Clouds gather. And Boris Johnson heads to downing street. Must avoid a damaging no deal divorce at all costs. Check ofget a quick the markets. We saw the s p 500 topping 3000, gaining the most in more than a week. Earnings from the morning session. Ofults out of the likes cocacola, united technologies, not to mention Lockheed Martin beating expectations. We got news u. S. Negotiators were headed to china for the first facetoface negotiations since may. U. S. Futures under pressure, down 0. 1 . Taking a hit after hours after reports they would be facing more antitrust scrutiny. Lets see how we are shaping up in asia. Pointing to a mixed start as investors consider the warning on Global Growth with china receiving a global downgrade. Even as we have optimism around the u. S. China trade talks. The boj expected to downgrade some projections as well as lower Inflation Forecasts. Pmi datapanese flash and earning seasons taking off in earnest with names reporting in south korea. Of updates from aussie companies. 64. 4. Lias flash pmi, think you very much. Lets check in the first word news. On the first word news. The u. S. Justice department looking at whether companies are harming competition. They will express address concerns people have expressed about social media and online retailers. It is the latest sign of official scrutiny by washington. Facebook and google parent alphabet fell. Warningbusiness is incoming Prime MinisterBoris Johnson he must avoid leaving the European Union without a deal. He will enter 10 downing street reiterating his pledge to leave by the end of october, whether october, whether or not a deal is in place. Today at this pivotable in our history, we have to reconcile two sets of instincts. Between the desire for friendship and free trade and mutual support and security and defense between britain and our european partners, and the simultaneous desire, equal the billet equally deep and heartfelt, for democratic selfgovernment. The bank of japan likely to lower its inflation forecast for the year and may downgraded growth productions downgrade its growth projections. Price growth. H forecasts may be reined in due to global insecurity. I ran will som iran will ormuz. The straight of har the u. S. Has a battle group in the region and has claimed iran is behind attacks near the straight. 24 hours a day. Journalists and 24 countries and analysts in 24 countries. Senior trade officials are to fly to china on monday. Review the issue of the two sides dividing the two sides. Joining us is Tom Mackenzie and joe. Let me get started with you. It seems that officials within the Trump Administration seem to be downplaying a potential for huge breakthrough here. Senior Administration Officials including wilbur ross have said they dont expect any big changes to come from this. It is a breakthrough after the truce between declared by President Trump and president xi. Wilbur ross said it is impossible to judge how long it will take to settle some of the big issues that remain between the u. S. And china. Huawei, oneomes to of the outstanding issues, we heard from wilbur ross. Take a listen. Then some cases, applications have just been filed. A few have said they havent even gotten their applications in. Applicationssome from 35 companies that have been received. In the next couple of weeks, we expect to have verdicts. How prominently are we expecting huawei to feature in these talks . A major part been of the conversations. A key demand from the chinese side. Sanctions,of restrictions, whatever you want to call them on huawei. Blocking the sale of components to this equipment maker. The chinese side has been pushing for an easing on those restrictions. They have interpreted this meeting between President Trump and the ceos as a positive signal. In the back of that meeting, you had white house officials saying they would progress with timely licensing approval to allow these Companies Potentially to start selling some of their equipment to huawei. That was seen as a positive by the chinese side and has fed into this decision to meet and shanghai. In shanghai. The mood music has been made positive, talking to some of the biggest firms, saying we can look again at buying u. S. Soybeans. Joe, we have heard strong words from the fbi director. Steal china is trying to its way to economic dominance. Saysstifying today, he there are more than 1000 intellectual property theft cases the fbi investigates. Most have led back to china. Various ways of getting the information, both through espionage, as well as feeding back to china information from chinese students, chinese scholars working in the u. S. Working with u. S. Companies. He said it was widespread. The biggesta is counterintelligence threat to the u. S. He was pretty adamant that is a major issue for the agency as they investigate these claims. The Central Bank Governor has been talking about the economy. What has he been saying. There isgovernor a major focus on what the fed does next. The assumption there is going to be a cut by july. What that means for china has been a focus. We spoke to analysts who say they expect china to follow suit. But he is pushing back against this idea and the interview saying we are not necessarily going to follow the fed. We may not follow them this time. He was reasonably comfortable with this targeted approach that the pboc has been taking. He says one of the bigger of thes may be reform Interest Rate mechanism. The attempts that will have. Supporting the real economy. That is what the pboc is focused on. Beijing. Ckenzie in thank you for joining us. Global Growth Outlook again. That suggests missteps on trade and brexit could derail any rebound. A dose of reality. U. S. Stocks rose, pushing the s p 500 back 3000. We will ask if the market can hold on to the gains. This is bloomberg. I am shery and in new york ahn in new york. I am paul allen. Workenty for investors to with. Some decent earnings from wall street among the highlights. Texas instruments boosting optimism after stronger than forecast sales and profit forecasts. We will get results from a japanese equipment maker which rallied after Morgan Stanley used it its outlook. In tokyo, we are going to be watching autos. Nissan is in view on a kyoto carmaker lands to deepen job cuts 10,000 globally. Suzuki is in focus with news toorts it will drop a plan develop manufacturing capacity in india due to a lack of talent in this state where its facilities are located. Joining us now is the Quintessential Capital Management cio. Great to have you with us. Lets talk about this rally we are seeing. Very much dependent on the latest headlines. Topping 3000. Are we getting too expensive are supported by fed cuts . You can make a case they are not as expensive as they would valuationnormal basis. I dont see any signs of the economy slowing down. Unusual, given the circumstances, there is an expectation of Interest Rates going down rather than up. It can continue, but if it does not, that is good news. Good news is also a double edged sword. What happens when the if the fed does not go ahead with a cut . We you will see a lot of red but it will be shortterm. Do consider that a buying opportunity . Absolutely. Saw this in december and before, you have historical volatility, drawdown. Very often, they are not substantiated by any problems in the economy itself. Everything drops and it makes for a great buying opportunity. We will be there. The imf does not share your optimism. It has reduced its forecast for Global Growth. Bloomberg economics thinks the imf is being optimistic. Hasglobe growth tracker 4 worse than the imf. If this is to be believed, wheres your optimism coming from . To comet Central Banks to the rescue . I think the imf is correct. Has betteronomy fundamentals, indicators. Lately to be able to sustain the u. S. Economy. Low unemployment. Despite the fact the rest of the worlds may be growing a little slower, might be slowing down more. You can share the pessimism about the World Economy. Is robust and healthy, wise the fed looking at easing . Why is the fed looking at easing . They are trying to be proactive rather than reactive. There are no signs of inflation. Little. Wer the rate a you can make a strong case either way. Everyone expects a reduction in Interest Rates. If it does not happen, the market will react in a diverse way. Even if it happens, it will be a shortterm full a tilting problem and a good buying opportunity. And insurance cut. There has been a lot of talk about the fed going ahead with this. In the bloomberg, u. S. Stocks are doing better than their global peers when it comes to pe basis. Outpacing europe or asia. Where do you see opportunities when it comes to the global context . There are cheaper opportunities, going for a fundamental value strategy rather than a growth or tech strategy. Asia is a completely different animal. We think even in the u. S. , every once in a while, this crazy volatility, everything gets cheap. You can cherry pick the stock that fits your investment profile. Be interested in getting your thoughts on gold. Do think that is overdone . That is a difficult answer. For most portfolios, it can be a nice insurance. Trying to predict gold fluctuation is a skill very few can predict. I think it is kind of luck. Wary. D say to be very Quintessential Capital Management gabrielle grego. A roundup of what you need to know. It is available on mobile and the bloomberg anywhere app. You can customize your settings so you only get the industries and assets you care about read this is bloomberg. Care about. This is bloomberg. This is daybreak asia. I am shery ahn in new york. Orst fears mays w be coming true. The International Monetary fund is cutting its growth forecast again. Kathleen hays is here with the details. What exactly are they saying . They are worried about the Global Economy because of the things everyone has been fixated on for so long. You have a brexit, a potential no deal brexit. With Boris Johnson taking over as Prime Minister. They have upgraded their forecast for Global Growth. They trimmed it in a significant way. Things could hit confidence, we can investment. Slow growth even more than they already have. The sluggishness and global in Global Growth is selfinflicted. It is the outcome of prolonged uncertainty in the trade front. The prolonged uncertainty with. Rexit the forecast was cut significantly from 3. 5 in 2019 to 3. 2. An interesting point has been raised. Which has a tracker. Lets look at what we are seeing. The white line is what we are seeing in Global Growth so far. Tracker, imf forecast, which to 3. 2. Cut down the turquoise line is the tracker. Growthointing to 2. 1 this year. If it continues to be accurate, if it is accurate, the forecast. S already way too high another reason why everyone is so worried. If you talk about central bankers, i think this is so interesting because it plays into what everyone has been saying. The boj governor kuroda, he is talking about heightened uncertainties and how they are going to have to watch the impact of this global tension in the domestic economy. The federal reserve, also meeting. Isnt there a new mantra . Is lookingc economy fine. It is the Global Economy we are worried about. This is why so many are turning more rate hikes. Wildcard andnew play, Boris Johnson becoming Prime Minister. How did this increase the risk of a downturn . I think it is pretty interesting Boris Johnson is do or die on brexit by the october 31 deadline. Know hises over, we party elected him so there is a certain amount of support not only for his leadership but the sense of, we will get what we want from the eu or we are going to leave without a deal. British business, the confederation of this industry, exit theyeal have estimated it could cause business to contract by 5 in the first year after it occurs. What would it mean for the European Union. Played down just how big that cut would be. In anything that in the u. K. But European Union, it is hard to know just how bad of an impact it will be. Financial markets. That is one of the reasons why Central Banks are bracing for what would probably be the worst possible outcome in their view, shery. Does that mean even lower yields . We are getting negative yields around the world. A great story in the bloomberg talking about the end of quantitative tiding. Tightening. Another story, the first ever european Corporate Bond issued with a negative issue yield. They can invest in whatever they need to. The more we see this, the more the Central Banks are convinced they have to move. One thing that could change quickly, a trade deal. Right, kathleen hays. Thank you for joining us. Lets get a quick check of the business flash headlines. Shares enjoying a boost after 5 nese they are buying a stake in the mercedesbenz group. Investment adds to the 10 stake. Staff foris rewarding accelerating income rose by 30 in the first half after securenaged to critical supplies. FromRevenue Growth is down 39 in the first quarter. Sources say while way is relieved huawei is relieved the situation is not worse. A new report says nissan is planning to cut thousands of jobs. This is bloomberg. This is daybreak asia. Flying tocials are china monday for the first highlevel talks since may. Throughl be in shanghai wednesday. The talks are expected to be a broad review of the issues dividing the u. S. And china. The two sides have spoken by phone recently. The bank of japan likely to lower Inflation Forecasts for the year. Cut the will probably outlook to 1. 1 through march reflecting sluggish price growth. Growth forecasts may be reined in due to global uncertainty. Forecastss lowered for Global Growth, suggesting they expect the this year expand 2. 2 and slightly more next year. Down from the forecast in april. The u. S. Is sanctioning a state violating for restrictions in crude from iran. They are expected to having links to the Chinese Military and has a history of accepting iranian oil and selling it to mainland refiners. The sanctions, as the u. S. And china edge back to trade talks. Next years Tokyo Olympics are ad sales. Cords for to s already in course surpassed the 1. 2 billion sold in 2016. Morning events will air live in prime time in the u. S. Global news, 24 hours a day, powered by more than 2700 journalists and analysts. This is bloomberg. The korea markets come online in half an hour. Lets check on what to watch there. Have earnings calendar, we lg 10 which will offer an update on how things are going. Month, we had reports lg is considering a second battery factory in the u. S. As well as partnering with a Chinese Company to build a plant in indonesia. We will get more insights into the korean Auto Industry when hyundai logistics reports today. Sales are likely to remain sluggish, paul. Thank you very much. Big attack is in the washington spotlight again. Launchinge department a review of the biggest names. Twitter, facebook, and google all fell after hours. Tom, how is this a change from how washington has been approaching the tech competition issue . This looks different from our understanding previously. Dojad been the ftc and the had this agreement to divide the tech industry, the Biggest Companies in tech with the doj taking aim at apple and google. The ftc focusing on amazon and facebook. Wide the doj taking a to take a broad look at the tech industry. This is not the doj taking some sort of action immediately. They are saying, we are opening the field. We are not going to be held back by some artificial delineation between what we can look at and what the ftc can look at. Is widening the field and saying we want to look at competition in these onlinelar areas like retail. These platforms. Search. Which really kind of opens, gives the doj a lot of leeway to look broadly at these companies. What does the scrutiny signal . Still scratching their head. We have talked to people within the industry. Industry experts. They are trying to get there heads around it. What it signals is, washington, d. C. , which for a long time kind of turned a blind eye to the growth of many of these , but the drumbeat has gotten so loud and regular, d. C. Power longer ignore the and the way these Different Companies are using their power onpotentially trample competition, make it harder for new entrants to come into the market. This shows within multiple agencies across both parties are going to ramp up their scrutiny of this company. They are taking it very seriously. That point, we do have multiple agencies. The doj, ftc, all potentially looking at the same companys at the same time. What sort of applications are therefore this . The doj which has the power proceedings,inal say there will be penalties to pay. Punishment in some form or another. Ates, a change of behavior, the same time, the ftc also has this power to levy fines against companies. Force them to change their behavior. Companies could be agenciesby multiple does create an overhang. If you are an investor in these companies, are you going to be concerned, management will be tied up as it focuses on multiple investigations . Hauled for Congress Instead of focusing on the business, focusing on growth . Expectds of things we companies to be focused on. It does open the potential for great investor overhang as well as management, distraction. Tom giles. Thank you so much. Coming up next, gold has retreated slightly. Our next guest says there is still support. We will hear from an analyst next. This is bloomberg. This is daybreak asia. Risk assets could be getting a boost from news u. S. Officials shanghai next week. We are seeing an update after a steep decline. They will have updates to consider as well. Iron ore futures as cracks slipping. Fall coinciding with news from banks and users prices are set to ease. China says they expect prices to drop below 100 in the fourth quarter. We are seeing gold growth continue to take a breather. Some analysts still see further support for boolean, boullion. Thank you very much for that. Formore on the outlook the, lets bring in commodities analyst. Lets start off with oil. We have seen a bit of a rally. From this encouraging news we have had from u. S. China trade talks resuming next week. Pricer do you think the can run on just the fear and optimism in china . It is a great question. Both factors have been critical. Demand was a big part of being down the man in the june quarter. Since talks have restarted, it is a positive development. Shoots righteen now. While that is positive, we dont know that that will pull oil prices much further. Source of positive tension is linked to the straight of her mood strait of hormuz. As tensions ratcheting up between the u. K. , u. S. Against situation could get tense very quickly. Leaving that aside, the next big risk is what is happening in libya. Supply there is also under risk as we see a civil war continue. Supply disruptions is where all the positivity for oil lies. We see 6570 dollars per barrel in the second half of the year but there are supply risks. Strait ofs of the hormuz, that piece of water is no stranger to tension and disruption. If you look at the gulf wars, the tinker wars, tanker wars, what sort of potential d. C. This happening . Do you see this happening . Both parties are still looking for diplomatic channels. A militaryt moves to solution for the u. S. And u. K. , that is where our concern is. Right now, where we currently sit, the fact that both parties want to get to the table and negotiate, the base case is not for a spike. Abouts talk a little bit seasonality. The weather factor. We have hurricane very passing through the gulf of mexico ba rry. As we head into the rest of the year, is this going to make a difference in oil . Of the disruption risk, i think for now, that has not been a major factor. Coming out of the u. S. Where the peak summer demand season. Here is where you expect gasoline stockpiles to start falling. You expect that to lead to Strong Demand for oil. What we saw was a pickup in gasoline stocks. Demandd start signaling concerns for the u. S. That is front of mind. Much the supply disruption and the u. S. From hurricane. Hurricanes. Lets turn to gold. More and more investors are bullish. With fed rates coming cuts coming, is that good . In our view, yes it is. We see them moving to 1500 an ounce. Really, that is underpinned by what we are seeing in terms of rate cut expectations. Longterm u. S. Real yields calling. That historically has been the primary driver of gold prices. We think that relationship is something that will continue to be a big support. Aken fromdollar will we september. Following u. S. Real yields. It is a key support as well. Finally, you have safe haven demand which in the middle east is adding a premium. Trifecta of reasons pushing gold higher and there is no reason to think that will unwind anytime soon. A story crossing the bloomberg terminal. More m a. It production numbers out from evolution. When you look at gold priced in australian dollars, the numbers are astounding. Is this a good time to be and aussieold minor an gold miner . Aussie gold absolutely. Foras been a big boom aussie gold players. We see aussie gold peeking around the december quarter. While we have the u. S. Dollar eaking, weing, p in the december quarter. We know demand from india tends to slow in the summer months. The physical market as it has proven in the past, has been important. It is very much a background a driver. It is something we see. When it comes to physical supply and demand, it has not been as critical. In terms of overall trends, you are much better paying attention to what is happening to longterm u. S. Real yields than market. Ical side of the thank you so much for joining us. Commonwealth bank commodities analyst joining us from melbourne. Guest, and for those who missed any part of our conversations earlier, tv is our function can watch us live and catch up on past interviews. Also become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. This is bloomberg. Asia. S is daybreak york. M shery ahn in new lets get a check of the business flash headlines. Jetblue says it is dismayed and disappointed to receive fewer than half the airbus planes it was expecting this year. A 321ries of 80 31 neo neo have been hit by production delays. The delays are forcing that blue to adjust flight schedules and trim growth plans. It is a key market for visa produceborder payments higher fees. Shares have gained 30 37 this year, outpacing the i. T. Index. Thankspchat parent to an improved version of its android app. Of 300 millionl daily users in june. Were 388 million dollars, ahead of expectations. The Company Offered an upbeat forecast for the Third Quarter. Tosoftbank said to be closed announcing a tech investment vehicle. It could be launched this week with the Saudi Public Investment Fund among the backers. Softbank is working with Goldman Sachs and Cantor Fitzgerald to raise money and support. Planningay nissan is to cut thousands of jobs around the world. Kyoto news says that would more than double the amount of dismissals in may. The cuts would push the losses past 50,000. Stephen engle has been watching this. Unique and wellpublicized problems. There seems to be an industrywide malaise, doesnt there . Decades of blistering growth in china, the Chinese Market showing consistent weakness. Itsu. S. Market hitting peak. Europe in a downward spiral. Also, the confluence of technology in the Auto Industry. Who are going to be the survivors as the industries merge . Lots of pressures on carmakers to consolidate or perhaps even die. There are job cuts. Ford had 12,000 on june 27. Ford back in may had another 7000. 10,000 job cuts. More than doubling the cuts by nissan on may 15. It is pretty much a perfect storm for nissan. Have the ramifications of the carlos ghosn saga and the simmering if not bubbling a rift with rental. Renault. There are all kinds of problems. The ceo said nissan had overstretched after operating profits fell to the lowest level in a decade. He said nissan had hit rock bottom quote unquote. Obviously not. No wonder we are seeing global giants turning to china for more capital. The german giant daimler becoming even more chinese. A now we are seeing we had company take a nearly 10 stake in daimler, the largest shareholder. Now daimler i should say beijing auto taking a 5 stake in daimler. That takes Chinese Company stake to nearly 15 in daimler. Bought volvo, now taking the stake and daimler. Daimler. N in this is an interesting time for chinese automakers. I said, you have a lot of pressures against you. Less protection from the chinese government. You have that confluence of technology. He said, we need to invest more and getologies stronger. Look what they have just done. Taken a big stake in daimler. Thank you very much. Stephen engle. Korea,kets and south japan, and us toya it underway at the top of the hour. Asian stocks look set for a mixed start. As the dollar holds onto overnight gains. Earnings very much in focus today. Takes reporting season off. Second quarter operating profit beat the highest estimate. Also, closing at a six month high tuesday. The nikkei news reporting plans to cut 3000 jobs worldwide. Pull out of manufacturing and r d in europe. View after a 780 million acquisition of atlantic gold. Evolution mining is in view after posting and 8 drop in gold sales volume for the fourth quarter. Expect annual production to come in weaker. That is the snapshot. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Paul good morning. Im paul allen in sydney. Asiar rkets are about to open. Shy im shery ahn in new york. Asia. Come to daybreak paul our top stories, trade. Alks have set resume next week facetoface meetings in shanghai would be the first during negotiations since may. Crowds gather over the Global Economy. The ims cuts, warning of policy missteps on trade and and brexit. Is likely toj lower its completion forecast and may downgrade growth projections. Lets get to the market action. Japan, south korea and australia coming online. Sophie futures coming through, tokyo stocks set to build on tuesdays near 1 gain for the nikkei 225 as the yen holds a threeday decline with investors assessing earnings and the imf cutting its Global Growth forecast. The boj could downgrade its growth projections. Heads up today, we will get flash pmi data from japan. Lets check in on the feeling in 0. 2 . Down samsung under pressure, keeping an eye on this after a cell a solid outlook from texas instruments. This remains murky. Strategists forecast a 26 decline in earnings. Opening in on sydney, 0. 1 higher while the aussie slipped below 70 in the face of a firmer greenback. The kiwi dollar under pressure, slipping against the aussie dollar. , want to highlight the aussie one basis point this morning. Paul lets get the first word news. Big tex faces more investigation with the u. S. Justice department looking at whether companies are harming competition. The antitrust division will address concerns that consumers and businesses have expressed about search, social media and online retail. It is the latest sign of official scrutiny by Washington Area facebook, amazon and alphabet fell in extended trading. The imf has lowered its forecast for global close, suggesting policy missteps on trade talks and brexit could derail a rebound. They expect the World Economy to expand 3. 2 this year and more 0. 1 down fromt april. That lowers expectations from what was already the lowest since the financial crisis. Dish businesses, warning Boris Johnson he must avoid crashing out of the eu without a deal. He enters 10 downing street pledging to leave the eu by october whether or not an agreement is in place. The confederation of british industry says that would be hugely worrying and threatens investment and jobs. Today, at this Pivotal Moment in our history, we have to reconcile two sets of instincts. Foreen the deep desire friendship and free trade and mutual support and securities between britain and our european partners, and the simultaneous desire, equally deep and heartfelt, for democratic selfgovernment. Reports say iran will secure the strait of hormuz. The report cites comments made by irans deputy Prime Minister, on an official visit to paris. The u. S. Has a backup group in the region and claims iran is behind attacks on vessels near the strait. The waterway accounts for nearly half of global shipping. Global oil shipping. Powered by more than 2700 journalists and analysts, this is bloomberg. Shery thank you. Senior u. S. Trade officials may be set to fly to china monday for the first highlevel trade talks since may. The team will be in shanghai through wednesday for talks that are expected to review issues dividing the two sides area joining us is our china correspondent. The people speaking to bloomberg seem to be playing down the expectations of a potential breakthrough. What can we expect . There has been positive sentiment on both sides leading up to this. We have reports the chinese are considering buying more u. S. Agricultural purchases and are asking for exemptions from the tariffs, but we are hearing u. S. Officials downplay the prospects of a quick deal including wilbur ross saying it is unclear how long it will take to reach a deal. Sources told bloomberg the meeting is expected to feature wideranging discussions on where things stand rather than engagement on substandard issues. We are hearing talks have focused on huawei and agriculture while lacking discussion on bigger issues. Standsagreements still now, including washington wanting structural changes to beijings economy as well as issues around the removal of existing tariffs. We are hearing this is the first time chinas commerce minister will join the talks. We have been told he is more of a hawkish member and his presence will make sure the more hawkish side of the chinese negotiations are heard. Paul one of the major issues how our huawei. Discussions over the Chinese Telecommunications giant going to play into discussions . Reportsthere have been if restrictions are eased up on this means china will purchase more agricultural goods. Trump and officials met with top ceos of Big Tech Companies thisding cisco and intel. Was seen as a step in easing restrictions on huawei. These Companies Argue banning them is hurtful to national security, that some of the components they supply to huawei can be found from suppliers elsewhere and by coming cutting them off from the revenue, that hurts their ability to invest in Clinical Research and development to maintain the u. S. s lead in the semiconductor industry. Even if the license is are doled out quickly to u. S. Companies, this isnt a quick resolution. Facing backlash from congress on the easing of restrictions and china isnt satisfied with resumption of licenses. They want huawei removed from the blacklist completely. Wang, thanks for joining us. Lets check in on what is moving markets. Sophie . Sophie i want to highlight stock movers in tokyo. Julymura sliding after sales plunged, falling 18 year a year as japan experienced cold month with a Record Number of cloudy days. Moving to sydney, lucas sliding after Second Quarter output. They posted lower output and sales which dented earnings for the first half. We saw increasing costs offset butising Commodity Prices the shares fell as much as 8. 5 in sydney this morning. Paul still to come, the chairman of cambodias Largest Hotel joins us. That is a bloomberg shery exclusive. Shery asian Central Banks have room to cut. Our correspondent will tell us she is putting money. This is bloomberg. Asia. This is daybreak paul sources say the bank of japan could downgrade its inflation and growth forecast for this year as it is meeting next week. Lets bring in our managing editor malcolm scott. Prices still love picking up in japan. Picking up int japan. Many forces at work, some longterm and structural. Note apprise, we have the aging mindset no surprise, we have the aging population and the deflationary mindset. A couple specific forces at play. 0. 6 year on year in excluding fresh food prices in june. That is way below the where they wanted to be. Specific things are holding it back. Cheaper mobile phones, a government push deliver the price of preschool education, make it free in many cases, lower energy prices. That is putting the brakes on prices, getting us further from a 2 target. The bojs earlier forecast was 1. 1 for the fiscal year ending in march 2020. It is looking like they might take another look at that forecast next week. Paul what about shery what about policymaking . Theirhey need to tweak approach . There is speculation that they will need to. Not necessarily next week but at some stage down the road. The governor has a we said he will stick to this powerful stimulus that is in place. He hasnt said they will do more, but he said in interviews with bloomberg and elsewhere that he does stand prepared to do more should that path towards 2 , in his mind, look like it is no longer tenable. Even if we are a long way away, in his view we maybe we may the on that path. He may think he needs to do more but as soon as he is the path towards 2 as unrealistic, that is when he may feel the need to do more. Paul how our global conditions, locating things . Complicating things . Tilt of Central Banks compounds the pressure. He doesnt have much room to move unlike the fed. There is not much he can do. If the other big Central Banks ease, does that put more pressure on the yen to strengthen . A strengthening yen takes more away from the reinflationary mindset. It could depress demand. Certainly some headaches ahead. Tax,ignoring the looming sales tax increase. Shery these headaches obviously are not only related to the boj and japan. We have seen the imf cutting Global Growth forecasts. Willus how affected economies around the world be as we see these missteps on trade and brexit . These are global headwinds, global risks. They are risks, we are seeing real deterioration in trade but the other stuff is depressing the world at the moment, the World Economy, they are still risks. There is a chance the Global Economy could come through this. We have likely insurance Interest Rate cuts coming from the fed possibly as soon as next week. There is some view that maybe the Global Economy could perk up towards the end of the year, but there are many unknowns. There is trade, brexit. It is a rough policy environment. Shery thank you, malcolm. More isus now for jenny. Great to have you with us. We were talking with malcolm about the potential downgrading of Inflation Forecasts from the boj. These inflation concerns are not only related to japan. Central banks around the world have failed to create Inflation Expectations the last couple years. Is the only course now just cutting rates, keep cutting and even potentially expanding the Balance Sheet . You are right. We do think the Inflation Expectations right now remain quite low at the moment. Of they the order Central Banks, trying to generate inflation. We havent seen any pick up yet. Given that the market expectation of inflation is flipside, thethe market has not priced in any potential pickup of inflation. As a result of all the monetary easing in the markets. I would say this is probably a bigger risk than the market thinking there is no inflation. Wonder we are seeing markets expecting a potential fed rate cut at the end of the month. Take a look at this chart on the bloomberg. Markets pricing in three quarterpoint cuts by the end of 2019. Does this give Central Banks across asia more room to cut . Jenny you are right. We think asian Central Banks, particularly Southeast Asian countries, have more room to cut, given that the Interest Rate remains high in those countries. For example, indonesia and india and in china, we think the chinese policymakers have more room to act if needed. Jenny, what does this mean for the bond market . On this chart, negative yielding a quarterg up about of the total of investment grades. We have these Global Growth can banks lookingns, at easing. Do you expect negative yielding to become more normal . Jenny i would say yes. I would say working in an area that more and more government bonds are getting closer and closer to zero. In asia, i would think there is a long way to go for that. That is definitely the direction, but i think the next question to ask is whether those monetary policies will be effective or not. That,re is no pickup in no pickup in Inflation Expectations, what other measures the Central Banks or governments have. Paul on the subject of Central Banks, in the past few moments, westpac,ws from typically one of the most aggressive when it comes to forecasting rate cuts from the reserve bank of australia. Westpac seeing a cut of the cash rate in australia down to three quarters of 1 in october. In the new year, taking us down to 0. 5 . Can you see unconventional measures introduced in australia in 2020 . Jenny to be honest, australia is not the area of my focus at the moment, but i can tell you in other regions, other countries in asia like china and indonesia and india, not only will we see Monetary Policy continue to be very dovish, we will see the physical policies will step up as well. Shery lets talk about china. As we continue to see low rates, the search for yields continues not only in china but around the world. This chart on the bloomberg shows the nonperforming loans in china are at the highest level since 2004. Should we be concerned about the risks in the financial markets, potentially more defaults across asia . Think china is entering a different credit cycle at the moment, despite the monetary easing that the pboc has done. The biggest problem is, the liquidity may not necessarily go to where the government wants to go. For example, if we look at the cuts, there are many in the private sector. Private sector, is contribute in the majority of the growth in the economy but at the same time the private sector cant have a similar level of excess liquidity. When they hit a maturity wall, particularly this year and next year, we will see more pickup in defaults. That is one of the areas i think the market may have overlooked. Paul jenny, thanks for joining us. You can get a roundup of the stories that you need to know in daybreak. Ion of this is available on mobile in the bloomberg anywhere. You can customize your settings so you get news on the industries and assets you care about. This is bloomberg. Shery this is daybreak asia. Johnson will officially become the next u. K. Prime minister later wednesday. He has this game plan in mind. Of theknow the Mantra Campaign that has gone by. In case you forgot, you probably brexit, was deliver unite the country and defeat jeremy corbyn. And that is what we are going to do. Paul our Senior International editor joins us from hong kong. How easy will it be for Boris Johnson to deliver brexit, and partyother two tory objectives . Although he says he is delivering brexit on october 31, and that was his game plan all along, that is what he ran on, there are all the issues that made it hard for theresa may to deliver brexit. None of that has changed. The eu is saying they have to go i october 31 and they are not going to extend the deadline. He says he will go then, but not saying how he will do that come a what is going to change, how he will get this through parliament. It wont be easy. Right now, there are lots of good feelings within the party about him, but how they make this happen is going to be his tough task over the next few months. Looks particularly easy for the road ahead for johnson, even just making his new appointments. What are the difficulties there . , he told plenty of people who backed him that he would give them roles. He wants to give ministerial roles to more women and minorities and he only has so many roles to give. Foreign jobs, some jobs to give out but it wont be enough to make all the people who supported him happy. He is going to start with disappointing, with some disappointing news to some people that he needs in his camp. Shery in the meantime, President Trump seems to be happy with the election outcome. Take a listen. Whoe have a really good man is going to be the Prime Minister of the u. K. Now, Boris Johnson. Good man. He is tough and he is smart. This mean forll the u. S. U. K. Relationship . Jodi President Trump at this point is very welcoming of Boris Johnson, called him the british trump and said that he is the right man for the time, which is, it seems to be good news for that relationship. There is also complicating news for Boris Johnson. He is going to try to make himself appear to be somewhat centrist as he takes over this new role, and to try to get brexit through, he is going to need to reach out to the other parties, the Opposition Party and 20 of people outside his closed his close circle. Giving getting that kind of raise from President Trump complicates that. If you want to be seen as a centrist, having President Trump declare you as the british trump isnt necessarily good news. At this point, at least he doesnt have to worry about Harsh Criticism from the u. S. President. Shery thank you so much for that. Senior International Editor jodi business flash headlines, chinese authorities are barring some private funds from subscribing to ipos on the new star boards, including shanghai securities. This is as the amount of ipo shares, the funds have scribed to, have 60 exceeded their assets. The report says the ban applies to 139 products managed by 29 private security funds. They will be barred am participating in ipos for 612 months. Paul indias bestperforming bank in the past decade is counting on its acquisition of the countrys largest Microfinance Firm to help it gain further. Indusind bank says its purchase help it boost profitability and give it a presence in more than 100,000 villages. Indusind shares have risen almost 1500 in the past 10 years. Shery apple is asking President Trump to waive tariffs on the mac pro desktop. Production relocate from texas to china. This doesnt specifically theion the mac pro, but parameters resemble it. The president promises relief if companies can show parts of products can only be obtained in china or the duties would cause economic harm. Alibaba willt, sell american goods. The ecommerce giant opened up its Online Platform to u. S. Sellers for the first time. This is bloomberg. Shery lets get you started with breaking news out of japan. We are seeing the pmi manufacturing numbers coming up from japan. It is coming in at 49. 6, which is a slight acceleration from the previous month of 49. 3. These are july preliminary numbers, still in contraction territory, below the 50 level. We have seen japanese exports under pressure, continuing to fall for the seventh consecutive months. The manufacturers talked about a slowdown in sales to clients in china. When it comes to the pmi in expansion territory, 51. 2 for a preliminary numbers in july. A slight acceleration when it comes to the Services Part of numbers, 52. 3. Both of the composite and Services Numbers have been involved in the 50 expansion territory for the last two years. It has always been about the many fracturing side of things and it is now again under contraction the manufacturing side of things and it is already under contraction again. Is decelerating. Chinas official manufacturing pmi in contraction territory. Lets see the market reaction. Sophie little in the way of market reaction. The yen, looking like a little change, 1. 08 after a decline. This is after the outlook of u. S. Trade talks with china, the eu and japan. Stocks in tokyo climbing for a second session, led higher by auto stocks and electronics. The imf coming projections for the economy this year and next, and there is expected volatility for the expected sales tax hikes. Samsung, weighing on the cost be. On the kospi. The aussie dollar slipping as westpac brought in its forecast. The cash rate is 50 basis points by then. Year yieldthree slipping below 90 basis points this morning. A quick check on stock movers, i want to highlight this one, climbing on a report that it may domestiche duration of factory closures to one week after indicating a slump in demand could cause it to Halt Operations for a month. Lg display is falling after the Second Quarter. The losses are seen extending to a Third Quarter with its by supplyhallenged and chinese rivals. Samsung losing ground after posting a why did wider than expected net loss. They cited a slowdown at a plant due to scheduled maintenance impacting earnings. Paul lets check in on the first word news. Senior u. S. Trade officials are to fly to china monday for the first highlevel facetoface talks ins may. Since may. The team will be in shanghai through wednesday for talks that are expected to be a broad review of issues dividing the u. S. And china. The sides have spoken by phone after President Trump and xi jinping met at the g20. The u. S. Is sanctioning a chinese oil trader for violating sanctions in the latest attempt to isolate iran and cut off a big buyer. They are expected suspected of having links to the Chinese Military. The sanctions come as the u. S. And china edge back to trade talks. The bank of japan is likely to lower its inflation forecast for the year and may downgrade some of its projections when policymakers meet next week. The bank will probably cut its inflation outlook to 1. 1 for the year through march to reflect sluggish price growth and the impact of lower mobile phone charges. Growth forecasts may be due to global uncertainties. Next years Tokyo Olympics are setting records in the field of add sales. Ad sales. Nbc is already on course to pass a recordbreaking 1. 2 billion of commercial spots sold for the 2016 games. Favorabletime zone is for advertisers. Global news, 24 hours per day, on twitter, powered by more than 2700 journalists and analysts in more than 100 when he countries. This is bloomberg. Alibaba says u. S. Merchants are able to sell on eplatform. E alibaba cells to 10 Million Companies around the world, one third of them in america, but until now u. S. Companies could ynly by from the site bu from the site. Today is a great day for u. S. Small businesses. Manufacturers and wholesalers can join alibaba. Com to sell to the world. The platform is open to enable those businesses to reach the 190 countries where we have 10 million businesses on the platform. How big do you estimated to be . 23. 9 trillion. Six times larger than the b to c market. I didnt realize that. B to b is larger than b to c. Alibaba is the largest b to b market. We built tools for is new System Market to customers and reach deep into the globe so they can sell their goods. Besides being on bloomberg, how do i know that if i am a u. S. Company, that i can sell on alibaba . One third of the demand, the buyers on alibaba are here in the u. S. So those folks we have done business with since jack founded the company, you have been sourcing on the platform. You can sell to the world of the platform. Any plans to go b to c . We are focused on b to b. Alibaba. Com is purpose built to help Small Businesses sell to the world so we are focused on helping digitize Small Businesses around the globe. One statistic, 70 of u. S. Small mineesses dont sell on today. This market is not yet digitized. We created simple to use tools that help Small Businesses get online. It is hard to say competition and alibaba in the same sentence but how do you wind up competing . Who are your competitors . It is interesting. The value chain for small is sosses, for b to b complex that no one has digitized it end to end other than alibaba. So smalld a platform businesses can handle below just export orders. We are in a class by ourselves. How does this read against the u. S. China trade tensions . Our business has seen triple digit growth. This plan has been in the works for years. I joined alibaba in 2017 and transformation of the business from yellow page business to endtoend procurement platform is adding the globalized supply to the platform. Paul that will north that was alibabas american head. Satellitetv provider dish buy, tohas agreed to pay 5 billion for wireless assets in a deal with tmobile and sprint. This is important because there was scrutiny over the 26. 5 billion merger. This could open the way for the Justice Department to sign off on this tmobile and sprint this thursday,as according to sources. What this agreement is about, dish will pay about 1. 5 billion for prepaid mobile businesses and 3. 5 billion for spectrum. Dish has agreed to pay 5 billion for the wireless assets in a deal with tmobile and sprint that could open up the to doj approval. Back to the story on alibaba, they are opening their Online Platform to u. S. Merchants. Lets go to our asia tech reporter. How big of a deal is this for alibaba . This puts alibaba directly against amazon in the u. S. Merchantsuring u. S. And trying to encourage them to sell to domestic iron is. It has been two years since jack ma promised donald trump he would create one million jobs in the u. S. So far, progress on that front has been slow but this is probably part of that initiative to help create more jobs via alibabas platform in the u. S. It also helps alibaba seek a new avenue of Revenue Growth as growth slows in china. Elsewhere, howof are alibabas forays outside its home market . Says he wants alibaba to generate more than 50 of its revenue outside china by 2025. We see a majority of revenue generated in the domestic market but that doesnt mean alibaba doesnt have ambitions elsewhere. Aliexpress is doing well in russia and brazil and for tmobile globe are global, they are catering to chinese retail customers. Alibaba. Com, which is the oldest hasform for this company, always been more wholesale focused, focusing on the merchants and the transactions between them in the way it makes money, generating revenue for marketing and membership fees. Not really taking a commission from the companies yet. I think alibaba probably wants to pace out how much they monetize these new sellers that they attract from the u. S. Paul a wellestablished rival. Ken alibaba compete with can alibaba compete with amazon . Concern, whether it is convincing u. S. Sellers to sell on its platform. That will be key to whether alibaba can extend in the u. S. U. S. Sellers are already used to using amazon is a platform, which is why alibaba is using an army of sales agents to try to convince small merchants to join its platform. Some brandsvincing and merchants to join the platform and maybe that will set an example for smaller businesses to come. Paul lulu chen and hung up in hong kong, thanks very much. We will have an excuse it an exclusive with a profitable gaming company. This is bloomberg. Shery this is daybreak asia. Paul now to earnings from the Largest Hotel, gaming and leisure operator in asia. 22 . Orp said revenue rose sophie is in hong kong with the nagacorp chairman. Sophie i am in the studio with timothy, chairman of nagacorp. Congratulations on the latest results. We saw a pickup in growth for massmarket and other segments, pgradeen with the naga2 is competitive. I think there are a few factors in terms of what we have seen, the sustained growth over the past decade, really. That is country growth, certainly tourism growth, it is Market Growth in the bip and the regional southeast sector, then i think there is Revenue Growth. In terms of the country growth, ashave seen, it is projected 6. 8 gdp growth over the previous decade, better than 7 . Conservation contribution from the tourism sector, increased participation in Foreign Investment from china, and we have seen a lot of business visitors and investment in the phnom penh community. Sophie that was heart of the growth in the visitation. What is the estimation from the contribution for the next five years . It isng back to tourism, significant. In 2018, more than 6 million visitors overall. 33 , 2 million plus from china. This year, we think that will or millionbillion for the first half of 2019. Again, tracking better than 33 china. 2025 is a projection from the 12 million tourism. Visitors to cambodia and that will be 5. 5 million chinese visitors. A big impact on the community and the chinese contribution, whether it is construction crews working on roads, Airport Infrastructure throughout the country, all of those are significant contributions as of the relationship. Sophie you are preparing for the outlook. Naga3 will be a feather in your cap. Was announced in april. We have an extraordinary general meeting to brief and get the concurrence of our minority shareholders in another week, august 8. From there, we are hoping to start commencement of the construction at the end of september, early october. Very exciting, very ambitious on our part. Towers,be two 65story towers, theme parks, virtual rides, nightclubs, additional retail, 4300 additional rooms. The minister of tourism projected cambodia needs 100,000 Additional Hotels to keep up with the tourism growth and demand. Our contribution will be significant. We have a monopoly license until 2035. We want to maximize the license. We have a lot of confidence. That is why we, the shareholders are reinvesting into the community, reinvesting back into the nation. Sophie can you give more details on naga3 . Any funding . The funding will come 50 from the company, 50 from the Controlling Shareholder. We feel that is the best without diminishing either the interest of the minority shareholders, ourg allowed to continue dividend practices and policy, also minimize our risk. The shareholder has, but the Controlling Shareholder will put up 50 of the money. This is 50 investment by the Company Without reducing our 100 ownership rights. Sophie shifting to the regulatory landscape, what do you expect the gaming tax rate to be in cambodia . I think it is coming soon that we will see the gaming law put in place. Probably my best, it would be, would my best comment be, in our dialogue with the ministry of finance and and put in the legislation, we expected to be on the low end in relation to our competitors around the region. Is 39. 5. We think it will be under 10 . E we think we will be competitive. But i dont want to speak him the half of the cambodian government. Sophie if it is on the low end, will it change your risks . We have seen sustained Revenue Growth over a long time. As i mentioned, with the opening in 2017, that has been a transformative event. It has attracted many of the highend players around wetheast asia and macao. Have representation of the major junkets in our facilities. Our vip rollings have gone up significantly. The mass market continues to impress us, as well. We have favorable result both in buy of table by ins continuesass market to grow from southeast asia, and there is a lot more Business Visitation to phnom penh. Past. Penh has a troubled the population in 1980 was about 400some thousand. Now it is 2 million plus, with projections to grow to 3 million. I think our growth is in parallel with the nation and contributing to the urban environment of phnom penh. Sophie thank you for painting a picture. That was timothy mcnally, nagacorp chairman. Shery lets recap the breaking news moments ago. Dish is set to agree to a 5 billion deal with sprint, tmobile for assets. A reporter has the assets. Sprint spend years trying to get this approved. This hasnt been a sprint for tmobile. It has been a marathon. Been trying to convince regulators of the merits of the deal for more than a year. This will pave the way for regulators to say yes, we are happy to go ahead with the deal. Was the numberrn of carriers in the Wireless Industry goes down from 4 to 3 area they wanted to reserve a fourth carrier and dish will be emerging as that fourth player. We know about how the deal was structured . Dish will buy a bunch of prepaid mobile brands from sprint. It will pay about 1. 5 billion for that. They will pay 3. 5 billion for spectrum assets. As part of the deal, dish has to agree not to turn around and sell control of these assets or control of the agreement to somebody else for three years. Over that threeyear timeframe, tmobile will help dish transfer customers onto their network. Has been going for this for three years. How does dish expect this to perform as a wireless operated operator . Dish has a ton of spectrum. Spectrum assets worth 20 billion 30 billion. The owner of dish network, the has been talking about building out the network. He has been talking with amazon among others for partnership in that network will doubt. This deal means he actually has longer to build up a Network Build out the network. Doj felthy the comfortable with the assets going to dish. They think dish has the ingredients to become a fourth carrier. Abila, thanks for joining us. A check of the latest business flash headlines. Performings best bank is counting on its acquisition of a Microfinance Firm to help it gain further. Indusind says its purchase of bharat will help it have a presence in more than 100,000 villescross the country. Indusind shares have risen almost 1500 in the past 10 years. Enjoyed amler shares boost after china strengthened its stake in the company. Beijing automotive is buying up 5 stake in the mercedesbenz a 10 yearmenting alliance between the auto giants. The new investment adds to the 10 stake already held by daimlers top shareholder. To want tork is said go public in september in what is expected to be the biggest share sale of the year after ubers debut. Inwork submitted paperwork december. Softbank is we work past largest backer we works largest backer. Shery nissan is planning to cut 5000 more jobs around the world. 4800uld be on top of the dismissals announced in a turnaround plan in may. This would represent more than 7 of nissans total work force. Their operating profits fell to the lowest in a decade last year. Nissan will reveal the plan when they announce Quarterly Results thursday. Paul new yorkbased jetblue says it is disappointed to learn it will receive fewer than half the airbus planes it was expecting this year. Haveeries of the airplanes been hit by production issues. Jetblue will only get six of the 13 aircraft it ordered. The delay is causing jetblue to adjust in the second half of the year and trim growth projections for 2020. Lets take a quick check of how markets are trading right now. Looking like this, gains 0. 0 3 . The cost be is flat. Is flat. The kospi australia is up. Are seeing u. S. Futures under a little bit of pressure, down 0. 02 . Would faceng stocks antitrust scrutiny. The s p 500 closed at the highest level in more than a week. Strong earnings, positive trait developments between china and the u. S. Ftse closed about four hours ago, up 0. 37 . The chinese yuan unchanged. What else should we be watching . Eye on we are keeping an assets in the mainline, checking on the yuan, Holding Steady after beating news that u. S. And china resume highlevel talks monday. It depends on what trump has to say on huawei, keeping an ion suppliers for tech companies. This is bloomberg. It is not 00 a. M. In beijing. I am Tom Mackenzie. Yvonne we are counting down to the hour of trading. We have some optimism with trade talks set to resume. Meetings in shanghai will be the first direct negotiations since may. Yvonne the cuts forecasts again. Johnson heads for downing street. He must avoid a damaging no deal divorce at all costs