Transcripts For BLOOMBERG Bloomberg Markets Asia 20240714

Lower. G seng 8 10 of 1 to what we are going to get out of this Earnings Report coming out that we were alluding to. Composites recovering a little bit, a little bit flat. The aussie market is one of the few that is moving to the upside. Lets have a look at the majors here as well. Of the noises coming out white house as well. Larry kudlow saying the u. S. Would not intervene in the currency market. Donald trump saying im not so sure. That has a bit of uncertainty. Lets go back and look at policy decisions by the bank of japan. The yen depreciating a tad. Momentxit stands at the is causing further weakness for sterling. Possibility that bulgaria might join the euro zone. That is what we have at the moment. Get more from what is going on elsewhere and get to the first word news with su keenan. The u. K. Is deploying another warship to the gulf to escort commercial vessels. Alongsideerate another naval shift amid tensions with iran. The move comes as iran and european powers met to discuss the 2015 nuclear deal. Both sides have complaints about each other today. The atmosphere was constructive and the cussions were good. I can say there are lots of commitments to the jcpoa and its survival. Su reports from london to say the u. K. Is stepping up preparation for a no deal brexit. This will come at the end of october with a Senior Advisor saying it will happen unless the European Union reopens negotiation. The advisor says the government hopes vessels will change its view on neit. Johnson has formed a panel to oversee the brexit process. Australia and singapore are among the five countries that could lose Market Access to the European Union. The Financial Times says russells is now targeting countries that it says do not regulate Credit Rating agencies as rigorously as the eu. The other three on the hit list are brazil, argentina, and canada. Any move would be the first time that european Market Access rights have been withdrawn. The u. S. And china trade negotiators will fly to china later monday as talks resume after a two month timeout. They will travel to shanghai with little expectation of a breakthrough. We have seen mixed signals coming from both sides with neither showing much inclination of compromise. Said it will buy u. S. Farm products but soybean purchases have fallen to the lowest in decades. Global news 24 hours a day on air and on tictoc on twitter. Journalists and analysts in 120 countries, this is bloomberg. Chinas top Hong Kong Policy office will give its First Response to two months of unrest in the city. We saw clashes between riot police and protesters in multiple locations. Rishaad our Senior Reporter is on the ground. Containy struggling to the unpredictable tactics. We saw the scenes turn east in part of hong kong island, that is a new one, isnt it . David they are unpredictable and we dont know where the next break will occur. That startedally in central hong kong, some of it ended up in the causeway about two kilometers at the Liaison Office of the chinese government. Once again, for the second week in a row tear gas was used to disperse the crowd. There was a lot of tear gas. We could still feel it on our skin and in our eyes as we are down here filming. This is the Main Police Office in the western part of hong kong. You could say these huge see these huge barricades that you cannot get beyond. The police expecting more protests in this area. There is going to be a whole lot placeer protests taking until october 1. That is the national day. They have the Civil Servants rally, they want more leadership coming from the government. They dont think the government is doing enough. That is coming up on friday. It general strike is being called for on monday. There will be some protests taking place to complain about allowedpened when they whereo come in last week protesters are actually at. That is the essence of what is happening. It is the unpredictability of it all as police try to manage the unprinted debility. They dont know when the next protest will take place. We were speaking with james from the pro establishment voiced saying the issue has gone beyond hong kongs handle. They cant do anything to control the situation. It may be up to beijing. What is likely to happen in this press briefing . Im extremely curious to find out what they are going to say. What we get normally from beijing, we havent from the Liaison Office. We have that condemnation of the protest. That the protesters themselves are undermining the one country, two systems that they claim they are trying to protest. Yesterday, not even on the island, she was attending an event. It was quite an unusual press saying they are looking for more leadership from carrie lam to reassure the public this will never come back. Thanks david. We will be back with him a bit later on. Tensions are culpable on the streets of hong kong. The leadership unpredictability and also all of this widespread more on the hong kong protests proving to be more of a challenge for the authorities. Not so great here, expectations, we talk about why ines for breakthrough shanghai. This is bloomberg. Is going to be a busy week for the Global Economy getting underway today. They await the Federal Reserve policy decision on tuesday and the bank of japan announcement on wednesday. Kathleen hays is in tokyo for us this week. Lets start with the fed. Gdp strongerthanexpected number we got this week offset any impact from the Global Economy and the weakness we have seen. Behleen the answer seems to that it is determined to keep the economic expansion going. That is what jay powell said over and over. Signs of overlook some the domestic economy and look at what is going on with the Global Economy. In december and january it started on the big pivot. This is the thing they emphasize. The domestic is holding up ok but not the global. Gdp is up to. 1 . That is slower than 3. 1 in the first quarter. Lets look deeper into the report. There is two sides to the story. The consumer, very strong in the Second Quarter. You will see that Consumer Spending was up 4. 3 . Theid line is the white line is what i should be pointing you to. That shows a 4. 3 . The forecast was only 3. 35 annually. The blue line is important, investment. It is down in annualized rate of 0. 65 . What are we going to be looking at . We are waiting for the 25 point basis rate cut. Will the hawks put their feathers into this mitt by arguing the feds it should not overdo it . Will we hear that in jay powells remarks . People want to know is this insurance rate cut more wait and see . Or is it the beginning of a cycle . I think more people are looking for the first part. Just because of the fact that growth seems to be holding up and a big worry is how the global trade war feeds through more investment and manufacturing. We have seen some weakening numbers around the world. The fedsow does moves look at what is going on with the bank of japan . We expect . The boj knows and knowe around the world the yen hasnt had a big spike. Maybe you dont have to worry about it. Some people think with the ecb already signaling more stimulus boj might be well served to have its own dovish signal. Maybe tweaking the Forward Guidance to say they will keep the stimulus going for longer than spring of next year. The Bloomberg Economics team saying they wont change 2021ing until at least because the japanese economy is still growing. Even though exports are getting weaker as it drags on. Industrialchinas progress. 947 economists surveyed in tokyo do think there will be some small tweak. That means three quarters dont see anything at all. They had a story a few days ago oft they found out members the bojs policy board are reluctant to do that. They dont think it will change the economy or inflation picture. The boj probably doesnt do anything but i think people are holding out the chance that maybe you get some dovish signal to keep up with the ecb and fed. Thank you so much. Kathleen hays out of tokyo. Ust an update we are starting to hit session lows. The hang sengross index. The worst week since may. To be the case this week ahead of all the events. Lets have a look at the other movers. Samsunging the likes of. What is interesting is analysts were saying foreigners are intensively buying the likes of samsung and betting on a rebound in prices. They are saying when it comes to this japan export curve leading pricesrallies, the chip might be petering out. The likes of samsung is weighing on the company. That is the equity story. Bloomberg dollar index is about one point. Comes off the best day for the bloomberg dollar index. The bbdxy. Nth for the big decision this week from the fed. Guest toined by our talk about the big event this week. The fed seems to be baked in. Most of thend market are expecting 25 basis points. The key is the kind of guidance we get from the fed. We expect to see this followed up by another rate cut in december. We are expecting not to see the number of rate cuts that money markets are pricing in. We see these moves being preemptive and we continue to point to the ongoing strength within the u. S. Economy. Relatively strong albeit down from q1 levels. We are expecting 180,000 jobs to be announced on friday. That suggests that the household continues to do pretty well. End of the day, this is an insurance cut. The fed reacts to offshore global developments. That probably suggests that we continue to see strength from the u. S. Dollar. You are calling for further dollar strength, do we get that insurance cut, where do yields go. Are we vulnerable for some kind of corrective backup in yields . There is a lot to be said for the guidance that the fed chair gives us. That will be critical. My sense is the u. S. Equity markets certainly have priced in further monetary stimulus. Clearly there is the case when you look at the level of curve and that you level of yields, there is some risks of disappointment. Jay powellsching press conference for guidance, the language that he is using. I think that is very important for bond markets and Global Equity markets as well. We have been asking our online question, lets load up for our audience as well. Do these low yields stop supporting stocks . Robert when you look at the earnings season we are in, it feels like markets did a good job discounting the lower price of increase in earnings. Is that if thegh fed does start to let the market down, i think there is risk in the situation where we have multiple rate cuts. Some talking about 50 basis points this week. It is not obvious that Interest Rates are particularly supportive. It is a fair question to ask. The answer to that question will be a little bit more obvious as powell delivers his press conference. We see how the markets react to that. Rishaad you didnt answer the question. At exactlya look what we are looking for. Signalsar here, mixed talking about the u. S. Mr. Trump says it is up to me really. Robert absolutely. There has been some . Said about the guidance that we might get from u. S. Officials. I find it very unlikely and think it will be opportunistic were we to see any intervening given the size of global markets. Remembering of course the ecb paved the way for what could be multiple Monetary Policy actions. Ultimately, Foreign Exchange markets will be driven by fundamentals. The outlook certainly much better at the moment. Were we to see any attempts to intervene in Foreign Exchange markets. Im not particularly convinced we have the significant fit right now. We can expect to see further modest strength in the u. S. Dollar through the end of this year. Certainly for currencies, i think it is a matter of time before we break that. We are seeing signs of weakness in the british pound this morning. World, thet of the Australian Dollar and new Zealand Dollar underperformed. They were the weakest currencies within the g10 last week. Lows for the euro and sterling. Preservation,t of these next 24 months, where should i leave my savings rate, and what currency . It has not been particularly favorable from a market point of view but we have continued to argue for u. S. Dollar strength. If we are correct and it is only thefurther rate cuts if u. S. Economy continues to grow above levels through the end of this year, we expect to see further strength in the u. S. Dollar going forward. My money would be in the u. S. Dollar. Viewad how much of that is predicated on what happens with regards to this trade war . Good question. I was interested in these current talks going on this week being held in shanghai rather than beijing. They have much to do with the political cycle. Probably what it suggests is the body language we are seeing coming off officials on both to see anynt expect nearterm settling of these trade talks. Im not sure at the end of the day whether it is in either sides interest to settle right here, right now. This is probably a risk the chinese dont necessarily meet those high levels of requirements. A chinese point of view there is probably a good argument for them waiting to see what the u. S. President ial election looks like. To get a better understanding of who they may be negotiating with next year as well. I dont think there is too much expected. Certainly i would be very surprised if there is any significant agreements. Thank you. Coming up, u. S. China trade talks resume this week. Neither side seems eager for a deal. The views of our guest on the shanghai discussions later. This is bloomberg. Welcome back. Have a look at what is happening in the philippines. The big news was the president ordering police and military to stop all lottery and gaming activities. Accusing the Government Agency of corruption. Followthrough a across these gaming related shares. This is bloomberg. Kong,29 a. M. In hong 10 29 p. M. In new york. Im su keenan would first word headlines. Pushing ahead with the tax on big cap, this despite President Trump threatening retaliatory tariffs. He has planned what he has the ghoulish and as of the levy that the french government says will be opened anyway. Bruno le maire insists the measure is not deliberately targeting American Companies, and says fair taxation and intellect of any is a universal interest. Friends should understand the decision of france to have its own digital as any willingness of targeting the other companies, but thats not the case. We are not willing to target the American Companies. Meanwhile, chinas top Hong Kong Policy office will give its First Response later to the continued escalation of protests in the city. The weekend some mass demonstrations across the city and violent clashes with police. The American Chamber of commerce in hong kong is calling on the government to show more leadership. The sad story in the philippines. At least eight people have been killed in a series of earthquakes in the northern section of the philippines. The tremors struck the province with seismologists recording almost 200 aftershocks. The government has promised about three quarters of a Million Dollars of aid to the withess to the province translators describing it as one of the most treasured destinations in the country. Two spacex. The company has successfully completed its 18th resupply mission to the International Space station, installing the dragon cargo capsule over the weekend. It docked at the space station carrying more than 2000 kilos of research, as well as supplies for the crew. The experiments include a 3d organ printer, which will create nerve cells and let scientists see how they hold their shape in zero gravity. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Thanks. The United States and china heading back to the tray table this week for the first time in three months and theres little expectations on either side that there will be a breakthrough. Looming over the talks issues, andical signs that beijing and washington dont have the willingness to budge on key demands. Lets set the stage. Tom mackenzie is in beijing. It sounds like tuesdays talks could be a little what, fraught . It does, indeed. Theres been a lot of jockeying from both sides leading up to these talks, that will run from tuesday through wednesday in shanghai. You have the Trump Administration suggesting they might be concerned about huawei, which is seen as positive. On the others either the others either u. S. Is also said they will investigate chinas developing nation states at the wto, which opens a whole new front in terms of challenges to china and its economic model because it could add additional pressure. And there are discussions in china about allowing private and state owned companies to buy more Agricultural Products, but from the chinese perspective theyve continued this investigation into fedex, outlining what they see as their three key demands for getting a trade deal, which is the removal of tariffs, the twosided deal, and less onerous demands. On the trade front, both sides seem as far apart as ever. The usi downplaying expectations, insisting they want a proper deal. Thats wilbur ross. And tom, china has suggested it will start buying u. S. Soybeans. How good could that be for u. S. Farmers . It is maybe only going to benefit u. S. Farmers at the margin, at least in the short to mediumterm. The data for the first half shows very clearly the drop off, the significant drop off, in terms of u. S. Supply of soybeans to the chinese markets, which is the largest buyer of global soybeans in the world. For the first half you see the total purchases falling to about 5. 9 million tons from the chinese side, thats after 20 million tons back in 2017. In the month of june alone china bought about 5. 5 million tons from brazil and one month. The demand here is slightly softer as well. We are not expecting any major benefit to u. S. Farmers from these changes, not yet at least. Tell me about the state of play for the chinese economy. There was data out over the weekend perhaps indicating more pressure what more do we know about that . Certainly a lever that the Trump Administration hopes to use to pressure china into slowdown, and from trumps perspective, more good news, which is the bad industrial profit numbers, dropping to 3. 1 year on year. Its not just the tariffs theres is also the Global Demand picture, and the fact that you are edging closer to deflation in chinas factories. There are a number of factors that are squeezing these industrial profits lower, and we have manufacturing pmi out on wednesday which will give us another clear indication as to the direction of travel for chinas economy. We expect them to remain in a contractionary state, and this may be used by the Trump Administration as a lever. Again, the u. S. Or chinese side saying they are not concerned about this Pressure Campaign and the threat of additional tariffs. They have outlined their demands and they want those met. Thats tom mackenzie, our china correspondent in beijing. Hes off to shanghai to cover those talks. Joining us is the Asian Trade Center founder and executive director. You must be very busy, deborah. Whats the main concern here, and how damaging is it in a cornucopia of questions . Where are we and what damage has been done thus far . Well, i think it depends on who you talk to. For some companies, the damage has been fairly significant, for quite a ways into the discussion and into the trade tensions. For some companies that were hit early on, the damage starting to mount, and they are feeling the pain quite significantly. For other firms, it looks like it is a win, because they have had increased order. In countries like vietnam, many orders continue to show signs of promise and growth. I think it depends on who you ask in where they happen to sit whether trade tensions have been a net positive or net negative. In general any time you have a war of any kind, people lose. We spoke to the commerce minister, he is seen as a hawk does that indicate a hardening of the position being taken on the beijing side . Not so sure, there seem to be some split views on what this means for china in terms of shaking up the team going into these talks. Earliestor china the thought was this would be a relatively shortlived trade negotiation. Im not certain why they thought that but that is what they thought, and they didnt need a robust team in place to negotiate. But if this is going to go on for a long period of time, and i think the assessment in washington is that this is going to be long, then you need to have more people involved in these talks, and i think thats what beijing decided in may, that if this goes on through potentially next summer, wish that seems to be the sense in washington, then you need to have more people on the ground in beijing to handle this. Is how perspective, that i would assess it. Lets strengthen the team in china to deal with longhaul negotiation. Right, ok. It seems that some of the other guests that we talked to this morning have said that if they continue talking after this week, its a good sign. Is the bar to walk away this time around, the second time around, higher than last time . Want,hink what both sides if i were to guess, they really just want to keep this turning over. Basically from the u. S. Side, the key goal, i suspect, is to ensure that china continues to buy Agricultural Products, especially the key goal on bob lighthizer, the u. S. Trade come hometive, is to and meet with donald trump and proof thatback with beijing is going to buy Agricultural Products as you have said since the g20 meeting, even though no one else in the room seems to have heard the same thing. We still managed to lock down some agricultural purchases for you to deliver to farmers, and i think thats the key goal for the u. S. Side and particularly for bob lighthizer. Beyond that, it would be nice to say we have had talks and will continue to have talks and make sure that the markets dont get and keep lowked level conversations going so nobody gets a serious rupture in discussions, but i dont think you could expect this to wrap up anytime soon. So while white still remains the biggest issue, i presume. Do you think the Chinese Company will get a pass in this latest round of negotiations . I dont think they are going to discuss huawei. I think what they are doing right now is trying to lock down the agricultural purchases and have a discussion about where are we in terms of resuming negotiations . In other words, are we prepared at this point to start negotiations again, number one, and if so, where do we start . Do we start with the texts we have on the table in may, or do we start with Something Else . And if we start with Something Else, what is that Something Else . If we start with the text on the table in may, which text is it . We have an argument on both sides about where we were in may. I think what they are trying to are weay, at what point in these negotiations . What are the ground rules . Where are we in these discussions . What are we actually talking about . I dont think huawei is going to appear on the agenda except iybe not break conversation, dont think they can really have a discussion about huawei. House at least wants to lift some of the restrictions, in particular when it comes to the consumer side of the business. The intelligence agencies are still citing the National Security risks with the rollout of 5g. Do they see those differences, or does anything related to huawei become a threat . Well, what i was told when i was in washington is that theres a lot more flexibility on huawei than it first appeared, that theres going to be this process for applying to licenses to work with huawei. At first, it looks like all licenses would be rejected, but now it looks like sublicenses will be granted. In particular, you can get a license much more easily if you are on the consumer side. If you are working with huawei and only working with consumer areucts, those licenses those applications can be approved. Deborah, thank you so much for your thoughts. Very interesting. Deborah elms, Asian Trade Center founder and director. How is the trade war affecting the chipmaker . Thats on the way. This is bloomberg. Welcome back. Lets give you a quick check of the latest business flash headlines. About down the most in 2. 3 , the most in three months. The companys junket operators are linked to an asian Crime Syndicate, allegedly laundering money. They have responded by saying they have a comprehensive Money Laundering and Counterterrorism Program in place that is regulated by the financial crimes agency. The London Stock Exchange is in talks to buy financial Trading Platform refitted to, a deal expected to be worth the equivalent of 27 billion. It is part of the transaction with the holders receiving just lp, whiche bloomberg is the parent, competes with them in certain fields. When it comes to the chip sector, that was one of the worlds biggest chipmakers weathering this trade war . Intel reports an upbeat Second Quarter despite disruption cost of the winding dispute. Him about the 5g growth and outlooks for the slowdown in china. During the course of the Second Quarter, initially with the entity list came out, we abruptly stopped shipment to huawei until we could get a better understanding on the implications of the entity list and the impact of export control on our business. After the interpretation, thurber some cases we could ship in some cases we could not. Our challenge is always serving our customers, but also abiding by the laws and the countries in which we operate, and as we went through the course of the quarter we were able to chip some products. The Second Quarter result was modestly impacted by the entity list order and as we go into the second half of the year we have applied per commerce instructions applications for licenses, to ship products that are general portis generalpurpose nature and have no bearing on what the entity list is trying to accomplish. That is our expectation going into the second half of the year. Obviously we are going to watch the dynamics that happen in washington, and we will adjust that accordingly, but we are going to continue to serve customers as best we can and abide by the laws for the countries in which we operate. The Just Announced deal, apple allows you to wind down your efforts in mobile and now im curious does your turn, now that you are in negotiations to get out . Can you give us an update . Importantly,most the exit of the 5g smartphone modem allows us to double down on 5g and building out this , thergence Network Convergence of computing and communications at the network, which is a big business for us and our expectations and 5g. That will be a bigger and bigger portion of the makeup of the company revenue. That is the most important. As you know, we laid out three criteria that we think about when we make large bets that will evaluate those bets along the way. One, its a technology infraction that will have a real differentiated growth rate on the future of the industry. Networks andth 5g memories meet that key threshold. It has to be technology that allows us to play a bigger role in our customers success. And this meets that threshold as well. We need to be able to generate attractive returns for our investors and that is what we are working on. Memory is an important part of our business and a big part of the materials, and we have a real differentiated technology. The challenge for us is to continue to improve our execution to generate returns for investors, and that is what weve been focused on. Intel. Was the ceo of look at the snapshot monday to friday across the asia,y 1200 stocks in 300 along the msci asiapacific, very busy. India will be interesting to see are halfway, we through, quarter to go, it will be focused on ets estimates because if you look at how different this market is you see 33 so far with the fullyear growth estimates and if you talk about earnings stories this market is probably at. And of course we are talking about that market, just about an hour away. Divina, is standing by how was it a looking . Far, nothing much happens. Insaw some declines corporate earnings took center the reportedt of that they are pretty much in line with expectations, but the about the we spoke prevailing weak demand and we just spoke about the stresses coming in from this segment and there is a threat to some of these commodities and they met expectations that dont want to be reported but they said weak demand will continue to progress. Thatould see ineffective we are completely charting our own course opposite to what the u. S. Is doing. They are making record highs and really struggling so it will be an interesting start to the week. Auto in focus, a new scrappage policy how are they going to open up today . Openings thisse , they meet expectations within margin in the last two quarters was good because it came meeting expectations. This time around the government has said for 50 years plus or older, they have to be strapped. This could actually lend some support and boost demand. You are seeing new car registrations picking up. Ok. Thank you so much. A preview of the trading day. In india we are talking about the economy, remaining sluggish in june. Exportss a plunge in for our latest animal spirit indicator, the earliest of the earliest indicators for june showing a lack of momentum with overall activity unchanged from a month ago. Our editor for south asia has more. Tell us about the main stress areas. Hi, good morning. It was another disappointing animal spirit dashboard. The main worry seems to be on the Services Side of the economy, we still have the pmi for services contract, which was quite a surprise. Comprises more than 50 of the economy, a decline in that side of the economy is going to weigh on overall gdp growth, but we also saw a decline on exports and imports, those are definitely worrying. Along with the global decline in demand, we are seeing exports come down but imports are also worrying, because it is a sign of slower domestic demand, sluggish consumer , and capitaling up equipment is weakening. Its a sign of the week thank you so much. Our south asia economy under. Coming up, we are talking battle of the charts, in the market roundup. Stay tuned for that. This is bloomberg. Battle of the charts. Pitting best charts against each other, g tv is where you look at them. All right. Im here to talk about natural for the last few years theyve been based off brent crude, because liquid financial gas didnt have its own benchmark. You see this white line here shows the price of actual futures, which is the spot price of liquefied natural gas in asia, much lower than oil. So high inices are different than lng because they have different fundamentals. Its a difference you see in the market developing. All right. Whats the elevator pitch . 10 seconds or so. Right, ok. The feather reserve is going to do this weekend beyond last week we had gdp data which is a project to the offset, with the shutdown turning to the investments. Cant make a decision today. Ion today. It is almost 11 00 here in singapore, 8 30 a. M. In mumbai, im Juliette Saly. Im Rishaad Salamat. Last minutes of the morning session in hong kong, heres a look at our top stories. Markets anticipating the first fed rate cut in a decade, a busy week bringing policy decisions from tokyo and london. Is the latest in the weekend of protests in hong kong, stocks are down sharply in the city, volumes are spiking. Animal spirits are in short supply as india struggles with its own economy, services and exports both slumping. This is woburn markets. The stocks in hong kong certainly the forefront on investors minds following those weekend protests. The hang seng is at levels we havent seen since midjunes with volumes spiking as consumer stocks hit hard following the weekend protests. We will hear from amgen as to what members are saying about the protests and whether businesses are looking at an escape route. Aboutners are selling 72,000,000,001 in coffee futures and analysts are saying they could expect to see the index come under further pressure in august has we start to see concerns about valuation and earnings. The nikkei is being hurt by the strength in the yen, dollar about. 2 lower beginning with the handle of one away. 5. Lets look at whats happening in oceana because a lot of focus on new zealand the stock is tracking higher and weve seen a big fall coming through on the 10 year, a drop of three basis points, yields actually hitting a record low on the increased bet that they are going to cut rates, saying they will be cutting the official rate to 1. 15 at their august meeting. Having a look at the asx 200, Still Holding on quite well. Stocks in australia still trying to get toward those record highs but a pretty risk off session across asia today. Lets have a look at whats going on with the indian up fory, indian futures a change, after days of it being negative. We could get out of the doldrums we saw last week, which had a series of losses over the last five trading days. Have at least one saying that india needs a series of interest to beuts which seems lacking as we have the slowing economy. 10 year yields a bit befuddled by whats happening with regards to this 10 billion debt auction with the debate raging about whether it should be held are not with different factions in the administration deciding on whether the merits are worth doing. All that is going to be playing out with regards to india. We have many coming out with earnings as the season perhaps the busiest week of the quarter. Beijing, selina wang has the first word news. Thank you. Reports from the uks saying they are stepping up preparations for nokia brexit at the end of october, the Senior Advisor it will happen unless the European Union reopens negotiations. Michael go says the negotiations still hope that brussels will change views on talks that is operating on the assumption that nothing will change. Boris johnson has formed a six person panel to oversee the brexit process. I do not know deal brexit. That is not what we are aiming. But we have to face the fact that the moment we are being told, as weve been told for the last three years, that the deal cant be changed. But withhat, confidence and friendship to our european partners, we are going to continue with the discussions and we are going to get ready to come out on the terms that are necessary. The u. K. Is deploying another worship to the gulf export through the strait of hormuz. They will operate alongside another navy ship amid heightened tensions, and with iran having seized a british tanker. The news comes as iran and european powers met to discuss the 2015 nuclear deal, which the u. S. Abandons last year. The initial talks in vienna went well. We have had complaints about each other, i think the atmosphere was constructive in the discussions were good. I cannot say it solved therehing, i cant say arent last commitments to the jcpoa. All sides have expressed their strong opposition against the u. S. Unilateral inquisition sanctions, specifically they are an explication of the sanctions. Spacex has successfully completed its 18th resupply mission for the International Space station, installing the dragon cargo castle over the weekend. It docked with the iss, carrying more than 2000 kilos of research, including a 3d organ printer which will print nerve cells and let scientists see how they hold their shape in zero gravity. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Areonight your markets preparing for what could be the world economys busiest week of the year so far, rate positions in the u. S. , japan, the u. K. , and brazil, with the highlight being the Federal Reserve. Markets and economists are united in predicting that Jerome Powell and his colleagues will cut rates for the first time in more than a decade. Joining us here in singapore is our Credit Suisse we near investment strategist, a very big week. We are expecting to see some kind of a cut, showing the spread between the implied august rates in the current level is closest to that 25 basis points is that what we will see . I think we will see a rate cut because the Manufacturing Sector has been quite weak. The fed will take precautions to support the Economic Outlook but we dont expect any aggressive rate cuts. Language,l about the and we heard the same thing from every meeting from jay powell, the plan to support the economy are you planning to see any change in the language i think we will focus more on if we seedency, but escalation of the disputes that is where i think we will go. It also gives us a little bit of impetus in terms of the stock market. Whenuestion of the day is do these low yields stop supporting . Even amidst all these hopes of stimulus, youve got u. S. Stocks at record highs. Absolutely. The biggest cushion in the stock market is what the stock market and bond market are saying. I think so far the lower bond yields have supported the stock market, but over the next few months we need to see compared to what has been the last few months. Expectationsabove and thats a good expectation for the stock market but we need to see stronger growth in the next few months. What is the bond market telling us and what is the equity market telling us . This is the big debate, i suppose. Yes, absolutely. Thats thes biggest in the market right now. But we have seen a similar scenario in 2016 when there was that economic slow and Central Banks started to ease policy. Has been the case so far. Back fromwill shift the fed and Central Banks to Economic Data and we need to see a bounce and economic momentum to sustain this equity market. That will be a tall order. When we see whats happening with the earnings season in the u. S. , hundred 66 companies out this week alone. Guidance is going to be key its perhaps a bit anemic. How much has the Federal Reserve paid to that . I dont think they were paying too much attention to the earnings season. I think the focus should be more on the Economic Data, pmi numbers out of the u. S. So far earnings season has been ok. We have 166 Companies Reporting results, earnings rates have been in line with what weve seen over the last few orders. Earnings season has been a supporter of the market. But in the next few months, if the Manufacturing Sector does not improve further, that it is going to be a problem. When you are looking at specific sectors, you are positive on the tech sector. Have you been reading the earnings there . Netflix disappointed the market, but then we had ok numbers for microsoft and the like. Most of the large caps have reported good results. Within the tech sector, if you look at profit names, as compared to the hardware sector, within the tech space there is a cash flow we think theres more upside to that space. We want to come back to u. S. China trade. Stay with us. Ahead, u. S. China trade talks resume this week, we will assess the likelihood of concrete progress. Awaiting ang kong is greeting from china after another weekend of protests. The president discusses the business implications from this unrest a bit later on. This is bloomberg. You are watching bluebird markets asia. Im Juliette Saly in singapore. In hong kong, i Rishaad Salamat. Three months after trade talks break down, chinese and american negotiators are said to meet again in shanghai this week, scheduled for tomorrow. Here is how this uneasy truce was read at the g20 summit last month. Beent expectations have tempered for any breakthrough as key disagreements remain. China has indicated its readiness to buy american Agricultural Products, but has also called the u. S. The black hand behind antigovernment protests in hong kong. Still with us is the Credit Suisse Senior Investment strategist how positive are you that theres going to be anything tangible coming through of these talks . I think it is very optimistic to believe that within a couple months they will be able to achieve something. We think by the end of q4 there will be enough pressure on both parties to ease confusion. We expect over the next few months more negotiation and by the end of we know it is likely that the pboc will continue with some kind of targeted stimulus so with that in mind in the backdrop of trade tensions, how are you playing msci china . It is like the asian markets, and when you look at the emerging china index, its more on the new economy sector in china, if you look at the Online Retail sales growing at 25 as compared to 8 growth we think thats a good place to be and that is why we are like the china index, which is one in the sector. If we dont get a deal by december, it could all go wrong, i suppose. What could happen . Thats the biggest question for the market, that is whats being reflected in the bond market, 2. 1 . The Manufacturing Sector globally will remain under pressure, and that will be for the equity market, given that the s p is close to 3000 and all the markets feel very strongly stop its less of a risk for the bond market, but you could see specs whitening. We are clearly watching it and hopefully we get more and q4. This will go one until we are in the full flow of the Election Campaign stop will donald trump hold off until the last minute to do a deal for electoral reasons . Discuss. If trade talks are gone and theres no trade deal in the next few months that it is quite possible that markets come down in the meanwhile. Markets will remain very volatile, but as for the escalation, there is no further tariffs imposed, i think markets are always supported by the view that the feds will use policy. What we are watching theres no further escalation of the big dispute, i. E. No further tariffs on chinese imports. I think markets should be ok. Is it safer to be in somewhere like japan, if you want to be invested in this part of the world . Asia, chinaithin offers more value compared to japan, because the japanese market is more sensitive to clearlyroduction, and the global Manufacturing Sector has been slowing down. It is also been trending downward. We like the china market, which is the growth story. Valuations are much more attractive compared to anywhere in asia. What about some of the other markets . We have seen singapore hit quite hard by south korea, and as i mentioned at the top of the show, we are seeing foreigners fall on these trade concerns, at least in the futures market. Which markets are you worried about at the moment . We are right about the export markets in asia, taiwan or korea, this specially for taiwan which is trading at an expensive valuation. Traderade trait the pricing is already at the deal. From the fedit easing in the domestic economists going 5 or so. I guess the other aspect is what weve been seeing, not just in terms of the u. S. China trade disputem but whats happening in hong kong. Its not a great backdrop at the moment. Yes, but that is not a great backdrop given whats happening with hong kong. If you look at it from a market perspective in the past we have seen it taking place, markets have come back to normal behavior. That is what i expect. It pretty much depends on how performs andconomy what happens in terms of Political Investments in hong kong. Much, ourou very Senior Investment strategist joining us in singapore. Coming up, more on the unrest in hong kong, eight straight weekends in protests, beijing preparing a response. The latest on that next. This is bloomberg. You are watching Bloomberg Markets asia. Im Juliette Saly in singapore. Im Rishaad Salamat in hong kong. Office willpolicy give its First Response on monday to two months of increasingly chaotic unrest in the city. Rightll clashes between police and protesters in multiple locations. Authorities seem to be struggling to contain what has become a change in tactics, more unpredictable to protesters. This is going to be a right in the middle of central. Bay,are going to causeway and some coming here. Location of the Liaison Office. This is the chinese representative of the office here in hong kong, and it is the office were a lot of the protesters face bureaucrats who are meddling in hong kong, undermining the one country, two systems framework, which is supposed to govern. I want to show you Something Else. We are outside the Police Headquarters for this district, the western district. Look at these great big barriers, still full of water. Cant get over them, and you certainly cant push them. Here obviously they are expecting to see further protests to continue, but we dont know where else we are going to be. I can give you a few example of protests one is via the Hong Kong Administration civil servant, which could take place on friday. The Civil Servants are complaining they are not getting enough support from the government, not enough leadership. There is going to be a whole series of engagements on hong kong. A lot of the protesters are drivers,ng about the allowing the doors to stay open in one of the New Territory villages last week, which allowed a mob of angry men to come in and attack passengers, who they accused of being protesters. The real difficulty now is the fact that the whole movement has become fragmented, and the protest movements will be unpredicted, but theres one thing which is pretty clear, theres a lot of momentum that will go on for quite some time. David, the Hong Kong Office in beijing will also give their views are we expecting . This is a really interesting change, hong kong and Macau Affairs office, it usually remains mom. This is the first time weve had a press Briefing Since 1997. It is interesting that they are going to do this. Carrie lam, the leader of hong kong, hasnt said a word since last week. She has remained quiet. All we have seen from her was she attended the Peoples Liberation army childrens summer camp somewhere in the New Territory, and she told those children that they should look to china for the opportunities that china affords them, they can go back to school and tell their friends about the great things china can do for them in the future. Shes not addressing the situation. That seems to be at for the hong kongMacau Affairs office. And come up with some sort of solution like withdrawing the extradition bill, that would be completely undermining the autonomy of hong kong and the administration. All we can possibly have for some complaining or condemning the acts of violence we see among the protesters. All right. Senior reporter david tweed on the streets of hong kong, thanks so much. Later in the show, we will be speaking to Amgen Hong Kong president. A quick check now with the latest business flash headlines. A report from germany says Deutsche Bank is investigating whether confidential Customer Data was compromised after it failed to deactivate the accounts of five staff following the closure of its Global Equities business. About 50 traders in london and new york were able to access bank systems and emails for weeks after the first round of layoffs, and one cent 450 messages remotely after she was let go. Chinas struggling bank has got some government support. They are buying a 10 stake in the bank. Bonds fell last week after a report that regulators are seeking to resolve the liquidity problem. Crown resource fell the most in two months after local media reported that they used junker operators linked to a Crime Syndicate that laundered money. The crowd has responded by saying it has a comprehensive antiMoney Laundering and Counterterrorism Program in place that is regulated by the financial crimes agency. We are off to the china lunch we have this tension composite not trending positive. Composite is hurry up and wait, investors picking through any development on trade, the chineseu. S. Trade talks in shanghai. This is all coming through on top of negotiations, the expectations have been ratcheted lower by both sides and they are not really at the moment signaling that they will be getting a break in this latest round of negotiations. 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. Gentleman that likes raising Interest Rates in the fed. If we had the fed we would be like a rocket ship. Gentleman that loves quantitative tightening. Us down,lly floats there is no inflation. We are paying a lot of interest in it is not necessary. We have a gentleman who likes a very strong dollar. We are not playing on the fairfield. Eventually he will do what is right. 1. 2 to the downside in anticipation of no deal being done with the trade talks taking 200, looking at the asx one of the few markets in this part of the world which is ratcheting up slightly, perhaps weakening the aussie dollar which is responsible for a bit more optimism. Downside, we the have the lunch break coming to an end that reopened and the loss is being extended to half a percent. Looking forward to the india trading day before we get going in mumbai, this is the position with regards to the futures contract, the rupee pretty much unchanged, 68 rupee with a 10 year yield, settling down even though theres a big debate going on about the foreign debt auction with very different factions to be getting involved with all that. Lets get over to selina wang with the first word headlines. Thank you. Will have negotiators talks resume after a twomonth pause, traveling to shanghai with little expectations of a breakthrough. There has been mixed signals from both sides without much desire to compromise. The purchases of soybeans from china have fallen to the lowest in a decade. Bigce is pushing ahead with tech despite President Trump threatening retaliatory tariffs on wine. He slams what he calls the foolishness of a levy that the french government said would be implemented anyway. That le maire insists measure isnt deliberately targeting American Companies and says fair taxation of digital activity is a universal interest. Our american friends should not understand the decision taken by france to have its own willingnessas any to target the American Companies that is not the case. We are not willing to target the American Companies. Australia and singapore are among five countries that could use assets at the European Union. The Financial Times says they are targeting companies that are targeted rigorously. The ones on its hit list are brazil, argentina, and canada and it would be the first time that european markets access have been withdrawn. At least eight people were killed in a series of earthquakes. It struck a province with seismologists recording 200 aftershocks. The government has promised about three quarters of a Million Dollars in profits, with Rodrigo Duterte describing it as one of the most treasured destinations in the country. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Thank you. We have been watching those comments coming through from the indian finance minister and we are starting to see indian bonds higher with 2029 6. 46 , anding to indias economy remains sluggish in june with a plunge in exports. Bloombergs latest animal spirits indicator shows a lack of momentum, with overall activity unchanged from a month ago. Economyheast asia editor is with me in singapore what are the main stress signals . Number,er disappointing and i think what we are seeing is that this is a sector that accounts for more than half of the gdp of india, so thats a worrying sign. We saw this sector contract for the first time in more than a year. Elsewhere we have seen the trade tensions play out, exports contracted quite sharply year on year and imports also contracted, the decline in imports is worrying because thats a sign of the week domestic demand, not only as Consumer Spending slowing down but we are also seeing businesses not importing and that is a sign that they are not in the economy. No real sign of an economy anytime soon. Doubt the reserve bank will be looking very closely at is thes data coming out, rate cut a done deal . Be a keys going to Interest Rate decision, we will followt whether they can through with another Interest Rate cut they were already cut this year by 75 basis points. Our recent interview with the thatnor, he did indicate future policy action will depend on the incoming Economic Data, and he made clear that hes looking at inflation numbers. For now inflation is quite subdued. Mark is well below the 4 midterm targets of the r. B. I. It does give the reserve bank aree room to cut and they worried about the domestic demand. She would like to see some extra stimulus coming through, and if you look at what the budget came of a stimulusmuch coming from the government side, so the onus is on the reserve bank of india to provide more stimulus. Is really toward another rate cut next week. Thank you. Our south asia economy editor. Nifty indexg the rising to 12,000 by the end of the year. They headed in your research at ubs security joins us now. You are very positive why . We have been cautious on indias growth expectations. Both gdp and earnings. It has three important things we do expect it over the weekend, the growth slowed down, with measures to give equity markets which have picked up two or three quarters out. The other key measures are the calculation of banks, possibly through the r. B. I. Group. The second would be exciting reforms for the bigger majority, which will give Equity Investors hopeful for the longterm growth story. The third is a proper policy package which will bring us back on the golden opportunity to gain market share in Global Manufacturing exports. Many people have given it mixed reviews what is your take on it . Investors have a nearly consistent view, which we think is misplaced based on our report and the businesses in china of taiwan, korea, japan, and india. Investors and businesses are and business is also very high, more than 80 have been, and even if you look it has forced the tariffs and position and india is one of the few countries globally which gain share in these products. India has these building blocks, and that is what we look forward to. Its juliet here in singapore. I want to get back to your core of what you were saying, being bullish on the overall market, nifty rising to 12,000 by yearend. You were talking about some of the areas where you see growth where would you stay away in this environment . Id say 5 up is definitely possible, but having said that ,he sectors wont be overweight frome would stay away midcaps and nonbank financials. And in terms of what weve been seeing in terms of the data, indias private sector has been slowing somewhat are you concerned about that . Margin, but weve been highlighting that the Earnings Growth disappointment 6. 7 . N gdp trending to a big surprise but that is want to happen when we havent seen enough measures. Wednesday, there was this quite important reserve bank in decision taking place. Several Interest Rate cuts a panacea for the Indian Economy . Could itd part, actually be in a funny sort of way bad, because Household Savings and the incentive may actually lessen. That is a tough spot for policymakers. Cuts, see aggressive rate ith the businessman and may not help much. That will help at the margins and a large part of the Banking System is still under. In our view a recap of the Banking System is what could really help drive the economy back up. Monsoon, what about that . That is something that could really derail the economy. It was looking pretty ropey but what is the initial forecast . Be fairly important for 15 of the economy or thereabouts. Underwhelming, but our view has been and still remains that it is fairly of the direct5 influence. Fundamentals, unless we have two or three back to back it doesnt really matter for economic fundamentals. Thank you so much for joining us. Ubs securities. Watching softbank group, the shares up by about 2 in tokyo trade, and of course we saw the announcement of the Second Division fund on friday and we are now hearing that softbank plans to invest in indonesia, 2 million according to moshe oc some. They are going to invest in some other countries, this on the back of that announcement of 108 billion second vision fund, there are not that many goobers left that softbank is already coming out of the gate expressing interest in some firms with 2 billiondollar stakes in indonesia. Coming up, we speak to the president of the American Chamber of Commerce Hong Kong is International Businesses worry about the escalating violence and political deadlock in the city. We are joined in hong kong next. This is bloomberg. [laughter] [applause] have opened,rkets lets get to mumbai we are standing by to take us through what to expect, and how was the trade set up looking after three consecutive weeks of losses . Subdued, the markets have been seeing a selloff over the last three weeks, and the broader markets have seen it for the last 45 weeks. We have the opening rates coming down, and it is very flat for Indian Markets in the nifty 285, it creating around has been breaching key levels in the last few days, the nifty has been trading below the 100 day moving average. But if you look at the broader market, the msc 500 index, it has been pretty weak over the last few sessions, opening on a and theative price, ratio has been in the decline which has been depreciating over the last few weeks, we have seen some weakness for the indian rupee. 36 companies are out with earnings this season as it gets into full swing. What are you looking out for today . Will be whereyes qualityy the asset was best in the last 12 quarters, going into the earnings, the stock was up on friday, and they seem to have given the thumbs up, with stocks gaining 3. 5 to 4 . One, the operating performance and the company was contracting tons the numbers which did not meet in thestimates management commentary was also indicating a very weak quarter for the company. Thank you very much. Kong calling on the government to address the grievances underlying the continued unrest, saying steps must be taken to restore sagging business confidence. Saying it is internationally credible to inquire assets of the protest movement. The legislation prompted these demonstrations in the first place. Joining us as the Amgen Hong Kong president. How much damage is being done at the moment, in your view . Right now, the damage we are seeing is the shortterm damage. Pessimism, which is creeping in after eight weeks of protest, and uncertainty about what is coming next. We are also seeing economic damage already in terms of retail and other basic areas where tourists would be coming or Business People may be coming who may have canceled their trips to hong kong, and also areas like luxury goods, highpriced gadgets, et cetera you wouldhe take a few months of the protests continue to see what International Companies would do if this continues longterm. Hopefully that wont happen, because who wants to lose hong kong as a premier International Finance center . I could think of several. He has been pointing to the administration in hong kong, pointing the finger there to some extent. You guys are thinking along the same lines. Have a listen. Our chief executive, carrie lam, shes a very capable person, but you should be a civil servant. And all this. Becomes a political problem it originally started off with sending a murder back to taiwan. Shes making a mountain out of a mole hill. Thoughts . One of the problems here is who to listen to and how to listen. I dont want to get into the political details that the chamber had about business, but the issue for businesses is we need to hear something, there needs to be a clear direction, and the clear direction would come from the hong kong government. Becauseyed our members, they come from so many business sectors, and said what would you like to see . What would make you feel more comfortable . The obvious answer was direction from the government, clear communication, and the thing that started it all in the first place, which is the extradition bill and the withdrawal of the bill would send a very clear signal. Thats what members are telling us. Tara, its juliet here in singapore. I know you said it will take a couple months for businesses to start to think about potential relocation, but i was following a twitter stream of your meeting last week in hong kong. Im not going to name who was tweeting, but one of the members was saying that a lot of your members are really concerned, considering relocating. To what extent do you think that is likely to happen . I wouldnt say that people arent considering it, what im saying is that people arent doing it yet, and i think backup plans and looking at alternatives would be normal for a big, International Company in this type of environment of uncertainty. Overall is very important for american and International Companies. They need a secure base to operate when they are in asia. Hong kong makes perfect sense when things are calm and comfortable. It has a rule of law, it has wonderful activity, and hopefully longterm that can be restored. But Companies Need to have a plan as to how they can operate. One of the government spokespeople was saying a lot of these protesters have been on the weekend, so it is not impacting business. Is that the sense that you get from daytoday business assets, that monday to friday, things are going as normal . Well, i walked into the office today without any worry about my own security or whether it would be able to catch a taxi, and generally, everything is working normally during the week. But behind the scenes, there is a lot of talk at the coffee machines. It is the subject of the day at lunch. This specially for hong kong errors, many of whom live in neighborhoods like you long, or who live across hong kong, its a more emotional time and it is the main topic of discussion. Goes, far as efficiency unless there is a protest during the weekday, things are operating relatively normally. We can have a general strike. We could. And we did see that at the airport last week. We had a protest incident, and that was concerning. And that carries on, thats the problem. The thing we are also waiting for today is a response from beijing itself, which is rather unprecedented. Im not going to ask you to comment on what they are going to say, but what do you think they need to do to assuage whats happening here . Its all about one country, to systems and the maintenance and understanding of what one country, two systems is. If that can be held in hong kong, regarded well in hong kong, so that economically hong kong can operate as its own model without being bothered and pushed aside, that is really important for the Business Community. The danger is if they double down, and if there is some implicit threats of the Peoples Liberation army perhaps coming to sort out these protests could be hugely damaging to that principle. The threat of doubling down in that way could be worrying, and of course this all started with the extradition bill, which was seen by the Business Community and many others as the blurring of the line and the taking of way of one country, two systems. If there could be some doubling down, it should be doubling down on asia and hong kong at the world city. If we hear Something Like that, that could be positive news. Tara, i just wanted to get your thoughts on some of the survey responses that you had, that you said you conducted with your members, because you said the primary beneficiary of hong kong would be here in singapore. Yeah. We have been hearing that for a while, right . The primary beneficiary being singapore is an obvious spot. Also because Southeast Asia is becoming an increasingly important market. But other areas that were mentioned were places like the United States, interestingly. Hong kong is mostly a services economy, so there is potential to move things back to the United States. But here, when you think about it, the competition between hong kong and singapore, if i could bring it up its really not one win and the other loss. Its a winwin. It is both hong kong and singapore that are Strong Financial and economic centers. Haveally wouldnt help to people move stuff out of hong kong and operate it in singapore. The real hope is that hong kong can in the long term restore its credibility and maintain a very strong International Finance center. You cant even compare the money flows in and out of china that weve seen in hong kong versus singapore at this juncture. , tara thank you very much. From Amgen Hong Kong. We will continue to reach out to lawmakers and stakeholders on all sides to expand our coverage. We are back. This is a look at the Hong Kong Market as we head toward the lunch break. , hang seng 1. 2 down, the hong kong dollar relatively stable. There are concerns about the curve being impacted by this protest. This is bloomberg. The following is a paid program. The opinions and views expressed do not reflect the opinion of bloomberg or its employees. Paide following is a plexodermment perplexit skincare. Is that me . 61. Do not look oh my gosh, wow. Who am i . I have no lines on my face. Im in love with the mirror right now