Transcripts For BLOOMBERG Bloomberg Markets Asia 20240714

Coming up. Tom a riskoff mood percolating through the markets. Of course, we had u. S. Officials coming out and downplaying hopes of a trade breakthrough at the g20, and the commentary from jay powell and james bullard, seeming to disappoint some investors who were banking on a 50 basis point cut in july. Warningsay powell said of Downside Risks have increased, but stopped short of saying that cuts are imminent, a nd jim bullard said a 50 basis point cut might not be warranted, going for more like 25 bits in july. We saw equities pullback from the initial fedinduced rally. China also looking in the red, hang seng futures down 91 points. Yesterday, the chinese banks really tipped the market lower here after the reports that they may have been involved in not agreeing with subpoenas when it comes to north korea violations. More on that later on. Moment, 6. 88 at the pretty flat, but Dollar Strength story is percolating through the asiapacific. The bond market continues to see yields going lower. Broket slightly, but we below 2 for the u. S. 10year overnight. 2. 01 at the moment. Crude getting a decent boost today. U. S. Stockpiles falling once again, so we see west texas at 58. 79 at the moment. The currencies to watch, the aht, boththe thai b with central bank meetings, and economists do not expect a change, but quite a rally for both of these. Well see if there is any dovish tilt that could derail the rallies when it comes to their currencies, at 10 00 for the rbz. Before we go, weve eased off and the on the rally, riskoff move we are seeing, negativeyielding debt in the market. You can see the safety haven play still has quite a bit of legs. The accumulation of negativeyielding debt is pretty much moving in tandem with the goal price. Out, when it that comes to hedge fund positions, still not extreme in their positions in gold. Meantime, first word news. President trump is threatening iran with overwhelming force if it attacks any u. S. Targets. Relations between washington and tehran continue to crumble, with the president even using the word obliteration, responding to the iran warning that the path to Diplomatic Solutions has closed after the u. S. Imposed new sanctions. Tehran accused washington of being retarded. The certains failure and defeat of the United States. I do not have any doubt about that. The americans have become confused, and they do strange things, things no wise person in the history of politics has done. The white house has a mental disorder. Trade war tensions hit three u. S. Hinese banks, after a media report suggested they may be caught in an inquiry into violations of sanctions against north korea. The three banks fell after the Washington Post said a u. S. Judge found three identified chinese banks in contempt for refusing to comply with the investigation. Hong kong leader carrie lams popularity has plummeted amid vast protests of her controversial extradition bill. Her Approval Rating dropped to a record low 23 . Support for her government is the lowest since 2003. The u. K. Is suspending sales of tear gas and crowd control equipment to hong kong until an inquiry is held into allegedlys brutality at protests earlier this month. Global news 24 hours a day, on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Tom thank you very much. We do have breaking news crossing the terminal. Robert mueller has, is agreeing to testify before has committees on july 17. This will be seen as a victory for the democrats, who have been pushing to hear from mueller after the investigation into trump and whether he colluded with the russians. Of course, the finding was that there was no collusion, but there are still question marks and questions the democrats want to be following up on, so that will be seen as a victory for the democrats. Mueller has agreed to testify before the house on july 17. More as we get it, on those developments. Yvonne and meanwhile the Trump Administration is playing down expectations for trade talks at the g20, saying it is not prepared to compromise. President trump and xi are expected to meet on saturday in osaka, with the u. S. Demanding meaningful reforms in china. Bloomberg news has been told the u. S. Will suspend the next round of tariffs on another 300 billion of chinese goods while beijing and washington prepared to resume negotiations. Our next guest says it will be the status quo. Lets bring in Thomas Poulenc of t. Rowe price, joining us in hong kong. Note,s great to read your saying dont be a hero. What is your thoughts on the equity markets, the bond market on a tear . Is competing forces in the market, with accommodative policy, low inflation supporting risky assets. On the other hand, you have onentions on the tensions trade putting uncertainty on earnings. We dont want to take either side at the moment. We think having an approach where you take yields on one it would be the way. Yvonne it seems like the equity market and the bond market are conveying different messages. Are you saying that this is not sustainable . What will cause that to break, do you think . Thomas two things. First, trade, secondly Monetary Policy of the fed. For the last few months we had a high level of complexity, especially around trade. Now the market is resuming pricing in the middle scenario, great outlook for globalization, but still future tariffs, sanctions. The market is looking at the fed for what would be next. Bad news used to be good news for markets, but now with a rate cut priced in, bad news might be bad news. So you have to be careful. Tom thomas, one of your calls is a preference for Growth Stocks overvalue stocks. We have a terminal chart, which we will pull up shortly, showing how cheap value shares have become. Global value shares havent been this cheap relative to Growth Stocks since at least 2005. Does that undermine your conviction call on this . Thomas look, this is something we pay a lot of attention to, of course. We see a disruption in the market at the beginning of the year, the s p. Estimate 30 of Customer Companies in the s p were at risk of cyclical disruption. You see tech is delivering the future growth we want to benefit muted growthra of for the economy. So better Earnings Growth from these companies is justifying our outlook. And if you look at the composition of the sectors, growth and value, value in particular is dominated by financials and energy, and energy, we view low inflation and muted economy growth dampening oil prices. Yvonne Jay Powell Tom jay powell, before we get to an additional question, we go to Scott Morrison, the australian Prime Minister. Meeting, scott0 morrison is calling for the u. S. And china to end their trade war. Live, he is giving his first Foreign Policy speech since giving since taking office. You can catch that exclusively on bloomberg live, and later on the show. Lets listen in to Scott Morrison now. P. M. Morrison a long period of time, and he may still to this ay, but that is only demonstration of how much time andrew spent on the road, which continues to this day, promoting our incredible opportunities and linkages and the friendships we have, friendships that andrew developed prior to coming into politics. Tom that is australian Prime Minister Scott Morrison speaking at bloomberg offices in sydney. We will keep dipping into that, and we have that exclusive conversation with the Prime Minister of australia later, which we will bring you as well. Back to the conversation around the fed and trade with our guest in the studio, in hong kong. Aomas, you say you see deterioration particularly in the manufacturing sector. Fed is something that the officials are talking about, as a result of trade tensions. You say that if this bleeds over to services, it could be a trigger for a recession. Tell us what you are seeing. Thomas first of all, manufacturing in the u. S. Does not matter as much as in china or germany in particular. What we are seeing right now, momentum inl weak the leading Economic Indicator for manufacturing, justified by the uncertainty that we see in the trade tensions. So when you do not know the root of the game, you dont play it, is the trade tension putting a cloud over what the rules are. We see that manufacturing in step countries, the next would be services, potentially on hold for future capex plans, leading to not hiring as much as is needed for the economy to sustain growth. And if unemployment is rising, there could be a risk for a recession. This is not our base risk right now, but it is something we are monitoring closely, so any leading indicator of manufacturing and services would be key. S we talktay with us, a more about the fed. Ourr on, well catch exclusive conversation with australian Prime Minister Scott Morrison ahead of his trip to the g20. He already mentioned that australia wont sit back as the u. S. And china fight worsens. More from that coming up. This is bloomberg. P. M. Morrison the crosscurrents have reemerged, with progress on trade turning to greater uncertainty and incoming data showing renewed concerns. Sitting here today, i think 50 basis points would be overdone. I dont think the situation really calls for that, but i to prejudgeate meetings, you know . Tom that was of course fed chair Jerome Powell and st. Louis fed president james bullard. The yuan, at 6. 87, so slightly weaker fixing there. We had a little bit of weakness in currency, offshore currently 6. 88. Lets bring back our guest, thomas from t. Rowe price, who is not as optimistic on the market. You expect to see a 25 basis point cut in july. If the base Case Scenario comes to fall where we get some kind of resolution of talks in terms of trade, but no major deal at the g20, a 25 basis point cut in july as you predict, how would the markets react to that, do you think . Thomas first of all, for the trade scenario, that would be what the market is pricing right now. Is the fed, the Market Pricing higher than 25 basis points ,and what we are concerned about is not so much the july meeting, but more the price over the next 12 months, 100 basis points of cuts. Its difficult for us to imagine, given the strength of the market, the lowinflation data, nothing pushing that number higher right now. So that would be very difficult for us to justify, 100 basis points of fed cuts in the coming year. So i think there is a bit of complacency in the market, which we have seen over the last few days, where commentators have been more cautious about the amount of rate cuts we could get in july, and that has started to be priced into the markets, and the market is now reducing enthusiasm they have around the fed. Tom explain to us why you prefer the front end of the Treasury Curve to the back end end. Thomas what we see, the 2year is more sensitive to the change of fed pricing, so we still see we could have a lower 2year on so back of Market Pricing, more of a shortterm view that we have there. The 10year, although it might not go that far higher, it is still at a place where growth and inflation would justify a higher rate than sub2 on 10year. So having this secular strategy is allowing us to diversify our portfolio further. Yvonne how convincing does the data have to be now, to change the feds mind about cutting rates . Thomas i think that what would be key, as i said before, the services leading indicator, the hiring plan, and potentially the Global Economic momentum as well. I would say that as of now, the 25 basis points already give them a bit of room to reevaluate for potentially not september, but the december meeting. So with the current state of the economy, we would say 25 basis points. I dont really have any specific numbers, but i would say that where we are now, if that is stable, we could have 25 basis points and a reevaluation in december. Yvonne thomas, thank you so much. Head of multiasset solutions for asiapacific at t. Rowe price. A reminder once again, the australian Prime Minister Scott Morrison is currently speaking at bloomberg offices in sydney before his trip to the g20. Bloomberg clients can listen to that on live go, and stay tuned for our exclusive conversation with the Prime Minister later on this hour, the q a with our very own haidi stroudwatts. This is bloomberg. Yvonne welcome back to Bloomberg Markets china open. The mobile World Congress kicks off later today in shanghai, where our very own china correspondent selina wang joins us. Good to see you. A lot of bright lights and a lot of buzz going on this year. What is on top of the agenda . See, buzzingu can behind me there are thousands of people at the conference today. The public conversations are really focused around the applications, how china will lead in this industry with its massive market. But behind the scenes, the focus will be the geopolitics of 5g and the tensions between the u. S. And china and how that will play out. It certainly comes at a very sensitive time. Huawei has been put on a u. S. Ban, and u. S. Allies are pressured to further ban huawei from their networks. We heard from the micron ceo in its Earnings Call that they are resuming some shipments to huawei, but still huge questions about whether the chipmakers will be cut off from the largest market because of these tensions between the u. S. And china. So regardless of whether they are talked about on the main stage, this is the overhanging discussion privately. Yvonne right. Obviously a lot of talk about huawei, the 5g rollout. Who are you looking forward to hearing from the most at the conference this week . Out hereell, huawei is in full force. A gigantic exhibition hall. They have several executives speaking today, including the deputy chairman. We will also hear of executives from nokia, ericsson. I will be hearing for how european telco players might be benefiting from challenges huawei is facing. We will also be hearing from chipmakers. I spoke to the director general of gs ma, who worked with erickson for 15 years. I spoke about what the huawei ban means with him, and he is surprisingly optimistic, saying that despite what is going on right now, he believes that 5g networks will be unified, u. S. And China Networks will interact, and it is too early to say how exactly the export ban will impact huawei in the long run. Tom thank you very much. Selina wang at the mobile world conference in shanghai. A quick check of the latest Bloomberg Business flash headlines. Investors are taking billions of dollars from h20 Asset Management over concerns about a liquid holdings tied to a controversial german businessman. After almost a decade of constant inflows, they saw a group of large funds lose 6 billion in four days. They say losses are slowing and some inflows came on tuesday. Fedex recovered some regular session losses in late trade after fourthquarter earnings butshare beat expectations, the annual forecast trailed wall street projections as the trade war drags on and turnaround efforts at the struggling European Unit continue. Yvonne we are also counting down to the open of markets in hong kong and mainland china. Not looking too good at the getgo here if you are long these markets. China futures down about 85 points. Shanghai composite broke below 3000 yesterday. The banks are still in focus. It seems the u. S. Investigation hito north korea links has three chinese banks particularly hard, sending the market lower. Hang seng also down 0. 5 . Not much change from the renminbi, after a weaker fix from the pboc at 6. 88. The movers we are watching out for, the banks, China Merchants Bank taking another leg lower, 2 . It fell over 7 yesterday. Some of these banks may have been singled out by u. S. Subpoenas when it comes to the european investigations. Ping an insurance is buying back shares. China mobile, talking about 5g, that seems to be heading a little lower today, down 0. 7 . So we are Just Moments Away from the australian Prime Minister Scott Morrison speaking at the bloomberg offices in sydney ahead of his trip to the. His trip to the g20. That is coming up. This is bloomberg. Yvonne you are watching Bloomberg Markets china open, counting down to the g20 and equity markets heading south today, despite learning from our sources today that the u. S. Is willing to suspend the next round of tariffs on another 300 billion of chinese goods while the u. S. And china prepared to resume talks in osaka. Seemarkets still disappointed about the fed. Tom and u. S. Officials trying to play down expectations ahead of this g20 meeting, those riskoffeading to a move. The china beige book saying that for the Second Quarter the economy looked like things were improving, but they say dont hold onto your hat, things probably wont be sustained in the improvement they see in the Second Quarter. Opening in the mainland markets, the csi 300 below the 3800 level, with red on the board as investors digest the comments, taking some risk off ahead of the g20 meeting. Shanghai down 0. 7 . Shenzhen down 0. 8 . The individual stocks, the individual stories to highlight. China mobile, as yvonne said before the break, have announced plans to set up a 4. 4 billion 5g industry found. Trading down 0. 7 . Some other news might be feeding into that as far as telecoms, technology, the trade conversation. Ping an insurance down 0. 3 after buying back 19. 8 million a shares for about 250 million u. S. Dollars. Shanghai fosun pharmaceutical announced plans to buy chinas list pharma for 110 million. In currency, a slightly weaker fixing at 6. 87, not a surprise given the strength in the dollar overnight. 88. See right now cnh 6. A riskoff mood ahead of the g20. Yvonne and we are seeing that riskoff in hong kong as well, the hang seng lower close to 200 points here. Some heavyweights, ping an, tencent leading losses today. We see tech shares a little under the weather, tencent down 1. 2 . Banks seeing headwinds after the north korea violations, the Washington Post reported. Market ase well, down 0. 5 . This company that works with software sales. The Hong Kong Securities commission has prohibited 14 brokers from dealing with or processing certain accents held in client accounts related to suspected manipulation of smartac holdings. The time was between october 2018 and march 2019. According to regulators, the stock down close to 50 at the moment, the lowest since november 2018. Prada, we saw an initial spike of about 4 , so easing off of this right now, but one of the bigger movers today. And tencent lower by 1 . Lets go to first word news with radical group that ratika gupta. Stocks in the u. S. Fell the most in three weeks after fed chairman jay powell spoke about rats to the u. S. Economy, saying the lack of progress in the trade war and weaker Economic Data are stoking concerns about the strength of Global Growth. Consensus is building that the fed will cut Interest Rates in the coming weeks, something President Trump has been demanding. Financialnce, the vulnerabilities are at a moderate level, which is not to say nonexistent, just at a normal level. There will always be vulnerabilities. And i would say as i said at the beginning, i would not hesitate to deploy a countercyclical capital buffer if the test for doing so is met under our framework. President trumpss soninlaw has offered to develop a pitch for middle east peace, with a glossy video showing his vision for a modern palestinian economy. Jared kushner told a seminar in bahrain the deal with israel could launch a vital commercial hub in gaza and the west bank, but did not explain how to achieve political reconciliation in the region. Palestinian leaders rejected the seminar as an attempted bribe. Economic growth and prosperity for the Palestinian People are not possible without enduring and fair Political Solutions to the conflict, that guarantees israels security and respects the dignity of the Palestinian People. Boeings grounded 737 max could fly again before the completion of an investigation into a faulty sensor linked to two fatal crashes. Thes from the faa say evaluation of the plane being fit to fly doesnt rest on those investigations. The report of the committee is expected to be released in 1012 months. New data across the u. S. Showing increasing threats to growth amid rising trade tensions and pressure on the fed to cut rates. New home sales fell to a five month low, adding to earlier signs of weakness despite lower mortgage costs. The Consumer Confidence index dropped to 121. 5, the lowest level since september 2017, below all forecasts in a bloomberg survey. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Tom thank you very much, indeed. Hsbcs chief john flint says the u. S. Trade spat with china is part of a broader western objective to contain beijings influence. He spoke to bloomberg in london. John one be get past trade, it gets clear theres a broader desire to see china contained in some way. I think we will move into something that covers technology, and maybe a bifurcation of technology and technology standards. Remarks kindpening of mentioned how much good has been done, from a human perspective over the last 50 or chinas economic story taking over 500 million, 800 Million People, whatever number you prefer, whatever number that is. An amazing story. And it is remarkable, for many reasons, but it gives western liberal democracies cause for thought. Because here is a deeply socialist system that has served its people really well. It has been a convenient narrative in the west for too long to point to socialist systems that fail their people, and here is one that has delivered an extraordinary economic transformation. So it does go beyond trade. It is a new geopolitical front we will have to navigate. We are kind of hanging on this meeting between President Trump and president xi in a couple of days. What can they achieve . John i really dont know. And i think the personalities involved are such that it is very difficult to predict. I dont know what either of them are going in with. And i think that when we try to construct that view, it is probably helpful to try to construct it working back from next years president ial elections, because i think President Trump needs to engineer a Strong Economy to really bolster his chances of being reelected, and i think he will be sing down with a strategy of trying to figure out how best to do that, and i am sure this data point, i would imagine there is a desired outcome from the state department, i have no idea what it would be. We were speculating, maybe another impasse would be celebrated by the markets, because they would extrapolate the fed would immediately rescue the markets by cutting. I really hope that is not what happens. It seems like a bizarre way to organize things. But i really dont know. I am waiting for the tweets. Yvonne that was hsbc bost john flint, speaking to francine lacqua. Some live pictures outside hong kong at the moment, close to where our studio is, in the Central Business district. We are seeing a silent march that just began a couple minutes ago. What is going on here, they are sending a message to xi jinping and President Trump ahead of the g20, delivering petition letters asking g20 leaders to press president xi on the situation in hong kong. So they are going to be heading to several counselors here in the next couple hours. Local media here has said that chief executive carrie lam remains adamant in refusing to withdraw the extradition bill that prompted protests in the last couple weeks here in the city, so we continue to watch those pictures coming through in hong kong. Coming up, a closer look at how Chinese Consumers are navigating the trade war. This is bloomberg. Tom welcome back. You are watching Bloomberg Markets china open. A quick look at the latest business flash headlines. Mitsubishi heavy industries is buying bum barniers bomb ardiers regional jet business, capping a multiyear overhaul for the canadian jetmaker that will focus on Business Jets and passenger trains. Createll let mitsubishi its own airline, with the first japanese built airliner since the 1960s. Workers are still blocking access to some of the biggest copper mines in chile, extending the strike to 12 days over a labor dispute. Dispute is that mines run by conoco, cadelco, thelargest miner in industry. Labor unions say there are currently no plans for talks. S may bebudget household planning an ipo, inviting banks to pitch for roles in a share sale that could take place in hong kong or new york. Withare backed by tencent, over 3500 stores around the world and revenue of 2. 5 billion last year. Retail,sticking to Consumer Sentiment remaining high in china. Retail sales have been a bright whichgrowing 8. 6 in may, was above estimates and higher than aprils 7. 2 reading we saw a recently. Our next guest says now is time to Consumer Companies double down from china. Joining us is our guest from bain, who published a paper on the Shopping Behavior of Chinese Consumers. I know theres a lot of concerns, but given the research your team has done, what have you found about the health of the Chinese Consumer . Areo the Chinese Consumers behaving as you would expect in a growing economy, very confidently about their future. Their income per capita has increased. They have more discretionary money to spend, so they are spending. Growthearch found the rates for 2018 were very much in line with the previous year, no no slowdown. Premiumization, which is of course a sign of healthiness and confidence, is also going very well. So overall, very positive year for the chinese consumption, looking at the sector in particular yvonne . One of the big deals in particular. Yvonne one of the big deals we talked about, with carrefgour. Europeanican, retailers that are scaling back exposure to china, or tying up with a local partner. What do you think the foreign retailers are going wrong about the Chinese Consumer . Bruno thats a very good question. This is something we have been tracking now in our shopper report for eight years. One thing we track regularly, the growth of different channels of consumption in china. Not surprisingly, the bigbox retailers of china have been reducing or declining for the last few years. So not surprisingly, they are looking for ways to consolidate and improve their performance. The other trend of course that is impacting the retail environment is the growth of ecommerce, and the emergence of what we call new retail, a combination of offline and online retailers. And so the deal with carrefour is just the latest development of the trends. Remember, a couple years ago besides similar deal between alibaba, and im sure we will see more in the future. It is the transformation of the retail environment that is creating some requirement for transformation, but the speed which it happens in china is unprecedented, which is why we see consolidation. Tom thank you for your patience. We will come back to you, we just want to listen quickly to an exclusive conversation with the Prime Minister of australia, Scott Morrison, speaking with haidi stroudwatts. P. M. Morrison ultimately, the context in which we can do all that is very much determined by the strength of that relationship and its efficiency, and that there is a broader global interest that they are a beneficiary of. That there is a bigger dividend beyond the deal between the United States and china that they benefit from by ensuring this can be landed. Ive always been quite an optimist. It is my natural disposition, and i may know that disposition,. That doesnt mean i am not cognizant of the risks. Of course they are there. But we do need to move forward. I welcome the fact that theyre able to start a conversation. Heres another opportunity to reengage. I think it is important for both to come to the table, recognize theres some genuine issues. You cant deny those. They have to be acknowledged, and that is what we are doing again today. Were looking to them to put that broader Global Economic interest to the fore, which is what the g20 is about, all the day by the way. It is not the g2, it is the g20. For those two nations to create prosperity, ofl which they will be key beneficiaries. They will benefit more than any by the Global Economy being stronger. Haidi it is not the g2, but having said that, going into buenos aires there were concerns we werent even able to communicate able to get a communique, largely because of the u. S. If you look back at this, its not just about trade, it is not controversial that more trade and greater trade is better for everyone. But the key strategic competitive battle of our time between an old superpower and a rising superpower, not just trade, but geopolitics, security, all aspects of diplomacy. Are you still as optimistic . P. M. Morrison we have seen this before, and it has been mishandled in the past, but i have greater faith in our ability to learn from these things in the past. In my presentation, i was quite specific about the Global Leadership provided by the United States in creating a post Second World War environment that led to the greatest economic expansion the world has ever seen. And within that occurred ,rguably, if not unarguably the greatest economic miracle we have ever seen. So there is too much at stake. Call it my sort of great faith in vested interest, but the vested interest is for this to get sorted. I have always held the view that the u. S. Leadership, and i would certainly hope and expect the tonese leadership, tends land this. It may take longer than we hope, but as long as we are always making progress, i think that is cause for optimism. Haidi what does australia do, in all of this . Theres lots of concerns that at one point, and it is already happening depending on who you ask, that canberra is being forced to choose between our strongest and most powerful traditional ally and our greatest trading partner. So how do you deal with that pressure, rather than sitting back and letting Collateral Damage happen . P. M. Morrison well, i reject the question, i reject the requirement to purchase a paid in a binary way. I think it is a false framework and is not helpful. Its driven by a demand to see every issue in terms of conflict rather than resolution, and i think australia and my government will be very positive in rejecting that dynamic. Because i dont think it is helpful. I dont think it is a helpful analytical framework. I dont think it is a helpful commentary framework. Yes, it gets people excited about the possibility of conflict, or interested is maybe the better word rather than excited, and that can generate interest. But what we are interested in is having a more peaceful and stable world, and when that sort of framework is imposed on you as a sensible, mature, reasonable nation, you call them out, which is what i have just done. Varioustimes, i pick up analyses that talk about the inevitability of where this is, and i find the fatalism very unhelpful, not just for australians but more broadly. We are capable of all of that. How do i know that . Because of our history, particularly after the Second World War. Not reflectdo enough on how much was achieved. Im not kidding when i say that when i am sitting next to the german chancellor, having spent time also with Prime Minister, seeing what the world can achieve when it sees past its own interests for the bigger picture. Its happened before. Its also been ignored before, and we know where that ends, and i dont think anyone wants to go there. Haidi we know that the relationship with beijing has been strained in recent years. Do you see that improving, or tensions improving . P. M. Morrison between australia and china . I see it as improving, and we are very happy for it to improve. We have record levels of trade. We have record levels of engagement. And i stress again, there are 1. 2 million australians of chinese heritage, here in australia. Its a very large diaspora, one that has been here for a very long time and has played an enormously Important Role in australias development, in australias outlook. The chineseaustralian community, through its entrepreneurialism, hard work, commitments to family, these values that have been the bedrock of our countrys success are closely associated with our chinese Diaspora Community of citizens in australia. I think that provides the foundation for something absolutely magnificent. Haidi the g20, as you head off to osaka, was founded against the backdrop of containing the Global Financial crisis, stronger together, if you will. Do you really feel confident something can be achieved, given the Global Growth trajectory, as well as the geopolitical front, which has significantly worsened . P. M. Morrison i think it will help. And that is the point of the g20. Global,s, these tooilateral forums think much of themselves, and build up architectures and bureaucracies and agendas that can sometimes frankly distract them from what the key goal is, which is to come together. You are right, it started out as a finance ministers forum, and i heavy pleasure apart and i have the pleasure apart is abating in it as treasurer for three years. We can look back at what was achieved through the combination of efforts by central bankers g20nations that sat at the table. They can be pleased with what was achieved. The g20 achieved a great deal through that process, but its virtue is its existence. It doesnt need to have longrunning agendas. I think its purpose is to deal with, the issues as they arrive provide a framework to do that. Obviously these meetings provide lots of opportunities for bilateral engagement, which i am looking forward to. Im always optimistic and positive and hopeful when people are meeting. So this weekend is another Good Opportunity for that. Will it resolve it . I doubt it, but i think and expect and we will be working to make sure it helps it. Haidi you spoke about the idea of this decoupling, an interesting one. Turns intos tussle something longerterm between the u. S. And china, we might end up with two different systems of technology and trade, the main spheres. Where does australia end up in the middle of that, and should there be a more Coherent Group strategy between asian nations . Japan and south korea are just as concerned about being caught up in the middle. P. M. Morrison i thought kevin made some really interesting observations about this the other day, particularly when he juxtaposed decoupling against some of the cold war rhetoric. I thought his analysis was pretty sound. The decoupling is an observation many are making, but what we are largely talking about is infrastructure, which has no moral quality. Everyone in china haidi but the ban on huawei has a moral aspect, does it not . P. M. Morrison i would not cast it in that term, no. Everyone inying, china doesnt need to have visa and mastercard and everyone in the u. S. Doesnt need to be on wepay to do business. They can have systems. That is fine. As long as you have an overarching Global Trading system and international system. All these systems can talk to each other. China has a complete lead different payments platform to australia, as it does with vietnam, with canada, the united kingdom. They are all different. This is infrastructure, in a different form, and what matters is the overarching, connecting infrastructure that enables these nations to do business. So again, the leap that is always made, oh, they have different payment systems, that is a sign of division and tension, is such nonsense, just nonsense. They are just different systems. They are allowed to have different systems, and they can do that for any number of reasons, and that is ok. So we dont have to leap to, these are expressions of hostility. They are not. Haidi there is infrastructure, but also the intangible that some might argue would be more damaging, which is the impact on sentiment, on animal spirits, on the lack of certainty investors have. P. M. Morrison i agree with that, and that is the point that i made on monday in a speech that i gave in perth. This is why i am highlighting this issue today. Only a few years ago, i was in china at the finance ministers meeting of the g20 in shanghai. From memory, it was the imf who the making the point that merchandise trade was one of the biggest issues of the Global Economy at the time, because of a whole range of other issues. So that was seen as the key, the key step that needed to move. Now, today, that is being impacted more by these tension andnd political factors, that has a real impact on the Global Economy. That is why it is important for this to get sorted, because it is dampening Consumer Confidence, Business Confidence, inhibiting investors from seeing how they might apply capital. That is important to australia, arguably the biggest economic risk that australia faces, the broader Global Outlook. It is in australias National Economic australias interest, for better jobs, wages, buying homes, starting businesses that depend on a more positive outlook at that level. That is why we will seek to do what we can to encourage resolution. Haidi when we talk at length about australia being the golden child coming out of the Global Financial crisis, 28 years now without a recession, the is itism that comes, good luck or Good Management . P. M. Morrison if things go badly, it is never bad luck. [laughter] in the analysis business. Haidi the china story is a big part of that, and it is remarkable. Most economists would say it is not something we are likely to see repeated in our lifetime. So what are the new drivers of growth and is australia well prepared for that . Yes is the shortmorrison answer. Only time will tell. , when youd asean think about it and its constituent members. Those that are going to develop and hopefully will, nations like myanmar and cambodia. The potential is significant. Hurdles obviously big to overcome, but the potential, particularly in the asean region for growth and development is very strong. Weve always understood that. We have understood that for decades. Our engagement with asia did not begin just recently, it goes back a long way. I just have the opportunity more recently to reflect on and read through john howards book. I commend the chapters that talk about the early initiation that occurred, soon after the Second World War, overcoming significant local and the mystic anxieties and a domestic anxieties about our engagement with asia. But the government has pressed on. I think it has developed an understanding of the preparedness and the australian economy to engage with the Global Economy. We enjoy thes why relationships we do in all of those countries today, and are looking to further that in the future. The Global Outlook were up to around 70 now of twoway trade covered by trade agreements. When we came to government 5. 5 years ago. 2022. Ill get to 90 by thats part of our preparedness. Lowering the tax burden in australia is an important part of the process. Our Infrastructure Development which the deputy Prime Minister is doing to ensure is on the ground, thats part of our plan. The Regulation Initiative i announced on monday will be a key part of ensuring there is no sclerotic impact on investment. Tracking investment now i think is australias biggest attracting investment now i think its australias biggest job. Unemployment, the full employment rate is closer to 4. 5 unemployment rather than 5 , and that means more jobs have to be created. My focus and the focus of the treasurer and the entire thing entire team is creating jobs, projects. Ncludes haidi a significant part of that is multinaturalism multinationalism in trade. Tpp, from about the what should the u. S. Has spectacularly withdrawn after many rounds of negotiation. You talked about a china led initiative. Is that viewed as taking a side . Pm morrison why would it . Haidi its unlikely the u. S. Would return to the tpp, wheres there is potential talk about china eventually joining. Pm morrison this is sort of my point. I dont understand that is a very binary way to look at it, and that is my point could point. We have a Free Trade Agreement with the u. S. The u. S. Pulling out of the tpp, thats what the president took to his election. What was important about our response is we kept going. We did so with new zealand, particularly with japan, and i think that was one of Prime Minister turnbulls great achievements was seeing that through. Great credit to him for that. Thingsue all of these not thinking, the great powers will have their view and participation good for them and we welcome their involvement when they want to do it, and if they dont, they will make that decision for their own interest. Standstill for, five minutes and we will do a trade deal with you. [laughter] the u. K. On postbrexit. Been true has always investment, immigration, trade. Why have we had so many years of uninterrupted Economic Growth . There are three big reasons. Haidi you complemented one of your predecessors. Not having a coherence china strategy was a criticism. Has that changed . Pm morrison i dont know, youll have to ask him. [laughter] pm morrison im sure he is up for a comment. Haidi i know his view hasnt changed, has the strategy changed . I think weve continued to maintain a consistent position on all of these questions. I would say across governments and across the partisan divide. It has always been our interest to engage since the process begin with china. We have all sought to enter that to greater or lesser effects. We have all sought to engage with asean. What i found particularly encouraging when i was at the was aseansmmit respect for australia as not being a fairweather traveler. We have always supported asean, weve always been part of it and encouraged it. I would hope it would, but i think when governments have been in power, they have always pursued that. There is a consistency. I believe there is a greater consistency on these points than australian commentary seems to be given credit for. Haidi there is a growing level of distrust in australia with regard to doing business in china and the relationship with china. Does that make it difficult for your government to navigate these murky waters . Pm morrison i think its a function of a lot of the things i have spoken about today. Ago,u go back many years when a lot of the new issues that are coming into the relationship can make some of these issues difficult, that is to be expected. They are getting more multifaceted and complex. New technologies. There are more questions to respond to an answer as part of the relationship but you have to keep going back, i think, to the fundamentals of the relationship youd relationship. The relationship with china, i stress the people to people link. They are better than they have ever been before. 1. 2 Million People of chinese heritage in australia. That is a sizable connection, and the yearly connection, whether it is in visitation, education, or any other linkages, it goes well beyond the governments talking to each other. This is something quite different, and why at the end of the day it provides a strong ballast to the relationship and something i think for both governments to reflect on and inshore ensure we are doing the right thing. Stepping up in the pacific is characterized by some tobeing one way to try contain or assert greater control over china, which itself is trying to assert greater control in the asiapacific to counter the u. S. Traditional influence. Is that a fair characterization . Pm morrison no. I think it fails the test i put today, which is to solely explain our actions in this binary prison. Why are we in the pacific . They are our family. Ive had a lot of engagement with people in the pacific over a long time and it has been a great privilege to be doing that as Prime Minister. It is incapable of expression. In one of our darkest hours, they were the most compassionate and real of friends and that creates a special responsibility. It goes so beyond this binary prison that frames things today. This is where we live. The interconnectedness between polynesian and other peoples and australia, it has a rich history. We simply want them to be independent, successful, have health, Better Living standards, and be able to get on with their lives as they see to it. I think when pacific nations look to australia or new zealand , they see a friend who wants the best for them. That is what we have always done. We are not new to the pacific, we didnt all of a sudden decide to be in the pacific the last several years. We have been there a very long time. Haidi why now with the increased Infrastructure Development . Pm morrison all of the reasons i just said. That is our responsibility and it want to see if make those responsibilities. My officials and staff know, it is a burning passion i have for the pacific. Haidi you spoke about the importance of human agency in your speech, of selfdetermination. I am wondering how that applies to what we have seen recently in hong kong. Should australia be taking a stronger message to beijing about how it handles these things . Pm morrison we have made our comments and i think they were appropriate comments. Others have made their comments as well. That is australias position. We will obviously always continue to reserve the right to express views from time to time, as china indeed reserves the right to express views on things in australia. That happens and it never causes me in the offense. That i think is part of the giveandtake of relationships. I dont think that is uncommon. Ishink what is important that ultimately, you have to respect each other as independent sovereign nations. Betweenas true australia and china as it is between australia and new zealand. Granted, our differences with new zealand follow more on the sports field, but occasionally we might have a different view on land, exports, and things like that. Seeing as you am ,ook across the indo pacific countries with very different systems, very different histories, different webs of alliances and partnerships in trading relationships and capabilities. In one thing they have common is they all want to be independent, sovereign states, finding their own way, and being able to do that successfully in the future, living happily with everyone else. That is the basis of the thatership and Coalition Australia is very happy to be part of and tries to foster. Haidi that seems like an appropriate and optimistic note to leave this conversation. Thank you so much for joining us. I would like to invite the ceo of asian link to deliver some closing remarks. [applause] rishaad heidi talking there with Scott Morrison, the Prime Minister of australia, talking about trade agreements. At the moment, saying they have been pivoting toward the pacific. Also going on to talk about where does Australia Land in ,his whole chinau. S. Trade war and he said its not a binary choice even though the u. S. Left the tpp. He says it is not a binary thing. He rejected the notion of having to pick sides for australia between the u. S. And china. Take a look at what happened during the speech. Change,he decision, no largely expected from economists , but the headlines we are looking at is the lower official cash rate may be needed. Were talking about risks to the economy. When it can to the kiwi, we saw a brief drop and we come back up at the moment. A twoweek high when it comes to the currency. Take a look at this chart. Rishaad kiwi dues. Yvonne if talking about it is talking about the short squeeze. Managers aree fund looking at record shorts when it comes to the currency. Can it continue to cover now that the rally continues on . Getting into an external threats, possibly the things they are looking at. Thats what Scott Morrison was talking about as well, the Global Outlook. Something echoed by the reserve bank of new zealand as well. Lets tell you what has been going on, Fund Managers looking at what is going on out there, risking exposure to the g20. The currency is open to a short squeeze as traders are posed to can remain rbnz dovish amongst global peers. Crosscurrents have reemerged with apparent progress on trade turning to greater uncertainty and with incoming data renewing concerns about the strength of the Global Economy. Sitting here today, i think 50 basis points would be overdone. I dont think the situation really calls for that, but i would be willing to go to 25 sitting here today. I hate to prejudge meetings. Things can change. Rishaad the fed chair Jerome Powell and sit was fed president james bullard. Yvonne bullard said he wasnt calling for a 50 point basis cut, he says 25 25 point cut. Our guest. In rbnz saying a lower official cash rate is needed if we continue to see Central Banks follow the fed, can we assume a weaker dollar . Out the ubs views to start with. We expect the 50 basis point cut from the fed in july. We expect a 20 25 basis point cut in august, and august from the rbnz. We expect a 50 basis point cut from the rba. Rate cutsluding to complicates matters for the Central Banks. We saw the ecb move last week and now the rbnz indicating that rates would need to go lower before they go higher again. The rbnz have highlighted global risks, and it is key that these currencies can lean in to some u. S. Dollar weakness, and the reason for that is because domestically, investment was highlighted by the rbnz and it is concerning to us that Business Confidence has been week for some time. We have a forecast for the kiwi dollar of around 65, and a forecast for the aussie dollar around 68. But we still have a eurodollar euro strengthening against the u. S. Dollar over the next 12 months. We think the antipoverty and deanencies antipo currencies will stay relatively weak themselves. With regard to positioning, it is very short for the new Zealand Dollar as well as the aussie dollar. You have to remember, when you think about why is it short, the traders are picking up carry here. This is a carry trade. Usually you get positive carry from holding the new Zealand Dollar or the australian dollar, but of course, the new zealand 10year and twoyear rates are below the United States. You are picking up carry by being long against the u. S. Dollar with these currencies. Ultimately, with a very dovish fed and 50 basis points in july, that gives more wiggle room to the peers we have been discussing. Could this be a currency race to the bottom . Wayne i dont necessarily describe it as a race to the bottom. Banks,end, the central particularly new zealand and australia, where already cutting. They were cutting for domestic issues such as housing markets starting to moderate, and domestic consumption weakening because of the negative Wealth Effects from the moderation and housing. I think what the, getting matter is, is the Central Banks have traditionally had quite a bit of room on the downside to cut rates. Downey continue to wind and ease Monetary Policy, the room they had for conventional Monetary Policy tools is getting smaller and smaller. That situation of course is quite normal for some other Central Banks like the ecb, for example. What it does introduce for someone like the rba, we have seen a significant rise in talk about unconventional policy measures or potentially kiwi qe in places like australia. I think as labor markets begin weaken a little bit, the markets will have to do more, but there is room to do less and less. Yvonne i want to talk about the gold rally as well. It seems like this thing has some legs. We have a chart that shows the net long position in for gold. It has peeked up a little bit but nowhere near the extremes we saw during brexit in 2016 or even in the middle in 2017. His gold looking oversold to you . How much longer can the rally go . Wayne i think at the moment at least, it is a little bit potentially on the overbought side. Risks to the fed disappointing the market are what we are seeing in current u. S. Dollar strength, a little bit of a rebound in u. S. Yields, etc. Because the market has priced thereabouts 75 basis point cut by the fed by the end of the year, as we have seen from the fed speakers of the last couple of days, 50 basis points looks extreme in their mind. The market is set up for a little bit of disappointment as we get closer to july. I think the key for gold is the u. S. Macro data. It is very clear from this that speakers the fed speakers that when they talk about rate cuts, 50 basis points they think may be a little far in the current circumstances. I would flip that over and say if data continues to weaken, if the labor market doesnt pick up, if inflation continues to look a little soft, if business investment, which was key in powells statement, doesnt begin to turn around, the fed has all of the probability of cutting right rates by the 50 basis points. The riskurns around, will have to be taken out of the price and that will have an upside to the u. S. Dollar in the shortterm and a downside for gold. Longerterm, though, i think inflation Central Banks are willing to let inflation run a little bit here relative to rate real, and consequently Interest Rates in the u. S. Are going to go deep into negative territory over the next 1218 months, and that could be very positive for gold on a 12 month basis. Gordon thank you, wayne from singapore. Coming up, we hear from indonesias finance minister saying the trade war is getting exportimports and putting pressure on commodity prices. We will hear exclusively from him. This is bloomberg. Yvonne here is your latest business flash headlines. Elon musk says tesla is on the verge of setting accordingly record for deliveries, although it will need to push hard in the last few days of the month. In a memo to staff, he says there are enough orders to set a new mark but not all of the right cars are in the right location. Tesla shares have slumped 34 this year in part due to concerns. Bout the a regional jet business is being cappingor 550 million, an overhaul for the canadian playmaker that will focus on jets and passenger trains. It will boost mitsubishis efforts to roll out its own aircraft line calleds page jet, the first japanese built airliner since the 1960s. Rishaad lets get to markets, what is going on as we had to lunch break. The nikkei and topics both down, both down. X looking at some of the movers making headlines. Down, buyingavy the stake in the regional jet unit. Plans to sell a stake in korea. Reneasa, they are replacing their ceo. Have a group looking to reinstate the former chief. That is what is going on. This is bloomberg. Rishaad it is 12 29 p. M. In sydney. This is the first word headlines. U. S. Stocks fell the most in three weeks. Fed chairman Jerome Powell warned about rising threats to the economy. He said the lack of progress in the trade war and weak Economic Data are stoking concern about the strength of Global Growth. A consensus building that the fed will cut Interest Rates in the coming weeks. Something that President Trump has been demanding. His soninlaw has a Developers Pitch for middle east pitch. Showing his vision for the economy. He said a deal with israel could tourist hub in gaza and the west bank. Palestinian leaders rejected the seminar as an attempted bribe. Economic growth and prosperity for the Palestinian People are not possible without an enduring and fair political solution to the conflict that guarantees israels security and respects the digit of the Palestinian People. Hong kong leaders popularity has slipped. R Approval Rating dropped to a record low of 23 . Meanwhile in u. K. Is suspending sales of tear gas and crowd control equipment to hong kong until an inquiry is held into alleged police brutality. After could fly again the investigation of the faulty sensor linked to two crashes. The evaluation doesnt depend on those investigations. A special committee began meeting earlier this month and released in o be 1012 months. Obal news 24 hours a day this is bloomberg. Rishaad watching chinas mobile World Congress. What is at the top of the agenda this week . Rish, this is chinas largest mobile conference. The exhibitions here are focused on the new an gations and how china is going to lead in this industry because of its massive market. Behind the scenes, u. S. China trade tension. The u. S. Pressures other countries to block that way from its network. They are starting to shift some of their components. There is concern they may be cut off from one of the largest markets. There are big hanging over how this industry will continue ving forward if the may have chains are disrupted. Rishaad stay with us. Joining us now is a Research Manager for client devices. They have throne up all of this uncertainty. How do the smart phone makers, equipment makers deal with all of this in the face of what they dont know is going to happen . This is the problem. I think for now that concerns , r huawei, what they can do what confidence they can supply. Into the market as well as make sure that inventory keeps getting clear. It doesnt get clogged in the and reachs the hands over the consumers. I think that is a key concern at this point. Yvonne so tell us a little bit more about the effect of this u. S. Ban on huawei. If we see this ban lifted can the smart phone market rebound or are we talking about a typical slowdown here as well . Even before, the consequences of trade war, the ban on huawei came in, we were expecting a sluggish market growth. E have seen a dip in the overall numbers. The impact is more negative. If the ban is lifted, we will probably see a shorter decline t if it continues to stay, then wole probably a longterm negative consequences for the overall smart phone market. Im here at shanghai. A lot of these questions are hanging over the executives heads. Phenomenons ew cant have android it probably doesnt affect huawei in the home market in china. The devices still ship. You dont have google play in china but outside of the china if you do not have those apps or services on the android phones, i think it is going to be really difficult for huawei to push those devices to the consumers. Building the whole ecosystem around it, getting those apps and services into those devices, getting users accustomed to that, i think it is going to be a much bigger challenge. Rishaad talk to me about the smart phone market ghobally. Not expecting it to grow. Is that more a function of these phones not progressing quite as much as they did and people are hanging on to them longer or is it much more deep seeded than that . A couple of years back, there was a strong market. A big reason for that growth is there was a very Large Population ready to move on to smart phones but did not have smart phones at that point. That was an easier low hanging fruit for them to get. Now most of the people who can afford a smart phone already have one. The quality is pretty good so you dont need to replace that every one year or two years. People with hang on to their smart phones longer and only see the need to go for the next upgrade of the smart phone. That is slowing down the smart phone market. It is a slowdown to some extent. , nne you mentioned as well samsung rising to the occasion. How much can it benefit from this whole huawaei situation between the u. S. And china now . Samsung offers what huawei has been offering in some of the countries in western europe. If huaweis sales slow down, amsung is likely to benefit. The Product Portfolio and the geographic coverage, i think it is going to take time to ramp up. Sam sung could rishaad overall, how do all of the pieces fit together . Who is going to be the winners in this whole smart phone battle that is going on and what if going to be the next big thing, quickly . A uawei will slow down little bit. Apple and samsung will probably continue to lead the market. Otherwise i think overall, it is a scenario. Yvonne thank you. Senior Research Manager for lient devices. Coming up rishaad indonesia. In the trade war. We have an exclusive interview with the finance minister. Thats on the way, next. Rishaad lets have a look at business headlines. Boris johnson saying that continuing tensions lead to more cuts and a postponing of investment decisions. 91 of its operating income chinas rapid expansion in the is giving western democracies pause for thought. When get past trade i think it is clear there is a desire to see china contained in some way. I think well move into a chapter that covers technology nd maybe technology standards. Yvonne microsoft shares slumped on a record from the biggest bear that called the stock overvalued. Market expectations are too high. The drop marks the biggest one day loss since january. The stock has still had a strong month with an eightday rally that took it to record levels. Rishaad Fourth Quarter earnings came in ahead of expectations. This is the trade war and turnaround of a struggling European Unit. Fedex considering extending deliveries to seven days a week and less reliance on the postal service. Warne the u. S. China trade is cutting indonesias exports, which will weigh on economic rowth. We look at the tension in the form of creating a risk. We see the risk in terms of the Global Growth weakening and the global weakening. Creating more global rates for our country including indonesia. Relationlly u. S. China on the trade. Creating an opportunity for us, indonesia as a place for the location of the industry and avoiding this kind of risk that is a new opportunity for many countries. Thats why indonesia focusing on how were going to improve our investment climb in order for us to become for the production and supply chain and also take the benefit of this situation. Is President Trump with his mercantilism giving you a new opportunity . We understand, china to low age vietnam, can you be benefited by to transfer of manufacturing indonesia as we see in vietnam . We definitely can. We have all of the necessary conditions for the investments to flow into indonesia whether in the form of infrastructure in if past five years. And deregulation. Ease of doing business has been improved and we have a big market in itself. We have an attractiveness in the form of our own economy establishing macro stability as well as prudential policy with it being impolicemened constantly for indonesia and we improve our ease of doing business and investment climate. So we have all of the necessary conditions. We are aggressively communicating this policy with the election of the president good going to be a moment for us. Yvonne what will be the impact of the trade war on indonesias growth this year . Can you put a number on it . We are still aiming for 5. 3 . The First Quarter we are growing at 5. 07. A combination of as well as close to the election in april. We see that the implication of this trade war and weakening Global Economy in the form of exports. Which is going into a negative zone. We have a contraction on the export on the First Quarter. That creates a dynamic with the input that is going down and the price. This is all the Downside Risk that indonesia is going to face. Whatever our projection for growth is this year, it is still beating a 5. 17 to 5 phony 2 . Rishaad our interview with the indonesian finance minister. Lets look at the market and the Companies Making waves here. Yvonne were watching currencies. The kiwi rallied after the fed decided to keep rates unchanged. Twoweek highs for the kiwi. Well see if they can continue this hawkish tilt or the accommodation or shift more to a dovish accommodation. An interesting call from bank of america. If we see a further deterioration in relations between the u. S. And china, that could set up a chain of events. They say there is a risk of 30 oil which could make things expensive as well. Rishaad we are coming down to what we can expect out of the open in india as well. Just about an hour away. Just under an hour away. This is what it looks like for the market there. In mumbai. What happened yesterday and how is it looking thus far for todays session . Yesterdays session saw a little bit of a turnaround. A good session, the second half of trade, the Late Afternoon session led forward by the large cap from the oil and gas. So we hadt moves shes to close about 11 rks 796. 11 rks 796. Tomorrow is the final close and the expiring day of the june series. Todays session, expect more volume pickup. The open should be more in line with what the rest is doing. What are you watching there . We started with the housing limited. Up for redemption on tuesday. The rest of it will come about once the cash position improves. This will go along with the tock price in todays session. There is a financial risk profile which is going to weigh down on the stock session. Record highs in yesterdays session. They plan to raise money to 400 million. Rishaad good stuff there. Coming up yvonne competing for our vote. The battle of the charts next. This is bloomberg. Rishaad it is that time of the day. He charts. Their best charts pitted against each other. Yvonne lets kick things off with janet. My chart is the big event due in india next week, the budget. The question is will the new finance minister feel enough pressure that she stimulates the economy . India lost the position as the worlds Fastest Growing emerging market. So the government is under pressure to stimulate growth again. If you look at the top level of the bars on my chart, the promise is to reign in the budget deficit. If you look at the lower set of bars, you can see Government Spending which is underpinning growth will come crashing down. It is capping the deficit at the cost of government expenditure. The question as we head into the dget is will the new finance minister allow more Government Spending to boost growth again . Rishaad all right. Lets have a look at what you have have. Go on. Ok. Im looking at bitcoin. This has basically tripled since the start of year. We got close to 125,000 too pd where have the 12,000 today. Where have the moves been coming from in a lot of the moves started to happen over the weekend. We had five moves in the past two months have been on mondays so it is kind of interesting it may be happening on lower liquidity. Sometimes you cant trust the moves as much. There are a lot of fundamentals underpinning the rally like facebook interests, j. P. Morgan. Fidelity. Rishaad doesnt that really sort of support the narrative . The Retail Investor is responsible for what is going on. For whatever reasons, it is the other thing too . Right, yeah. That is possible. That is probably when the retail people will be trading versus institutional. Yvonne i like joannas chart. I think it is interesting. Rishaad im sorry. Im going to go with joanna as well. Thank you so much. We look forward to that budget. It is probably a more important thing. The chart was quite instructive. Janette, thank you so much. Joanna. Congratulations. Thank you so much. Yvonne makes you think you have to check out what bitcoin is doing. I guess there is some action going on too. Rishaad well have a look at some of the charts that we have been featuring on bloomberg television. You can have a look at those and those charts and save them for future reference as well. Generally speaking, lets look at some of the auto make rs. What is going on here . Another torrid day. Yvonne we are seeing risk off overall. When it comes to the auto stocks, there was a rally this year. It is time to sell. This rally is over. The automakers making some of the worst performers in the Hong Kong Market today. That retail sales for june which looks pretty strong that is argely been priced in. Rishaad we have this slump here. Everyone expecting data out. Dealers have three million unsold cars. Two months sales. Sorry i interrupted you. Yvonne it is interesting news. Well see if the policy measures come intofect. Broadly speaking, we are it is kind of going nowhere when it comes to china and hong kong. Flat. Shanghai composite down 1 10 of 1 . Taipei sweal, a lot of flows heading into taipei recently. We have eased off. Southeast asia pretty mixed bag here. Jakarta seeing a decent day here. Rishaad the reserve bank of new zealand earlier unchanged but seeing a rate cut. Emily i am emily chang in san francisco, and this is bloomberg technology. San ng up in the next hour, francisco is home to juul, but officials seem to have to want nothing to do with it. We will talk about the citys crackdown on vaporizing. Plus, cyberattacks linked to the u. S. And iran. What is the endgame