What is required to bolster the economy. Basisx faces of tech of grilling. The biggest showdown with congress in 20 years. Shery lets get you started with a quick check up on how markets closed. The tuesday session in the u. S. That p 500 halting fiveday rally that we saw in the past week. We have the tech sector underperforming as we had more scrutiny on regulations from congress on some tech giants. The nasdaq fell. 4 . Energy producers were waiting on the s p 500. We continue to see the oil selloff. We had great news when it came to a few earnings. Goldman sachs jumping after the beat on their trading revenue. Pretty solid bailout when it came to u. S. Retail sales in june. Lets see how we are setting up for asia. Sophie this wednesday, asian futures are pointing lower while stocks and wellington are not budging too much after a twoday decline. A rise in iron ore output. Korean chip related stocks on view on reports that they are Testing Hydrogen fluoride from other countries. Crypto related players are in focus with bitcoin sliding below 10,000. A made increasingly pessimistic views, we will hear from a chinese heavyweight as well as a company in india. Offshore yuan this morning is holding overnight losses after pushing above the 6. 88 handle. Of course in the face of a stronger greenback. I want to highlight the child theng li keqiang saying economy is facing more downward pressure despite the upbeat data. Paul. Paul thanks very much. Lets check in on the first word news with ritika gupta in new york. Ritika fed chairman Jerome Powell says the central bank is always monitoring any threats to growth, adding he will act as appropriate to sustain expansions. Speaking at the bank of france, he said uncertainty is rising, particularly in trade and Global Growth. Hiscomments echoed testimony earlier this month in washington and support the case for lowering Interest Rates. Uncertainties have increased, particularly regarding trade developments and Global Growth. In addition, issues such as the u. S. Federal debt ceiling and brexit remain unresolved. Fomc participants have raised concerns about a more prolonged shortfall in inflation below our 2 target. Ritika sterling fell to its lowest against the dollar since 2017 as the prospect of a Nodeal Brexit returns to the table with increasingly tough rhetoric from the men vying to be the next prime minister. The pound fell against the euro, and Boris Johnson and jeremy hunt said the socalled backstop to avoid a hard border in ireland would have to be scrapped. The plan is considered essential by brussels. The German Defense minister has been concerned as the new president of the European Commission. She is the first woman to be to hold the job. It is the second time in e. U. History that a german has been in the role. The most pressing issue at the moment is climate change. She said she would speak to foster relations with the United States. We do have issues, but we should never forget that we are allies and friends. We sit on the same side of the table, if i might put it that way. Therefore, we are going to negotiate about the different topics that have to be solved. We do know that it is better to be trading with each other. Ritika bill gates has never lower than number two in the sevenyear history of the bloomberg billionaires index until now. His run has ended with the rise of overtaking him, pushing gates down to the third richest person. Shares rose to a record in paris to more thanres 200 million ahead of gate. Gates. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Paul thanks very much. Wall street fell from a record and the offshore yuan weakened after President Trump reminded us that the trade war is far from over. Pres. Trump we have a long way to go as far as tariffs with china is concerned. We have another 125 alien dollars we can pu 125 ilion dollars 125 billion we can put tariffs on if we want. Paul Stephen Mnuchin said talks resumeijing would likely this week. Lets cross to beijing and our china correspondent, selina wang. What can we infer from trumps latest statements . This confronts expectations by many lawmakers in beijing that a Clear Pathway to a deal is nowhere in sight. The possibility of retheme terrorists even further but it is a precondition on the part of beijing for the deal talks to continue that all iteris be removed the tariffs be removed. The Trump Administration made it clear they do not want to remove tariffs until it is clear evidence from china that they are making progress on these for once. This raises concerns that trump may not be in a rush to say hes reached a deal by the 2020 elections and in fact major ad it out to show his base he is being released up on china. Escalate, itffs do would have a Significant Impact on the chinese economy. Bloomberg economics was forecasting that growth in china could slow down to below 6 if tariffs were to increase. As well, we have heard from li statements coming out that china is prepared to weather the storms, increased protectionism, Global Growth slowdown, and they are prepared to adjust fiscal and Monetary Policy as appropriate. Shery we have the Treasury Department saying chinas for a thirdlined consecutive month. Anytime you have news of this, there is worries around there that china could be weaponizing treasuries. What are the concerns here . Selina it is always difficult to glean too much from these data points. A mideast geopolitical tensions, we are all watching them closely. Take a look at this chart. You will see the Treasury Holdings have been steadily declining over the past two years. Few this was the Third Straight month of declines. Part of this was technicalities. China wants to have assets that risks. Have counterparty that is why we have seen china significantly increase its purchases of gold. There is consensus that china will not really weaponize its holdings of u. S. Treasuries amid this trade war since it would have a backlash against chinas own currency and hurt its exports more amid these trade wars. In addition to that, we have heard from the Securities ChinaSecurities Regulatory Commission earlier this year, saying china is likely not to significantly cut its holdings of u. S. Treasuries. China will continue to have this current account surplus. Right now, the u. S. Treasury market is still the most liquid and safe and deep that the chinese market. Shery thank you so much for that. Our chinese correspondent, selina wang, in beijing. The big banks are beginning to feel the pain of lower rates. J. P. Morgan cut its net income forecast as revenue from stocks trading and Investment Banking both fell more than expected while wells fargo posted its smallest income since 2016. Goldman sachs bought the wall street trend with an unexpected revenue jumped. Lets bring in our guest. Bright side. Goldman sachs, how did they do . Their Equity Division crushed it this time around. The ceo talked it up on a call with analysts. He said equities were really strong across the board and that carried the franchise. Trading was not as good, but still, equities managed to carry the banner so that kicked off a very busy day across all banks. A bit of a whirlwind. Paul Goldman Sachs, as you say, the standout on wall street. Mainstream banks did not fare so well. Can they blame the fed . Lananh yes. The Interest Rate outlooks are really starting to pinch the banks and they are starting to talk about the rate cut in environments ads potentially affecting their outlook going forward, so that Interest Income is like net Interest Income is blowing in the wind. The winds are going against the bank. We saw jpmorgan, citigroup. That had the lowest Net Interest Margin in five years. On top of that, wells fargo posted its smallest lending income since 2016. So we are clearly seeing that the mainstream banks are as weng to feel the pinch get into a potential fed rate cut environment. Shery we have bank of america, Morgan Stanley, this week. What can we expect . Lananh bank of america is a main street bank. We will be watching to see what their outlook is for the u. S. Consumer. Brian moynihan has been very bullish. As we start to see some of these headwinds from the Interest Rate environment, we will see what the macro outlooks can look like. Morgan stanley, trading powerhouse as well. We will see how they do. Shery lananh nguyen, thank you so much. Still ahead, fed chair powell expectations of a rate cut this month, saying the central bank is monitoring Downside Risks to u. S. Growth. Paul up next, u. S. Stocks retreated from records on new saber rattling on terrorists. The s p on tariffs. We will have more Market Action as we get ready for the asian open. That is next. This is bloomberg. Xt. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. I am paul allen in sydney. The earnings season has kicked off from the u. S. To japan with increasingly negative revisions as analysts and companies expectations of central bank using. Should investors stay the course or bailout . In hongamaruddin is kong. Does it look compelling to stick with risk asset . Sophie for some, it does come down to the opportunity cost of missing out on the longrunning bull market. The risk today is not that of a meltdown but of being left out of the left out of the metal is not that of a meltdown, but being left out. He does see the opportunity cropping up. India and taiwan stand out in the em space. Bmo Capital Markets use a shift in sentiment as well. Whichy is falling might get to their latest note. A recent string of positive economic data. Elsewhere in the Global Economy, tremors remain. The acting chief of the imf urging policymakers to be ready with more stimulus. Calls tofaces rising trim rates given expectations the economy is forecast to grow this year at the slowest pace since the financial crisis. I want to bring up the latest the of a fund survey b of a fund survey. Shifting out of defensive positions such as bonds and reits. No one expects earnings or gdp growth or higher inflation or rates, so the the move does remain pessimistic. That is evident with the bearish calls we have had over at blackrock. Cutting equity risks while Morgan Stanley trimmed its global stock allocation to a fiveyear low. A mix of views when it comes to the outlook for global stocks. Shery thank you so much for that. Joining us now for all of the Market Action is the director of research, and he cap are in andy. We were talking about the risks and what analysts and investors are doing. Is it time to pare back . We have seen this equity rally continually to new record highs continuing to new record highs. We are continuing to see signs the globe economy is slowing down. Andy i think it is slowing down but the signs of a recession are pretty far off. If you look at most leading indicators, they continue to point to relative strength, although not the strength we saw 1. 5 years ago. All of which points to a continued rally in its assets. The other point is the Federal Reserve and other Central Banks are giving investors a pretty big gift by making policy more accommodative before they are risk of are material slowdown or recession. I would say the one risk is earnings. If there is any decline in the immediate future, it is going to be earnings driven. So far, earnings season is not off to a great start, but i have to acknowledge the early reporters are always been big banks, and financials. They have a unique earnings story which is the inverted yield curve makes it hard to make money. Shery it does not help that the fed continues to cut rates, right . Andy actually, it could. Shery it would stabilize the lending market . Andy it could also the press the borrowing rate, the shortterm depress the borrowing rate. The other thing it can do for the regional banks like wells fargo is encourage more mortgage borrowing, which is a big source of revenue for those banks. Shery does it even matter if the banks are liking right now because of earnings, given the market rally was not driven by them . It was more because of growth stocks. Andy it has been driven by growth stocks. The is getting pretty long in the tooth. Toot of things are pointing value stocks representing good opportunities in particular valuations. While i would not say things are going to lead the charge there, if you look at certain pockets of value like energy stocks, like industrials, there is really a lot of opportunities there. Want to return to a point you made a minute ago. You said there is risk around earnings. We always discuss how the fed promise of easing is driving prices higher. Doesnt that speak to underlying weakness . If it was not for the fed giving everyone a sugar hit, where would we be . With a lot more volatility, especially looking at markets in the red again after a pretty volatile mass year. All in all, it is hard to painted picture to justify other market without their also being a recession, and the recession is too far off. If there is a recession in the cards, it is willing to 2020. Well into 2020. Paul lets talk about trade. You like developed markets over em. But some em markets do stand to be beneficiaries like vietnam,. What consideration have you given to that . Andy vietnam ought to be considered. It has a very small equity market. There is not as much opportunity to invest there. Winheory here is you cannot a trade war. Everybody loses in a trade war except those who do not engage in it. The destruction in the u. S. And china over this particular escalation in the tariffs over the past few months. Supply chains are getting changed and disrupted in the u. S. , causing costs to go up. Retailers are having trouble passing those costs on to consumers. The same real jailers retailers are trying to adjust. Who is going to win . Thes going to be primarily economies that do not engage in this trade war. The u. S. Has a problem. China, one third of the emerging market by equity market cap has a problem. The rest of the developed world actually has an opportunity. If china throws up trade barriers that makes it harder for ge to compete, to sell jet engines in the u. S. , that is an opportunity for rollsroyce. It is an equivalent opportunity across a broad array of industries. The other than that makes this a potential catalyst is the nature of the most recent economic data. Pmis in western europe, in japan, took a turn for the worst six months ago. But they bottomed out. They appear to be stabilizing. In the u. S. , Business Confidence has been shaken by the reinvigoration in the trade war. That is not good news. On a relative basis, it may cause investors start to rebalance. Shery this chart on the bloomberg showing the global pmis. Blue thatthe line in has taken the plunge but is starting to rebound. Would you say growth in europe have bottomed out . Would there be any particular sectors you would like . Andy the most Encouraging Companies in europe are the industrials. The direct competitors to ge being Companies Like siemens, rollsroyce, basf, and the chemicals industry. Paul all right. Director of research, andy kapyrin, thanks very much for joining us. There is plenty more to come on daybreak asia. Stay with us. This is bloomberg. Paul a quick check now of the latest business flash headlines. Deutsche banks radical revamp includes an exit from servicing Hedge Fund Clients. It could see funds transferred to bnp paribas. Been. 1 bank has billion dollars a day from funds, raising the pressure for a swift deal. Bnp into onesform of the prime brokers. Shery strong Domestic Travel demands helps absorb cost pressures from the grounding of the 737 max. Earnings will climbed to 10. 50 a share, up from 10 in the previous prediction. United is improving its outlook less than one week after Delta Airlines boosted its own forecast, also citing robust demand. Online shoppers are trying to take full advantage of amazons two days of mega sales for prime members. Internet searches for canceling amazon prime were 18 times on monday, suggesting many shoppers are signing up to cash in on the discount and then immediately trying to back out of a membership commitment. They are predicted to spend 6 billion during the sales. Turns u. S. Lawmakers took blasting facebooks proposed libra digital token with sharon brown setting the tone early. Facebook is dangerous. Facebook might not intend to be dangerous, but surely, they do not respect the power of the technologies they are playing with, micro toddler who has gotten his hands on a book of matches. Shery he was joined by senators on both sides of the aisle who expressed similar concerns over facebooks years of missteps. Lets cross over to kill and whether. Caitlin webber. How did facebook doing this hearing . Caitlin they took a lot of heat. Lawmakers took the opportunity to really take facebook to task for a number of other controversies, including the recent concerns about privacy that we saw, and the recent settlement with the ftc. There was a lot of criticism raised about facebooks alleged lack of willingness to regulate better the content on its platform, so the facebook executive, david, who spoke today he was hoping to pitch libra. He really took a big drilling from these on grilling from the lawmakers, who show that they really do this trust the company at this point. Distrust the company at this point. Paul facebook took some heat along with apple, google, and amazon at a different hearing, focusing on whether tech giants are too big. How are executives from most companies received . Caitlin this was on the other side of the capital, the house. Those tech executives took a lot of heat from lawmakers. Democrats may have been more pointed in their criticism of the companies, saying they are too large. Their size does not allow Smaller Companies to compete. I think all the firms that appeared took heat, but i would say that amazon seemed to take the most. A lot of the Lawmakers Said that there just really was not amazon is the product and owns the platform so there is a conflict of interest. No opportunity for Smaller Companies to compete. Republicans for their part were a little less pointed, some of them calling for, you know, congress and regulators to go more slowly, that big business is not necessarily bad business. Paul Bloomberg News editor caitlin webber, thanks very much for joining us. Still to come, php looking to shift more this year. We will take a look at what it means for iron ore in a moment. This is bloomberg. Ritika this is daybreak asia. I am ritika gupta with the first word headlines. The offshore yuan weakened after President Trump said he might impose additional tariffs on china. He said the duties currently in place are having a positive impact on the u. S. Economy and that more measures could follow. The two sides have been edging talks withs trade the u. S. Team saying it may travel to beijing if negotiations over the phone this week go well. Pres. Trump we have a long way to go as far as tariffs in china are concerned. 3002030nother is 325 billion we could put tariffs on if we want. I was they did not break the deal we had. Paul li keqiang ritika li keqiang has openly admitted the economy is facing increasing downward pressure and hopes the government will do whatever is required. He pointed to a range of challenges as Global Growth weakens and trade and Investments Loans and noted the rise of veganism around the world. Protectionism around the world. He says it slid to the lowest level in years as the trade war rumbled on. Beijings reserves of dons felt 1bonds fell to on trillion. That is a Third Straight month of declines. Beijing remains americas biggest foreign creditor. Contrasting fortunes at the big banks. J. P. Morgan cut its fullyear net income forecast as revenue from stock trading fell more than expect it. There was more cheer at Goldman Sachs, which bucked the trend. Meanwhile wells fargo posted its , smallest income since 2016. It said a fed rate cut would be a welcome boost for business right now. Be said is something to for a softer landing, if in fact the fed does go and reduce rates to the extent that it makes credit better. And keeps consumers and businesses in the game, transacting, borrowing, investing, etc. Ritika south korean prosecutors are seeking an arrest warrant. Violating lawsf related to Capital Markets and external audits. It is the second time prosecutors have sought his arrest. A court rejected a for its request in may. Kim has previously said the companys accounting methods are in line with internationals anders. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am at a corrupter. This is bloomberg. I am ritika gupta. This is bloomberg. Lets get a check of what to watch in markets this morning. Sophie. Sophie focusing on japan with cash trade kicking off in a half hour, nikkei futures in singapore hinting at further losses. Hey add to woes the traits that with south korea continues to trade spat with south korea continues to loom. In sydney, we are watching resource players. Realprice chart rios price target was cut. The minor gets a reality check. Its 2019 production target. Galaxy resources price target was raised it percent on macquarie. A few calls there from macquarie, paul. Reported attributable iron ore production for the Fourth Quarter that did meet the average analyst estimate. Lets go to melbourne to david stringer. David, what has bhp said about the cyclone in march and the other operational struggles . David good morning. As you say, bhp has had a number of issues to contend with over the last financial year. If you recall towards the back end of, 2018, it suffered that quite dramatic Train Derailment when iron ore cargoes were scattered across mentioned the Tropical Cyclone in march. The impacts on point production from Western Australia has been a bit of a blow for bhp. A have seen iron ore put up they have seen iron ore production fall. The company was formed in 2001. We have seen we have seen those volumes slip. That looks like it could be a temporary blip. They will press ahead with programs aimed at raising capacity through the rest of the current fiscal year. Terms of raising met capacity, how much of a rebound are we expecting . That capacity, how much of a rebound are we expecting . David they expect that total production volumes to rise as much as percent in the current fiscal year, so it jumped back quite quickly. Longerterm, they will carry out maintenance. The big export hub, the gateway to china, and also other minor maintenance. All of the intended to raise capacities to 290 million tons. That compares to output last year of about 270 million tons. They are expecting a rebound in the planning to continue to lift those volumes. Flagging what is bhp ahead of Financial Results next month . David well, given those problems that we have mentioned, and some other setbacks they have had, there have been fires in various operations, other unplanned outages. The total impact should be a billiondollar hit when they report results next month. That does not include the impact on the Tropical Cyclone that, as we say, caused some minor damage supports. They said there damage to ports. They said there are other charges related to the mine disaster in 2015 in brazil. They are recalculating the potential provision there, and flagged 260 million charges to close down and that operation. They flagged at least that billion dollar hit when Financial Results come in next month. Shery david stringer in melbourne. Federal reserve chairman jay fedll and two other policymakers are signaling support for rate cuts even after strongerthanexpected retail sales reports Shows Consumers are still boosting the u. S. Economy. Is here with more on this. Mr. Powell really is not wavering with cuts being on the table. Kathleen that is what we heard last week at the semiannual testimony to congress, when jay powell made it pretty clear he has opened that door very wide torate cuts and is ready walk through. They are monitoring Downside Risks to growth and will act as appropriate to sustain the expansion, echoing what he said to Congress Last week. Uncertainties around this outlook have increased, particularly regarding trade developments and Global Growth. In addition, issues such as the u. S. Federal debt ceiling and unresolved. N fomc participants have also raised concerns about a more prolonged shortfall in inflation below our 2 target. Kathleen growing concern about inflation being below target. We heard that again from Charlie Evans today. He backs a couple of rate cuts, 50 basis points this year, because of low inflation. When he was asked what about a 50 basis point cut at the july meeting . He said i can see the argument for it. Why not do it all at once . On the other hand, we have to begin full of how much the careful of how much ammunition. Robert kaplan, who has been more on the middle of this he said,, not immune from the global spillover of the trade war of global slowdown. He would favor perhaps a tactical rate cut, but not the beginning of a serious rate cutting cycle. Shery we have been talking about the American Consumers still being strong. Retail Sales Numbers seem to back that. Kathleen they hit the treasury market. The Global Economy spilling over. Chart. , lets look at a i want to show you the numbers as i tell you about them because june retail sales month on month were up 0. 4 . The main number was revised tire. It is not what they are soaring but it shows the consumer is till spending. Iss move onto another still spending. Lets move onto another chart. The consumer and dead yet. That yet. Here is the average going back to 2000. I think if you want to be reassured, this number did it for you. U. S. Industrial production, that is talking about manufacturing. The june number also out today was flat. That helped bonds recover a bit. People see that was because utilities were down so much, 4 . The number. Manufacturing rebounded by 0. 4 on the month. We know of course President Trump loves to attack the fed for all the nations woes, but jay powells main argument is that President Trump is depressing growth. Kathleen a lot of economists and central bankers around the world are saying that. We have the german i Investor Outlook survey out. We can than expected. Third month in a row that it has gotten weaker, close to the weakest in five years. It fell below zero for the First Time Since 2010. Where were we in 2010 . We were in the middle of a very deep recession. One more chart i want to show you. , yes you domestic economy may be strong, but we know manufacturing is getting hit around the world, and we can take a look down here at the turquoise line. That is the eurozone. That is where germany is. Purchasing managers, 47. 6. 50 is the line between contraction and growth. That is not a very good place to be. The white line, that is china. They are in the contraption zone. U. S. Is still skirting contraction zone. U. S. Is still skirting above it. That is down below 50 as well. This is the fed concern. This is what they are talking about. Unless this trade war ends quickly, there are a lot of supply chains shifting. There is no reason to expect it to get better just yet. Good news the consumers are still spending and the jobs are still growing. Maybe we do need the insurance rate cut. Downside risks continue to materialize, we could be in trouble. Paul kathleen hays, thanks for joining us. Still to come, President Trump is targeting china again, threatening more tariffs despite promising to wall off on any additional duties last month. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. President trump has given us a reminder that the trade war is far from over. Saying he could impose additional tariffs on chinese goods at any time if he wishes. Pres. Trump we have a long way to go as far as tariffs with china is concerned if we want. We have another 325 ilion dollars that we can 325 billion we can put a tariff on if we want. I wish they did not break the deal we had. The threat comes one day after Stephen Mnuchin said talks with beijing would likely resume this week. Joining us now is a Senior Research fellow, christine make them you mcdaniel. Christine, thanks for joining us. We just heard President Trump there reiterating a threat. If this visit by Stephen Mnuchin and lighthizer to china goes ahead, to what extent does that provide a useful or not useful backdrop to the top . To the talks . Christine markets keep watching about what the latest President Trump says on tariffs, understandably, but this president wants tariffs. Loves tariffs. Whether or not they meet their counterparts in china, it looks like that tariffs are here to stay the tariffs are here to stay. The u. S. Has been collecting five and above what we collected this time last year and this time two years ago. But the tariffs are really the easy part. I think when President Trump said there is a long way to go, what i interpreted that as there is a long way there is a big difference between the u. S. s position and chinas position. That is where i am looking and i do not see that distance shortening anytime soon. Paul yes. How would one go about shortening that distance . Is it a matter of doing it incrementally . Reaching a deal on some things and maybe setting the more difficult things such as tech and huawei to one side . Christine huawei is largely a National Security issue. Know, a lot of these things get lumped together when trade policy people talk about it. It is a their separate issue. The National Security experts have a whole set of issues regarding huawei, and the trade policy realm does not address it. So i think the tariffs are addressing some of the longheld tensions and annoyances, you know, that the u. S. And many others have had about the chinese economy, with china not really living up to its promises when they joined the wto in 2001. Instead of moving towards a more market oriented, oriented economy, they moved towards a statecontrolled party economy, where you know, the communist party basically has a seat at the table at most a very Large Private Sector Companies now. That is a very different china than what i think people thought people would get when they joined the wto in 2001. Shery there are fears that china could actually start weaponizing its holdings of treasuries, which have already declined for a third month or even organizing the chinese yuan. Are these concerns something you give credence to . Or are they farfetched ideas at this point . Christine i cannot speak to what the Chinese Government is thinking and may or may not do. I do know the council of economic advisors, i think it was in the president obama, did look at that scenario pretty indepth, and basically concluded that it really was not in chinas interest to do that, but they could for sure. I mean, i dont think anybody wants to escalate this, where you know, it is a lose all around situation. It is simply a matter of the United States, and frankly, many other countries, wanting china to open up, to liberalize, and to get the government out of the boardroom. Frankly, the Chinese Military out of the companies that the u. S. And others do business with. Shery we are headed towards the u. S. President ial election next year. Does this make it easier for them to agree to something and then to claim victory . Or will this make the china hawks where you are in d. C. Just louder . Christine sure. I dont know. The politics of this evening me elude me. Those most time by the tariffs, the manufacturers and farmers the most harmed by the tariffs, the manufacturers and farmers, are in support of president s strategy. It does not seem he has much to lose by adding firm on his stance. The trade policy Community GivingNational Security folks a lot of space. The democrats i think it would be hard for them to fight trump in 2020 on trade. And there is bipartisan support for addressing a lot of these longheld concerns in china. I dont think that the 2020 playion has any major right now, one way or the other. Paul something that might have a major play and it goes to something you said a minute ago about nobody wanting to escalate things we have the u. S. Potentially selling 2 billion taiwan. Arms to a Chinese Foreign minister warning the u. S. It is playing with fire. That sounds like it is escalating things. Christine does our National Security issues. I will leave that to the x that sounds like National Security issues. I will leave that to the experts. It is one thing to look at tariffs and talk about tariffs. As an economist, that is easy to do. The longer term issues are geopolitical, and it does not look like those are going to be resolved anytime soon. Shery in december for joining us, christine mcdaniel, Senior Research fellow thank you for joining us. Christine mcdaniel, Senior Research fellow. This is bloomberg. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Idea was too turn the puffer jacket into a luxury item to be worn everywhere and anywhere. He has ditched traditional collections and harnessed social media to transform the brand. Here is a clip from this weeks episode of turnaround. [video clip] it was a triumph of social media marketing. Exuberance in new yorks Grand Central station. At the dawn of the instagram image. Generals media in means you have to attract a community. You really have to talk with them everyday. When montclairs chief executive staged his new york mixed ocular spectacular or took over the lincoln center, he had already stepped outside the traditional boundaries of the catwalk into the realm of the theater. Welcome to the Winter Palace into the social media zeitgeist that had propelled a bankrupt ski wear company into the upper echelons of global fashion. Now, he is taking a new risk. Been 2018 in 2018, he announced he would get the Business Model that ditch the Business Model. He propelled it from a middle to ang ski gear maker business among the most profitable listed Luxury Companies in the world. But he has refused to rest on his laurels. In an effort to prepare the company for the next stage of expansion and turbocharged sales turbocharge sales, he announced a new way of doing business. Instead of spring, summer, winter, fall, mens, and womens, he has a collection every month, with eight different designers. He dubbed it genius. For me, it is an incredible instrumental communication, because it could have something to talk about the market every designers, famous nice images of products, innovative products, strange products, so it is an incredible reach of content, this approach. This allows them to, with great frequency, the sharing be sharing something new, targeting different subsections it is moster base to valuable aspect they have on social media today. Ceo, hear more from their on turnaround. And we have japan, south korea, and australia coming online at the top of the hour. Lets check out what you want with sophie. Sophie futures are hinting at the kleins. Declines. Checking in on the kospi, it may resume the the kleins declines. Today, plans will soon be unveiled to reduce the economys dependence on japanese industries. Extendor suppliers to their rally. It will take two months for such companies to post any earnings boost from increased orders. Also worth noting that samsung said it is open to all possibilities and reportedly Testing Hydrogen fluoride from other countries. Testing is likely to take several months. We are seeing ties emerge with china. Media reporting that a south Korean Company is to set up a fund of more than one trillion won with China Investment group. Renewed trade tariffs on china from the u. S. That has seen offshore yuan very much in focus. So for this month, it has been stuck in a range, as implied volatility dissipates with trade talks. The pboc keeping a tight reign. A vanishing vol may signal traders are becoming too complacent. That is a snapshot. This is bloomberg. Paul good morning. Asias major markets are about to open for trade. Shery good evening. Sophie welcome to daybreak asia. Paul asian stocks look set for decline as President Trump turns up the heat on china, saying he can add more tariffs if he wants to. The fed chairman confirms he is watching developments closely. Jerome powell says he will do what is required to help the economy. Shery Silicon Valley heading for its biggest showdown with congress in 20 years. Lets get straight to the Market Action with sophie in hong kong. Sophie stocks opening to the downside. Steady nearolding low set late tuesday. Be lookingelds will for cues from the 20 year bond sale on wednesday. Checking in on the kospi, off by 6 10 of 1 . A few new slides of note. Concerns around where chipmakers will secure supplies of key materials that face the japan export curb. Checking in on the korean yuan. It is under pressure. Lets take a look at how the mood is faring in the antigones. The aussie dollar is rebounding. The kiwi dollar is looking steady this morning. We are seeing calls on an cd nzd. Gears. Hifts kiwi stocks trading flat so far. Paul thanks. Lets check in on the first word news now. Representatives has voted to condemn President Trumps tweets about four democrats that told them to go back to the country they originally came from. Vote backed a resolution that condemned the comments as racist and says they legitimized hatred against americans and hatred of color. Trump says his comments were not racist. Jerome powell says the central bank is always monitoring any threats to growth, adding that he will act as appropriate to sustain expansion. Rising,uncertainty is particularly in trade and Global Growth. His comments echoed his testimony earlier this month in washington and support the case for lowering Interest Rates. Uncertainties around this outlook have increased, particularly regarding trade development and Global Growth. Issues such as the u. S. Federal debt ceiling and brexit remain unresolved. Fomc participants have raised concerns about a more prolonged shortfall in inflation below our 2 target. Contrasting fortunes of the big banks. J. P. Morgan cut its fouryear net income forecast as revenue from stock trading fell more than expected. There was more cheer a Goldman Sachs which bucked the trend with an unexpected stock trading revenue dont. Wells fargo posted its mulling smallest lending income since 2016. Theres something to be said for a softer landing if the fed does go and reduce rates to the extent that it makes credit better and keeps consumers in the game, transacting, borrowing, investing. Sterling fell to its lowest since 2017. The prospect of a no deal brexit returns to the table with increasingly tough rhetoric from the men vying to be the next prime minister. The pound fell against the euro. The plan is considered essential by brussels. Global news 24 hours a day on air and on on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Wall street fell from a record and the offshore yuan weekend after President Trump reminded us that trade war is far from over. Go ashave a long way to far as tariffs with china are concerned. We have another 325 billion that we can put a tariff on if we want. We are talking to china about a deal. I wish they didnt break the deal that we had. Comes ahe latest threat day after treasury secretary Steven Mnuchin said talks with beijing would likely resume this week. Lets go to our china correspondent. Comment president s make it harder for working level officials to get to any progress now . Absolutely. Comes comments confirm the view in phase beijing that already exists that there is no Clear Pathway to a lasting deal. China wants the complete removal of tariffs for these discussions to continue while the Trump Administration has made it clear that tariffs will remain until they see evidence that china is keeping his promises. This raises concerns that trump isnt in a rush to reach a deal ahead of the 2020 elections and that he may drag it out to appear tough on china as hes campaigning. If tariffs continue to escalate, this would have a Significant Impact on the chinese economy with Bloomberg Economics forecasting it could cause growth to fall below 6 . Beijing is wary of these concerns. We just got statements from a premier that if these tariffs to escalate, if protectionism continues to rise, they will adjust their fiscal and Monetary Policy as appropriate. Paul u. S. Treasury department is reporting that chinas holdings of treasuries dipped in may to the lowest level in two years. Does this tell us anything at all . Is there nothing to see here . Its really hard to speculate on this data. Theres a lot of opacity. I want to take a look at this bloomberg chart. You will see that Treasury Holdings have been on a steady decline for the past several years. This would be the third consecutive straight month of declines. Part of it as technicalities. Chinas ongoing efforts to diversify away from u. S. Assets. Thats why we have seen china increase its purchases of gold. Theres consensus that china will not reprise weaponize this. It would adversely impact their exports. Weve heard from China Securities commission in january that china is not going to significantly cut holdings of u. S. Treasury since china is still a saving surplus country. To findifficult place another place beside the u. S. Bond market to invest in that is as liquid and safe. Paul all right. Our china correspondent. Thank you very much for joining us. Next, we will have a look at how these trade tensions are playing out. Our Asian Equities Team. What does this mean for markets today . Yeah. Trumps latest comments on the fact that he could add on additional tariffs on chinese goods clearly is having a negative effect on the stock market out here in asia with japan and korea already down. I think the one place that we should probably keep an eye on is the shanghai composite and chinese stocks when they start trading today. Thats really where you will see how investors are reacting to this nude news and asia. This could set the tone for what happens across markets in this region today. Lines we are getting saying that the u. S. And japan r. I. M a potential small trade deal by september that would include only agricultural goods and autos. That wouldnt necessarily mean the approval of Congress Need the approval of congress. If you say progress between japan and the u. S. , how positive could this be for the markets . Clearly, it would be a good thing for the japanese stock market. Sluggish thise year in general. If there is a trade deal that could come through, even if its just for a Certain Group or sector, it is still going to be good news for the stock market in japan. The question is, how long could this rally possibly last . Are there other factors that investors would still have to keep an eye on to see whether its worth buying stocks in japan . Shery lets talk about south korea. Beenock market earlier has embroiled in its trade spat with japan. What else do stock investors have to take into account for the cost be today cost be kospi today . Its having a huge impact on the stock market. One second its up, the next second, its down. Theres clearly a lot of concern about this spat in general. Where are you going to see play out . Whether or not suppliers in south korea can actually help samsung should this trade spat escalate with japan. It will boost the suppliers that are listed in korea. The kospi. Elp theres that to keep an eye on. Like theres also the Rate Decision coming in tomorrow. Cut that couldte be good for stocks, that could be bad for the lawn. Theres a lot of things playing out this week for south korea that investors will be watching. Shery thank you so much for that. Our Asian Equities Team leader. Still ahead, facebooks plans for cryptocurrency have attracted plenty of calls from lawmakers for more regulation. We will talk to a crypto proponent who says it should be given the green light. First, jay powell sees rising uncertainty around the world. We will talk about the new challenge facing global central bankers. This is bloomberg. Central banks have to keep an eye on the circumstances in their particular jurisdiction and try to keep their economies on the right trajectory to achieve their objectives. All need to be ready in case there is a significant slowdown to respond much more forcefully. Paul the ims acting manager director who was talking to bloomberg as investors eye queues from the ped fed. Jay powell says it is ready to act as needed. Lets bring in jpmorgan australias executive director for macro sales. Think you for joining us. Weve had a few comments from the dallas fed. Cuts saying, any hes been managing expectations around cuts. How far can the fed with this easing cycle . This been a lot of debate about whether this will be a set of insurance cuts or whether this is the start of a 150 basis point easing cycle. It has always felt like the risk was more the former. It does seem to be a little bit early in their response. The fed pivot came earlier than the market suspected. We only look for july and september. I think that the markets , that seems to be appropriate. There isnt a lot of pushback. A lot of central bankers complaining that its time for some fiscal stimulus as well. We have the g7 meeting started a. Would you expect to see hear anything encouraging about those lines . Theres been a lot of pressure placed on the fiscal side of things. Stimulus has done so much. It is time for fiscal to do more. We have seen that slowly around the globe. Trump kickstarter that in 2016. Its clearly a topic for continue debate. All those things would help. Its really a matter of getting the right interests aligned. At this stage, theres a lot of disconnect locally between federal and state. Not exactly in a position yet to really make that difference that would be needed which would help to maybe alleviate the need for further rate cuts. Thats why we continue to expect another 50 basis point of easing by mid2020. Shery what does that mean for the aussie dollar . Will it trade in tight rages . Ranges . It does seem that way. Essentially, you have the rba still in easing mode even if they might take a little hiatus over the next few months. Clearlythe commodities performed a lot more strongly than expected. Essentially going forward, its going to be an issue where if it games,xtending its clearly the market needs to be prepared for an aussie dollar that may have been strongerthanexpected. Fed expectations play into that as well. From aussie side, theres crosscurrents. Shery what about other global currencies . We have seen more positive data out of the u. S. It seems that the global macro backdrop is still a bit of a slowdown everywhere. Have you position when it comes to currencies . Yeah. It was interesting to see the move in the u. S. Dollar overnight. It had clearly been under pressure given the fed dialogue. At the same time, always the story for the dollar is, it can potentially be very strong when the rest of the world is weak. We have yet to see. Was a coming through from other parts of the globe. Theres still a lot of concerns around europe. We have week maybe had better china data and the u. S. Data is coming in better than expectations, it is still probably too early to see strength coming through in other currencies. For now, the dollar is going to continue to do well in that little if we saw overnight to continue. Paul when it comes to fx, you still play with a safety currencies. Absolutely. Jpmorgan points out in this sort of environment, trying to short those currencies can be very dangerous. Its not really the time to be long haidi to currencies. N exception. E a we dont think that is sustainable. Where do you see it heading from here . The seven level will continue to be spoken about a lot. At some stage, that can be breached. We are relatively neutral overall as a bank. I do feel that the risks remain that dollar one stays higher from here. Im not as bullish as some is the in the market. Shery thank you so much for that. Joining us from sydney. Our jpmorgan australia executive director. You can get a roundup of the stories that you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers, go to your terminals. Also available on mobile. You can customize your settings so you only get the news on the industries and assets you care about. This is bloomberg. Shery this is daybreak asia. Lets get a quick check now with the latest business flash headlines. Deutsche banks radical revamp includes an exit from servicing Hedge Fund Clients in the plan could seal most 170 billion of funds transferred to be in be parable. Deutsche clients have been pulling about 1 billion per day from funds. The move goes ahead, it could transform bnp and one of europes prime brokers. United airlines is raising its fouryear profit forecast as strong Domestic Travel demands help cost pressures. The carrier says earnings will climb to at least 10. 50 per share, up from 10 in the previous prediction. United is improving its outlook less than a week after Delta Airlines boosted its own forecast, citing robust demand. Paul Online Shoppers are trying to take full advantage of amazons two days of mega sales for prime members. Internet searches for canceling amazon prime were 18 times higher on monday as sales began. That suggests many shoppers are signing up to cash in on the discounts and immediately trying to back out of the longterm membership commitment. Shoppers are projected to spend almost 6 billion during the sales. Shery tesla has cut the price of the model three sedan in the u. S. Weeks after a federal tax credit was cut in half. The move pushed shares lower on concerns of whether the company can sustain sales. The model three starts at 39,000. They cut prices on all vehicles shipped to china. A model three will still cost buyers there more than 50,000. Shery Financial Firms continue to grab the earnings spotlight. Goldman Beat Estimates on sales and trading revenue. Wells fargos revenue was little change. J. P. Morgan chase warned it will take a hit from lower Interest Rates. We have the latest on this. Its been a mixed bag so far. It has been. Hearing them saying the rate cut blues as we get into the late cycle for the banks. Take a look at how the big three that reported in this latest session did. Goldman and jpmorgan both saw their stairs shares rise. The industry as a whole was a laggard in the market. Wells fargo taking a big hit. They miss some of the lowest estimates. Lets focus on goldman and what was the surprise is their consumer business which is still a fraction the size of rivals surprised investors when it jumped in Equities Trading and helped be earning expectations. Their trading unit was the bright spot, coming in at Second Quarter revenue for the total trading with 3. 4 8 billion. The earnings per share dollars . 81. Equities revenue was the standout. Really putting the second highest Quarterly Results in four years for the unit. Thats what sets it apart from its rivals. Says he remains cautious on the geopolitical front. Hes optimistic on the really billion see of Global Markets resiliency of Global Markets. He says he was optimistic on the Investment Banking pipeline. They are ramping up there consumer business. Shares up 29 year to date. Now to jpmorgan. A slightly different story. The bank lowering its net Interest Income forecast by 500 million. Really cutting its winning streak in that regard. The fixed income desk put staying posting the fourth straight quarterly drop. Warning thatng lending income is going to take a hit. That will be because of the cut in Interest Rates. They generally sounded optimistic, particularly about the u. S. Consumer in the credit strength of their clients. They are very optimistic. They point out that despite the worsening prospects for Interest Income, it will not affect j. P. Morgan chase is expansion and investment plan. Sharese saw wells fargo slump the most after it missed the lowest estimate on the street. Costs in play there. They are part of the issue. The lowest lending income since 2016 for the bank. Wells fargo has had a lot of challenges with the accounts scandal which is behind them. Notably, the revenue was little changed. Some analysts said this was a positive. They defied predictions for decline. Net Interest Income which is the difference between the bank, what they charge borrowers and what it pays out to customers with the posits, are the lowest since 2016. What was a positive for the bank was that they continue to win business from consumers. Mainly with checking accounts, of 1. 3 . When you consider that they have the fake account scandal just a year so ago, that is a positive. It shows the banks are winning back customers and trust. Of the three banks, they were the ones that took the biggest hit in terms of share price. Shery thank you so much for that. Plenty more to come on the next that half hour of daybreak asia. We will have dana out of singapore. We are expecting june exports figures in a few moments. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Shery this is daybreak asia. Paul this is daybreak asia. Shery we have breaking news out of singapore. We are seeing no dekes numbers for the month of june. The mastec exports year on year continue attracting 17. 3 . Thats a most double the rate that was expected. Its also a big drop from the previous month when we saw a drop of about 16 . When it comes to the seasonally adjusted quarter on quarter numbers, we are seeing a contraction of 7. 6 which is almost double the rate that was expected. Singapore, being a very export oriented economy, is the canary in the coal mine. These numbers dont bode well for the trade environment. Electronic exports year on year, 331. 9 , a bigger drop than expected. Same size of declines that we saw in the previous month. We continue to see the semi conductors industry reeling. We have seen the singapore economy now contracting in the Second Quarter by more than 3 from the previous quarter. A drop wheneen such it comes to these export numbers since the Global Financial crisis, six years ago. We are looking at no backs exports decreasing by 17. 3 . Lets get some of the market reaction. Sophie is in hong kong. Sophie we are checking in on the sing dollar which is under pressure after the latest exports numbers which saw the biggest drop in six years. We are seeing that move towards 136 happening. When you look at the year to date move, it has been trading in a tight range. Just eyeing that 136 handle after the shock numbers that showed the economy contracting the most in almost seven years. Lets take a broader look at markets. Stocks falling across the board. We have the nikkei 225 extending losses. A potential small trade deal with the u. S. In agriculture and autos. Investors have been in wait and see mode with the Upcoming Elections in japan. Relatively has dropped to a near twoyear low. The region is being led lower by pi. Kos the korean won under pressure this morning with analysts penciling in 1200. Lets check in on stock movers in seoul. Samsung snapping a sixday advance. The supplier is extending its rally set for a 60 advance, pushing this stock to a record high. Lets check on another move are of no. Warnock a mills, falling as much as 6 after dying denying reports that its looking to revive merger talks. Thanks very much. Lets get some more on what we should be watching as trading gets underway in asia. The gross value debate in the stock market heating up again. One strategist thinks that value stocks narrow once in a decade trade. What this beast to is the huge rampup in prices that weve been seeing in the volatility stocks. Sophie was talking there about how volatilities come down in the japanese equity market. Thats a global story. People have been able to make a lot of money by betting that volatility will stay low in equity indexes. What that has done in the eyes of markets is that it has created a huge bubble in mobile stocks. It is pushing more money into that area and creating what he has looked over and hasnt seen a bubble of this magnitude in modern equity market history. What he is saying is that if you get a little bit of positive news coming from the trade war or the economic data, you might see some of this move coming out of low vol stocks and coming into value. You can see the extreme difference between the volatility on the blue line and value on the white line. If you get incremental positive news coming from trade or earnings numbers, you could see a rerating there and more money flowing into values. Thats the thing you want to be looking out for, according to Morgan Stanley. Shery no wonder we are seeing lots of risk exposure. Blackrock, Morgan Stanley suggesting taking less equity risk. Janice henderson says the big risk would be to bailout of stocks now. Yeah. This is the view of ashley car who looks at the Options Market for signals as to when you should be entering into trades and moving around his asset allocation. The signals are telling him to remain invested in the equity market. Hes a bit of a contrary or player given that so many people on the street and in the Asset Management industry have been dialing back there risk positions and thinking that you need to because shes in a world where the fed is cutting rates in the policy outlook is uncertain. You dont want to miss out on any continued upside for equities. Inain bullish on equities the mediumterm. What you are seeing in this reward inhat the risk credit and equity, he said you should finance should remain overweight in those areas. You should be very cognizant of the risk that an inflationary strike spike could trigger a shock to the economy and equities. That is something you want to keep an eye on. At the moment, dont bailout of this equity rally. Shery thank you so much. Check out adams charts on the g tv library on the bloomberg. Headlines first word come in next. The offshore yuan weakened after President Trump said he might impose additional tariffs on china. Y are having a positive impact on the u. S. Economy and more measures could follow. The two sides have been edging the u. S. Rade talk, team saying it may traveled to beijing. Has admitted the economy is facing increasing downward pressure. He says the government will do whatever is required. He pointed to a range of challenges as Global Growth weakens and trade slows. He noted the rise of protectionism around the world. He said the government will continue to use the prudent monetary and fiscal policy. In u. S. Holdings treasury slid in may to the lowest level in two years as the trade war rumbles on. Fell pointeserves 2. 8 billion, according to treasury data in washington. As the Third Straight month of declines with chinas holdings the smallest since may 2017. Beijing remains americas biggest foreign creditor. South korean prosecutors is are seeking an arrest warrant for the ceo of samsung biologics. Hes accused of violating laws related to Capital Markets and external audits. Its the second time prosecutors at have sought his arrest. The court rejected a first arrest in may. He has said the companys accounting methods are in line with the international standard. Bill gates has never ranked lower the number two in the sevenyear history of the bloomberg billionaires index. Until now, that is. His run has ended with the rise of overtaking him. Shares rose to a record in paris. Million ahead of gates. Global news 24 hours a day on air and on tictoc, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul all right. Thank you. The next president of the European Commission says she hopes to dissuade President Trump from imposing new auto tariffs by reminding him of all the areas where european and american interests coincide. She spoke to bloomberg in strasburg. We do have fishers. We should never forget that we are allies and friends. We sit on the same side of the table. Therefore, we will negotiate hard about the different target topics that have to be sold. At the end, its better to be in a healthy way trading with each other than otherwise. I will work to have a Good Relationship with our partner the United States. Knowing there are issues to tackle. Unlike defense where President Trump has done a lot of talking but not a lot of fighting, he has been using tariffs against the eu. Now there is a threat of levees on european cars. You have any idea about how to address that . If you look at the broader picture, a lot of things are interdependent. To convince our friends from the United States that its better that we find a good compromise and Work Together because there are way more issues and problems that concern the two of us together will be my way to address it. I think theres a lot of good arguments for working together. Tackling together the other challenges we do have from other parts of the world. Are you hoping to avoid an escalation through titfortat tariffs . Both sides should do that. Its not good for any side, both sides should do their best Work Together to find a solution. The other trade issue is brexit. Weve talked about a willingness to prolong brexit yet again. What about the Withdrawal Agreement that moscow put forward . We do have a good Withdrawal Agreement. It has been negotiated. Regarding the red line the u. K. Has drawn. I am convinced that it is very important to the way we have brexit because its not an end of something. It determines the beginning of the future relationship between the United Kingdom and the European Union. We want to be partners. They are our neighbors. We have common interests. I will put a lot of emphasis that we will have, if necessary, a brexit in a good way knowing that we have a common future. [inaudible] i think it is absolutely a given to speak with every u. K. Leader or any other head of state. I want to Good Relationship. This is the best thing for people in the European Union as well as in the United Kingdom. We should work on that. Shery that was the Incoming Eu Commission president. Coming up next, facebooks cryptocurrency plan has come under more fire some senators on both sides. When asked what it implies for the crypto industry as a whole. This is bloomberg. Facebook is dangerous. Facebook might not intend to be dangerous, but surely they dont respect the power of the technologies they are playing with like a toddler who has gotten his hands on a book of matches. Their motto has been, move fast and break things. We be crazy to give them a chance to experiment with peoples bank accounts. We will take the time to get this right. Would never be easier and safer if people could securely and inexpensively receive money transfers through their smartphones just like they do for so many other things today . Shery that was democratic senator sharon brown grilling facebooks blockchain head earlier today. Lets continue our discussion on cryptocurrencies. A bc grouped by executive director from hong kong. Great to have you with us. Congress is very united when it comes to its concerns about libra, whether its republicans or democrats. President trump himself. Criticism is that it could lead to Global Financial instability, perhaps it could reduce government power when it comes to managing money flows. It could be really difficult to hold up sanctions regimes and so forth. That doesnt only talk about libra. Its really reflective of the broader crypto market. What would you say to that . Thanks very much. We saw facebook in june announced a native digital reserve back currency with providing lowcost payments. Imagine that the traditional , they are quite apprehensive about anything that could disrupt those initiatives. Whole, the move that facebook announced is very bold. It is ambitious. Its telling that you have 30 of the most Prominent Technology and finance Companies Backing the foundation that looks to monetize libra. It looks like the future is bright. It reinforces that this entire Digital Asset ecosystem is here to stay. We will see whether what happens the future the lawmakers and policies and regulation around the space is very critical to the success of libra. Shery a key question is whether or not congress has the ability to be able to regulate it. We have seen some other countries, singapore, thailand, hong kong, talking about regulations as well. If we are talking about something that could regulate the broader market, does it need to be country based . Or does it have to be a global effort . This is one of the things that Digital Assets and cryptocurrency has had as one of its pain points. The reality is that bitcoin, Digital Assets are a global currency. This is new policy. Another interesting thing to think about is the fact that this isnt the First Time Technology companies have disrupted traditional payments ant financial incumbents. If we look at china with tencent and we chat, these are technologies that are very prominent and are used in everyday payments for a Large Population in that jurisdiction. If you look at facebook with its subsidiaries, they do have penetration to a quarter of the worlds population. You can understand why the financial, traditional Financial Institutions and payment route operators are very nervous about being dislocated and disrupted. If anyone has the means to do it, it is facebook with its founding partners. Described Digital Currencies as global currencies. Currenciese global at risk of becoming a little bit too ambitious . Issuing currency is the Foundation Stone of the nationstate. If it gets too big, what governments crush it out of existence . Its a very good observation. If we look at the roots of cryptocurrency and bitcoin, its very difficult to actually ban a decentralized technology. Libra is decentralized, at least for now. Similargy has disrupted or other ecosystems in the past. Thats one of the things that most people are nervous about right now. One of the things that i will comment on is the fact that regulations are going to play an enormous part of this ecosystem and its asset class going forward. If you look at the traditional historical roots of bitcoin, we went through a phase where it was dismissed for a long time. Are beingal assets acknowledged that they are here to stay. It will be difficult to navigate. The reality is, its not going away. Thats why we are seeing continual adoption and institutional involvement and less speculation in this asset class. Paul how much of a problem is volatility . Does that restrict the use of some Digital Assets . You hold them for a fraction of a second and then convert them into a more stable currency. Another really good observation. With libra specifically, it will be backed by reserve currencies. It wont have the typical volatile attribute of a cryptocurrency like bitcoin. Bitcoin in itself, we always talk about these retractions in the price. Bitcoin is only 10 years old. It only started it getting mainstream adoption five years ago. The asset class overall is less than 300 billion. Its expected to be volatile for the forthcoming future. I dont think that will change in the next 12 months. This asset seeing is class being at knowledge. Is being adopted. We are seeing mainstream involvement. Libra,itiatives like its bootstrapped and accelerated that journey further and faster than what anyone anticipated. Paul dave chapman, bc Group Executive director. Thank you for joining us. More to come on daybreak asia. This is bloomberg. Paul lets get a quick check of the latest business flash headlines. By max is getting bigger in china. Shares jumped the most in three weeks as the operator of bigscreen movie theaters announced plans to add 300 more locations across the country. Including 43 longtime partner cjb holdings. He currently has more than 600 theaters in china with ticket sales up 26 this year. Retailers in hong kong are seeing a dramatic fall in sales due to the recent street protests against government policy. Declineect demands to by doubledigit margins this month and next. They will revise its sale court Sales Forecast of the situation exist. Protestersong kongs extend their fight be on the streets and onto social media, some brands are gaining support for weighing in on the debate. Our asia consumer editor joins us now from shanghai. Which brands have been placed praised by protesters . Protesters have been active in china involved brands. We have seen a group of brands with stock will stop advertising on tbb, a channel seen as probeijing. At the top of those brands is the curry sweat, it is owned by a japanese company. It has emerged as the drink of the protesters because of its support by stopping advertising. Hut, a tissue brand have also stopped advertising. The tissue has said that the campaign ended normally and that it planned to advertise in the future. This response had it put on the blacklist. Brands thatare the fared a little better. Which have suffered missteps . Protesters are quite angry with a couple of brands that they see to be supporting what the police have been doing in the protests. One of the Big Companies is a Property Developer which owns a mall that riot police entered on sunday to disperse protesters. Protesters are calling for a boycott of all of the properties and malls owned by them in order to punish them for what is seen as this acceptance of what police said. Did. All right. Asia consumer editor rachel chang. Thank you for joining us. Lets get a preview of what to watch in markets later this morning. In a few minutes, we will get the reaction from singapore investors after that plunge in june exports. 136. Ing dollar eyeing that in taipei, we are watching a decision as the taiwanese maker is abandoning its auto business with a focus turning towards smartphones. Turning down orders from tesla. Earnings do after the bell. Pessimism coming through on secondquarter profit. Its time to move on with the stock looking to pricey. , saying diversifying its a historic opportunity for low valuations in the market not yet responding to the recovery in the first quarter. Thats a look at some of the things we are watching at the start of cash trade in singapore as well as the start of cash trade in greater china. This is bloomberg. Tom 9 00 a. M. Welcome to Bloomberg Markets china open. Yvonne we are counting down to the open of trade. David your top stories. Deeper,e war biting singapore seeing the second biggest drop since the Global Financial crisis. Falle stocks and the yuan as President Trump threatens additional tariffs on china. Tom big tech given a grilling on capitol hill. Itscon valley heading for biggest showdown with congress in 20