The white house says there is no chance of meeting halfway. Victim of the trade war, with lackluster sales. They are putting upgrades on hold. Lets get you started with a check of the markets, the dow falling on the s p 500 sinking almost 3 , every sector on the s p 500 in the red. Of course, the yield curve invert in briefly for the First Time Since 2007, recession fears again, giving some anxiety to investors. Wti continues to be under pressure after the u. S. Session losing almost all of the gains from yesterday that we had after we u. S. Tariffs delay, and had the yen, treasuries surging in the u. S. Session. Take a look at yields, because the 10year yield fell towards that 1. 5 level. We also had the yield curve inverting for the First Time Since 2007. That was a brief inversion in the morning session. Not here, but the 30year treasury yield also breaking a record low of 2. 09 . Futures are down 2 10 of 1 , so lets see how markets are shaping up in this very riskoff session. Bracing forre losses, with the nikkei futures at a drop of nearly 3 at the start of cash trade, and the bond Market Driving yen strength, while gold is adding gains at a sixyear high, and the 10 year yield slipping yet again to a fresh record low, and be looking at the governor in australia, who says the world is at risk of a selffulfilling downturn, and there is major longterm risk for australia. And there is chinese parking prices and japanese factory output, and heads up, guys, south korea sitting this one out with both markets on holiday today. Paul . Paul thanks very much, sophie. Some breaking news, President Trump very active on twitter, saying he has no doubt that chinese president xi jinping could quickly solve the hong kong problem. He goes on to say, i know president xi very well. He is a good man and took that business. I have zero doubts that president xi wants to solve this crisis. That is the latest tweet from President Trump, and for more on what has been unfolding in hong kong and the rest of the days news, lets get the first word news. Reporter next, paul. Chinese Security Forces near the border with hong kong. U. S. Satellite imaging seemed to show vehicles from the armed stadium ining in a shenzhen. Meanwhile, restricted access after days of protest, with airport staff allowed to enter for the time being. China is seeking to plan trade talks in washington next month, indicating negotiations are on track, despite the rough escalation in tariff threats. Were described as very productive, with President Trump saying he thinks china wants to do something very drastic. However, others are not optimistic and are looking at major concessions. The trade deficit continue to narrow in july as imports climbed for a second straight month and signaled a deepening economic slowdown. The gap between exports and thants was 2 billion less june. The reserve bank has cut its growth forecast for the year and cut Interest Rates in a bid to spur growth. British banks are being urged to make changes as the u. K. Heads for a potential no deal brexit. It is said they are slow walking towards the spit. The chance that banks cannot continue to rely heavily on eu clients from within the u. K. Jeremy corbyn has asked parties to support him as Prime Minister in a coalition to block a nodeal brexit. Leaders in the conservative party seeking a vote of no confidence in the Boris Johnson government. Appoint him should as caretaker Prime Minister, so he can delay brexit and call an election. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Paul . Paul thank you. What we saw on wall street, every sector of the s p 500 finished in the red, financials leading the way lower. Goldman down more than 4 . For more on all of this, bloombergs su keenan joins us now. Su, a selloff . , anditerally, a sea of red one analyst said we are seeing sell first and ask later. We had the s p 500 sinking, the dow down 800. Take a look at the futures, which are relatively flat, considering the financials, as mentioned, leading the way lower along with energy. Lets take a look at just some of the sectors that were hit hard and the size of the losses. , and if you look at the first panel of stocks that were lower, we had goldman down. Lets see, lets go to the bloomberg, because the finish here is we talk about the inversion of the bond curve. The last three recessions have not occurred when the curve was inverted. That was in early 2000 and between late two and 2007 for the last two, so the wall of worry is rising. Others are saying, hold on a sec. Lets take a look at the volatility and the losses. Many believe what you will see is increase volatility. Bank stocks down in a big way, goldman down 4 , jp morgan down for percent, energy down close to 4 , pretty much across the board jp morgan down 4 . Down, microsoft we microsoft, and then other stocks, overstock. Com down big time because of some comments made by the ceo playing into this downdraft. And and lyft, big losses, capri. Sophie no surprise given the concerns of the Global Economy that oil is taking another hit. Su what is very interesting is we cite huge buildup in supply, and that was of concern to saw a huge we buildup in supply, that was of concern to investors. Been a very long week, and the concern about the supply glut is back. Take a look at gold meanwhile. It rallied back to a fresh, new sixyear high, and bitcoin, interesting, because last week when it rose, people were saying, hey, this is a new haven play, but the crypto was , and the debate still rages, but some backers say that is because it is just going to be volatile in general because it is a small player. Sophie su keenan, thank you so much for that, and joining us now is the director of capital markets. Phil, great to have you with us. We just had president tromped tweeting again, adding the hong trump tweetingnt again, adding the hong kong layer, saying he has no doubt that president xi wants to quickly and he mainly solve the problems, and then talking about node tensions, so given that talks are scheduled as of yet, we continue to see no real resolution in global uncertainty. The fed is meeting in about a month. For the shirt term shortterm, is this just going to get worse . Volatility is sweeping the market, for a lot of the reasons you just said. It is really since august that we have seen the s p 500 off of alltime highs or highs for the year of 5 or 6 . The market quickly reacted, but it was not enough, it seems, and now, it highlights the protests. Y with the you have hong kong, argentina, all of the protests. Nearterm panic, at least. Fundamentals, though, justify this panic . About i was thinking this inverted yield curve. We came in in the morning and saw that. You know, not inverted at the moment, but it is pretty close, where you could almost argue it is a recession sign. However, if you take a step back, consumers are strong. We have to see what happens in the next quarter and how that progresses. The consumer is still buying. Retail sales in the u. S. There are some good things keeping the u. S. Market up and keeping investors interested in equities. Though, itbroadly has been a very, very long bull run, i think the longest in history. It does have to end at some time. Are you seeing something that investors are taking some profits and backing down . Sylvia doesnt have to end, or is it a self fulfilling prophecy does it have to end . A slowdown, earnings are certainly slowing down. Fears seeing potentially are further pullback, so investors, i think, are certainly reacting to a lot of headlines in the market to get we are definitely seeing investors looking to diversify their portfolios, so i think a lot of them are sort of overweighted, and now we are seeing a lot of player in gold and in 20yearplus treasuries, latecycle performers, so investors, i think, are skittish and diversified and looking at the market with some skepticism right now. Paul you mentioned a minute ago that there are still some good earnings stories out there, so where are they . Gold . Sylvia yes, i think there are a lot of ways to look at this. If you are a longterm holder and have a longerterm horizon, there are opportunities to buy on the dips and on the cyclical names. Tech. There is a lot of growth in robotics, the Artificial Intelligence space, and i think investors like that. In terms of the safety plays and diversifying portfolios, i think going into things like gold, 20year treasuries, etfs, we are seeing performance in the shortterm gold etf, and things like that exist, but for tactical traders, this is for the tactical, shortterm, sophisticated traders 50 off of their highs today. China has been down 15 off of their highs today. China has been down. Regional banks have been down. There are some benefits shortterm, but longerterm, it is the old diversification coming back to remind us about our portfolios. Smallcap,mention underperforming the broader market. If you consider the fact that the u. S. Dollar, as you mentioned earlier, a bad loss, isnt that a little bit counterintuitive . Youia you know, it is, and would think that trade wars small caps might be a more defensive play than large caps just because of the exposure to International Tensions and geopolitics and things like that, but i think it comes back to financial fundamentals, Balance Sheets. Bigger Balance Sheets have more stability right now. That a lot of that just has to do with the higherrisk level, the general market pulling back. Itl on the trade front, looks as though these talks in september are going to go ahead, although expectations seem to be pretty low on either side. How close are you going to be watching this . Isvia i think the market going to be watching closely. What can turn today around . Lets look at what happened yesterday. We need some positive news from the president or president xi that trade talks are going forward. 20 20 is an election year. I doubt that a whole lot will , and i think we have there,sitive potential and we have the fed play, as well. Trade tensions. We will probably get more action from the fed. We need one of the two for the markets. Sylvia, thanks, very much for joining us. Still ahead, cisco gives a downbeat Sales Forecast, with the ceo saying business in china has dropped dramatically. Next, President Trump is not ready to make concessions to china during the trade talks. This is bloomberg. Daybreak asia. I am shery ahn in new york. Paul and i am paul allen in sydney. Lets go over to sophie. Sophie a severe Tropical Storm is said to make landfall on thursday, and Japan Airlines has canceled flights, affecting more than 4000 passengers. It is considering calling off international services, as well, as several rail operators have halted train service. Been stopped. Ve and turning to bond markets, we will be waiting for a key from the doj, hinting yields will drop lower below the targeted range. Down 30 basis bojs before the doj meeting. Shery the tariff delays of President Trump seem to be shortlived. It is said that they will not meet beijing halfway. Remain, withsues the officials saying to stick to plan talks in washington next month. Editor,d to our senior and we continue to see President Trump tweeting on these trade negotiations, saying first that the u. S. Has been winning the trade war. We are winning big time against about theso talking American Consumer being fine with or without the september date when it comes to those tariffs, eventually linking those tariffs to what is going on in hong kong, saying working more humanely, so there are so muddied different layers to these negotiations. So many different layers to these negotiations. A big surge, we saw in the news, saying that some of these tariffs are being delayed, and i think that was a kneejerk reaction. A coincidence that President Trump was trying to put some of the blame on the fed for the economic situation, saying, you know, they have not cut fast enough or deep enough, but, really, i think what we are seeing is there is some data coming out. Germanys economy in contraction, some other weak data from europe and china, and it is clear that investors are nervous, and the world is in a weaker patch, and really, trade tensions have been at the center of that. We have heard whether it is the International Monetary others that trade tensions are among the biggest risks right now, so i think there is probably a little bit of will from the Trump Administration to try to start pointing fingers in a million other directions. This meeting in the meantime for next month between china and the u. S. Is set to go ahead. It is said that the u. S. Will not meet china halfway. Chinese officials for their part saying they were not expecting anything particularly terrific. I am paraphrasing there, obviously. Is it fair to say that expectations are not very high . Comments really underscore what the thinking has been. The temporary reprieve from the tariffs that were announced yesterday, about politics. Trump did not want businesses or consumers to get hit around the holidays. They get a lot of criticism for that, and they were being told to hold off on that, so that was one aspect. And then, we had Peter Navarro and commerce secretary wilbur ross saying the really is no indication there is headwind being made in those talks, that that was the reason for the tariff delay or some softening by the Trump Administration, so even if talks progress, the Early September talks with the chinese coming to washington, it is externally difficult to imagine how they are going to get out of there positions, and, of course, chinas number one is the removal of all tariffs, at the same time the u. S. Is ratcheting them up, so on that point alone, it is hard to imagine compromise. Paul all right, our senior trade editor, sarah, in los angeles, thank you. Some earnings news breaking on the bloomberg terminal. Fullyearr reporting results, net income coming in a little weaker than expected, 527. 9 million. 49lyear revenue, 2 billion. Special dividends of . 17 per share, and this is on top of the final dividend of about . 40 per share, so beating expectations on that front, although there was an expectation that maybe things would not be to fresh. , those results seem to be fairly encouraging. 20 more to come here on bloomberg daybreak asia. Plenty more to come. This is bloomberg. This is daybreak asia. I am shery ahn in new york. Paul and i am paul allen in sydney. Lets bring in our Bloomberg Technology reporter, ian kin. Ian, what is your key take away . Market, other than the world is a wonderful place. Cisco did not say that, the revenue may be flat from the year earlier, and that is really the first order of several. Clearly, people did not want to hear that, and they were beaten up in afterhours trading. Ceo waslipside, the saying, look, i am not calling for a worldwide slowdown, and there are particular sectors are areas that are not too great, but, in general, business is not that bad. Shery this has been one of the companies that has been pretty resilient to the trade tensions and were able to move their supply chain efficiency. What happened then . Is it finally starting to hit where they cannot absorb any more of the costs of this ongoing trade war . Ian it is not so much the costs. It is the orders. Orders went up in the quarter, which is an indicator of what is going to happen in terms of revenue this quarter. What the Management Team said, we got into july when we thought this would be picking up, and that did not happen, and that is indicative of concern going into their customers mindset. The telecommunications providers, the big service providers, are not ordering new cisco gear. They are spending money on base stations. Once we have got 5g up and running, once we get some use out of 5g, then they will have to boost their data centers. Thank you song, much for joining us from San Francisco on cisco. Coming up next, the operator of the Hong Kong Stock Exchange says a solution is needed about the ongoing protests. We will hear from the ceo. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. This is daybreak asia. These are the headlines. More bad econews with a serious downturn, china reporting its weakest factory growth since 2002. The German Economy shrank as exports slumped, and the euro area production slowed the most in more than three years. Marketsu. K. Bond sending strong recession warnings, the worst since the financial crisis. An Independence Day thursday with a disputed region under lockdown for a 10th day as activists are challenging the government claim, with daily a continued communications blackout. Pakistan is warning india it is prepared to defend its own ri territory. Ashmi i warnstan, once again, you. Get ready. We are fully prepared to respond. The time has come where we would teach you a lesson. Planning a new pipeline for oil beyond the strait of hormuz. Completed by march 2020 one. First cargo leaving later that month. Underre potentially threat to warnings of tehran about the straight. The u. S. Has a battle group in the arabian sea and says it will prevent any disruption. Hundreds of flights and bullet Train Services in japan have been canceled with a severe Tropical Storm heading towards the south of the country. Wind could reach 100 Kilometers Per Hour for the storm set to make landfall later on thursday. You can track the storms ress by using the map function you see on the stream screen right now. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Shery . Away we are half an hour from the open in sydney. Lets go to sophie. Sophie we are keeping an eye on further flattening in the yield curve come now at its lowest since september 2008, but looking ahead, a Bloomberg Survey shows it eventually steepening by the end of the Third Quarter with the twoyear yield rising, and the 10year yield at 129 basis points. There could be more caution from to Governor Deputy warning that australia will eventually suffer from the trade war also. Paul all right, thanks very much, sophie. Dam is here with us. How much is this move in markets being driven by market concern and how much about the market doubting the Central Banks . I think this is a confluence of negative factors coming together at the same time. Also, in the last 48 hours, we have had an investor reappraisal of the trade war. We had a brief rally in markets, but i think other people reach a conclusion that things must be have hadd for trump to to do that. And the economic worries we got in the past 24 hours, and, indeed, the Central Bank Credibility situation is one of the reasons why you are seeing relentlessart, this pressing down on global bond deals in many places of the world already in negative territory, many places like australia, where you can get less than 1 on your 10year bond. As Mohamed Larry and was saying earlier, the absence of the fed now being even looser than they are, there is no anchor anymore to stem the flow. There is a lot of talk about whether the fed come out and do something. Of course, many people argue they should, but they probably will not, especially with jay powell at the helm. And then getting to the jackson hole symposium in terms of speakers, there is little on the policy front that can give a little bit of a circuit breaker, some real stress we are seeing a global markets. It gets really complicated for equity investors, right, what to do in the bond market is sending these warnings. What is the risk of missing out on further upside if you do something too early . And as we were told earlier at bloomberg, the equity chief strategist, there is about a 30month lag between the inversion on the u. S. Treasury curve and when you technically get a change, and this chart shows it pretty well. You tend to get stocks still grinding higher and giving some decent return if you look back over history. Of course, this time, it might be slightly different because of the way that Central Banks have manipulated those lower bond yields, but if, indeed, you get this continuation of an equity market that continues to be the only place or resting places that people think they can get a decent return over the medium term, then you may, in fact, get a prolonged period, certainly over the next six to 12 months, where you get people wanting to add more money into equity markets and to grind higher, but, of course, there are a lot of concerns now building up, and some people, at least, are wanting to take a bit more of a cautious approach. , thank you. You can find his charts on o. Omberg on gtv what has happened today is broader than just the fed. It is about Global Economic weakening. You do not need an inverted yield curve to know that things are not as rosy anymore. The bond market in the u. S. Is finally screaming, ok, we have had enough. Weeks ofeks or eight inversion followed by the yield curve starting to steepen, then i would say, yes, it is a sign of a recession, and it is also signaling a turnaround. I am sure the fed is looking very hard at what is happening with stocks. More progrowth policies to lift things, but, unfortunately, that is not likely to materialize, and that is the big concern, looking forward. Perspectivet more on the yields, with wells fargo securities, a guest joins us on the line from charlotte, north carolina. Rate to have you with us. We continue to hear all of this could turnand what the tide . Haigh wasll be as adam telling us that it is all about jackson hole next week . Economic data is taking a backseat to geopolitical worries, brexit, trade, et cetera, so for the time being, we do not think the data will move it as much as perhaps a president ial tweet or news out of hong kong protests, so at this point, the fundamentals are taking a backseat, and geopolitics is taking a front seat. Shery the relief or some investors is the inversion of the yield curve does not necessarily mean imminent recession. They are saying that it has to be inverted for a while and a steepening of the yield curve, which could be problematic. Does that give you a sense of relief, or what other negative yields lower the across the yield curve have . Zach yes, when it comes to the curve inverting this time around, we kind of focus on the impact qe has had on longerterm rates. If you look at the 10year term rate, it is about 125 basis so we think while the fed Balance Sheet has come down a bit, it remains quite inflated, and that is putting downward pressure on longerterm yields, so we think the curve is a less a tougher predictor this time around and may not be as consistent as it has been in the past. Yeah, as you point out, it is not always 100 reliable, but we do have the new york fed predicting well, recession odds of about 30 , every time it recessionbove 30 , a has followed, so what do you make of that . Call it wells fargo is for growth in 2019 kind of on the back of a strong consumer. A lot of uncertainty that we have seen lately is around trade and Business Risk investment. These uncertainties because ceos and Business Leaders to delay spending, but at the end of the day, that is a much smaller part of the economy that the consumer is, and the consumer was strong in q2, a smaller part of the economy than the consumer is, so from that perspective, we think the economy is in good shape, and we are not calling for a recession anytime soon, despite what the yield curve is starting to hint at. To seeell, do you expect this inversion persist . We expecto not, and the curve to steepen into yearend. A couple of big factors that we think will drive this steeper, perhaps we get through some of this Geopolitical Uncertainty over the next month or 2 the fed is coming in and buying treasuries again, and by our estimates, roughly 50 of those purchases are going to be focused on the front end of the curve, between zero and three years, so that is one of the factors we think will propel us steeper as shortterm rates remain somewhat lower, and treasury supply remains very robust, as we expect the issuance of 1 trillion for this primary we look at dealer Balance Sheets. They are already pretty full of treasuries, so having supply and somewhat weak demand would push the back higher. Wel yes, and to your point, are just getting some headlines rba saying he is not sure he would rely on the yield curve about recession. Zach, thank you for joining us. President trump has been tweeting his thoughts about president xi jinping, about what he is calling the china problem, saying he can quickly and humanely deliver a solution and also suggesting a personal meeting. The Economic Impact of the disruption, our chief correspondent, stephen engle, is in the tourism part of hong kong, and, steve, the economic concerns now seem to be getting somewhat real for hong kong. Eve yes, absolutely, and maybe those six days of protests at the airport did raise the International Profile that the protesters wanted, and we are getting more comments out of washington, d. C. , as evidence of that. That more recent tweets, and there has been more from President Trump on the hong kong situation. I want you to bring up that tweet again that you just alluded to, paul, because i think there are two key parts of that tweet. The first and probably the most critical part of that tweet is he believes that president xi jinping could resolve the situation in hong kong quickly and humanely. That is the key word, humanely. We all know that president xi and the authorities could probably end this fairly quickly and that that would possibly involve some level of force. That has been amassing on the other side of the border. The key part of this tweet is the term humanely. Also what i found interesting in this tweet was the last sentence that had a question mark at the end, personal meeting . So using this as a way to possibly get a personal meeting with president xi jinping. Donald trump likes to think of himself as a Good Business broker. Perhaps, he could also give some input on how to resolve the situation in hong kong. I am not sure what exactly, but, you know, as the white house has been fairly measured on hong kong, donald trump really has not had a very strong condemnation or strong support of beijing. He has kind of been playing both sides. An answer to a question just yesterday, he said, i hope it works out for hong kong and for china, as well. He says it is a tricky situation. Now, while the white house has been more measured in response, they do not want to promote beijing at the time of sensitive trade negotiations. We have had other people in washington, d. C. , who tweet out much more sharp tweets. Marco rubio says beijing stands on hong kong as a cautionary lesson of anyone thinking about any kind of trade deal with them, meaning beijing. He is, of course, a cosponsor of a bipartisan bill that could potentially withdraw the special trade relationship that hong kong has with washington, d. C. Also, senator Lindsey Graham says 30 years after tiananmen square, all people stand with the Peaceful Protesters in hong kong, and he went on to say that this is becoming a defining relations,u. S. China white stronger from those two republicans in congress, quite a stronger from those two republicans in congress. As these protests continue for a 10th week or so, we continue to hear about the Business Impact that this could have on the financial hub. This gtv chart on bloomberg showing a declining economic cloud, this shrinking in the past decade, so what is the of hongfor the economy kong as these protests continue . Steve yes, where do you want to start . It is a potentially long answer, because you have so in different parts of the economy that are affected. One of the big shopping malls here that caters largely to tourists, already, we are seeing the tourist numbers slow to a trickle, in large part because of the protests, but also because beijing is more heavily scrutinizing those who come down to hong kong. Also behind me is a company headquarters, cathay pacific. We all know that they have been hammered because of the airport turmoil. Also were here, a marriott hotel. Hotel revenue is dwindling. Also, revenue is suffering. Hong kong is going to feel the thefects of these aftereffects of this protest, and there is no end in sight. Shery thank you so much for that, our chief north asia correspondent in hong kong. Coming up next, after yesterdays data dump, we now wait for another crucial indicator. Newhome prices will talk about whether or not there was a strong start to the year. This is bloomberg. Shery and we have breaking news, a pc maker, lenovo, beating earnings. This was against expectations of 152 million. First quarter revenue was also million,g in at 12. 51 2. 7rating profit at 34 million, so, paul, a slight beat for lenovo. Weakestina posting its factory growth since 2002, retail sales in july also slumping, and unemployment rose to 5. 3 . We do have one final reading this week. It was the newhome sales data from last month. With a preview of this, we have a Standard Chartered economist. It is fair to say the numbers out of china recently have been underwhelming, and that is being polite. Do you expect property prices and the demand outlook to be much different . Expect a moderating trend in the property market, not as strong this year. Sentiment clearly tier evaded giventhe beginning of q3, items targeting developers. Prices, we think they will be stable the rest of this year with no correction, because developers are likely to start cutting their selling price in order to accelerate their Sales Revenue collections, but the downside room is relatively limited given the high acquisition price. Housing transactions, housing sales, are likely to remain sluggish the rest of this year, given restrictive measures. Paul yes, do you expect this to be causing some pain for Property Developers when it comes to refinancing . Shen yes. Developers conditions improved the first half of this year with their Credit Access going up. This gave them a better position for the difficult times ahead, but the recent tightenings with many controls, the developer channels, it will likely put more pressure on developers cash flows and force them to accelerate sales. We have seen housing revenues account for about half of average. S funding, on for smaller ones, it is higher. For housing sales remaining week, we think that the tightening will eventually weigh ity andlopers activ lead to consolidation in the sector. Shery do the hong kong protests affect what is happening in Mainland China at all . Shen we think the hong kong protests will definitely affect the investment appetite for onshore investors to the hong kong markets, and it will also cause the slide of growth as well as capital flight and hong kong markets, so the negative impacts will last for some time. Yuan is the chinese still trading around that seven level. Does the weakness affect the markets . Shen we think that the Exchange Rate is rightly driven by the market force right now, so policiespolicy and the in the Real Estate Market might have a bigger impact on chinas Housing Market transactions, so for now, as we get disappointed, we anticipate that q2 and july is likely to elicit more stimulus measures from beijing, especially on the monetary cutcy side for a possible and a market Interest Rate cut, but we are thinking beijing will continue to improve putting support to private sectors and manufacturing sectors instead of property sectors, so financing conditions for developers will remain relatively tight for the foreseeable future, but if 6 , we growth dips below think they can temporarily ease to help controls. So much, ouryou Standard Chartered economist joining us from beijing. More on daybreak asia. This is bloomberg. Lets get a quick check now of the latest business flash headlines. Warren buffett is getting a , buying a newman chunk of Berkshire Hathaway, bringing its total stake to nearly 700 million. Uber has spent many days trading below its ipo price and failed to a record low on fears of a global slowdown adding to a disappointing secondquarter results last week, the stock dropping to the lowest price since its debut. Take off inarkets tokyo and sydney at the top of the hour. Soph, what are you watching . Lookingasian stocks are at heavy losses in australia, and stocks in tokyo and sydney right there, and the futures, the are testing the risk aversion this morning. We are also watching the strength of the yen on haven buying. Oneto much suey Company Looking at upcoming u. S. Data, including Retail Sentiment indicators tier rating which could see even lower levels, so that could encourage something from the boj and central bank, looking for signals about sensitivity with on futures rising to a record high. Littlecurities, seeing resistance, breaking 25 basis points, with cash trade in tokyo, and this is a snapshot for when trading kicks off in asia, plenty of focus on the bond market, in particular. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Markets about to open for trade. I am ood evening, good morning, i am shery ahn. Daybreak asia. Paul our top stories this thursday, clouds are gathering over the Global Economy, string of disappointing data flags a serious downturn. Hong kong braces for another weekend of protests them up President Trump weighs in saying president xi could easily deliver a solution. An increasingly strained time between korea and tokyo. Lets get straight to the Market Action in sydney in tokyo. In the session we are setting up for a red day, sliding while the yen is maintaining its overnight strength and it could be looking to test that one of five handle if the risk aversion momentum continues. Jtb yields could look to negative territory, we could see a push into negative 25 basis points. Lets check the mood, we have by half. 00 lowering the aussie dollar higher by. 1 of 1 ahead of aussie jobs data along with chinese property prices. Keep an eye on the aussie 10 year yield, we are seeing it the 2210 even further as we see concerns run growth. The rba Deputy Governor warning that australia may feel the impact of the trade war in the long run. Wellington stocks are off by one point 6 . Were looking at a down day for asia this thursday. Paul thanks. Lets check in on the first word news. New images may show chinese Security Forces near the border with hong kong. U. S. So m a Satellite Company appearing to police in a stadium. Hong kong airport is restricting Public Access on todays protests. Only passengers with valid tickets and airport stocks would be allowed to enter for the time being. China is sticking to planned trade talks in washington next month indicating negotiations are on track despite an abrupt terror threats. Describing recent talks of the phone as very productive with President Trump saying he thinks china wants to do something dramatic. Sources in beijing say negotiations are not optimistic and are are optimistic and are likely to make major concessions. India marks Independence Day with the disputed region under lockdown for a tense day. A team of activists is challenging government claims that life is returning to normal there. Protests amid a Daily Communications blackout. They say they are prepared to defend its own territory of necessary. India as you plan to attack on pakistan administered kashmir, get ready, we are fully prepared to respond. The time has come when we will teach you a lesson. Newran is planning a pipeline to export oil from beyond the strait of hormuz. Willlink to the cfo mond be completed by march 2021 with the first cargo leaving later that month. Oil exports from the gulf are potentially under threat amid warnings from shery ahn about closing the straight. The strait of hormuz. It will prevent any disruption. Bullet Train Services have been canceled with a severe Tropical Storm heading toward the south of japan. The weather agencys headwinds will reach 100 Kilometers Per Hour. Storms said to make landfall canr on thursday, users track the progress by using the map go function, you can see it on screen at the moment. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Huawei announcing it is seeking a [inaudible] the federal agencies from buying from huawei. Why we responding to the u. S. Request to have its Lawsuit Dismissed saying that the [inaudible] ways under pressure from huawei is under pressure. Not necessarily the blacklist where commercial entities in the u. S. Have to get temporary licenses to buy from huawei. Seeking that ruling to be overturned on u. S. Purchases. Paul thanks. More more on what to watch as markets open, Mark Cranfield joins us from singapore. Obviously the big talk talking point, the inversion in the 210, that is the yield curve we have been watching for some time. Horsemen of the apocalypse or something simpler . Probably a bit of all of the above i suspect. We need to take it seriously. It does not guarantee there will be a recession, but often the case that within 18 months to two years after a yield inversion recessions follow. People will be factoring that into some of their calculations. Fact that the the curve flattens so much in the states, the dramatic flattening in the past month has cut people off guard. It usually moves gradually but it has fallen off a cliff in the past month or so. Sentiment has deteriorated a lot more. You add that back into the negative yield which is seen across major markets whether it is in germany, japan, switzerland already deep into negative territory. More and more countries are getting negative yields, you have curbs flattening. More people will be factoring in the risk of a severe downturn and the mobile economy. It feeds into one another so it is not surprising that people are grabbing anybody else they can. Even as far away as malaysia. We saw yesterday high demand from a more relation a malaysian bond auction. 100 basis points lower than they were a few months ago when there was how the in the demand for bonds. It is a global thing. Anyone who can get a bit of yield is trying to do so. Shery really testing the bojs resolve when it comes to the 10 year target. Nearing the floor that the governor has put on the 10 year yield. View we have a good macro from my colleague talking about the flexibility that the boj has and how they may need to define that. It is a problem for them. It feeds into the global story. The bank of japan could say what can we do about it . Yields are being driven by treasuries, treasuries forcing yields down everywhere. Jgb has to follow. It is a real dilemma. The bank of japan has said in the past that they would like to , 0. 2 more movement percent on the jgb. We have gone through that and heading toward alltime lows on yields. At some stage they may need to clarify what they mean. Modesty need to do some intervention in the markets to slow down. Everything everything. Insurance companies have got enough trouble as it is trying to find any kind of return and when you drive fields into such deep negative territory there is a big problem for pensioners in japan. Situationjor economic for japan as it is for some other countries. It could well be that we will hear voices from the bank of japan protesting about the strength of jgbs as they may need to on the japanese yen which is back on the one of five handle and looking strong. Not an easy day for japan. Shery thank you for that. We will see what our next guest is expecting. Great to have you with us. We are seeing bond yields around the world falling. The new new zealand 10 year yield is about to fall below 1 . Flight tof this safety is justified by fundamentals . Margaret good morning. We are seeing Market Sentiment andurning bearish overnight [inaudible] beenve seen before have wiped out completely. The treasury yield curve in the u. S. As well as the u. K. Has inverted for the First Time Since the subprime crisis. There is a correlation between the yield curve inversion and recession, in the past it tells good indication of a recession. This recession could come if consumers are fleeing the putssion that is coming and curbs on purchasing and spending. That will transfer into corporate earnings. The session. Edite if the market believes the recession is coming and the Market Reaction toward that direction that could kick off a feedback loop into the economy. Willing out this assumption i would say the u. S. Economy is outperforming the rest of the world. Those macroat Economic Data like core inflation as well as Unemployment Rate. The economy is still in a good shape. Shery as you say, the treasuries you will be in demand given what is happening in the rest of the world including negative yields, Interest Rates abroad as well. Isnt not totally absurd to treasury markets and going into negative yields as well . Think theyes, i capital is fleeing into safe havens including like gold and silver. It is pushing down the treasury yield even lower. Capital are fleeing into the bond market looking for safety. In the immediate term, there are headwinds in the market and so many uncertainties including trade uncertainty and economic downturn. Secondquarter gdp is getting close to zero. In asia the open economies like singapore and hong kong are facing downward pressure. That is ringing alarms too many investors. We are seeing this technical correction in the risk assets endently going to the deep in the shortterm. It depends on the macro data especially from the u. S. And china. I think now the outlook is full of uncertainty. We also are watching on the next step to be carried out by the fed as well as the u. S. China negotiations. If the u. S. Market tumbles it will put tremendous pressure on President Trump administration to [inaudible] china and policy with the trade process. Paul on the subject of the fed you made a point, i ask a lot of questions about. If the fed is data dependent and jobs are looking pretty good, it does make the argument to cut rather more difficult. Where do you see the fed heading, will we get a few more of these hawkish insurance cuts . Margaret that is a good point. The Federal Reserve is in a difficult situation. It is struggling with cut or not cut. If that is neutral in the data dependent, looking at strong cpi data from u. S. Came out early this week as well as Unemployment Rate at decades low, it will have little reason to cut Interest Rates so far in september. On the other side the fed is racing pressure from the white house and trump and the markets. For saying what will happen in the next couple of months, the fed will probably have to support market with dovish statements. They are now in a difficult situation. The market is hoping and pricing in hundred percent probability of that cut in september and maybe one more cut down the road by the end of the year. Disappoints market withholding rates unchanged in september meeting, that will lead the market to fall even more. For bid if the fed disappoints. To your point earlier on haven demand we had a guest a few hours ago from bank of America Merrill lynch giving a forecast for the gold price, 2300. Do you think that is a bit overblown . Margaret that number seems to be a little out of the chart. I wont say this entirely impossible, it is still a lot of room to go up from the current 1500 level. I think gold is still one of the top picks, the Current Situation to hedge against currency depreciation with, Central Banks are cutting interestrate risks as well as political and economic risk for now. In the shortterm, there is still some more room to go up for gold. Given the fact that gold is an asset class that is not giving any dividend, and he returned like cash flow to rewarding letters, so treasury is giving 1. 5 return for the 10 year u. S. Treasuries. Attractiveoks more from make cash flow point of view. Paul a whopping 1. 5 . Foraret yang, thanks joining us today. Still to come, tencent comeback is stalled. We will break down the latest results as the Company Looks to move on from a horrendous 2018. Kong the latest from hong as the tension turns to the attention turns to the prospect of more protests this weekend. This is bloomberg. Shery this is daybreak asia. Paul President Trump has been tweeting his support for president xi in dealing with what he called the hong kong problem. Saying that the chinese leader can deliver a quick and humane solution. This tweet comes with more protests planned in the city that is feeling the Economic Impact of the disruption. , aphen engle is in admiralty key business and tourism part of hong kong. Our conditions consider condition seem to be [inaudible] economically. Keeps the government going on about the damage to the economy. That is a main reason why protesters took their protests for the last six days out to the airport. They wanted to spread that message internationally and have burn,d the slogan, if we you burn with us. They want the damage because it gets headlines in attention of the International Airport committee gets the message out internationally and then we get more comments from the likes of donald trump, he has commented on it numerous times now in the last 48 hours. In various tweets and comments for the cameras. I want to bring up that tweet again, the most recent as he has said this is a tricky situation right now. He said he hopes it works out well for hong kong and china but in this tweet that the came this morning he says, i have zero debt that if president xi wants to quickly and humanely solve the hong kong problem, he can do it. We all know that president xi and the chinese can and this swiftly and harshly but how can they do it humanely and should they be involved question mark they should be a hong kong issue, right . We will see. The last line, personal meeting . Will they use hong kong as an argument for those two gentlemen to get together and talk about it. Shery we have mentioned earlier the Economic Impact on hong kong. Didnt chief executive carrie lam talk about bold measures on the economy . What is the outlook . Allhen that is what we are waiting for, what are those bold measures . A gentleman who did not want to be quoted but who is responsible there wasponse a plan to boost the economy and spend a lot of money. It was controversial. Wheres the plan from chief executive carrie lam of those bold measures question mark we bankhearing that the two sides need to bridge their differences and come together but what is the solution . Lets hear from charles lee. He is the Hong Kong Exchange ceo. It is notarkets down looking great. Heres what he had to say. Charles this is not helpful as a financial center. Trust and confidence are the most important and in this regard, we clearly, the city, this place has a lot of deeper issues for us to sort out. And we have to find a way to work this out. Again, a solution a concrete measures to resolve this problem is difficult because the chasm that has built up in society and it is a polarized city. A common enemy. Finding a solution will be difficult. We just heard from the South China Morning Post that the first head has rolled. Reassignedas been perhaps to take the fall for the handling of this now more than two months long crisis. Shery thank you so much, stephen engle, our chief north asia correspondent. Plenty to come on daybreak asia. This is bloomberg. Paul this is daybreak asia. Hathawayrkshire increase in appears to be increasingly bullish on amazon. Warren Buffett Company boosted its stake by 11 . Su keenan has the latest and we know they have a big bet on apple. How does this compare . Su apple remains one of its Biggest Holdings and amazon is a billion dollars smaller. What we are learning from these snapshot,alling for a a sneak peek into the holdings in these portfolios is that his deputies are increasing the tech dings and shifting away the way berkshire looks of them. Theyre filing shows a 1 billion share of stake as again the june 30 filing come a we dont know if they have increased or decreased since then. Warren buffett again viewed as the value icon for many hedge fund managers. Streety the Main Investors like to follow this, but also one wall street, close attention is paid to what he is holding. If we take a look at one of the bank ofings, he has america, cocacola, those are among his Biggest Holdings along with wells fargo at american express. The amazon stake has been boosted by 11 and he cut back a little bit on the food companies. What was also interesting is that one of the hedge fund viewsers, bill ackman, Warren Buffett as a hero. Normally he will take shares of a company to act as an activist and take over the board. We told that is not the case here. Paul do we know notice any big trends . Su what was interesting is the big hedge funds piled into uber after the slight slightly disappointing ipo. What is interesting is the 25 since that time. Other funds are also pausing. In alibaba shares and lets take a look at what carl icahn added, adding shares of occidental and diamondback energy. Energy holdings were cbi which is up 29 year to date and occidental which is, as you may know, Warren Buffett was on the other side of that recent acquisition that carl icahn opposes and he is applying some pressure to the board. Paul thanks very much for that. Lets get a quick check of the latest is this flash headlines. Has lost some appeal for investors. They are trying to take on starbucks. Issuing earnings for the first time as a public company. Still posted a net loss of almost 100 million. They have questioned the strategy of sacrificing profits to lure new customers. And a lackluster Sales ForecastShows Companies holding off on Computer Network updates. Higherill be flat, 2 compared to a year ago. Next, commodity watch, we will keep an eye on oil. This is bloomberg. This is daybreak asia. Or bad a good news flagging the threat of a serious downturn. China reported its weakest factory growth since 2002. The German Economy shrank as exports slumped while your area production fell the most in three years. On top of that, the u. S. And u. K. Bond markets are sending their strongest recession warnings since the financial crisis. Deficit continues to narrow in july as imports decline for a second straight month as signals are deepening economic slowdown. The gap between exports and imports was over 13 billion last month. 2 billion less than in june. Reserve bankers cut forecast for the year and cut Interest Rates four times in a bid for growth. British eighth banks are doing more to accelerate the transfer of resources to the u. S. The u. K. Heads for a no deal brexit. Slowcb says lenders are walking toward the split and have moved significantly fewer [inaudible] to the eu thin was foreseen. Rely cannot continue to servicing you clients been from within the e u. K. And a coalition to block a no deal brexit. He wrote to other leaders and rebels in the conservative party seeking support in a vote of noconfidence in Boris Johnsons government. He said if the vote was successful they should appoint him as caretaker per minister so he could do a brexit and call an election. Canadian Prime MinisterJustin Trudeau is being dragged into the biggest scandal of his time in office weeks before the next election. A watchdog has ruled that he interfered inappropriately in a judicial matter by seeking to help an Engineering Company settle corruption charges after court. His poll numbers sank on the initial accusation but have been recovering. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul thanks very much. Lets check in on the Market Action with sophie kamaruddin. Stock selloff is continuing in asia led lower by japan and the topix up and aussie shares are up. Its forecast as the trade war drags on. In the bond space treasuries have studied with the 10 staying near its 2016 low. Jgbs are rallying with other bonds pushing the yields to a july 2016 low. Target range. Ase the market is looking to the bojs for signals. Falling on aspects of further margin pressure from these lower rates. Its First Quarter results with net income growing 22 . [inaudible] after it posted a fourthquarter loss. Shery oil has tumbled the most a week must slowing swallowing u. S. Supplies. Indicators are showing some of the deepest signs of stress since the 28 2008 financial crisis. It seems that the focus in the oil market is dramatically shifting toward a demand outlook more than geopolitical risks are continuing to rise in the middle east. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. That is correct. If you look at the oil markets the whole story has shifted away from a supply side story that we have seen over the last several years to a demand size story. What we see the demand is slowing down across the markets, our estimate is that global oil 600. D is 500 or to give you a perspective, growth tends to be 1. 2 Million Barrels per day. All the major demand indicators are prettytrack bearish over the last several months. If you look at the global trade volumes it has been the weakest since the 2008 crisis. Freightne fleet and airline [inaudible] freight [inaudible] if you look at Global Manufacturing pmis they are clocking below 50. The link to where the overall manufacturing [inaudible] and the biggest example is falling Global Oil Sales across major markets. In china and india [inaudible] at the slowest in two decades. All these factors are making a cocktail of headwinds for oil demand and that is what you see demand slowing down from here. Paul a lot of gloomy macro effect factors. Thats have gone solo, well provided tailwind for demand . Interestingis an point. If you look at what happened in Oil Prices Since 2014, most of the demand has come from emerging markets. 2014, it was 100 plus. Although markets have price subsidies. Ledr the price crash that to oil prices below 14, most of these markets, china, india, brazil, just to name a few, they moved the price and increase taxes on fuels and the dollar continued to increase. All these factors together are inmake domestic prices emerging in emerging markets higher than they were. These markets are not getting what they need for demand to pick up and emerging markets have been [indiscernible] things have improved from the demand side. Prices are not helping. Is interesting as demands are playing out in emerging markets. What happens as we have these low prices, could we see opec doubling down on supply cuts . That that is something comes to the table and we believe opec will have to do that. Demand growth is so slow that opec will have to cut more supply. It becomes a catch22 situation. Pricesll prop up oil over the nearterm. Because of the higher prices and the fact that i mentioned earlier, demand does not pick up materially. That will mean there will be more demand contraction from higher prices. Eight lower price environment. For prices to move up, we need demand growth to improve. And u. S. China tensions to ease. Ut supply cuts will make things better in the shortterm. [indiscernible] paul thank you for joining us. Reporting seventh revenue that missed estimates. Growing worse than expected at 10 . Kong and over to hong our guest. Tencent is for disappointing. To what extent is [indiscernible] or is that a factor . Revenue disappointed in the Second Quarter. It is due to a couple of factors, one is the weaker demand because of the macro slow down and second, because of the increased inventory in the market especially from the [indiscernible] third, because of the last cup in june and july year and fourth is because of the delay in terms of the [indiscernible] due to the government approval the 70the to anniversary of the republic of china this year. It is due to a multiple factors that lead to the slowdown. In thegrowth persists second half of this year. Nothing will change but tencent will mitigate the impact by increasing inventory which is a unique property. The pricing is resilient. If you look at the social [indiscernible] still quite strong area 28 year on year. The margins for advertising is high. Gross, it ist that 50 year on year. We dont think that is shortterm pressure because of the macro but it will not have a big impact in terms of earnings. Paul in terms of margins, i want to bring up this interesting chart on the bloomberg that illustrate some of the unique problems facing tencent, the company is 300 times bigger than it was 15 years ago but as it has grown, its margins have begun to fall and sales growth is falling. Is this the law of diminishing returns for tencent, has it spread itself a bit fiddly . Guest right. The margin is declining. The new business such as the car business which are not making money right now and that is why the margin is declining. For those businesses, accounting for 20 of total revenue. The business will be huge in the long run and profitable with 25 margin in the long run. The two force you can see it is 100 billion for evaluation which is 25 of the market cap. If you look at the margin or pe [indiscernible] the company. Shery if tencent was holding its own against financial fintech is fact that a Young Division for them. Yes. Their online payment business is lagging compared to alipay. When we go to the mobile world, things change. Tencent took the first move to go offline and invested in a tople of their businesses [indiscernible] for their mobile Payment Services and using [indiscernible] to use the mobile payment. They also issued to link up the. Ong tail merchants there offline payment is going a lot faster compared to alipay which is 6 of alipay. Now by volume they have 55 off the mobile Payment Market. By value it could be 40 . Are capturing 90 of the mobile Payment Services, 30 or 40 of the total Payment Market in china. Alibaba is a company that has been getting into lots of different areas of business. Reache seen them try to into lower tier cities as well. As we await those earnings results, how closely are you watching their margin trends . Guest right. We expect the top line, [indiscernible] a few days ago. The top line beat expectations. Online has been a lot more resilient than people expect as they are penetrating into the lower tier and penetrating into older and younger people, they are using more smarter products recommendations, social content, livestreaming, and purchase on the platforms. On the margin side we expect that there is a lower margin in the Second Quarter because of the advancement in [indiscernible] which they just acquired recently. Soy want 50 market share they will increase the subsidy in the Second Quarter. We may see the operating profit grow around 15 which is slower than the last 2, 20 4 . It is important because once they hook up with all these restaurants they are not just generating revenue but generating revenue from restaurant software, Payment Services to this restaurant. That will be positive for their longterm growth for the company. Paul as you were talking we saw a chart of alibabas share performances, up more than a percent and combined with tencent, they have lost 140 billion of market value since may. Do you think that is a fair reflection of their performance or are they Collateral Damage in the trade war . Guest right. Both stocks doubled in 2017. The performance since then is under pressure mostly it is due to the macro impact. If you look at the top line Growth Committee is still robust around 30 and if you look at forward growth, it is also able to sustain 20 to 30 or even the earning growth of both companies. Tencent is driven by gain and alibaba is driven by ecommerce. The monetization has a huge potential that can double advertising revenue. Growth for forward these companies are attractive and the current valuation which is [indiscernible] times pe for both companies so it is a good entry point. The macro is going to have pressure on both, and that could be a relative depreciation. If global fund underweight china, this other stock as well. Shery thank you for your insights. Nice, korea marks independence in the wartime defeat of japan. We will look at the relations between seoul and tokyo. This is bloomberg. Paul this is daybreak asia. The trade spat between tokyo and seoul continues as both sides it marks the anniversary of japans defeat in world war ii. Both will deliver speeches which will be closely watched for any statements that could aggravate the simmering feud. The koreannow is institute president. Have seen tensions for years whether it is historic or territorial. We never really saw it escalate so much and the economic sphere of things. What will it take to break the standoff . The official reasons that japan gives, there are restrictions on exports, they are about sanctions breaking by south korea. I think everyone acknowledges the real problems are historic. This is japan reacting to the south Korean Supreme Court decision as last year which said force labor is still owed compensation. It take to will break the standoff . Will the u. S. Intervene and what could washington do . I dont think the u. S. Can intervene. It could provide good offices, have conversation to discuss the common interests they have and maybe try to provide some kind of a venue for conversation about the historical issues which are still out there to be discussed. You think there is a degree of pride getting in the way of common sense here and how dangerous is that . Mark it is not just pride. It is tempting to say that they are acting in an emotionally rational way but these historical problems are very deep and not result in we can put behind youou but you never get past history. You have to manage it or deal with it or live with it. At the same time you are dealing with current contemporary problems and challenges. Paul and is such an emotionally challenged environment. Tensions flare up before and calm down again. Mark in the past there were politicians who knew japanese politicians personally and the could talk behind the scenes so that is not the case now so much but difficult to engage in dialogue. Both sides have domestic political restraints in with they can do to find accommodation. What has to happen is there should be conversation among the japanese government and south korean government, the japanese corporations and the forced laborers, to see if there is a fairer settlement of some four some sort. Japan force labor law is not a settled issue. It is even heard in california cases so it is not done yet. The south korean government has some responsibility for the fact the laborers were not paid for their labor. When japan gave south korean they did not give it to the laborers directly so there are still some issues to be had. We are seeing japan removing each other from trusted hardwares economically. List and so forth. What does that mean economically the cut as we have not seen any more clarity from japan of how this would actually get enforced and how severe this could be. Mark you are correct, we have not seen how japan will increment it. Japan issues licenses quickly. The impact could be more minimal. If japan slows licenses down or does not issue them or what drags, there could be some serious consequences. It is difficult for korea because they do not want to be too alarmist. They want to assure investors and shareholders that they can manage no matter what. The problems have to be elevated and be taken seriously. There is an interesting point that some sung has secured [indiscernible] and this is a critical in agreement ingredient in chipmaking. Does this illustrate a risk for japan because as you mentioned, there are no political relationships like they used to be. Is there a risk that south korea might go back to an unreliable chains and these supply would remain unorganized . Mark they would be a search for other suppliers and that will go on, whether it is belgium or china. The korean corporations will have to look for alternate japaners if correct if does not grant licenses. If they can get the problem behind them they can get back to a more traditional trade relationship. They need each other. Paul thanks for joining us. Still more ahead on daybreak asia. Stay with us. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Macys has plunged as quarterly numbers missed estimates and also cutting its profit outlook and warns that even that cut does not take into account the next round of President Trumps tariffs. Disappointing figures are fueling fears that the tutoring apartment store industry is stocksfor more pain with in Traditional Chain Stores tumbling. Paul Berkshire Hathaway is hosting its holding in the second Second Quarter. Berkshires view of Tech Companies has been shifting. The stake is smaller than its Apple Holding which totals almost 50 billion. Berkshire raised its holding in bank of america. Shery Warren Buffett is earning an investment boost from bill ackman. The activist investor has bought himself a new chunk of which are bringing the stake to almost 700 million. The investments have returned almost 50 this year according to its website. Acrossand yields falling the board this morning. Lets get a preview of what to watch in markets later today. Earningsong kong focused, tencent results will be in focus. Revenue growth disappointing in the face of more competition for advertising. Thanng better earnings expected after claiming the top spot in the global pc market due in part to major new orders in india and other markets. The exchange came through with a solid report card for the first half of revenue from the program with a big boost offsetting weakness at home as turnover time. D during the the outlook is being overshadowed by macro risk and political turmoil in hong kong. Shery that is it from daybreak asia. Markets coverage continues as we take a look at the start of trade. Open,ina for the china this is bloomberg. David so you have been to north korea and met with the leader of north korea. What kind of person is he . Have you communicated in english with him . Can you summarize your impression of the leader of north korea . Withs, i spent more time him than any american. I passed Dennis Rodman on the last trip. Trump never tweeted anything unfavorable about you. My experiences sometimes when people get close to a president and see the job up close they say, i can do that job. Does that occur to you that maybe you could do the