China. The administration is demanding meaningful reforms. Stockpiles continue to shrink. This could lead to rising tension in the gulf. Shery a quick check of the market close. We saw the s p 500 for the most since may. It was already a pretty fragile session for the market. Tensions. Opolitical then we heard from Jerome Powell and also the st. Louis fed president. Investors did not like what they heard. Check and communication stocks are leading the decline. We are also seeing the nasdaq down 1. 5 . U. S. Futures are not doing much. Lets see how the markets are shaping up. Sophie were looking at a tenuous beginning. These are nudging higher. The yen is looking study. Study. Eady. Steady. Goldman is seeing the silver lining, raising korea and taiwan to market rate. Australia onowered Bank Earnings risks. Stocks are nudging higher. This is head of the argan decision. We are seeing 10 year yield holding steady. The goal rally is taking a bit of a breather. Paul lets check on the first word news. President is threatening iran with overwhelming force if it attacks any u. S. Target. Crumbles continue to with the president using the word of liberation. He was responding to the warning from iran that the path to a diplomatic solution has closed after the u. S. Imposed sanctions against. Tehran accused washington of being retarded. Whatwise person would do they are doing. I feel there is severe among u. S. Leaders and the white house. Amongularity has slumped mass protests of her controversial extradition bill. Her Approval Rating dropped to a 23 . D low of support for his government is the lowest since 2003. And crowdtear gas control equipment in hong kong. Has grounded the 737 max 8 and it could fly again before the completion of an official investigation. Numbers from the faa and Transportation Department says evaluation of the planes fitness to fly does not begin depend on those investigations. Reports are expected to be released in 1012 months. ,lobal news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. The Federal Reserve moved markets. Jerome powell reiterated his stance that Economic Risks are strengthening the case for a rate cut. Jim bullard agreed it is about time to move. Inflation expectations deteriorating. Growth is still ok. Looks slowward, it with Downside Risk. This looks like there is a good recentermake us inflation and Inflation Expectations. This showed weaker housing stats and general confidence. Yelena. Edit up his we have powell and bullard saying there is a stronger case for fed rate cuts. Why dont investors like it . It is july. It is all about the prospective cut. Will it happen as soon as july or will they try to push it back a little bit and see what happens to Economic Data question mark i think it is really important to watch Economic Data between now and the july meeting. Of course, what will be important is to see what the outcome is for President Trump and xi meeting over the weekends. Paul you can see to make us this year. What is the thinking behind that . We have long held the view that the fed would be holding steady. It is now the economic fundamentals that are changing at this point. We think the fed is reacting to our market conditions, financial conditions. What is really happening is that the fed does not really want to invert the yield curve. But what is happening to the bond markets. The 10year gilts move was below 2 . If the fed does not cut rates, it will invert these yield curves. They dont want to do that. They dont want to move far away Central Banks that are using policies or preparing to ease policy. Shery when it comes to Economic Data, the numbers show a drop in Consumer Confidence and home sales. It has been a mixed picture. What do you Pay Attention to . Thena anything related to state of the consumer. The drop in Consumer Confidence was something. It showed that consumers are starting to deal a little feel a little uncertain about what is going on. Maybe because of what is going on with trade uncertainties. A because something is going on that we dont see. Maybe they feel the wages are not rising enough. Important to very watch what is happening to the consumer. That seems to be the only driver of Economic Growth right now. Other sectors are really not engaging to any degree right now. Thank you so much. Bloomberg economics, the senior u. S. Economist. Investors are awaiting policy signals from other Central Banks today. Expectedof thailand is to keep rates on hold. You can get more on the fed and the Central Banks in todays addition of daybreak. Of daybreak. Bloomberg sources say the u. S. Is willing to suspend the next round of tariffs on an additional 300 rounds of chinese goods. Angeles to to los sarah mcgregor. There is no getting expectations in terms of the deal. We are in the best Case Scenario and reporting what it showed today. It seems President Trump is willing to hold off on imposing tariffs on 300 billion of chinese goods. That would hit every chinese good coming into the u. S. I think the reason that he agree to this is because china said it would not come to the table. President she would not president xi would not meet trump at g20. Leaders. Een the trump held off on tariffs. Most important thing to remember is that the two sides are nowhere close to a deal right now. The Trump Administration is more than willing to raise tariffs if they cant reach an agreement. A little bit of good news that we are at a stance. Shery it has been interesting to hear all of the senior u. S. Officials trying to play down what is going to go down at the g20. Even bullet wasnt points of what the leaders would agree to. It is being organized very hastily. It is just to get past this point. They are not speaking at all. They can use this personal bond to get them to restart. That would be the best Case Scenario for these talks. There are no expectations of a trade deal being reached this weekend. Meanwhile, the Collateral Damage from the trade war continues to spread. Scott will give a speech on these themes as well. G20 gets underway, is there an expectation that there will be pressure from the other 18 nations to get something sorted out . Published a story by sean that look at the Collateral Damage from the trade war. It is not just exports being hit, it is imports. Supply chains are starting to shift. Indication that companies are not doing what they are saying, they are starting to rethink their supply chains and dig in for the long for ar a projected protracted trade war. Buy a littleng to more time before this next round of tariffs on the 300 billion. Paul that was sarah mcgregor. Thank you for joining us. Inll to come, we are live shanghai to check the latest andhon 5g, trade tensions huawei. Shery this is bloomberg. Paul this is daybreak asia. I am paul allen. Shery im shery ahn. New york stocks the the most in onee weeks after jay powell about Downside Risks to the economy and President Trump officials signaled that a trade breakthrough at the g20 is unlikely. Investors are being too negative according to our next guest. We have craig hodges with us. Lets get started. This illustrated what the markets have been doing. Especially when it comes to the small caps. These seem to be pricing in that something is not quite right in the economy. How correct are they . Craig they were already somewhat depressed. There is obviously the action when you see the small caps being down 12 from their highs. Youre seeing the s p 500 at its highs. Something is amiss. I think we are in the midst of a slowdown. Earnings from our site have been pretty good. A little better than expectations. You can tell the tone of management teams out there is to hedge a little bit and underpromise and overdeliver. Maybe just use the tariff situation to bring down investor expectations. That is what we are seeing. Stocks are really inexpensive in our universe. Shery no wonder we are seeing them crowd this these defensive stocks. Craig there are a lot of defensive names that trade 20, 25 and 30 times earnings. They have 35 growth rate. That is scary. There are a lot of companies that are growing 1520 . Reward. Uch more risk paul what are your favorite stocks . Craig my favorite is a company i have fallen for. It is called commercial metals. They are rebar manufacturer in dallas texas. Dallas, texas. The stock is down from the mid20s to the 16 level. They just reported a tremendous quarter. They have a 50 market share in rebar, that goes into construction and roadbuilding and bridges. This company has a 50 share that is doing extremely well. If there is any sort of infrastructure and building of americas roads and bridges, they will end of it. You can buy a stock that is growing and has a Great Management Team and is doing all the right things. Get if you want to defensive in this environment, do you see any good options . Craig in defensive things . I would state with the bigger blue chips. Even though i am a small cap manager. You can trade at 10 and 12 times earnings. There is a lot of those out there. I think some of the retailers like a capri ortega street or tapestry, though stocks have been butchered. I think there is less than 10 downside and probably 40 or 50 upside. Those are the things i would be looking at. Shery is this Norwegian Cruise Line going to be impacted . We seem to be seeing some Consumer Confidence taking a hit. Craig most of their bookings are way ahead of time. Something like 65 or 70 of their bookings are one year in front. That stock has corrected about 15 in the last two weeks over a travel ban in cuba. It is a . 40 hit this year. Here it is at 50. It is a growth company. Shery given the market uncertainties, what are your thoughts . Craig the proliferation of etfs and computer training has changed the market where there are haves and havenots. This will attract the market to the havenots that have been left behind and have not participated in this etf and weighted average that has gone up so much. Paul do you expect to see some are and then they m action . Craig there could be some. You saw that deal today. There are some deals out there being made. Some of these deep value stocks, youre seeing management teams maybe take advantage of the fact that some of these value stocks have no incremental buyers out there. A lot of them are off 40 and 50 for the year. Paul i wanted to get your opinion on gold. It is a popular trade at the moment. Is that something you are involved in . Craig no, i understand why gold is growing up going up. People are fearful. Gold is breaking out on a technical basis. There are so many people looking for a home for assets. You will probably see a trade up in gold. Hodges Capital Management chair and ceo craig hodges. Figure for joining us. We will have an exquisite interview with the us drilling Prime Minister after he delivers an address. Firsts Scott Morrisons major policy speech since winning. Analystdex beats estimates on the shares earnings for the fourth quarter. The ceo said he was disappointed with trade under the Trump Administration. Joining us now for the details is thomas black. What did the company say about the impact the trade war is having . Thomas it is definitely hurting their international market. Where they are doing is their ground unit are they deliver packages for ecommerce. That is doing ok. Is hurtings in trade their International Express unit. Shery that is why they have such a week outlook. What does that say about the Global Economy . I think they are being a little bit conservative. They had high guidance and then they had to bring that down. I think they are being conservative and they are hoping things want be as bad. I think there is a real concern about the trade conflict and how that might affect international business. Paul china is considering blacklisting fedex. What impact will that have on the company . Thomas hard to tell. They have not given numbers on how much revenue they get from their china business. They said the u. S. China deliveries, bilateral deliveries are not 2 of their sales. It would have the significant impact. I think they are trying to show we have been a good Corporate Citizen in china for three decades. The mistakes they had with the packages are just mistakes, they are trying to convince them of that. Shery thank you for joining us with the latest, thomas. Investors are pulling the liens of dollars from the h2o asset management. Dollars from the h2o asset management. Loses over 6 billion in four days. Hey say losses are slowing paul mitsubishi heavy finding this jet business for 550 million. The canadian plane maker will focus on Business Jets and passenger trains. The acquisition will reduce mitsubishis efforts to roll out its own regional aircraft line. This is the first japanese built airliner since the 1960s. Shery blocking access to some of chiles biggest copper mines. This is over a labor dispute. The bulk of this disruption is from mines ran blanket elko by elko. Elko there are no plans for talks. Householdese budget minnesota is planning an ipo. They are inviting banks to pitch for roles. Sales could place in hong kong. They are backed by tencent and 3500 stores around the world. Shery microsoft projected sales will be in line with analyst expectations for the third quarter. They are matching the median estimate. Micron hasesumed resumed shipment from huawei. Paul lets check in on asian markets. We have new zealand up ever so slightly. We have futures here in australia are weaker than by about. 5 . Saw a bit of ae selloff in u. S. Equity markets disappointedell some with his outlook for the economy. There will behat some easing from the fed. We will hear more from the exclusive interview with james bullard. Cutsid a quarter of rate maybe all that is required. We will hear more about that in a moment. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. This is daybreak asia. We have the first word headlines. Fall the mostes in three weeks ever since jay powell wonder that the economy. He said the lack of progress warned about the economy. He said the lack of progress in the trade war could slow growth. This is something President Trump has been demanding. That thedgment is vulnerabilities to the Financial System are at a moderate level. That is not to say nonexistent moderate level. As i said at the beginning, i would not hesitate to deploy the capital buffer if the tests were under our framework. The Trump Administration is playing down expectations for trade talks at the g20, saying it is not prepared to compromise. President trump and president xi will talk. Trade war tensions hit three top chinese banks with shares tumbling after a u. S. Media reports suggested they may be caught up in an inquiry into violations of sanctions against career. All fell after the Washington Post said a u. S. Judge found three unidentified chinese banks in contempt for refusing to comply with the investigation. President trumps soninlaw has offered a developers pitchfork the middle east. Using a glossy video to show his vision for the economy. Jared kushner held a seminar in bahrain saying that the deal with israel could launch vital tourism. He did not explain how to reconciliational in the region. Day, onews, 24 hours a air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. To sophies get back in hong kong and get a check of what is moving in the market. Sophie we are at some stocks in focus. Week for visiting dignitaries across the region. Meeting withbe them. s meeting withe oil. We are watching south korea on this. This will start another feasibility study. This is after a twoday advance. To is jumping due in part iranian concerns that may indiasate the visit to from mike pompeo. Pulling up this chart on the terminal, we can see that pressure has been playing out in the oil market as iranian crude exports, china, turkey and japan have all disappeared. India has continued to seek an exemption. Echoing mideast tensions would make that tricky. Paul thank you. Lets look at what oil is doing. U. S. Stockpiles are unexpectedly shrinking. That is boosting prices. What other factors might be in play . Factor is the primary it rose as much as 1. 8 . It is just the inventory drop. American petroleum is reported 7. 5 5 Million Barrels last week. That is double what analysts were expecting. They will wait and see what the u. S. Government reports. Their inventory report is out later today. This ratifies with the api numbers chapter. Oil demand is rising. That could be because of more from drivers or Stronger Economic activity. It really suggests that u. S. Demand is coming back. We have the ongoing geopolitical tensions between tehran and the u. S. Does this signal that prices may continue to go up . That is right. That is the backdrop for this. The u. S. Iran tensions have contributed to the rise. There is a lot of concern about supply disruption out of the middle east if tensions between the u. S. And iran continued to summer and spill over. The other factor is the upcoming opec meeting. There is still a lot of uncertainty around that. A few weeks ago, it seemed certain that opec would extend their production cuts through the first half of this year. They are scheduled to meet next week in vienna. Was Alexander Novak little hesitant about committing to those cuts. Saudi arabia posco conference are scheduled crownn and saudi arabias prince are scheduled to meet. Saudi arabia cost conference are scheduled to meet. Shery thank you so much, that was our asian energy editor. This is a racist 50 basis point cut for the fed. He explains why he thinks the fed needs a smaller insurance cut now. Is running below target. That is surprising given that surprised thes upside. Growth is higher than expected. Labor markets have been very strong. Unemployment markets are at 850 year low. Year low. Growth is good looking backward but looking forward it looks like a slowdown with some Downside Risk. You have an inverted yield curve. Tos seems like a good chance make an insurance rate cut and treachery center Inflation Expectations back at the 2 target. Immediate term, a lot of people say you have a meeting at the end of july. You have the g20 in a soccer, xiesident trump and president , you know soccer in osaka President Trump and president xi will be meeting. Think the idea of recentering inflation and Inflation Expectations is not all that dependent on what. Appens in osaka i think the u. S. And china are embroiled for the long term in trade disputes. I dont think you should look to anyone event as putting an end to this. I think it is an ongoing uncertainty. A regime of high uncertainty about future trade arrangements. The two parties are disputing how the trade arrangements should be arranged in the longterm. Want to allow and Inflation Expectations running well, the economy is looking to slowdown more sharply than we thought. It seems like you better get inflation back up to target. That is why i think we should cut here. Generally speaking, i dont like that is a tactic. If you think the conditions are right, you should go today. That is one of the reasons i dissented. You are putting really high probability on this. Unclear what kinds of data the committee would be expected to get during the timeframe. E a lot of people are waiting for g20. A lot of people are talking about a 50 basis point cut. Are you on board with that . That 50 basis points would be overdone. I dont think the situation really calls for that but i would be willing i hate to prejudge migos meetings. If it was going today, that is what i would do. Haysshat was kathleen exclusive conversation with james bullard. Scalet, we will look at internationals dispute with the south korean government. Dispute internationals with the south korean government. This is bloomberg. Lets get a quick check of the latest business flash headlines. Microsoft shares slumping on reports that the stock was called materially overvalued. Thein expectations for company are too high. Is the biggest oneday loss since january but the stock still had a strong month after the eight day rally that took it to record levels. Shery john flynn says the bank has not thought that the impact of the trade war. Continuing tensions could lead to more customers spawning investment decisions. Income, theting rapid inspection is given western democracies pause. When we get past trade, i think it is a broader desire to see china contained in some way. I think we will move into a chapter that covers technology and maybe a bifurcation of technology and technology standards. When this was consumed 17 years ago in south korea, it was supposed to be a smart city, covering 1500 acres. Now a cloud hangs over the city as we see a feud between two companies hired to build it. Gayle international is seeking with a 200 billion in damages from the south korean government. We have stan gayle. Expense was how you got involved in this object first and what went wrong. 2001, the Central Government of korea wanted to build a brandnew International City with the likes of singapore. For northeast asia, near the new international airport, they recruited myself and john heinz, my partner. And enough, they asked us requested strongly that we, take on this project. We did. Shery what went wrong . Itself is the project no problem at all. The project is excellent. 250 Million People live there now. It is the first green city built from scratch. It is a brandnew city from scratch. It was built from scratch. What has gone wrong is that our construction partner has been overcharging us. Posco has been overcharging us by hundreds of millions of dollars. They seized our shares and sold them to would be hong kong companies. Shery that is why you are fighting against posco and the south korean government. Have you taken this further up within the United States . Is the Trump Administration aware of what is happening . They are fully aware. They are fully aware. It is the largest joint venture in the real estate business that has ever been done between the United States and korea. What is so critical to know is that the republic of koreas Central Government created this land. Not posco, not gale. We inquired that went from the Central Government and they were our partner from the beginning. A lot has changed in the administrations over the last few years. What has occurred is we going back to our original partner. That is the republic of the Central Government. That is who we got our assignment from originally. Yvonne this is sounding like thisy extensive paul is sounding like a very extensive legal battle. What are your expectations of a victory or a settlement . Thank you for the question. We are very reasonable people. This was an almost Impossible Task when we started. I am not sure how we got it up. My biggest thing was to be sure that the Korean People got their fair share out of this. Gale, they level of architecture and such, i do not want any leakage happening. I am very open to resolving this. Im very open to being sure that the republican republic of korea, the Korean People are well taken care of. Paul in terms of korea, this makes it look like this is a potentially bad investment destination considering your experience. Is that part of your strategy . Stan for an investment . Foreign investment . We come with our american is myrs and Jack Nicholas aus is my nickl partner. They had tremendous fanfare around the world. This was seen by a billion homes. Jack has also been damaged by this. We are going back to our original partner, the republic of korea Central Government. Shery have you seen any signals from the moon jaein administration . Stan they have bigger things to talk about but it fits in line with the relationship between the United States and korea. I was a big promoter of the free trade agreement. I am a big promoter of korea. I love the emerging concept about korea growing and going further. Yes, this ist is something that will come up at the highest levels. I believe the moon jaein is reform minded. They should be very open to looking into this to be sure the relationship does not get ruptured. It is a large project. On what grounds with that big . Are you alleging violation of the u. S. And south korea . Yes. It would be there. I believe the underlying contractor was maybe allowed to take further leeway on the project. Since we are governed by the Central Government, we are focusing on them to be our partner and big brother. Who invited us in. Andhank you for your time your side of this ongoing story. Chairman of the gale international. We reached out for comment but got no response from the other side. He will have the interview with the australian Prime Minister after he delivers an address on australia and it is have a. This is Scott Morrisons first speechoreignpolicy after winning a second term. Also, if you missed out on any of the interviews we had throughout the show, tv is the function on the bloomberg. You can watch it live and delve into any of the securities or bloomberg functions. Be part of the conversation and send us to the lower left corner of the screen. Tv , this is bloomberg. The Electronics Industry is watching china as the mobile World Congress kicks off in shanghai. What is at the top of the agenda for the week . Chinas largest mobile conference but it is coming out a sensitive time. Chinas massive market is going to drive development of technology. The focus will be on the geopolitics of 5g. Oncourse, we have had huawei this u. S. Blacklist. Pressuring allies not to allow them into their system. They have started to resume some. F their shipments to huawei concerned they can be cut off from the biggest markets. This would be the biggest topic of discussion. Who will we be hearing from . As you can see behind me, there is this giant huawei exhibition hall. Theyre are coming out of this conference in full force. We will be hearing from the Top Telecommunications players. The question i will be watching for is how these actions may be benefiting competitors. There could be some chipmaking executives here. I will be speaking to max max and a little while. I will be asking him about the topics around 5g, what this huawei means. Looking forward to that. Of course, we have the market opens at the top of the hour. Lets preview the open. Futures are pointed to a down day across the area. When it comes to stocks to watch, we are watching shares after shareholders voted for the return of the former ceo and all of the candidates. This book is boosting the share price. Watching mitsubishi today. They are bolstering the Aftermarket Service for space jet. This is an bogus after losing to my premise from the bailout plan. The ceo make consider helping if they get cooperation and the japanese government. On thekeeping an eye kiwi dollar. Qes could put the squeeze on dollar shorts. The imf sing the kiwi dollar is not an immediate concern. Paul coming up on the next hour of daybreak asia, the bank of america and Merrill Lynch he will join us just discuss to discuss commodities and his outlook on oil. That is next. 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. Paul good morning. Asias major markets are about to open for trade. Shery i am shery ahn. Sophie and i am sophie kamaruddin. Welcome to Bloomberg Markets asia. Daybreak asia. Looks needed at best. U. S. Downplays expectations for a trade breakthrough with china. Shery oil is jumping. Concerns that there are rising tensions in the gulf. Lets get to the Market Action in hong kong with sophie. We are taking some of those cues from wall street. The yen is strengthening further. Towards 105 with some of the more errors traders. Remaining mange bound. In tokyo around the region, keep an eye on crude prices jumping. With tohe coffee flat kospi flatocus with prices in focus. Because in on australia goldman has cut australia with performance beating. The most expensive. We are seeing it under pressure. Stocks wellington, kiwi i fluctuating this morning after a two day advance. Stalling after a rise. The currency levels are not intermediate learn. It might put the squeeze on kiwi stocks. Paul lets check in on the first word. President trump is threatening iran with force if it attacks any u. S. Target. Crumbleions continue to with the president using the word obliteration, warning that the path to a diplomatic ocean has deteriorated. This means the failure and feet of the u. S. I do not have any doubt about that. No person ins that the history of politics has done. The white house has a mental disorder. Call e lams popularity has slumped. In a public poll, her Approval Rating dropped to a record low. Support for her government is the lowest since 2003. An inquiry will be held into a Legend Police brutality. Afters could fly again investigations linked to two fatal crashes. They say the evaluation of the planes fitness to fly does not depend on those investigations. They began meetings earlier this month and a report is expected to be released in 10 to 12 months. 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. This is bloomberg. Paul thank you. More dovish words from the Federal Reserve. Scott is the bloomberg managing editor for asia. We have jay powell reiterating the case. Dialing back expectations from his dovish perspective. Where does that leave us . Hei think we are on the path was trying to reiterate that vastly, which is where we seem to be headed. That set a global tone. About thenkers talk room to respond. A few days later, we had governor kuroda saying that they could do more, if needed. Of course, jay powell is signaling that makes are more likely to go lower. , thisller Central Banks global tone is very important. Shery lets talk about those Rate Decision we have today. Positions on the kiwi dollar hitting a record. What are we expecting . Economists are expecting a hold this month. The most recent move was one to lower. The first to lower. There are a couple reasons why that might not be followed up. No new forecasts. There is no press conference from the governor, so less of a chance to make a case for why he thinks this cut is needed. We might get a surprise. That is because he did show his intention to get ahead of the pack last month. If he wants to stay there, he might need to do so again. Again, no move expected for now. Is there a sense that a lot of banks are sitting on their hands to wait and see what comes . It is a compelling reason to do so. There is always a slim chance that we will get good news over the weekend. There are three good reasons to cut in thailand right now. Inflows coming through and inflation is very benign. The Growth Outlook has been downgraded about 2. 3 . Is toeasons to not cut wait and see what happens with the g20 and Financial Stability can learn. High Consumer Debt in thailand. Shery thank you. Much, malcolm. We both wanted to thank you for that. Lets turn to the g20 and what could happen there. The u. S. Is willing to suspend the next round of tariffs. President trump and president xi jinping preparing to meet at the g20 this weekend. Lets crossover to sarah mcgregor. News for theive ongoing trade tensions between china and the u. S. , but not necessarily progress, so what are we expecting . That they are set to meet on saturday. What sources are telling us is that the Trump Administration is seriously considering holding off on imposing tariffs on chinese goods ahead of this meeting. That was the promise that china wanted to sit down at the table. Donald trump was the one pushing for this. That was a condition, but the u. S. Is not willing to give any other reprieves china. Rolling back or promising to rollback existing tariffs. You really have to believe that if trump does not get along with xi jinping, will the u. S. Hold off much longer . You could be forgiven for thinking that this is just a g2 meeting. This is the Collateral Damage spread. The australian Prime Minister giving a speech today, saying countries like australia cannot sit around with this competitiveness continuing. Some of these nations will bring some pressure to bear this weekend. Absolutely. They say that trade risk is one of the biggest clouds hanging over the economy right now. A lot of their forecasts have priced in what has happened. You can bet that will affect economies elsewhere around the world. Reporter wrotee that imports have fallen over the past month. That is just one sign of Global Supply chains shifting around, rethinking investments. Saw the u. S. Ently techlisting five more companies after quality. Any idea if these will come to the forefront of the g20 . Know, is just we a way for the leaders to show that there is political will. The best Case Scenario out of here is President Trump and president xi jinping promising to move forward. We want china to address issues. They want the u. S. To rollback tariffs. They will reiterate their demands to each other, but there will be no agreement. Things like the blacklisting of these Chinese Tech Companies by the u. S. It probably will not get down to those specifics. Shery thank you for that. Still ahead, the geopolitics of 5g. We had lived at the World Congress and shanghai, talking live to the director general. Next, bank of america and Merrill Lynch. How the trade war bull affect markets. This is bloomberg. Daybreak asia. Paul looking stronger amidst signs of stockpiles and concerns of rising tensions in the gulf. At bank oflanch america and Merrill Lynch. Today, he is joining us from singapore. Lets kick off with oil. Maybe we are heading up from here. Lets have a look at the chart on bloomberg. We have hedge funds bidding on a rebound. Golf, tradethe concerns as well. You actually have a modest price increase in your outlook, correct . We think the second half of , mid to high 50s, so maybe not much of a change, but really, what is going on in oil are risks on both ends of the market. One is related to the ongoing trade war and the other is around the risk of a war with , and in the meantime, it is about to trigger next week with the organization trying to restrain output. We will also see the fed cutting rates for the next three months. That will support prices as well. The other thing that will happen, i think President Trump is going to be dialing up trade war to the extent that it does not damage. They give us confidence. We will see prices stabilizing, but also, we have this risk of the trade war getting worse. To the upside, we have the iranian situation which is also very volatile. Paul that is right. It is interesting to see risk on the supply and demand side. As we head into the opec meeting , finally agreed on july. What are you watching coming out of that . The meeting, i think it will be centered around compliance. We have countries like iraq that are overproducing, so i think the saudi leadership will try to push for some of these members to comply their commitments. I do not think they are going to connect to cut production further. I do not think russia once Oil Prices Higher than where we are today. I think it will be a little bit of a rubberstamp meeting at opec , probably patting themselves on the back for stabilizing prices. Is a good outcome given that week picture. I think opec should feel pretty good about price levels. Then, the cost has been deep cuts that we have seen across the organization already. We will see other members potentially complying. I do not think it is a major meeting with any major disagreements, but they are probably watching the same we and those that i refer to. Shery lets go to the fed. Where does that put you on the dollar . This chart on bloomberg shows that we have seen a breach of critical support level. The fed easing policy should help emerging markets broadly. It should help engineer a somewhat weaker dollar. If you go back to the beginning of the year, we were talking about potentially hiking rates. Now we are talking about potentially moving into further quantitative easing. If you look at the relationship emergingmarket currencies, what is critical to keep in mind is the u. S. Dollar and the chinese yuan exchange rate. That will trigger a meaningful oil price. That is very much connected to the outcome of the upcoming trade discussions at the g20. Shery if you are talking about the ecb and other Central Banks easing, wouldnt that put more emphasis on the dollar to strengthen . It looks like the best game in town when other agencies are slowing down. We are seeing gold prices jumping. Exactly. Typically, gold is a function of real rates. As well as macro risks. It is also connected to the dollar, as you pointed out. There are a few things that drive gold, but think about the real issue driving gold is this massive concerned that the Global Economy is decelerating. Tariffs are rising and u. S. Has the highest tariffs since 1973. That was 46 years ago. I think it is important to note that the u. S. China relationship has a lot of different layers here. I am not sure those can be a handout over a summit over the next few days. There are a lot of complexities. There are issues about economic around and issues domestic politics. The only thinge, that they seem to be able to agree on is that china has been taking advantage of the u. S. In different ways. They are trying to stop that. Whether it is intellectual there are a lot of issues. Economicis that the pie is shrinking, which means that rates are falling. It is getting a bigger share of a rising pie through this implementation of the tariffs, which are supporting the economy in the u. S. It is possible that we will end up getting a stronger dollar. For a stronger dollar to take place, we need to see what happens after just after this summit. It will depend on how this discussion goes with china. Paul normally, silver goes along for the ride. That has not happened here. Does it silver is an industrial metal. I think that is exactly right. At ahad the same question presentation yesterday. Somebody came up with that same remark. The Global Economy has been decelerating so much. The macro data has been appallingly poor. The global pmis have been decelerating for 18 months straight. This is linked to the manufacturing cycle which is suffering under protectionism. Silver is very much connected to that weaker Economic Activity and it has not picked up the benefit of being a safe haven, and asset that people park their money at when they are worried about macro risks. In my view, one thing that could because of big changes sinking in the macro, deeper into negative territory, what could happen is we ignite activity through manufacturing. Silver is going to massively outperform. We do need to see the economic cycle, particularly in the manufacturing cycle picking up around the world. Trumpes are on president and president xi jinping over the next few days. Clue in body language will be analyzed. Shery what about base metals . We have seen the chinese economy decelerating recently. Very different from what we saw earlier. Has the damage already been done . Yes, we havetent, seen damage. Much of the deceleration in Economic Activity and the negative impact on cyclical Commodity Prices is related to the last trade war, not so much the ongoing one. Impact of the increased tariffs on china has been completely played out. For your Industrial Metals have benefited from a little bit of support from china, but we are not very optimistic here. , you most circumstances will see continued pressure on the complex. We are outtunately, of time, but thank you for joining us today. Come on daybreak asia. Shery lets get a quick check on how markets are trading in asia. Policymakers comments from the fed on potential rate hikes in july. We are seeing the nikkei falling. 4 after the japanese yen hit the strongest since january against the dollar. Still around those january highs. Stock is down and we heard the finance minister talking about spending 70 of the extra budget in the thirdquarter, if that is approved. We will have plenty more to come in the next block. 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. This is daybreak asia. Most ascks fell the chairman Jerome Powell morant about widening threats to the economy. He said the lack of progress in the trade war and data is stuck in concerned about the strength of local growth. That the is building fed will cut Interest Rates in the coming weeks, something that President Trump been demanding. That balance, the Financial Vulnerability in the Financial System is at a moderate level. That is not to say nonexistent, a normal they are at level. I would not hesitate to deploy and give tariffs a capital buffer. The Trump Administration is playing down expectations for trade talks at the g20, saying it is not prepared to compromise. They are expected to meet in osaka with the u. S. The indonesian finance minister has said the trade war is hitting the economy and they would be happy if they lower the rate. Hit three topions banks with shares tumbling after a u. S. Media report suggested they might be caught up in increase, claiming violations of sanctions against south korea. President trumps soninlaw has offered a pitch for middle east peace using a video to show his vision for the palestinian economy. E taught a seminar he did not explain how to achieve political reconciliation in the region. Palestinian leaders rejected the semi as a bride. Seminar as a bribe. 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. This is bloomberg. Paul thank you. Time for a market check with sophie kamaruddin. Sophie asian stocks are slipping for a second session. Remaining under pressure under tensions and escalating concerns. Oil is jumping on the back of that, rising more than 1 . We are seeing a gold rally taking a breather, but the bulls are out. Checking in on start movers. 2008. St since 20,008 rising after announcing a buyback and the Company Plans to close its shanghai store. Liquidation two to ¥3 billion. Sk hynix is climbing as much as 2. 8 . U. S. China trade war is cutting indonesias exports, curbing its imports and reducing Commodity Prices, all of which will weigh on Economic Growth. Speaking in an exclusive interview at the Frontier Forum in london. Tension in thehe form of creating a risk. We see the risk in terms of the Global Growth weakening. Business this is creating more rates, including indonesia. The u. S. China relation on trade, this tariff is creating an opportunity, including for indonesia as a place for the relocation of the industry, avoiding the tariffs. This is a new opportunity for many countries, including indonesia. Indonesia is focusing on how to improve the investment climate. Also, the benefit of the situation. Yous President Trump giving a new opportunity . Benefited by the transfer of many fracturing processes to indonesia, as we see in vietnam . We definitely can. We have the necessary conditions flowing into indonesia. Doing business has improved. We had a big market in itself. We have an attractiveness in the form of our own economy. Policyll as potential being implemented, constantly for indonesia and a reputation of a place where we do business in the investment climate. We have all the necessary conditions. Policycommunicating this that is going to be a good moment for us. You talked about the impact of the trade war. What will be the impact of the trade war on indonesias growth this year . We are still aiming. 5. 07 , whichg at. S seasonality we see that the implication of this trade war and weakening Global Economy in the form of exports, which is now going into a negative zone. On exports in the first quarter. With thetes a dynamic imports that is also going down and the commodity price. This with the Downside Risk that indonesia will face talking about the projects. What is our projection . 5. 2 . Paul that was our exclusive interview. Coming up in less than half an hour, we will have an exclusive interview with australias Prime Minister after delivering an address at the Bloomberg Office here in sydney. Next, we are live from the World Congress and will speak to the director general about the brave new world of 5g and all the complications that come with it. This is bloomberg. Paul this is daybreak asia. Ago, our months Bloomberg Opinion columnist warned that storm clouds are coming for the tech industry. Here we are and how he says it is worse. Arguing the conditions have worsened since you first raised this problem back in august. Is this mostly because of the trade war . No. It actually goes beyond the trade war. Has been happening since the before donald trump became president. They have only been a few companies that have had a lot of growth. Once the president came into awer and started looking at trade war, talking about what he is going to do to rein in china on the trade front. Really it made it worse, without a doubt. What we are seeing in the last 10 months, since i first raised red flag for the signal about these can earn is that the economy has slowed down. Of course, there have been the actions against huawei. Was you do note that this a problem before those action, but surely, that cannot be helping. What is their role in all of this . Issues against them have made things worse, but the thing that i want to point out to people is that we might have seen improvement in the sector, specifically for chips because of what is happening. They saw this coming, soon after donald trump announced this move. Been stockpiling chips. Iran the numbers across the sector and it showed that what we saw was a little bit of uptick in semiconductors, but what was happening, the data backs this up. It was then saving for a rainy day. Fact, this effect was a shortterm uptick, a shortterm spike for many companies. Now that it has been put into companiesose u. S. Will see an even bigger drop off in sales of semi conductors because bolle has already built up stockpiles. We might have seen some. She and that revenue or demand was stronger than it really was. Shery really interesting that we are seeing asian to manor makers rebounding. Overows perhaps optimism the upcoming 5g technology. What are your thoughts . What should investors watch out for . If you are looking at this sector, i suggest looking at inventories. Inventory might not be rising, but it sales are slowing, i suggest people look at that. Haveme point, people will to stop buying components. This optimism surrounding 5g is a little bit overblown. People will be talking about how 5g will be the next big thing, but it will not be overnight. It will be a slow boil technology. People should not get ahead of themselves thinking that 5g will solve all of their problems. Paul joining us from singapore, thank you. Starting today in shanghai. The blacklisting of huawei and other Tech Companies is making it tricky for some professionals to get down to business. Selina wang is there. What is the feeling as the event gets underway . That is right. There is a lot of Big Questions hanging overhead, including the geopolitics of 5g. I am here with matt, the director general. He said 15 years at ericsson. Thank you so much for joining me and say hi in shanghai. 5g might be more overblown than what we think. Where does the country stand right now . Is launching this year. We are seeing south korea has launched. Throughout 2019, we will see another market. It is certainly happening right now. Is it overblown and overrated . I think you will see an enhanced growth. Ou will see higher speeds all of this Bright Future will take some more time, so be patient. For us and industry, we thoroughly enjoy this. What are the dangers of having a politically separated 5gs system. 4g was the first time we had a technology that stayed the same across the planet. 3g was not, but 4g was. In china, the u. S. , south korea and elsewhere. Even though there are certain , you think that the network will still operate . Yes. How will that work if there are bands again certain countries . That is on the equipment side. Componentrce the through different vendors. Once it is sourced, we put into operation. From that perspective, you take year 5g and it will work. You conduct a lot of studies. How are you looking at the impact it would have . Too early for any conclusion. Roughly 4e will see billion 5g connections. 30 of them will come from china. In 2025, we forecast 50 of the population will be on 5g. In six short years, it will be a ble. A reality. How much more advanced is wayne huawei than their competitors . It is far too early to say. Choices. Had your your preferences. It is difficult to make such an analogy to say who is better than the other. You seem optimistic that this might hold up differently, but there have been reports that the Trump Administration is requiring all 5g to be designed and manufactured outside of china. It very complicated. It is through many many years. That demonstrated where it is the best and cheapest, we will do so. I think we need to be mindful of that situation. It is too fragmented. That is not good. There have been some efforts to reform, including the mixed ownership. In chinae the players becoming more competitive . I think they are very competitive. They are investing a lot in innovation and building out a tremendous amount. I would argue that they are very competitive. Basically, everybody. What is the biggest concern . We create growth . How do we make sure that we have it growing . How do we make sure that we satisfy your needs . Security is important. Us with youring data. We need to be so careful in managing your data in a responsible manner. Those are the most important ones. Time. Nk you for your we will be listening and watching for these communications. Co. Back to you. Shery if you missed this interview, you can watch it on tv. You can watch past interviews and you can watch it live. Dive into any of the securities and functions that we talked about and you can ask us questions. This is bloomberg. Shery protesters will still be on the streets on wednesday. They are calling for help from g20 leaders meeting this week in osaka. Candy is watching this in hong kong. What should we expect . Protests are continuing today. They will march shortly right here our offices in a bid to petition World Leaders before the g20. In terms of international reaction, there has finally been. Where does it come from . Todaycoming from the u. K. That says that it will suspend teargas. They have a little bit of extra skin in the game and hong kong. This is the reaction to violence that we saw earlier this month when teargas was fired on protesters. We have seen the Approval Ratings for carrie lam hitting a record low. What does her future hold . Will she be forced to resign . The ratings are not good. Disapproving and 18 approved. That is the lowest since other protests in 2003. It will fuel protesters call for her to step down. Karen lee and hong kong. Think you for joining us. Lets get a quick check of the flash headlines. Over materially overvalued. Expectations for the product are too high. Sinceggest oneday loss january. The stocks within a day value. Recovers some losses in late trade after fourth order earnings. As the traderecast war drags on and turnaround efforts continue. Extending deliveries to seven days a week and reducing reliance on the u. S. Postal service. Markets across asia and the bed right now. Lets get a preview of what to watch. Sophie keep an eye on bond market. The treasury is continuing to slip after the feds comments. You have 10year notes rising by two basis points. I quickly went to mark next time. The father is halting the sale. Look at the agenda up ahead. We have inflation data quickening. Front, newralbank zealand and thailand expecting to hold on key rates. Softening a touch head of that forum. It is sticking year a high. Themonger currency giving more reasons to cut height hike rates. Before we headed over to Bloomberg Markets asia, lets get a quick check on how market are trading. This is despite the fact that we are seeing some weakness on the japanese yen. Levelsyear the strongest since january and we had commentary from the fed on more rate cuts. At the same time, then being limited according to the president. South korea unchanged at the moment. Nowourse, all focus right is on the upcoming g20 and we continue to see officials trying to downplay expectations of that meeting between President Trump and president xi jinping. Paul as we lead up to the g20, we will be hearing from the attendees. Scott morrison is joining bloomberg for a oneonone chat after his address. Right here at the Bloomberg Office in sydney. That is coming up in a moment. This is bloomberg. Paul 9 00 a. M. In beijing, shanghai and singapore. Welcome to Bloomberg Markets china open, i am tom mackenzie. And i am yvonne man. Ofnting down to the opening markets. Jerome powell warns of rising threats to the economy, sending wall street down an asian markets falling in response. Hopeshe u. S. Plays down of a trade breakthrough. Australian Prime MinisterScott Morrison will address the issues live on bloomberg this hour. Yvonne hsbcs john flint says the trade war is part of a western drive to limit chinas global