. But the palestinians are boycotting the event and critics say kushners plan may flop because it says nothing about how to resolve the regions political troubles. Everdent trump denies threatening to demote fed chairman jay powell, but insists he has the right to do so. He repeated his long running criticism on meet the press and said he is not happy with the way Interest Rate policy has been handled. Trump picked powell to replace butt yellen as fed chair has repeatedly attacked him for raising rates too far, too fast. 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 the Trump Administration saying major new sanctions on iran later monday coming days after tehran claims the downing of a u. S. Navy drone in the gulf. President trump limit the Islamic Republic would never be allowed to make Nuclear Weapons and tehrans plans are on except double. Trump said in an interview on nbc he is willing to talk. I am not looking for war. If there is it will be a bluray like you never seen before it will be obliterated in like you never seen before. No preconditions . Not as far as i am concerned. For more on where we are right now, Jodi Schneider is with us. Where do we start . Jodi it is unclear how much pressure that would ramp up given 80 of irans economy already is sanctioned. The latests is attempt by the Trump Administration to try to get them to stop before they do anything else with Nuclear Iranian nuclear enrichment. This is the administration our attempt. S President Trump obviously wants that to happen in terms of sanctions. Saying he would look to military intervention intervention only of sanctions do not work and stepped back from a military strike just moments before it occurred last week after the newly navy drone was shot down. At this point he is not giving into his home his more hawkish advisors. Some say they want to see military intervention. Trump stepping back from that. Rishaad one of those names is john bolton. We also have him changing his language towards that. What is the language on that . We saw on friday these planes were called back. Jodi the story is President Trump had just moments before this attack was supposed to occur said did not do this, saying he decided once they were he heard there would be a number of civilian casualties he did not want to do that. A lot of questions still remain about that strike that did not occur. Whether congress was consulted, there are a lot of questions about that. At this point he seems to be sticking with his past comments. He threatens Nuclear Intervention Nuclear Intervention but he does not want to see military and a lot of places. He prefers the sanctions around. Is whether he would be serious about talks. He said that in the clip we just saw. Secretary of state mike pompeo is in the middle east this week and will be talking to others. He said he would be willing to talk with iran. Hard to see that happening in this current environment that apparently is with the administration is putting on the table. David seems like a pattern. Threatened tariffs then pulling back. We talked about the u. S. Side. What are the iranian saying . Jodi we have not really heard from them much the last few days. But in recent months they have made the case there is really nothing to talk about at this point the u. S. , especially since President Trump pulled out of the agreement and put pressure on the other signatories to that agreement, the europeans, to leave it as well. They said it was wordplay. That is what we have heard from them about President Trumps offers. And his actions did not indicate he is willing to talk. Of course he keeps saying the iranians want to talk. At this point it looks at the ratcheting of the sanctions, which comes the same week President Trump will be heading to the g20 and i assume they will be a lot of talk about iran there. Rishaad jodi, keeping abreast of what is going on. David that has driven up the price of oil. Also driven up the price of gold. Have a look at the bloomberg chart. You know with the price of gold is. Your seconddegree move. This is how many ounces of gold of silver can gold buy. The last time you could buy 91 ounces of silver with one ounce of gold was way back in the when you had the first desert storm. Week,ioned this last Richard Deere and cindy crawford. Obviously a very long time ago. Lets bring in eric robertson. Very nice to see you. We have made the case for gold. Is there anything else he would like to add and what range are we looking at right now for bling . As you mentioned we have been very constructive on gold for most of the year. I would take a slightly different angle. I think people would focus on the geopolitics and the g20. But the bigger story is the major collapse we have seen in global Interest Rates around the world, frankly. Since november of last year. The amount of the amount of negative negative yield in debt is up over 70 since october. In many markets we are heading to zero or negative Interest Rate. I think that really raises the prospect of a much more significant rally in gold. You can make an argument for much higher prices here. Rishaad i am going to bring up and strengthng rsi index. I realize it is showing quite overbought territory is where we have gold at the moment. Maybe the sheer speed of the movement. Does that concern you at all . Eric concern is probably too strong of a word. Highly aware of it. It makes one a little cautious in the shortterm. I would argue implied volatility for gold options has gone from 8. 5 to something along the lines of 13 in the last couple weeks. Tells you the market was unprepared for the move and i think the technical indicator you highlighted shows a similar message. Shortterm could we get a pullback . Absolutely. But the mediumterm story remains very comprehensive. Low ratesterms of how can go, we can pick between sweden, austria, a big part of europe. The 10 year and a year u. S. , i would like to ask you about that. 1, 2, 1. 25, lets call it some of the extremes. Does that make sense to you . Eric our forecast for the balance of this year is at 10 year yields could drop to 1. 75. I think where you are seeing these more aggressive forecasts come from is the fact that if you look at term premium on u. S. Treasuries, which is a measure of some incremental risk in the yield curve, that measure is now at a historic low of 90 basis points. To 2016 the back last time 10 year yields on treasuries made a quote, unquote historic low, premium was only about 75 basis points. We have seen incremental demand for duration, incremental demand for u. S. Treasuries. I think that disconnect between term premium and treasuries are where people are coming up with the idea we could see a move to lower yields. Considering demand for duration we see globally, not just in the u. S. , i think it is certainly possible. Obviously,e dollar if no one is into it everyone is buying it at the moment. If you look at yield differentials, you could make that case but not much else. Is an interesting narrative here. If you look just at the g10, where you have negative policy rates and negative Interest Rates and a number of the countries, i think what has concerned people is they would like to sell dollars but in the g10, what do you buy against the dollar . That is also a supportive story for gold. What we have been arguing issue is if you start to get negative on the dollar than emerging markets represent perhaps a more compelling story for dollar shorts. Rishaad good stuff. Eric, stick around with us. The malaysian Prime Minister telling us about his plans to hold Goldman Sachs accountable. David and we head to kuala lumpur to look at the wider economic challenges facing the p. M. There. We will impact that story. This is bloomberg. David i thought yvonne was starting but clearly we are. Look at where yields have gone. Especially since the last meeting in may. Agreement among policymakers the case for accommodation has increased. Especially in the last six to eight weeks there has been elevated uncertainty about the outlook. The economy is hitting crosscurrents now. There has been a marking down of Global Growth prospects, uncertainty about International Trade. Some evidence that is weighing on sentiment. We are monitoring that closely and will act appropriately. David jay powell speaks on tuesday and a raft of big events for him. Towards the end of the week you have the thailand decisions, and out of china. Rishaad lets get back to eri. , just getting back and talking thet the fed, it felt like rate cuts are coming, that is the general view. The question is how far and how much. Railing 180 basis points since november. A november it was yielding 3. 3 . Now it is yielding about 1. 5 . What gives in all this . Your choice of timing in the calendar is important. If you go back to october and november, we had a couple factors. One was jay powell saying at the time he thought the fed was a long way from neutral. We all agreed that was a policy mistake at the time. Markets were priced for a series of rate hikes from the fed. We have gone in about six months time from expecting the markets inspecting two to three two expecting 100 of cuts. It has been a dramatic shift. We expect the fed to cut in july with a 25 basis point cut and followed up in the second half with a 25 basis point cut. In our mind the fed is clearly moving to reducing the policy rate. Yvonne it seems like what we got from the markets is everything seems to be a buy now. Seems like when it comes to the equity traders they seem to be hoping for the other two and the badly. Other to end eric at the moment we would agree with your observation. We have seen a significant divergence the economic outlook. Our view is the bond market is roughly consistent with our own economic views which is that Global Growth is slowing. Importantlyaps more we have seen significant softening and inflation not just in the u. S. Got but globally. This inflation story i think is what is really driving bond market pricing. Equities are clearly responding to the prospect of more stimulus from the fed and as long as the Global Economy doesnt go into a recession, equities may be ok. I think certainly prices here and now look a bit stretched in our opinion. What is aer than gold top trade you have put in place recently . Eric we have turned more negative on the dollar over the last three to four weeks. As we were just discussing that is a difficult proposition against the g10 currencies holding negative currencies and places like euro and swiss. Certainly in emerging markets, if you believe Global Growth is only slowing or moderating but not going into a recession there are a number of highyielding markets that look especially attractive to us. Indonesia and brazil. The shift in our portfolio if you will use to increase our gold exposure and we have to leave it there. Just want to alert you to lines coming through from malaysia. He deputy Public Prosecutor speaking out. The court has set a case for september 30 as the next hearing for goldman. This is off of our conversation over the weekend talking about the compensation goldman offered million to settle this case. He said it was not enough. They were hoping for billions of dollars. We will continue to flash that out and have more on that conversation later on at the bottom of the hour. Coming up we will hear from to discuss the political outlook for the country. Live from kl. This is bloomberg. Rishaad we are just checking the latest business flash headlines. Exxon looking at selling its remaining assets in norway. It would further accelerate the shakeup of the countrys oil industry. Exxon is one of the pioneers of the Norwegian Oil industry and remains their fifth guest producer even after selling the fields it operated directly. There has been interest and a deal could happen this year. David lets have a look at dime. At daimler. Regulatory scrutiny of its diesel powered vehicles. Y face they had targeted higher earnings this year but says the additional burden will hit any secondquarter and fouryear profit is forecast to be similar to last year. Rishaad the softbank founder says he wants to relist the british chart Chipmaker Arm Holdings within five years. It was the uks largest listed tech company at the time and its products can be found in almost every smartphone and tablet. He says he has not decided where the new Public Offering will be held. Yvonne lets take a look at some movers. When it comes to equities we are seeing some big movers in hong kong. Here. Lk it has been down substantially the last three days. Tech stocks. Down 3 . A lot chip stocks falling in japan after the u. S. Blacklisted five chinese tech firms. A shanghai petrochemical falling 10. 5 . Still figuring out what is going on there. Cathay pacific lowering targets when it comes to price targets. We are seeing the stock down some 2 , close to that. Brokerages in focus. China boosting financing to ease the funding squeeze. Boosting lending as officials try to ease the strains we have been seeing. From the nikkei talking playersmsung, kia, big in korea moving production out of china. Kia motors up close to 3 . Gold miners in china following the gold spike this morning. This is bloomberg. This is bloomberg. Kong in a. M. In hong 10 29 p. M. In new york. Im su keenan with the first word headlines. Reportse is dropping on that the r. B. I. Deputy governor has resigned. Indias Business Standard stepping says he is down six months before his term is due to end. The newspaper says he will return to the u. S. To work as an economics professor at nyu. R. B. I. Has for the told them he is unaware of the developments. To impose the u. S. Is major sanctions on iran later monday, just days after the downing of the navy drone in the gulf. President trump tweeted the Islamic Republic must never be allowed to make Nuclear Weapons, and that the current verification is not acceptable. He and his senior advisors also warned iran that they should not mistake a measured response for weakness. A on monday, there will be significant set of new sanctions, and the world should know that we will continue to make sure it is understood that those efforts we have engaged in to deny iran the resources to build out their Nuclear Weapon system in their missile program. To north korea now. The country has released a photo of what it says is kim jongun reading a letter from President Trump. State media describes the tone of the message as excellent, and that he would take the contents seriously. Mike pompeo confirmed the letter had been sent, and that the administration is ready to restart talks. There has been little contact between the two leaders since they met in hanoi back in february. Latestthe u. K. , and the on the race for Prime Minister. Leading brexit supporter Boris Johnson has repeated his view that the u. K. Can and must leave the European Union by the end of october, writing in the telegraph that the split will happen if he becomes conservative leader and Prime Minister. His campaign has suffered a big setback over the weekend after police were called to his london home amid reports of a heated argument with his partner. He has so far refused to comment. The grouping of Southeast Asian nations have adopted a regional strategy to protect their interest amid increasingly strained geopolitical tensions. The report is carefully worded to side with neither the u. S. Nor china. This comes after months of discussion in which leaders were reportedly divided right up until the beginning of sundays summit in bangkok. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Joe kaiser says trade tensions between the u. S. And china are a concern for the company. He says the two countries are its number one and two markets respectively. Siemens, this is our number one country, china is number two. You can understand that this is obviously concerning. Base is mindful about the geopolitics and the economics, there is some slow economy andglobal we are very mindful about it. How are you changing what you are doing as a result of that . We arent. And ween to customers are very strong in both the medical sector, and people are looking for new productivity so we can help them make products cheaper which obviously helps them to stay positive and continue to invest but obviously geopoliticsdow is the major factor of Economic Growth. They are unsure about what happens. So when you have board meetings or when you were sitting in your office and thinking about what to do, how are you modeling whats going on between the u. S. And europe and the other tensions like with whats happening between the u. S. And iran . The only way to get out of geopolitics, of who is going to be the number one in the world in the future, that is what its all about. The only way to look at this in the long term, meaningful manner is to localize your innovation, your production in the United States. Today we have cut more than 22 and we arerevenues doing business in 50 states with almost 60,000 people looking for customers. Similar in china, we have about 40,000 people. Localization and local innovation is the key to counter unilateral matters of global trade. Ceo speakings exclusively to guy johnson. Is the of that story u. S. Outputting five more chinese tech firms on its blacklist ahead of the highstakes meetings. We will see what happens between President Trump and the chinese later xi jinping. We are in china for the story. What do we know at this point . Right. Those companies include for chinese firms as well as a Research Institution that the Commerce Department says are involved in chinese supercomputing efforts and they claim this is a National Security threat because they are said to be developing the Chinese Military equipment. It follows a similar blacklisting of huawei last month, in which Companies Need a license in order to sell to these chinese firms, but the presumption is that those licenses arent going to be approved. This of course complicates efforts to reach a trade deal, with the g20 days away. It escalates concerns that this isnt just a trade war but is spiraling into this broader economic conflict in which Chinese Companies cant get access to u. S. Parts and u. S. Companies have to shift their supply chains. It also comes at a time in which the u. S. Is sending mixed signals for the second time in which they were planning to give a critical speech on the chinese human rights record, but that is being delayed, which reflects that theres a group of people trying to have a multifaceted attack on chinas companies, but theres is another group that wants to reach a trade deal as soon as possible. U. S. Awei is also suing the over the seizure of telecom equipment. What more do we know about this case . It has beenims dragged along bureaucratic limbo. 2017 it hadat in equipment that it shipped from china to the u. S. For testing in a lab and that when they tried to shift that equipment back to china it was held up in alaska where officials were checking to see if it had all the qualifying export licenses. They claim in 2017 there were no export licenses that provided all the necessary information, and they are complaining that two years later they still dont have a decision on this case. With their attempts to sue the u. S. Government, it shows they are really digging in for the long run. Thank you very much for that. Selina wang, our china correspondent, from beijing with these latest trials and tribulations. Want tos a stock we bring to your attention trading in hong kong, and apparel maker. 19 , which would be the biggest drop on record. You might have heard the name bonillas research, where the shares are at zero. We tried to reach out to the company. They said they couldnt immediately comment on this report. Isentially what the report they are short on shares because of concerns over financial reporting, so we are down 16 . 80 of china is what they are holding, 700 million usd. Right. Lets tell you what we have on the way. We will be hearing from the malaysian Prime Minister, to discuss the political outlook for the country, live from koala lumber. This is bloomberg. Welcome back. Prime minister says Goldman Sachs offered about 240 million usd as compensation for the role it played in the 1mdb missing money scandal. But he says that is nothing close to enough. He spoke to us that the business summit in bangkok, where haslinda is. It was a wideranging chat you had. Tell us about the highlights. With regards to the goldman case, because the amount being offered as small compared to the huge killing, his words, it made for the 1mdb case. He also said they are considering filing a civil lawsuit on top of the criminal suit that is already being faced by goldman, but that remains to be seen. Take a listen to the conversation. Well, it is little compensation. Can you clarify let me give you a figure. 1 billion, more or lessor on the nose . They offered one billion ringgit, but i think the total amount is about 6. 5 billion usd. But how did you come up with that figure . Goldman made 600 million in fees, u. S. Sachs. Not just goldman Goldman Sachs took 10 to heftyn, in addition Interest Rates of 6 . Thats not usual for governments. Governments normally get less than 3 . But this 10 extra that goes to Goldman Sachs means that we get 90 of the money raised, but we see interest on 100 . Thats what it means. May haveoldman sachs feelings on this. You are waiting for a response from goldman. What was the query . Wanted to settle out of court if possible. It seems they are not willing to offer a reasonable sum of money. What is the reasonable sum . We would like to get our 10 back at least. When will you take legal action . Upon if theyds will try to expedite things as much as possible. How long are you willing to wait before you take legal action . We are very patient. [laughter] cant tell them to please expedite the matter, that would mean withdrawal. Will you be filing a civil suit on top of the criminal suit that has already that depends on the case. We will have to examine the case. That was the malaysian Prime Minister speaking at the business summit in bangkok. A goldman representative says the bank wont be commenting on any negotiations with authorities, and if you are wondering, you can see my interview in full on our special 4ogram, coming up july 3 and at the times you see on your screen. Looking forward to that one, thanks. Scandal,truggle, a sex slow progress in implementing a lot of these economic reforms. Some things just havent changed. It does seem that way. The Prime Ministers engineering the first transfer of power in decades, but questions remain over when it will be handed to the successor. Our next guest seems to be on top of the problems facing malaysia. Joining us through the phone from koala lump or, thank you for joining us. More than a year after this stunning election upset, you are saying they still have a handle on things, but somewhat argue that not much has changed. Is this a functional Coalition Government . Well, thanks for having me on. It is a functional coalition but one has to bear in mind that not only many people in the new government but many politicians are somewhat inexperienced and running but they also have to work with a Civil Service that has been subservient to the previous ruling party for more than six decades. Culture a change of that needs to be relieved, at the same time the coalition is coming in against quite a strong so they are working with the coalition that is generally pragmatic, but theres a lot of resistance within the public space and also within the bureaucracy that is trying to adjust to new ways of doing business. At the same time, they have encountered very serious irregularities and problems that will take time to be fixed. So the reform agenda will take two to three years to be addressed and bear fruit and in the meantime they will have to contend with criticism from the public in the political arena. He is in hisis, 90s, although he looks great for that age. Time is obviously marching on but we dont have a Succession Plan in place and we do have someone in the wings to replace him but when is that going to happen . The agreement is within two years, and that brings us to the middle of next year. I mentioned a specific day and hethink the view is that doesnt want to mention a date because that would make him into a lameduck Prime Minister, and he has very firm sites on the issues he wants to address. But that does give rise to tensions. We have seen this particularly within the followers of his successors. Over theso uncertainty nature of the transition. And it seems based on what you were saying that we are still in the middle of that they aren because opposed to some of these changes. Give me one issue where he has made a lot of progress and another where he hasnt at all moved the needle. Of progressde a lot with respect to fighting corruption and addressing the problems of governance within the government structure, and to that end i think he has put in pretty credible people who are not beholden to business interests to address the issues, people like the judges, the anticorruption later, and the chief of police. One does have a certain level of has that the individuals he put in place are quite credible to take on the job. In addition, there is commitment to command the countrys laws so that institutions such as the police, the courts, the election commission, are independent, reporting to the Parliament Rather than the Prime Minister. But all of these things actually take time. Main concern is the economy. They want to see the prices of goods stabilized. These are issues that they are having some trouble addressing. But are fighting corruption at the same time addressing the economic concern is much harder than what was once originally contemplated. I was reading a quote from a political analyst, a leopard never changes its spots. Is this the same we are seeing in the 80s, theres a lack of a transition plan right now and he says he may step down in a year or so. What does that tell us about his intentions . Reads between the lines in the body language, a lot has not changed. There is the certainty he has about his decisions, other people have other ideas. Hassecond thing is how he used the Prime Ministers prerogative. Have not gonets without criticism. He has appointed key people to policies sts and that does give some comfort to people around him. Time, the management style is constrained by the fact that this is a new coalition. There are limits to how far he can carry his prerogatives with the same policy and action. Thank you so much for coming on the program. He mentioned price stability the malaysian equity markets have not gone anywhere. Have a look as to how it only one across the asiapacific that is still down for the year. Explodedier markets from that and i would leave it up to you with what to do with that. Lets look to india, heading into the session in mumbai. I reporter is standing by. You talk about the pain trade here, three stearate weeks of losses when it comes to indian stocks. Is there more pain ahead . Be a looks like it could volatile week because this is , we couldy option anticipate more volatility. Indices havethe been taking supportive, crucial levels in anticipation of a bounceback after the fall off weve seen over the last few weeks. It was a big selloff, even in the Broader Market space. Most of the stocks were beaten down heavily. Niftyr 11,600 for the stands to be a crucial support level. If it holds on you could anticipate a bounce to the upside. Investorsnstitutional went closer to 400 million, not a bad number to go by after a week of being down in trade. Thank you. Going up, our reporters chapter chart headtohead, and we will be going headtohead. Battle of the church is next. This is bloomberg. Sorry about that. I was going to reintroduce the battle of the charts, but i cant do that, given that one of the contenders decided to shy away from the challenge. No doubt we will have it for you this time tomorrow. Can have theu latest business flash headlines. The chinese retailer planning to buy an 80 stake in the chinese division, explaining on the 700 million in cash for the deal, awaiting regulatory approval, expected to close by the end of the year. A great number of european retailers are scaling back in china, shifting to Online Shopping with favors to local operators. El dorado resorts is said to be buying caesars entertainment. We are told they are paying 18 billion, that values caesars at almost 13 per pot, more than 30 premium when you compare that to the friday close. They completed a bankruptcy two years ago following a leveraged buyout led by Apollo Global and tpg. Wall street planning to raise rates by early next year, coming from the nikkei news. It is going to be boosting salaries for management track employees to encourage stock workers. Annual pay will be raised to more than 180 thousand dollars in the u. S. And europe, about 90,000 for those in japan. The average valerie is about 80,000. Anpaladin energy is selling 85 stake in malawi. They will require this of steak at local news resources. The company will receive almost seven dollars usd plus a return of one of their 7 million previously advanced for its Environmental Performance bond. You are watching bloomberg tv. It is almost 10 00 here in bangkok, 8 30 a. M. In mumbai. Im Haslinda Amin. Im rishaad salamat. Last hour of the morning session in hong kong. This is a look at our top stories. I ran bracing for new u. S. Sanctions after the downing of the navy drone, but the president says he is not looking to go to war, also saying he never threatened to fire Jerome Powell, despite being unhappy with policy. The drumbeats of her letter for Interest Rate cuts. Investors are looking ahead to the g20 and the chance to provide stalled trade talks. It could be the faceoff of the year. This is bloomberg. We are coming to you live from bangkok, where 10 leaders recommitted themselves to the rules of International Trade amid rising trade tensions between the u. S. And china, also committing to push through china they say it will help promote growth in their respective countries and ifde will cap 30 overall that were to materialize. Lets have a look at whats going on market wise this is the position of hong kong, lets have a look at the chinese market. Up, malaysia on a move to the downside. A lot of action on the currency market, we have seen this shift concern and there is about whats happening with the bond market and how much the rally can go on for, generally speaking. We have a swathe of currencies doing well, with the yen having the handle of 107, the pound at 132. Ng and the euro looking forward to the indian session, we have news to digest their concerns at the r. B. I. , stepping down six months earlier amid reports that they were going back to the u. S. University. The rupee losing a little bit of ground against one of the few losers, with the dollar on a tear to the downside. The yields are seven basis and that is the position for india. 43 minutes to go before things get underway. Lets get over to beijing and have a look at whats going on in terms of the first word news with selina wang. Thank you. President trump denies ever threatening to demote federal chairman Jerome Powell but insists he has a right to do so. Not happy with the way interestrate policy has been handled. Australia says there are limits to how much further monetary easing can be achieved. Philip lowe says the markets are already pricing in cuts, and that while the Global Economy has slowed, it is still in reasonable shape. He says they should consider alternative measures. President suffered a dramatic election defeat in istanbul. The vote was rerun from march after the president contested a narrow loss in the race for mayor, but opposition candidates won again by a bigger margin. The Political Uncertainty has dragged on the wearer, which has lost 10 of its value. Borisg brexit supporter johnson has repeated his insistence that the u. K. Can and must leave the eu i the end of october, writing in the splitaph, saying this would happen if you became conservative leader. His campaign suffered a setback amid reports of a heated row with his partner. Johnson has so far refused to comment. Administration says it is set to impose major new sanctions on iran later monday. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Back to you. Ok. Lets find out whats going on because we do have these sanctions on iran and all these events taking place around the geopolitics being where you could argue for markets. This is what President Trump was tweeting, saying iran would never be allowed to make Nuclear Weapons. Interviewl this on an at nbc but he is willing to talk. War, andt looking for if there is it will be obliteration like youve never seen before, but i am not looking to do that, but you cant have a Nuclear Weapon. No preconditions. This, we aren joined by derek wahlberg. Warays hes not looking for but there is a possibility. I think there is a concern right now, certainly on the u. S. Side, about how much tensions have ratcheted up. Donald trump is looking at a strike in he was by all accounts 10 to 15 minutes often actual strike with iran before he pulled it back amid concern about what the fallout would be. Lets be really clear. Destruction like youve never seen before was not on the table. Trump was talking about 150 dead, this isnt hiroshima or nagasaki, i want to be really clear because destruction like youve never seen before when you have the u. S. Military arsenal is a lot. We are talking about that. Instead you are talking about targeted strikes. Those were pulled back. Talk says he is willing to with iranian leadership but right now we are not seeing any indication from iran that they want to talk to donald trump at all. There are some suggestions out of iran that doing so would be a total waste of time and they dont think the u. S. Is serious and they wish trump would shut up and go away. How has his tweeting in statements changed . First he is very hawkish and then he turned down his language with planes being sent back from attack. Thats a really good observation. I think you have seen a big change in Donald Trumps rhetoric. This is a guy who originally ran for president on the idea that there had been too much war going on. He said somewhat erroneously he was against the iraq war from the start wasnt from the start, but he did come around to the position that it was a mistake and it was a long entanglement. That youepeatedly dont want to get involved in endless entanglements and endless wars. Donald trump does have some very hawkish people working for him, but he also has some people in his administration, as well as some of his friends and the more friendly media, who wanted to remind him of the position he took in so you did see a really big easing. You are still going to see some of this hawkish rhetoric, thats trump, thats what he does. Seen a biglly have ratchet down of the rhetoric from the president from his initial tweet where he said this is a big mistake that iran has made. Still im not really seeing what the way out of this situation is , neither side is really putting forward it certainly doesnt seem that iran is in any shape or form interested in the big public talks, the sort you see with trump and kim were trump and xi,. Hearing frome iran . How is it responding . Now, they are saying they are not particularly interested in talks, but lets see what happens tomorrow, because the president has said that sanctions are coming monday. Lets see what happens as the day unfolds. What do these sanctions look like . We right now dont have a great ton of visibility what the u. S. Is going to sanction. Theres is already a very lengthy list of prohibitions on iran, specific iranians, the revolutionary guard. I think a lot depends on what this latest u. S. Move is. The president hasnt been particularly explicit about what sanctions will be. Lets see how big those are. Lets see if there are workarounds that irans allies can take advantage of. Lets see how third parties like the European Union have tried to strike a balance will be able to respond. I think that is the big next thing and the president has threatened sanctions later today against iran and we are waiting to see what those look like and how severe they are stop thank you very much. We did see some big moves in marketth the dollar but sentiment has already shifted ahead to the g20 summit in osaka later this week. We are joined now from mliv. Tell us how this is working itself. Iran is a very important and the decision not to the u. N. Immediately is helping bring back risk sentiment back to the market. Be key focus this week will deals are up 20 at the moment, visibility is still very low. There are reports that negotiations came from both beforeater tomorrow and xi jinping meets trump. Thinke of a trade deal, i this relief rally coming back to the market trump goes ahead with tariffs on all chinese imports, then probably they will be in a very bad kneejerk reaction in the market. The equity markets and risk markets are still supported by central bank easing, and the to theuickly shifted size of fed cuts. Measure, itlly a will be a matter of how much. How much the fed can reduce Interest Rates. Is it a 25 basis point cut or 60 . I think risk markets should continue. We have seen a flattening of the eurodollar is that suggesting anything . Yes. I located the idea on the blog this morning, eurodollar futures pricing in full Interest Rate cuts. Curve, after 2021, what his traders see the so resuming the hiking cycle the traders dont see the recession coming for the u. S. Economy. Thank you very much. You can follow more on this story and other data on our markets live blog, mliv on the bloomberg terminal. Mliv gives you the market run down in one click, with commentary and analysis from bloomberg expert editors. Have a look at how your money is behaving. Still ahead, will as he on nations be forced between to choose between the u. S. And china . That is coming up. Raced. 14 million he we will analyzed indias debt later on. This is bloomberg. Welcome back. We are coming to you live from bangkok. Leaders met over the weekend and trade was a hot topic. They came up with a strategy to ensure that growth remains intact and build trust among member nations, but as the Prime Minister of malaysia told me, asean isnt likely to take sides. We are friendly with all the countries in this world, but we also believe in free speech. Need foreel and something that seems critical, we should exercise our free speech and reach this price when necessary. There has been some concern over the rise of china. Singapores Prime Minister recently expressed concern that at some point in time because of the u. S. China trade war, countries in Southeast Asia will have to take sides. Do you see a day coming when that will happen . No, we will not take sides. We will tell them please dont go to war. But under what circumstances do you think countries will have to take that binary option . I think they will be able to come to their senses. Is useful for both the u. S. And china. If trump loses the likes to election we might have a solution. [laughter] [applause] what role do you see china playing, and do you see the roles between the china and u. S. Being swapped . No, not quite. Either way china has the ambition to be the number one in the world. Before this we would only hear washington, coming up with all kinds of ideas. Morehina will attribute because with this one belt, one road, everybody will go to even ad it defines country which has a population can work with china of 1. 4 billion people. I dont like the whole idea of cooking something up somewhere in the west, and then asking us to accept them. The malaysian is candid Prime Minister. Lets speak to the chief economist at cimb in one of them poor, good to have you with us. He seemed pretty upbeat. Bute is the trade war Research Data out of malaysia growth exceeds 5 . Do you agree . Growth willhink exceed 5 but not because of the development in malaysia, as the sinoamerican trade tensions, it will take a whack out of growth, mostly next year, given that we are likely not to get these higher tariffs until the fall. Does thisely, how trade war between china and Washington Play out . One could argue that there will be a beneficiary with supply chains, or is that not the case . Case, but that process will take time, and what you see in the short run is the effect weve had on Financial Market and the trade disruption effect. That is what you get to begin with. If you look out over a period of 1824 months then you get the companies that will come in with their new factories in malaysia and other parts will be the beneficiary. But if you look at the end of 2019 and into 2020 the net effect is bad. You will take off half a incentage point or more countries like malaysia. All right. It suffersthe case, more as you suggest theres a global slow down but what is the principal thing which needs to be addressed in your view to get it going again even though it is not in such a bad position . There are two lovers, the first is that they will have scope to lower Interest Rates aggressive that the market expects from the fed. The second is fiscal policy. One of the things that has happened as a result of this expected slowdown in Global Growth is all these declines weve seen and that makes the carrying cost of higher public debt lower, and it gives you the scope to use fiscal policy more aggressively than you otherwise. Ight while in the last year the focus in malaysia has been trying to shrink the deficit because of the obligations that were put on the Balance Sheet with this external shock more likely, there is a case to be made to slow down the deficit. The fiscal policy can be more expansionary in the short run to help the malaysian economy. That the rate cut is likely when and how much . We are likely to get the fed coming in july by 25 basis points in the big change over the course of next week is that the fed will drop Interest Rates three times this year and four times overall and into the next year. Over the one cut the secondhe fall either late this year or early next year. Points. Sis have you been satisfied with Fiscal Consolidation that you seen so far . I think the issues that arise its not my opinion that matters on fiscal policy, its that of malaysians and the holders of bonds and the yields are perfectly satisfying. Is thate that arises for schools can be used in this world in which we have crossed secular stagnation. There is more scope in the market than the government at the moment then it thinks it has , and given the likelihood of the shock, use that space. Thank you so much. The chief economist at cimb. Lots of coming up on bloomberg, including a look at the jet being suspended on the Hong Kong Stock Exchange after it became a victim of a short seller. This is bloomberg. We are back with a check in suspended in hong kong after a critical report coming from bonitas research. Lowerare price is 25 before the suspension to create short the shares because of concerns amid Financial Reports and it says the shares are worth zero. Stellar gains of late before this coming down of the share price. Did not immediately comment on that report. This is bloomberg. 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. Kong, im. M. In hong selina wang with the first word headlines. President trump denies ever threatening to do remote Jerome Powell but insists he has the right to do so. He repeated his longrunning criticism of him on meet the saying hes not happy with the way the Interest Rate has been handled. Himas repeatedly attacked for raising rates too far and too fast. The United States has outlined a potential peace plan for the middle east. Lay the 50r will billion blueprint for growing the Palestinian Economy. It comes ahead of the u. S. Led seminar in bahrain, but the palestinians are boycotting the event. Flop,s say his plan may as it says nothing about how to resolve political troubles. Im not looking for war, and if there is, it will be obliteration like youve never seen before, but i am not looking to do that. Economy. Have a bad no preconditions. On monday there will be a significant set of new sanctions in the world should know we will continue to make sure it is understood that this effort weve engaged in, to build up their Nuclear Weapons system. Rebuilt, new,y is and ready to go, by far the best in the world. Sanctions are biting, and more added last night. Iran can never have Nuclear Weapons, not against the usa and not against the world. The rupee is dropping on reports that the r. B. I. Deputy governor has resigned. Indias Business Standard newspaper says he is standing down six months before his term is due to end. He should return to the u. S. To work as an economics professor at nyu earlier than planned. The spokesman for the r. B. I. Told us hes unaware of the development. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Thank you. One year after a rare default in indias credit market led to a many lehman moment, some of the Biggest Companies are still reeling. The oldest surviving airline and the Parent Company of indias biggest television broadcaster. When do you see shadow banking stocks bottoming out . Good morning. Expect at least two to three quarters they are expecting demand from consumers with liquidity to the system, andng out, normalizing, investors can start looking at shadow bank stocks again. What steps should be taken by policymakers to try to engender some more Investor Confidence . There are two measures expected from the policy front. Expecting a green for Housing Companies which is where the stress is now. Step is already below the regime so they are expecting for that to happen, the government needs to take steps on that. The third is to boost the economy in general. Thank you. They are advising to shift to mid and smaller size counterparts. See thank you for joining us. Tell us your thinking and a bit more detail. Good morning. We have seen the nifty , it has givenl about 10 returns and we have seen a significant move in the midcap and smallcap space particularly after the high levels of the cap index. And holdingcted 20 weund 17,400. To that extent have seen price corrections. Data shows whenever there is a boundcorrection, they are to come up to these sharp upward moves. Valuations and times are right for investors to move some part of their holdings to midcap. We are not suggesting they should move their entire holdings to midcaps in small caps but the time is right for them to start allocating in staggered fashion depending on liquidity expectations and return expectations. Do we look at valuations with the nifty overall, currencies of 25, historically it is an expensive market. How does that figure when you look at basic levels with mid and small caps . How much more value is there to be had . Is that the case as that is so often that they are obviously promising something in the future and never at the moment . About the we talk valuation for midcap, on 20. 6,er 31, 2017 it was and currently at 16. 1. They are earning multiples for the midcaps and particularly we have seen good correction so we at 20 it is operating discounted valuations. Deliver 400dcaps basis points higher. To that extent when midcap , it reflects the valuations reported at this level. Investors saying should start looking at all midcaps, we have seen sharp predictions anywhere between 10 to 70 or 80 , so we are not advising investors to catch the falling knife, but we do believe some quality midcaps offer supportive valuations. Tell us more about that. You have advised clients to invest in stocks, not industries. Which ones are looking attractive . In india, the consumption has been a secular story. Be attributed to some lag reformsetization and like gsc, radar, and so on. But i think we believe that his deception and the demand, whether it is rural distress or urban demand, it is temporary, and it will improve in the next two to three quarters. Private sector banks have great shadownity, and with the banks not being able to do well, stress emerged in august, 2018. There is a market share shift from the shadow banks to banks. We believe the private sector banks have a great opportunity and we have seen credit growth picking up to almost a 20 month high and in particular Retail Credit growth has been very good. These are the sectors to go for indians have developed expertise in these sectors, and that is something that is our favorite. I want to take a look at risk, because theres limited fiscal space modi faces bigger challenges this time versus his first term. How is that being factored into the market . I know this is a decisive limited they have fiscal Space Available with them and we have seen a slowdown in the gdp growth. Last quarter it was about 5. 8 and last year we have seen a gdp growth of about 620 , which is a fiveyear low. They have a path cut out for thatand the expectations we will see a significant level in the sentiment as well as demand and they will take some decisive steps. This budget is going to be all about augmenting resources. They will go for a higher tax disinvestments, trying to monetize the assets. We expect they should be able to secure more resources to develop capital in the market. Sector investments are not happy. We want to ensure there is more investment and india being in infrastructure deficit country, we have a lot of work to be done , where they will be increasing. We believe they will be able to optimize resources to monetize theassets as well as committee helping them with the infusion of capital. I think that will be a big boost to the economy. The Business Times has reported that has resigned early from the reserve bank as Deputy Governor. Coming you make of this into that sudden resignation in december western . I think it all started these events do happen in the market. Hisink markets will take resignation in stride and move forward. I dont think we have to do anything with a difference of opinion in the Monetary Policy committee. Viewsn always have his but this can lead to resignation. This resignation before we can replace the trio. Thank you so much for joining us, from hdf see securities. The malaysian Prime Minister on why he is unhappy with Goldman Sachs as compensation out for for its role in 1mdb. This is bloomberg. Lets do a quick check of the latest business flash headlines. Exxon is looking at selling its remaining assets to norway, and the move that would further accelerate the shakeup of the countrys own sectors. Major players head for the door. Exxon is one of the prime major one of the majors in the norway area even after selling in 2017. We are told there has been interest in the deal could happen this year. El dorado resorts is said to be buying seasons. Million into 18 this cash and Stock Transaction that values them at 13 per share, of 40 premium on the stoxx friday lows. It completed the sale of its largest unit following a buyout from Global Management and gbg. Is planningr to buy an 80 stake in the chinese unit of car for, 700 million in cash for the deal, awaiting regulatory approval, but expected to close by the end of the year. A growing number of european retailers are scaling back amid a shift the Online Shopping. Lets go to the indian markets, lets go straight to mumbai. Lets look at how things are going at the start. It is acquired opening for now. We are not looking at too Much Movement in the benchmark, you must remember there has been some amount of concern over the past few weeks, even though we have seen weakness in the benchmarks have come out. We are seeing them make a tentative start with the Broader Market index, treating marginally in the green. Stable, soremains there has been a little bit of consolidation. Up, promoters infusing funds into the lender. What is the purpose of this and how much are they looking at . Right. Promoter will infuse about 319 million through warrants. This is also taking into consideration shirt shareholding that we need to have after the merger takes place with respect to another micro finance company theyve acquired. Because of that we are looking at some gains of as much as 2 , and that is also one of the reasons we are looking at the nifty trending slightly higher, because it has a reasonable amount on the index. Thank you so much for taking us through the day equity actions. Getting back to our interview, the malaysian Prime Minister says Goldman Sachs offered 240 million u. S. As compensation for the role it played in the 1mdb missing money scandal. He says that is nothing like enough. He spoke with me at the business summit here in bangkok. Well, they did offer some little compensation. [laughter] can you clarify let me give you a figure, 1 billion. More or less are on the nose . Well they offered one billion ringgit, but i think the total amount is about 6. 5 billion u. S. But how did you come up with that figure . Its just the fees that goldman made o, im talking about the total amount, not just Goldman Sachs. Goldman sachs took 10 addition to the Interest Rate of 6 . Thats not usual for governments. Governments normally get less than 3 . This 10 extra means we get 90 of the money raised but we want to raise at 100 . Sachs made aan huge killing. You are waiting for a response from goldman. What was the query . Settle out ofo court if possible, but it seems that they are not willing to offer a reasonable sum of money. What is the reasonable sum . Get our 10 like to back at least. When will you take legal action . That depends. We will try to expedite things as much as possible. How long are you willing to wait before you take legal action . We are very patient. [laughter] tell them to please expedite this, that would mean interfering. Will you be filing a civil suit on top of the criminal suit that has already that depends on the case. We will have to examine the case. The malaysian Prime Minister speaking at the Bloomberg Asean business summit in bangkok. Lost some technical support. She was saying you can watch her interview in a special program coming up on the third and fourth of july. Coming up, we will check on emerging markets and have a look at the currencies. This as the Opposition Party gets a landslide win istanbul. This is bloomberg. You are watching Bloomberg Markets asia. Im Haslinda Amin in bangkok. In hong kong, im rishaad salamat. Malaysian and focus after a landslide victory istanbuls mayoral election. Lets go to david singer in singapore. This really mattered a lot to the president. Yes, it certainly did. Istanbul is the powerhouse of the economy. The president even said a couple years ago, if we lose istanbul, we lose turkey. From a political viewpoint, important to maintain control. Certainly he will be worried by the result. Happyrket should be because at least it expects democracy. But the new mayor has said he will be tried on insulting a provincial governor. He could go to jail and to jail and be ousted which would bring us a question of the control that the president has. At the moment, democracy is expected, but how it plays out, the turkish lira may be under pressure once again. David, how it plays out, and how will that impact other emergingmarket currencies . In terms of other emergingmarket currencies, the main thing is the dollar strength. That is coming from the fed last week. I think there wont be a huge spillover because these things are more than related to just turkey. The other big issue is will President Trump issue new sanctions against the country after turkey wanted to purchase Defense System from russia. Even though this plays out very quickly, that comes weigh on the lira, and applies to turkey rather than em currencies. I think em currencies are generally better than the weak dollar following the fed last week. David, thank you very much. Our fx rates reporter. Emergingave is the market index for the foreign exchange. Not quitethe upside, what we saw with the turkish lira. Flat, onepretty much of the few ones which hasnt actually benefited from what weve been seeing with regards to this move to the downside. The aussie climbing against the american counterpart, 69 u. S. Cents for the aussie dollar. To korean won also moving the strongest side by 6 10 of 1 . Thats the position we find ourselves in. Equities are a mixed bag. Thats a look at whats been going on with regional fx markets. It is bloomberg daybreak middle east next. 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