, pilotsblems for boeing say they have Software Issues with other planes in the fleet. We are live here in osaka for the first way of the g20 summit here. Is big elephant in the room trade talks between President Trump and president xi on saturday, but before that, a busy day for President Trump. He just met with shinzo abe. Now, in trilateral talks as well. Those two countries have been criticized by President Trump when it comes to trade. And as a packed agenda you say, we saw President Trump sitting down with Prime Minister abe and prior to that, president xi. Also, they did highlight some of the concerns, island building by the chinese and some other tray concerns as well. Lets get you uptodate with some of the Market Action we have had self are. A midsectiong at in asia, most ending the session in green, but of course, holding back one would assume ahead of , the asiapacific pretty much flat. In terms of the futures, you are looking at a bit of positivity there, hans on teachers also cnh at 6. 87. Dollar again, we have been talking about the risk reversals moving into negative territory for the first time, suggesting trade a little bit more optimistic. Lets get to the big story now with ivonne. The white house says saturdays meeting will happen without preconditions. West throw it out for more on this. Lets throw it out for more on this. She joins us here in osaka and tell us the big story here is going to be a between president xi and President Trump. What we might see is an. Greement to have another truth right now, the differences between them are too significant to expect a real breakthrough deal. It could be an openended truth this time and it might mean that will take further action against 300, particularly against million of chinese goods. That is probably the best we can hope for this point. Theres a report about how the chinese want the export of huawei to be lifted or any type of agreement. What is the chance they will agree to that . Is probably just to get that troops. Truce. It would certainly be one of the things that china has on its targetery much an unfair in the trade war and that needs to be separated out in the broad discussion around chinese goods in general. We probably see that coming in terms of specifics. Which are you focusing on today . Froms plenty to choose with trump and merkel and putin as well. Therehave been come have been some concerns about she boardedefore the planes in osaka. Her people say she is perfectly but, recovered and here, there are some questions about that. Obviously, the relationship between Angela Merkel and donald trump has been tense as of late. You can expect those to come up in those discussions and the other is a meeting between donald trump and joining use editor here. Keep in mind, we have a big line of guests. Interview our excuses with the australian trade minister live here in osaka. Thank you very much indeed. We will dig into the story with archie aipac economists who joins us from hong kong. Overly, or markets complacent about the prospects of a potential deal out of the g20 summit . Expecting ane extension of a truce, but no tariff increase from the u. S. Side. I think that is probably the best we can probably hope for. My own expectation is rather. I think talks may start, but i think President Trump is going to put a short timer on those talks and threatened to raise tariffs within the next three months if those talks dont reach a deal and it will be much harder than it was at the beginning of may, so the u. S. Side thinks we can quickly get back to where the negotiations were and i think the sanctions on huawei have significantly and at least another round of tariff increases. Difficult toys read the smoke and mirrors on both sides. Suggests a posturing two sidesn the suicid remains significant . I think it is much wider than it was at the beginning of may. I think we are close to a very good deal before things fell apart. I think it will be a lot harder to get back to where we were. I also think both sides see less of a need to reach a deal in the near term. I think for donald trump being tough on trade is a winner for him willingnt see to make any serious concessions and i think xi jinping has built up a much more unified onshore view of china against making any serious concessions. Willm quite doubtful we get a deal until the economic get along first. Talk about the data because we have seen things slowdown globally here. Think it is leading to a slowdown or can you point a finger at a trade war as causing slowdown . Certainly in this part of the world and in the u. S. , the suddenness with which the data tells medeteriorate that in the manufacturing sector, the slowdown is mostly trade related and mostly trade policy related and there is a broader global slowdown we were expecting anyway in the second half of 2017, so we were expecting everything to gradually slowdown, but the sudden deterioration in the last five or six months is really trade policy driven. We hope would be that you get a deal and you can bounce back. To get a dealical in the next three to six month. If we were to get a deal, would that be enough to alter or do youss sentiment need that solid, one of the percent deal before businesses can start to reinvest again . Im not sure this point a solid deal is enough. I think businesses now, the bees of the game have to fundamentally transformed. Theres great suspicion that the and when be the end donald trump threatens the use of tariffs against mexico for a noneconomic objective, i think the fundamentally altered objection. They are describing vietnam as make people should think seriously about the assumptions they have. Will migrateains corechina and i think the is to bring manufacturing back into the u. S. We need to update our viewers, Vladimir Putin is arriving now at the Summit Center and we have heard through our own reporting that putin and his team are quite keen to get a meeting with trump, but there is Vladimir Putin, the russian president walking through at the summit view in osaka, the big players that will be part of the talks. Back to you, we did see some more positive suggesting maybe there is a bit of resilience all stop should we start to look at some of the asiapacific region in more detail . He talked about vietnam. What we are seeing over the last six months is a sharp deterioration of chinese imports and supply chains on tour onshore. In neighboring countries like korea, taiwan, they are exports are falling much more quickly than exports to other regions. Taiwan,from korea, vietnam are doing extremely well, not enough to alter the top line dynamics, so you are seeing a diversion of trade from china, exports now being exported from vietnam, korea and taiwan, but again in the vietnam context and i think the same , ifs for malaysia, thailand they can continue to export to u. S. Willi think the Start Playing whackamole with countries and apply tariffs wherever they see because the objective is to bring manufacturing back to United States, not just for to move to another country in asia. Im just wondering, can vietnam ever replace china as being the manufacturing destination here . Know, the only country possible is india because you need millions of people come up but noneustrial parks, of these other countries have. You can start moving is in pieces, but if the u. S. , even if just the u. S. Passes chinese exports need to go somewhere else, india is the only place where that is feasible. To put into context, consumer electronics, electrical equipment, the u. S. Last year imported about 240 billion from china. That is essentially all the other imports from all the rest of asiapacific. Chinese exports of those products, 10 or 12 times malaysias or vietnams for japans even. You just cant move that supply chain of any other country or a collection of countries so if you want to, india is the place. This current administration, the objective is to move her back to the u. S. And they will keep raising tariffs on any country they see benefiting from migrations supply chains out of china. There was great to get your analysis. Asianhe banks chief pacific economists. Now, lets get the first word news. The Iranian Ambassador to the u. S. Says powers are failing to prevent countries from reaching the 2015 nuclear deal. European signatories to the 2015 a quarter opposed president it. Ps decision to abandon indonesia has ratified the of joko widodo. They fail to observe his allegation that millions combined to help him when. The decision was not unexpected as the documents were mainly printed out of local news articles. The front runner for u. K. Prime minister Boris Johnson is refusing to rule out and no deal brexit. He is also being vague about the possibility of suspending parliament. Theresa may has indicated she is willing to go dance johnson and rival jeremy hunt if they pursue a no deal. Global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. Still ahead, owings problems may not be limited. More on that later, but next, we will check on the fes flightplan as economists expect to a cut this year. This is bloomberg. Feds flightplan as economists expect to pay cut a cut this year. This is bloomberg. Softened growth has and the fed is likely to lead the way with the central bank easing. Lets return to the chief aipac economists. Just looking at the fed funds have itand of course we pointing to potentially three cuts as soon as the and its year. You say it seems difficult to find the central bank dovishness. I think that is correct. What has changed is what they saw initially as temporary reasons why inflation had pulled , seems to be slightly but that disinflation is gathering momentum. An economy growing at a reasonable clip. We think secondhalf growth will. E one half percent it is really news on inflation continue to be over the last six months, just a little softer than the fed had expected and therefore, we expect the rates have shifted from where we were. Last year, we thought we would get five rate hikes taking expecting three cuts. Above 2 to probably not being much higher than where it is now. Wanted to listen into the fed president and she spoke to bloomberg earlier and she said essentially the data as they stand was not compelling her to make a strong call on the direction. Lets take a listen. It shows significant weakening and we are just getting headwinds and we are slowing, so it is too early to know whether we should use the tool at all and what magnitude we should apply. What is the data out of the u. S. Telling you . They are telling us that the Second Quarter is going to be significantly week which is ok. You are looking at about 2 growth, but if you dont think tariffs are coming down or forfacturing has a reason regulating entries, i dont see the economy bouncing back in the second or third quarter. As we get your the middle of the year, i think the fed will see the data is not getting any and with inflation having be much, the fed will more worried about Inflation Expectations declining than any possibility being above 2 , so with an economy growing above, that will trigger the fed to act. Thank you, Michael Spencer. Many more ahead. We will bring you later and get more analysis of that key meeting between the two president s and china. Plenty more ahead. This is bloomberg. Spotlight on g20 where arrivals continue. We will continue to keep an eye on that. We saw the russian president earlier just arriving. Lets play you an update bring you an update as we head to the market open. You could see china futures down, the shanghai down in terms of hong kong as well. We do have stocks we will continue to watch, but lets continue to focus as leaders arrive. We have bilateral meetings already between modi and trump. Plenty more coming up. This is bloomberg. Youre watching Bloomberg Markets china open. We are live here in japan for the first day of the g20 meeting. Xieeting between president and trump on saturday. Japan meeting with the likes of nota and Exchange Rates increased. Given the way that trump has lashed out over the currencys mario draghi and there were concerns about the two sides now, selling there is a significant cap between the u. S. And china. Lets check in now on the market open. This is the onshore. Movement,ot a lot of investors on the sidelines until they get a bit more clarity and also continuing questions in china with policymakers. The shanghai composite is down about 2 10 of 1 and small gaps in the red as well. We can move it to what is happening in hong kong with continuing clinical pressure. Down 1 10 of 1 , shares just marginally in the green. We can move it onto what we are seeing in terms of the foreign exchanges, weg have a chart that shows its. 294 six . 2 billion of shares in june, so supporting the shares in the month of june, it is the biggest net purchase. We should also look at the. Ollar yuan as well we had this risk reversal that has turned negative, suggesting trade is a little bit more positive ahead of this and of course, we will get more clarity between the two. Final thoughts, lets bring Michael Spencer back in to the next. Very keen to get your thoughts on the chinese economy. The consensus seems to be preliminary early data suggest a slowdown continues. How would you assess the health isthe chinese economy . It clearly slowing down. Offsetakers essentially from weaker exports and that beeny stimulus has largely removed in the Second Quarter, so i think well see gdp growth. This is still a tolerable late tolerable rate of growth. What we have seen over the last few weeks is everybody reassuring us that policymakers could do from the Monetary Policy side from the regulatory side and property markets , so theres lots of confidence that policymakers could provide enough stimulus to prevent the economy slowdown in our expectation as it slows down by the end of the year and maybe below 6 next year and i dont think that is the outlook that would be particularly alarming to chinese policymakers. Policymakers have stretch their support particularly for and also put in things like tax cuts. Are you seeing any evidence that measures are starting to help to a degree in which they can offset some of the pressures . Tripoli, it takes a long time for us to get evidence on things like credit to private skeptical that a central bank can force banks to change their lending practices. The reality is it continues to provide a very strong incentive vehicles to finance and the central bank assigning at the beginning of the year come im sure we will see more credit low, but i think really what we have seen and if needed, what we will see over the next few months will be in aversion back to the previous rounds of credits and the broader keep investment going, if not build on it. I dont see a serious effort to make life better for enterprises. The bse cutting benchmark rate . Ratesdo see them cutting do you see the boc cutting benchmark rate . , apricot ahem rate cut or two as the central bank will try to guide bond yields lower. Corporate bond yields are no lower than at the beginning of the year, or slightly higher. As we see more evidence the economy is continuing to slowdown, i think we will get rate cuts to try to drive lending rates, but credit spreads and Interest Rates and the bond market lower. Live pictures out here in osaka where the chinese president just arrived to the building here. Of course, a lot at stake in meeting President Trump, are we going to get some type of offramp . Before then, we still see plenty happening, but there you go, president xi just arriving, having a meeting with shinzo abe, the Prime Minister of japan yesterday and talking about how theres a new phase in this relationship and is a byproduct trade. [no audio] japan. China as well as when it comes to the currency, if benchmark rates are going to get lower, is seven is not the line in the sand, then what is . I think policymakers have made it clear that seven is not a magic number. My own view is as long as they we comfortable with growth are at about the lowest level the currency has been at since they started pointing us in that direction. I think we need currency depreciate from here in see the data get softer. Another round of tariff andeases would be a trigger if Growth Continues to slide lower, i think we will expect the currency to depreciate. Speaking with the institute and he just mentioned in a way when it comes to asian economies that perhaps there could be some resilience in the face of the trade war and we could see more enter asia type of trade and china have a more cooperation. The ecb type of narrative play where they coordinate a must each other more . We have been hoping this for more than a decade. It is overwhelmingly dominated by these supply chains in china and for that to change, the structure needs to change. Longterm,dium to the initiative will increase in china and its neighbors could begin to erode the importance of the supply chain of u. S. Tariffs. Term,k over the longer that is a reasonable expectation, but it is not going to say these economies the next 12 months. Thank you for your announces. Ets get the first word news President Trump wants to delay the u. S. Census after the Supreme Court rejected a plan to [no audio] resulting in undocumented immigrants being counted. The reserve bank of india says that flows should ease as lenders revamp most of their assets. These stress tests shows lenders could fall to 9 by next march, having dropped more by the most in 15 years, however, they are raising the alarm of the shadow banking sector. Most in that it could take three months to fix the latest software glitch. The issue came to light during a similar test. It is also emerged that pilots flying the aircraft have reported Additional Software problems. Global news 24 hours a day, powered by more than 2700 journalists and analysts and at tictoc on twitter, in more than 120 countries. More live pictures out of up soccer and trump meeting with the german chancellor Angela Merkel for their summit here this morning will stop there were some concerns over the chances help here. She wasre reports shaking, but according to a spokesman, she insisted she was fine. A lot to talk about when it comes to trade. The chancellor was not too optimistic coming into japan, saying it is going to be very tough to get any consensus when it comes to trade and Climate Change as well, so a lot of questions. Relationship has not always been cordial, but they are stressing their friendship so far, so we will keep posted on what happens. We will also dig into the story around boeing and the new theware issue, calling Safety Culture into question. This is bloomberg. Welcome back to bloomberg scoop. Robbinsts flag software on boeing jets, besides the max in recent years, those planes are still in the air. David is following the story. This comes as we hear the faa has down in you flaw in the 737 max stop what is going on . 737 max 8. Ax . T is goin what is going on . [no audio] certificationof and quite a lot of design, so we should not expect to see anything going wrong with one of these planes. We have seen that with the 737 max. It is really an ice financially worse problem and having one accident will make you worry, so i think that is what is really unique about this. Makes you worry about the safety and Security System and of course, some of the problems seems to be related to the Automated Systems. I think people have been and because of these larger engines, it lacks stability. If they dont return, it is a stable flight, a lot of people think that is extremely worrying stop i think that is quite a routine thing, one of the safest in the sky. Mainstay and as planes get more fuelefficient come up one of the main reasons is the fuel efficiency improves and these are things we want to the out of our planes, causing less omissions, so the answer is not to throw the baby out, but to have better function systems and getting rid of those Automated Systems altogether. Thank you. That was david thickly. Stay with aviation now. Of chief of Technology Officer tells bloomberg there is a fundamental to their methodology will stop when it comes to technology, it is really fundamental to take a step by 10 stepbystep approach and demonstrate as you progress along whatever roadmap you might have. It is important to take it step by step. Safety always first. Moving to trends, there seems tobe a shift from jet fuel hybrid engines. This is one we were talking about previously and it is decades away. Now, you are saying it is closer than you think . And it is ay close societal need. We really need to strive for zero emission aviation. There will be no Single Technology to take us there. It will be most likely a set of technologies to be developed concurrently to enable us to fulfill this. It is definitely an imperative. How soon are we looking at . And, how big of a plane with that the question mark it depends for what type of technology. If we look at purely electrical propulsion, that would be reasonable and we can think of purely electrical regional transport and that could be 42030 whereas if we look at the bigger type of aircraft, that is hybrid of ocean, so combining traditional propulsion with electrical which enables us to fly electrically during takeoff and landing, allowing to reduce significantly the perceived noise whereas for ,ongerrange type aircraft would continue being definitely on the radar for the next years to come. Back to some live pictures here in osaka where we are hearing from the uns secretarygeneral speaking to the crowd here as we kick off g20 here in osaka. We have several bilateral meetings here, present trump meeting with Angela Merkel, those talks underway here this ,orning and President Trump saying shes a fantastic woman and looks forward to the talks with her. This comes as a time when she is dealing with some Health Issues as well. And, he passed a tv set watch these democratic debates of the ongoing democratic candidates. A lot of factors on how he , given all eyes are on 2020 it comes to his president ial reelection campaign. Also, some data that just came , growing 6. 7 , so we will continue to follow the lines here when it comes to growth in vietnam. Coming up, we look at his role at shaping the apple era and who is replacing him. I apple chief designer donnie did is leaving after helping design one of its most iconic devices. He is forming his own independent company and apple will be a top client. Giles koning us. He was central to some of the most iconic designs coming out of apple at least since 1998, right . Inhe played a central role making these apple devices like , musthave have devices, easytouse, elegant, sleek. They did not have a lot of extraneous bells and whistles to them. They were simple and he was really central to that and it was a very important period of apples history. Out the door,oot his role has been deal back over the last couple of years because youll notice apple has not been introducing new, entire product categories at it had been for riod for about 10 years after steve jobs came back to the company. It is a different era now. Theres a saturation of the market and it is more about not so much introducing must have come a beautiful devices, making more money and winning more profit on the existing lineup of devices. Case in point, the iphone has been a huge cash cow for apple, but instead of coming out with a revolutionary new device every couple of years, what they are theg is iterating on existing one and making more money from the services this well as a result. It is kind of a different era. The end of an old era as you say. Lets get back to osaka where yvonne is with all the developments for us. I think we are getting close to the family photo, the gathering at the g20 here to kick things off here. Already seen quite a lot of withngs like president xi modi and putin. Flags are all placed in the worlds most powerful leaders gathering in japan. Also, are we going to get a communique this weekend . They key meeting between President Trump and president xi saturday morning. Plenty more to come. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. 11 00 a. M. In osaka. Trumping between donald and president xi jinping is the next event after a tariff pause, contrasting with trumps repeated threats of war duties. Rishaad is a look this is a look at the other top stories. And commodities, gold on a tear, hitting a six year high. They have risen too far, too fast. The iconic designs for the iphone and more. Yvonne we are day one at the g20 in osaka. Were waiting for the Family Gathering between the worlds two largest countries as they talk about the Global Economy and trade. President trump has nine meetings in the next 48 hours, fact of which given the trade still dominates the agenda here. Rishaad obviously, looking at the markets, markets on tenterhooks waiting for something to come out of this. Lets have a look at what is the priced action currently. Stocks slipping, part of that down onhings weighing u. S. Equities. Boeing up. The dow and positive terrain, down a fraction. S p up a fraction. This is the position at the moment. A caveat here has to be what we have are thin volumes. Lets have a look at the currency markets. Gainingsee the yen against its american counterpart. Getting back to osaka and having a look at whats going on there, Vladimir Putin is making a speech. Lets have a listen. Rishaad obviously, russian, no translation. Lets have a look at whats been happening ever since this year started and how various Asset Classes have actually been reacting to all the news forever weve had. Trade has been front and center. As wee do have currently, end the first half of the year, looking at the country stock index there. That is up 14 or thereabouts. This is normalized across the Asset Classes. You would have had a 14 return. Bloomberg dollar index is low. Commodity index, 4. 7 up. In bonds, you would have made over 5 . Thats u. S. Treasuries. Thats as we ended the first half of the year. Lets find out whats happening with the first word news. We go to beijing with selina wang. Selina President Trump wants to delay the u. S. Supreme court rejected a plan to include a question on citizenship. The Census Bureau says it could lower the Response Rate for minorities, resulting in undocumented immigrants not being counted. Immigration populations losing status. An ambassador to the u. N. Said powers are failing to prevent country breaching the nuclear deal. The eu says a special payment vehicle designed to circumvent it is almost ready, but it may not suffice. European signatories for the 2015 accord opposed President Trumps decision to abandon it, but have found ways to maintain ties with iran. Reserve bank of india said bad loans should ease as lenders revamp their assets. The r. B. I. Stress test shows sour loan ratio could fall to 9 , having dropped the most in 15 years. However, the r. B. I. Is raising the alarm about defaults and shadow banking sector. India has the highest bad debt in the world. President xi is expected to present conditions the United States would have to meet to diffuse the escalating trade tensions. The wall street journal says he will insist washington removes all 250 billion of tariffs on chinese goods and lyft the ban on selling technology to why way. Two huawei. Global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. Im selina wang and this is bloomberg. Yvonne thank you. The big story, the meeting between President Trump and president xi. Live pictures now we were just showing you of Vladimir Putin, speaking here, a lot of talk with what is happening with his bilateral meeting with President Trump later on this afternoon. There has been concern about the natural gas pipeline pressure developed that runs through russia to germany and President Trump has been talking about possibly threatening sanctions to stop that development. Those are key issues that might be raised at the moment. President trump and the german chancellor our meeting here this morning, as well, President Trumps saying shes a fantastic woman as they begin the stocks. Lets get to our asia managing editor. He joins us in osaka. Were still talking about the elephant in the room, xi and trump. How are we doing this . Is there doubt we could see a truce. Nothing is certain. Thats been true all along in this process. Is the what weve found markets are generally optimistic there will be a truce. There is a feeling both might want to pause and go back to the table. Onmp threatened more tariffs 300 billion of chinese goods. Xi is, in turn, through state media, threatened american companies, putting them on the unreliable entities list, threatening to cut off rare earths exports. Does this now take the next step down that road towards escalation, or do they just stop to say lets get back to the table . Thats what well find out saturday. Markets are expecting a truce, but anything can happen. Yvonne president xi is seated with the russian president. Theyre having their bilateral meeting there with modi there, as well. When President Trump was getting theythese with merkel, mention passing by the tv and watching the democratic debates at home. How is that going to play a factor in how he deals with china . Its certainly a huge factor. Trump is making a political bet his tariffs have worked so far, so they put him in good position to be reelected. Will the economy continue to hold up in the u. S. Or will we see a downturn that ultimately affects his chances . And that calculation will really factor into how much hes willing to give in talks with xi, both on saturday and in the weeks and months ahead. Yvonne you cant come back with nothing, though, right . Im just wondering, is it really going to be biden he is going to be facing . He sees it that way. Does that mean he has to play a hardline with china since biden is more lenient . The calculation is a political one. Weve seen trump walk away from the table before. He walked away in may and said the chinese reneged on what they already agreed and this is on acceptable, putting more tariffs on. He has shown a penchant for escalation. Hes also shown some pragmatism to come and cut a deal when it thinks he thinks it benefits him, politically. Democrats, most favor a hardline on china. The question is, who is going to calm the heart out . Will it be the democrats or trump as the incumbent last year . Joiningdan, thank you, us here from osaka. Plenty more to come here as we count down to the meeting between President Trump and Vladimir Putin. Rishaad thank you. Just looking at what is going on in osaka, how they are communicating with each other. It is the bricks having a side meeting taking place. Vladimir putin saying the brick nations, referring to brazil, represented by bolsonaro on the india from india, and south africa, Vladimir Putin in front, and xi jinping top left of your screen. Thats whats happening in osaka as we just leave that coverage and get over to a lovely professor of economics and a nonresident senior fellow. Mary, thank you for joining us. Do you expect anything from this . All expecti think we something or hope we can expect to something. This is the whole world watching and i think President Trump doesnt like to disappoint. President xi is clearly interested in making a deal and theres a lot on the table. Unfortunately, the room for making a deal has narrowed since december with the increase in tariffs by the u. S. , and then the hold huawei incident. And of course, some retaliation by china and threats by china, as well. So there is narrowing room for agreement, but were all trying to remain optimistic in that the two leaders can see their way forward. Rishaad does donald trump want to make a deal . He says hes the one Holding Things up. And if he doesnt, when would he want to . Thats also important because it becomes political with an election coming up in less than two years. Mary well, i think the longer this goes on, the harder it is to justify a deal politically because the rhetoric will escalate about how terrible china has been. The National Security issues will also be played out. So i think the longer it goes on, you have to increasingly justify a bellicose approach, it will be harder to roll that back. I think this is his best chance to make something happen. He is holding up the deal, so the cards really are on the table for him to play. Earlier, it isd a political decision, but its also an economic one. Surprisingly robust in the face of Geopolitical Uncertainty but a failure here could have a bigger impact and signal that this is here to stay and it is going to get worse. I dont think either one of the president s want to see what happens next. Do you see if we even get an agreement in osaka that it could be much different from the previous agreements that the u. S. And china had reached before talks broke down . How different could it be . Mary there are three main sticking points. one has to do with the tariffs and how theyre leveraged. Xi wants them removed. Theres the issues of changing chinese law to reflect Market Access and intellectual Property Protection for u. S. Firms. Xi says its a violation of their sovereignty to force them to put that into law. And lastly is the goods and services. Trump would like to see farmers reaping the benefits of whatever agreements he does reach. China, on the other hand, sees some of the u. S. Demand as unrealistic. Some of the numbers on the u. S. Side would be unable to deliver. We dont have the supply. These are three very difficult issues. Waye is a way to find a forward if the leaders want it done. Purchases could be spread out over a longer period of time and made bigger to satisfy trump, slower for xi. Xi could unilaterally agree to change the law. Tariffs could stay in a much reduced form. So there are ways the two leaders could find an agreement, some Common Ground if they have the political will. And really only they know how they view the Political Landscape today. Rishaad mary, thank you so much for your time. Mary lovely, professor of economics at syracuse university. Still ahead, ive had enough. Apples design chief for the past 30 years steps down. He literally shaped the companys fortune. Next, we speak to the australian minister of trade. Simon birmingham is a live out of osaka. This is bloomberg. Thene President Trump and astral and Prime Minister kicked off the g20 schedules by discussing Diplomatic Security challenges, including iran and north korea. Trump says he is committed to maximizing the Economic Partnership through fair, trade. D, and beneficial joining us is simon birmingham. Great to have you here. Glad to be here. Yvonne you were with the americans yesterday for dinner. What is the sense they are here to strike a deal . Does President Trump want to strike a deal with china . Want President Trump will the best outcome for the u. S. Global trade tensions are hurting Global Trading levels and therefore growth levels, and that has impacted not just the u. S. Or china, but the rest of us as well. We do share some of the concerns of the u. S. Has taken to china and we want to see an outcome that addresses those concerns around protection of intellectual property, ensuring that there is no forced technology transfer. Those type of issues are genuine ones, as well as modernizing the wto. We dont want it to be at the expense of showing continued growth. Yvonne if there is no deal, there seems to be doubt this time around, could we see australia stand to benefit if china is looking for other partners here on trade . Simon shortterm, there are always potential benefits. If you see further escalation in tariffs and a shift in purchasing arrangements from one country to another, australia could be a beneficiary of some. However, we take a longerterm perspective. What we want to see is a circumstance that continues growth weve seen around the world the last few decades. Having a rulesbased system for international trade, opening markets, reducing Tariff Barriers has ensured the world has been able to grow strongly, create more jobs, lift millions of people, hundreds of millions of people out of poverty. We want to see those gains continue. Australian jobs are trade dependent, so its critical to make sure we keep that openness and those trading rules. Yvonne and those we spoke with, the Prime Minister at bloomberg couple days ago, he said i refused to make the binary decision of choosing sides between the u. S. And china. But weve seen some entities in australia asking for australia to do a reset when it comes to its relationship with china. Do you listen to those concerns . Simon our relationships are continuous. Its making sure we continue the good work we have. China is australias largest trading partner. The United States is australias largest investment partner. They are both important partners. Whats critical to us is to make sure we build upon the strength in our relationships and work through the differences. There will be differences with any nation from time to time. Aonne australia has seen slowdown of imports and coal to china. You said its not discriminatory, but whats the latest here on that . Do you know why they are doing that . Simon china is provided by public assurances it is nondiscriminatory. What we are told is that there are additional environmental checks taking place, but these are issues we quietly raise with china to reassure ourselves it is being applied in a nondiscriminatory way to make sure we give Australian Business as much certainty about the timelines they will face. Its not just important for exporters, but ultimately its destined for chinese businesses. And its important for them in terms of security of supply. Yvonne why havent other exporters complained about the same issue, that its not happening to them . Can you explain why . Simon our understanding is there have been some slowdowns for some others. Were going to continue to watch those issues closely. What we want to ensure is that we have a productive a relationship as possible with both china and the United States. Our urging is for those two players to end the trade tensions. In the meantime, we get on with everybody else in making sure we advance possible reforms to the wto to make it more effective. Yvonne do you see it as china retaliating against australia for banning huawei equipment . Simon these are nondiscriminatory measures. Thats what were continuing to take. We want to make sure we get the most out of the free trade agreement, which has been to the benefit of both countries. Weve seen substantial growth not only in trade but in exchange over the last few years. This is a growing partnership more we want to make sure continues. Yvonne one last question on free trade deals. Indonesia and hong kong, what is the date for ratification here . Im guessing with hong kong, the protests, is that a concern . Simon were hearing positive things from hong kong. We have parliamentary processes to go through. There is a required number of sitting days before the parliamentary committee. That will take us through to about october this year, and then we will bring legislation to parliament. Yvonne indonesia . Simon indonesia, as well. Yvonne simon, thank you so much, minister for trade in australia. Simon birmingham joining us in osaka for an exclusive interview. Incourse, australia caught the crosshairs of this u. S. China debate, so well continue to watch what plays out here in japan. Rishaad thanks. Lets get a look at whats happening at those lines, those bricks nations meeting. There have been criticisms of trade restrictions and calling them politically motivated. Thats coming through this get of those five countries. Thats something were keeping an eye on as they discuss on the sidelines of the g20. Eye on thene meeting on the top left for xi jinping meeting president donald trump. We have more from the g20 through the course of the day and beyond. This is bloomberg. Rishaad back with Bloomberg Markets as we check with the business flash headlines. Alibaba pledged to raise money in its second listing in hong kong. People close to them telling us the Company Might aim to raise double that amount, putting it closer to its recordbreaking to any billiondollar ipo in new 25 billion ipo in new york. Biggest share retailer filed for hong kong ipo, theyll international holdings. Is offering sponsors and weve been told its raising as much as 1 billion, with brands at including adidas, nike. It has more than 20,000 retail outlets. Lets have a look at the movers in japan as we had toured the lunch break. Were seeing losses for the equity markets. Letters from the chinas harbor tech for investments of 300 million. Its a line security that will launch in the fall, 100 stocks to be listed there. Those are some of the companies were watching. Grownnese positions have harder since the addition to the unreliable entities list. It would be unrealistic to see a gapping of the fundamental differences between the two sides. If there were to be a truce and a handshake, an agreement not to continue additional tariffs, then that would be a step forward. I dont expect one at the current meeting because there really hasnt been as much preparation as there would need to be. And the two sides have really been escalating. The question really is, can they reach a truce, or at least a temporary decision not to continue to escalate . Over the medium term, its still going to be very difficult to come up with a real breakthrough. The best outcome that can toe from this visit might be give renewed momentum to denuclearization talks. It seems to me that they are ready to talk, but they seem to be expecting the other side to be more flexible. Some of our guests this morning speaking as the trade war looms over the g20 here in osaka. Live pictures right now with the host. Shinzo abe of japan waiting for his counterparts to come on stage for that big Family Gathering here today. There is the turkish president erdogan on the stage to join shinzo abe. A lot of questions on whether were going to see some kind of communique. We got a line from president xi jinping talking about bullying, condemning bullying, ahead of that meeting with President Trump this weekend. Rishaad theres the south korean president there. We get ready for this Family Picture, all of these leaders gathering at the g20. It will be the family photo coming there, as well, each of them greeted by the host, Prime Minister shinzo abe. Who is next . That is mr. Macron, emmanuel macron, the french president. Going andl be meeting shinzo abe as they get ready for the Family Picture. People looking forward to that chance meeting. Others on the sidelines, 24 hours from now, president xi jinping and donald trump getting together, may be getting something on trade, though expectations have been beaten down. The best we could expect is they will agree to carry on talking, pray minister Trudeau CanadianPrime Ministers trudeau with abe. What is the feeling there currently . Yvonne well, you know, im sensing were hoping for some truce, but theres a sense of doubt, as well. We see the Prime Minister of the u. K. , theresa may, her last g20 before she steps down, theyre meeting with shinzo abe, as well. Theres a lot hanging on this meeting saturday, as well. With president xi condemning this bullying ahead of the meeting with trump, it seems to me theyre ratcheting up the rhetoric, condemning protectionism, and any attempt to put ones own interest first and undermine others will not win any popularity. Thats what she said, according to some of the African Leaders ahead of the summit. You see the australian Prime Minister stepping on stage here. He kicked off the g20 with President Trump at a working dinner. They discussed iran, as well as north korea. So, theres a lot of talk here today of whether there is doubt here and if we do get a trade truce, how long thats going to last. Rishaad we did see the bricks nations, brazil, russia, india, china, and south africa get together before the family photo was taken. Some of the lines coming out from Vladimir Putin, calling trade restrictions politically motivated and did call on the bricks nations to perhaps do something to counter that. China is one of those countries. Well,n will get that, as i believe. I actually dont recognize that person. We have the 20 largest economies in the world. So, a lot to discuss. One of the underwriters on the agenda is what is happening in the least with tehran and saudi arabia, which is been affecting sentiment, naturally. Lets also go back to yvonne. Suppose we have this happy Family Picture in just a short while. Yeah, a lot of questions on whos going to replace juncker when it comes to the european commission. These elections have basically gone to square one once again after the front runners didnt get a majority when it comes to votes. A lot of questions on that on the european front. We mentioned these trade deals, President Trump did talk about he expects very big trade deals when it comes to japan and india, which is tough to come by, given you can continue pressure that the president has on countries like japan, as well as india here, especially when it comes to india with President Trump removing the country from that dutyfree program here, where india was a key beneficiary of that, and basically scrapping the preferential trade status. India retaliated with hiked up tariffs on more than a dozen or so products. Its going to be interesting to see if there is a d ramp in those negotiations, especially when it comes to the german situation on auto tariffs. Thats thrown around. Rishaad the worlds most powerful leaders getting together, this as we take a look of the globalngs economy make a difference between peace and not peace. Were going to be watching out for signs of a breakthrough between the u. S. And china. That is the one which is paramount. Weve also got rising to desh tensions rising tensions between the u. S. And tehran. And something to do about the environment, lower emissions, reducing plastic pollutions in oceans. Major agenda items is the meeting between xi jinping and donald trump, and Donald Trumps meeting with the russian president Vladimir Putin and german chancellor Angela Merkel, as well. Ahead of all this, we did actually have a broadside come through from xi jinping, who condemned protectionism and what he called bullying practices. He said that in a meeting with African Leaders ahead of the summit. Theres Angela Merkel. There are concerns about her health of late. She is stepping down in a year or so, having relinquished leadership of her political party. Comments also directed towards the United States, it is something which is largely shrugged off by President Trump. This is the position we are in as this family photo effectively starts the formal start of the g20. Yvonne . And weve seen reports of where president xi is coming from in his position coming to osaka, the wall street journal saying they want the u. S. To lift the ban on huawei in order to proceed with any trade discussions. Is it a prediscussion . Larry kudlow also mentioning there are no preconditions in this meeting. You see the brazilian leader there, bolsonaro meeting shinzo abe. Its almost like graduation. Theyve got to walk up to stage, shake hands, before they take the final photo. A lot happening. There is the indian Prime Minister, as well, fresh off his election when. There is momentum on his side. Well see if he brings that into trade discussions with the u. S. , as well. Between therothier u. S. And india of late as they have been dragged into the trade discussion, as well. Youve got to get through all 20 of them. Its going to take some time. Rishaad there are more than 20 of them because we have the eu three representatives coming through. Just to say that weve also had this meeting take place earlier between shinzo abe and donald trump, the second meeting in as many months, actually. I dont think the president was there in may, the first foreign leader to meet japans new emperor. Trump said the meeting would focus on trade, which has been an area of disagreement between the two of them, between everybody really. Thats what we have. Thats a look at some of the other aspects of this meeting, one of the more important meetings of late. Were waiting for the next person to come. Who is that going to be . Shinzo abe is kept waiting. Do we have anybody there . Hes looking at his watch. Yvonne . Yvonne [laughter] yeah, you mentioned about President Trump and shinzo abes meeting earlier this morning. Its come at an interesting time when it comes to relations between not just the u. S. And japan, but japan and china, as well. Shinzo abe decided to meet with xi jinping first for a bilateral meeting. And it kind of made the front page in the local media here. In the china daily, they talk about this new era of ties between japan and china. Its interesting to see these two nations that were just divided by historical issues for decades have a more cozier relationship now. Relations, of perhaps you can blame it on the trade war to put these two nations together. But its japan dealing with a tough decision now to take this balance of relying on china as one of their largest export markets, as well as leaning towards the u. S. And their strategic highlight. Athaad lets take a look the market implications and whats going on the mliv log. We have commentary from some of the editors, suggesting dollaryen Downside Momentum likely revved up if theres a benign g20 outcome, which most people do expect. The focus does shift to federal cuts. E rate we have a breakdown in talks between the u. S. And china, the current position, that would drive up risk aversion. If there is another dip below thefor the yen, it could be one that triggers more strong yen buying from option traders. Thats what they are suggesting, they would want to shift risk reversal back to a lower spot that would were, and be some way to clash between arguably a hedge fund and retail investors. Anyway we can see a rise in dollaryen would be of donald trump promises to remove all existing tariffs on china. That is perhaps as likely as seeing pigs fly, as well. Dont hold your breath on that one. That is tearing into market sentiment, dictated to currency market as these leaders gather. Here, is thaty chat between donald trump and xi jinping, which i keep going back to. Its interesting too, you mention about currency areas. President trump, one of the last ones to get on stage here. The big man, the important focus here of this weekend the last part of this photo op between President Trump and shinzo abe here. He arrives to meet with shinzo abe. He also met with modi, Angela Merkel, and Vladimir Putin is the next one to watch. Watch, thereing to wasnt that issue of currencies that was brought into the discussions because we saw there might be some currency clauses brought forth here. There were reports the u. S. Administration wanted to add to those negotiations and President Trump has been vocal about criticizing japan, china, the eu for weakening their currencies to benefit their own economies, perhaps a signal for President Trump he still wants the weaker dollar policy. But that hasnt been made into some of these discussions just yet. Okay, there we go, looking at those markets, as well. We have the yen in play here, as well. The yuan in the spotlight, as well, because forecasters have been patient. There is a xi jinping. There have been year and protections year end projections for the yuan. With the china u. S. Trade were at stake, we have the meeting tomorrow, quite a lot of potential implications for Exchange Rates here. And if they do come out with something, not likely to do something japan did in the 1980s. Chinese officials are aware the 1985 agreement to revalue the yen actually did prove to be pretty bad for the economy. But any progress in osaka may well actually result in better, or should i say a you want that moves to the higher side, as well. If we get further protectionist moves, that could do the reverse here, as well. Thats currently the thinking regarding currencies. Lets move it along and move it to mumbai. Just about an hour away from the trading day, were going to get you back to the family group picture. Lets have a look of what we have in terms of the india session. Coming to the india markets session yesterday saw the second half of trade, which was the important part. Nothing much happened. The nifty 50 ended flat for the day, lost all of the gains. At there was a slight bit of positivity, about a third of a percent. In terms of the series performance, it was closed, one of the worst series weve seen the entire year. The last six months, this has been one of the worst. Were expecting volumes to be slightly lower, however focus is going to remain on the ip pocket and we are considering what is 8. 4 in terms of revenue growth. Theyve increased the guidance. Thats a positive take away for the ip space. Rishaad thanks for that. Course, this Family Picture taking place. Were going to take a look at gold. All of this uncertainty regarding the trade and the breakdown in talks leading to gold price on a spike as people look for some are safe to put those assets. In port the diversifications for a while. Lets bring in joshua. Thank you for bearing with us while we got all those g20 leaders gathering. Youre saying its an essential part of the per folio if its diversified portfolio if its diversified. We had someone say always keep 5 in gold. Were looking at 2 10 . Can been proven these range actually enhance your portfolio result. So based on whichever they find suits. Rishaad does this mean the physical stuff . If you say yes, youre bound to say that because you stole gold, as well. You can buy the etfs, for instance. It depends on the idea behind it. If youre looking longterm, there is no problem. Why . Because its real asset. Its there all the time. There is no counter risk. Its not a financial product. If you look at shortterm trading, like we saw people gamble in the market, etfs are good enough. But bear in mind, gold is a safe haven. In times of trouble, you may be locked out of your paper gold holding. It happened before in other products. After brexit, the biggest Property Fund in london wouldnt allow redemptions. Imagine if you allowed gold strategics, and then youre locked out of your holdings. Rishaad and you would like the gold stored with you, naturally. [laughter] rishaad what weve seen this rally took a bit of a fluctuation taking place, going above 1400 whiskey, not ticular was a key, josh i agree. We saw what happened. It started, i believe, when trump tweeted mexico about imposing tariffs in the battle against immigrants. We see gold going over 1400, festering in the trade war and its affect, festering in the trade tension in the gulf between the u. S. And saudi arabia, factoring the federal reserve, growing off negative debt in the market. 420,his brought us over 430, went down a bit, but i believe its factored in. Rishaad ive got this chart showing us whats going on with the etf market. You can see its a tactical gold thousand pieces of gold being added to etfs in the last trading tension. Tobrings the net purchases 2. 9 million ounces. Moreis becoming more and popular. Its popular for a reason. Josh gold is popular. And the etfs are an easy way into the market. You can do it online. You can do it in many ways. Its quite easy. Its not 100 between gold. Thats why the move to physical. Its not 100 back. Id rather have my own holding held erratically with access 24 7. Rishaad lets get to your targets. I think, you said youd be surprised if you see gold going up. Josh at this point, yes. The risks are factored in. We broke the 1400 psychological barrier. We need to wait and see whats going to happen in japan. Rishaad exactly, thats my next question. What are the various scenarios youve worked out out of this g20 and whats the effect on gold . Josh what were reading, its hard to interpret. Its bad for business. Forward. Ry to move what you will see, in this case, well see gold going back, dropping slightly below 1400. Clear whatss happening on that front, we have other things on the agenda. We have president putin and President Trump meeting. We have other issues on our mind. We still have negative Interest Rates. Lets seeate thing, whats happening with president xi and President Trump. It may go down, slightly below. Rishaad the fed also comes into this. You get real rates, perhaps becoming negative at some point or the other. That in mind, gold is an unyielding asset. Youre getting negative yields. It then depends on the brights. And if you can be constant in the price, sure, you can buy into gold. Josh right, but if you look at the performance, its not to obad. The last 10 years, it averages 6 a year. Its not that. Rishaad bitcoin, cryptocurrencies also had a massive runoff the same time gold has had its runoff. Quite counterintuitive to think of it as a haven, but it has done extremely well. Very quickly. Josh i think bitcoin is where people either trade with quick speculation to gain money. Second, they want to park money outside the financial system, at least for a while. Rishaad gold can do the same thing. Josh exactly. Thats why crypto may be the new gold. Rishaad Intrinsic Value to gold as there is no Intrinsic Value for bitcoin, but the interesting value for gold has been a story value. 2018, thatwe saw in was a good example. All the markets went down. From s p, 7 gold went down the list, around 2 down. Bitcoin went down 87 . The last quarter, when markets are going down, gold cap your money safe. You lost your money on bitcoin. Its good if you want highrisk diversification, but gold is safety. Rishaad thank you so much. It is time for battle of the charts now. To pit their best charts against each other. Look at the functions at the bottom of your screen. Lets look at michelle and what you have. Michelle good morning. Taking it back home to the u. S. And the federal reserve. My chart shows something, getting things going forward. That is the five main fed research now near the lowest in trumps presidency. What were seeing troubling dallas, philadelphia, and overnight kansas city, all going down in their latest survey. Theres an economics lesson. The u. S. Economy has been resilient and look to something thats going to stabilize the Global Economy. Right now, were seeing serious signs of fracture. President trump says its going to complicate powell and his teams decision to whether to cop cut Interest Rates. That should be something to watch going forward. Rishaad ok, lets move it along. Michelle has shown yours. Why not you show yours . Home, thever in my thai baht is currently one of the worlds strongest currencies against the u. S. Dollar in the last year. With the Thai Central Bank wednesday raising concerns about how strong its getting, its undermining the thai exports competitiveness, which has already been impacted by the u. S. China trade war. The exports growth forecast was cut down from 3 down to 0 for this year. And the government also expecting manufacturing in may to be declining sorry, in june, at a slower pace than may, the worst level since 2014. Says thecentral banks slowing global trade because u. S. China tensions is the key risk factor. All eyes are going to be on g20. I really like both of them. I think michelle, if youve got Something Else to get a sense of how things were getting much worse, Something Like truck inventories, for example, that wouldve swung it for you, but im giving it to print, actually. All our charts, go to the bloomberg terminal and type gtv. Yvonne almost midday in osaka. Im yvonne man. Long, steady relationships up in the air. Well have all the developments live for you this hour. Haslinda im Haslinda Amin in singapore. Welcome to Bloomberg Markets asia. Rishaad im Rishaad Salamat as we head to the last hour of the morning session in hong kong. The other group has wrapped up, democratic own full sticking the stage for the second debate. Were going to head to miami live. Haslinda a new thought its the 737 max. Alex said a have had Software Issues with other planes in the fleet. This is Bloomberg Markets asia. Trepidation and the markets here in asia. There is some cautiousness and the markets. ,e have geopolitics and trade front and center at the g20 meeting. It is looking like this at this point in time. Japan is being breakdown by exporters. Cash holdings right now are at the highest level since 2011. Equity allocation is seeing the biggest drop on record