Government has fallen and we have a possible new coalition on the table. He will talk about a german bond auction. David we have a 30 year and they will test the market today. On top of australian markets, they sold 800 million worth of debt. Average yield below 1 . It seems the bond markets are pricing in more easing and the world gets worse from here. Our guest is with us out of singapore, head of asianpacific economics. Our things likely to get worse before they get better . Well, it is certainly a very challenging outlook. Exports in have seen the economies are feeling the impact of the collapse of trade volumes and it is not only about trade. We have seen persistent uncertainty has put spending assistance by consumers and businesses on hold. Producte, we are seeing face weakening in economic momentum. Broadbased weakening in economic momentum. A good part of asia is in a downturn and how long and how deep that down for downturn will be depends on policy maker actions in terms of fiscal policy and monetary policy. It is atit does seem the moment, we are seeing global bond markets pricing in armageddon in some places. Why have we got to this state of affairs . Inverted yieldhe curve in the u. S. And how it portends recession, but it is different this time because it has been yields falling at the longer and and not the universal move to inversion. Tuuli yeah, absolutely. Point, it is all about sentiment and i think the biggest risk is that sentiment becausefurther globally of, lets say, the trade conflict escalates further or other shocks. In such a scenario, these decisive actions by policy makers may not be enough to prevent the Global Economy from sliding into a deeper downturn. What we seized from the bank of thailand minutes, they are seeing a need for coordination support growth here. It seems like there are still a lot of questions from economist as well as traders of how aggressive policy needs to be to boost growth. Ken rockbottom rates reignite growth and inflation . Well, i think we will see further monetary stimulus across the region. There has been a fairly broadbased trend in asia toward easing policy. It seems some Central Banks are areing rates because there signs of weakness and some are cutting preemptively but given that inflation is so low and the weakness in the economy is not going to go anyway go away anytime soon, we will see further cuts even though there is not much space left. I think it is still enough space for further easing. Onid hong kong, final gdp friday contraction quarter on quarter. Singapore, contraction. Are we headed toward a recession in both those economies . There is certainly a high likelihood of that given these two countries are the most export oriented economies in the world. They are really the leading indicators for the world in terms of what is happening on the trade front, so i think trade uncertainties will persist is alsoile and there the downturn in the Global Electronics cycle and weaker demand so it is a really challenging situations. Rishaad one question about korea because that is seen as a bellwether for the Global Economy given its reliance on exports. Your research, you talked about three major considerations of why things might worsen. Go through them for us, wont you . Ok, so first of all the south korean economy is impacted weaker global demand. South korea is also feeling the impact of the u. S. China trade conflict because it is so integrated into the original supply chain, and then there is the downturn in the Semiconductor Sector which basically reflects weaker demand in china. In terms of the risks, the key betweenthe dispute south korea and japan and another one is the pending decision by the Trump Administration on imposing potentially tariffs on automobile imports and if that happens, that would be an adverse hit for south korea and also for countries like japan and germany, for instance. Yvonne what we have seen with south korea is with fiscal spending, they are trying to coordinate this with the be ok to try to do something and we will see the likes of germany writing fiscal stimulus. Howhe economy you cover, much room is there for fiscal stimulus . Which economies have more scope to do so . Countrieshink asian are fairly well positioned to provide further fiscal stimulus, are fairlyfinances solid and in terms of south both, public spending, play a role in driving growth need forward and it will to be a domestic demand related growth story because all of the risks and uncertainties related to trade our external sector. Yvonne we will have more with Tuuli Mccully from scotiabank. Lets get the first word news with su keenan. China is facing criticism from two sides over its response to the protest in hong kong and its treatment of muslims. Vice president mike pence says beijing must honor its commitments to hong kong, warning a trade deal will be difficult if there is a crackdown on protesters. Hashe same time, qatar removed its name from a letter in support of chinas human rights records. President trump is canceling a scheduled trip to denmark next month because the government is refusing to discuss handing greenland to the United States. The Prime Minister said the island is not for sale and the whole discussion is open absurd. Is the president thanked her for being direct and said he would move his trip to copenhagen to another time. Kong, said to be detained during a trip to mainland china. Was reported missing on august 8. Say they havece opened an investigation and are in contact with chinese authorities. Strain ties may between london and beijing. Italy, the country is facing a new political crisis with resigningster conte and saying the populist coalition is dead. He blames the antiimmigration salvini for his decision after a split from the fivestar amusement movement. He hopes strong poll ratings without the need of a coalition partner. Australian Cardinal George pell has locked his lost his legal challenge to a sex abuse conviction. The court of appeal rejected his case in september. Minister toinance pope francis was found guilty of molesting two choirboys in 1996 and 1997. At the time, he had become archbishop of melbourne and had a compensation deal for victims. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. David still ahead on the program, chinas actions in hong kong will shape the u. S. Relationship according to senator mcconnell. The latest on the unrest. Falling inus, Xiaomi Hong Kong after an earnings analysis is coming up ahead. This is bloomberg. David big event, and of the wheat from wall street to the white house. Jay powell will kickoff the jackson hole symposium with a speech that hopefully signals he is revving up for a series of rate cuts. Rishaad Tuuli Mccully from scotiabank is still with us. That would be music to donald trump spears, wouldnt it . Tuuli it certainly trumps years, wouldnt it . Tuuli mccully it certainly would. The big thing this week is the jackson hole speech by chair powell and it will be interesting to hear if he sticks to the midcycle adjustment tone or will promise more. We at scotiabank think the fed will cut two more times by the end of the year, most likely september and december. David is to cuts going to be enough two cuts going to be enough . Tuuli that remains to be seen but this evolving forecast and economy becomes more pronounced, the fed may have to act more decisively. They can act as decisively as they want but we have diminishing returns here. The needs to be done on infrastructure side, fiscal side globally and the u. S. , no exception. We had talked about more tax cuts coming from donald trump. Would that be something that would do the trick old medley . Ultimately . Tuuli it might happen because when we look into 2020, the fiscal stimulus from the last round will fade away completely and will be a drag on growth. If there is no further stimulus, economic use will show more signs of weakness from the base effect of the previous round of stimulus trading away. China fairly abruptly for because they years back, china say to the world by saving it self. Yesterday, they introduced a new loan prime rate. What are your expectations following that move . Staget ushered in a new of easing from the pboc . Tuuli china is clearly facing some significant economic willenges and i think we see further monetary and fiscal stimulus coming out of china, but in terms of this Interest Rate reform, i think even though it will bring down borrowing costs somewhat, the key thing here is it shows China Remains committed to reforming the economy with or without pressure from the United States. It is also modernization of the way they conduct monetary policy, one would assume, all part of a bigger theme of gradually approaching the international of the rmb and opening the economy. We are getting a slowly, arent we . Tuuli absolutely. Of course, it is a very gradual process. You have to take very cautious steps when you reform a massive economy like that of china. The Global Environment is so uncertain. Rishaad one word on the dollar. Dollar strength has been the big theme. Does it continue . What is the path of resistance . Which way is it . Term, i thinknear the Dollar Strength will likely continue given that there is so much uncertainty out there and we will have this flight to quality but in the longterm, the u. S. Economy will have some significant imbalances, especially on the fiscal side. In the longterm, the dollar should see some weakness but that may be later a story. David hopefully it comes soon for everyone safe. Thank you so much. Head mccully, scotiabank of asiapacific economics. For oil. , searching we hear from oil search. Find out how the stock is doing. That is coming up soon. This is bloomberg. Yvonne here are the latest headlines. Goldman sachs is reportedly in the race for the role in saudi aramcos next attempt at an ipo. It is a contention after months of lobbying by washington. Is alsostment bank working on the offering. They had begun work on the share sale and are to play key roles in a succession of underwriters and venues for the listing. Facebooks Digital Currency project is being probed by antitrust regulators in the eu. The European Commission is investigating whether the Payment System would shut how rivals and create issues of the use of consumer data. Facebook has promised to appease all regulators before launching the cryptocurrency. Rishaad youtube is finalizing plans to end targeted ads on to attracted after regulators asked if they breached the Online Privacy act. The fcc has reached a settlement. It is unclear if the move is a result of the deal. Maintains that kids should use the kids app which does not use targeted advertising. David the plant in a cars in china is on track with work on a new factory in shanghai going well. Building work on the plant in shanghais free trade zone is almost completed and the installation of machinery has begun. China is the worlds top electric Vehicle Market and tesla will pay more than 300 million annually in tax simply to make cars there. Rishaad looking at oil search, hoping for progress in its liquefied natural gas project in popout new guinea. Sinceng more than 18 april, down to risks of delay and political uncertainty. The manager director says he sees a possible resolution. We are engaging in discussions now and i think those discussions have made progress. I think Everybody Knows where everybody is on this and there are further discussions later this week. Broadly, we have seen a week oil price. Is that making negotiations with buyers a little more difficult . Clearly, it is a dinette a dynamic but when you are discussing lng contracts, there is apeaking number of years so 5, 10, maybe 15 years. This is a longterm relationship prices, including swap pretty low recently as we going to the northern hemisphere, winter, you would expect Contract Price to close. Plus, the trade war is overlying oil price and i think the quicker we get resolution on that, the better. The trade war casting a long shadow of over everything now including global growth. How much of this is impacting outlook . Certainly from an oil price areook, the slight there challenges in the middle east, venezuela. Oil price is still relatively subdued. We are lucky because we are at the bottom end of the cost curve for production so we are making sentimentfrom the perspective, the world trade situation is overhanging and demand is weak. The last you spoke with bloomberg about post earnings come you said the u. S. China trade war might be a blessing for oil search. Has that turned out to be the case . Peter in one area because if you are trying to sell gas into china, you can probably do it at an advantage to the u. S. If you are looking at oil price and world growth, world trade issues growth,rly attenuating the ability for oil prices to rise. Swings and roundabouts, i think. David that was the md at oil search speaking post earnings. An hour into the session here in hong kong and in china. We are down 26 points. Longerterm, the death crosses imminent. Between 200. Nts depends on what comes in august but it will likely come this week. Rishaad certainly worked before in 2018. David 15 decline. Rishaad and we had the reverse of that. Not the death cross, goldman cross and that worked, as well. It may be a guide to future performance. David we will see. Rishaad lets have a look at some of those stocks moving markets. , profit misting estimates missing estimates. Depressing smartphone demand and some curbing of efforts to sell more online services. From games to music. About 1. 9n yuan, billion. Certainly being cheered on. First half results, the company sees rapid expansion. A lender has lifted its price target and the price is up 6. 5 at the moment in hong kong. Weve got hong kong, china gas company. Energy and semiconductors, the first getting an upgrade from goldman. The second is an earnings story which dovetails into things you are watching. Yvonne more signs of easing in the japan and south korea traits that. Ishear sources saying jsr set to receive a permit to resume exports to south korea. This is a material maker in japan, they make a key ingredient for samsung. The stock spiked on the news but we are lower. 2 . Falling the most in nearly seven years with concerns about Earnings Growth in china despite the fact profits surged in the u. S. But still missed what analysts were expecting. Zte had a 5 gain on monday, perhaps with the 90 days for huawei. Selling kikkoman. Rishaad neutral rose 26 at that point. David just in time because we are approaching the japanese lunch break and this is the thing you using sushi. They make soy sauce. Speaking of dollar yen and the dollar, breaking out with a bad case of acne ahead of the jackson hole meeting. Acne or are you say you being hackneyed . Yvonne 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. A dialoguemediately with people from all walks of life. Time is running out. There is still a chance for her to do something, i believe. Carrie lam doesnt see citizens as stakeholders in the society. What do we expect her to talk about in a platform for dialogue . Some views on carrie lams offer of dialogue with protesters in hong kong and a trio of senior american officials are chiming in on the protests in the city, putting pressure on beijing by linking the unrest in hong kong to the u. S. China trade talks. Stephen engle is here. Tell us what officials are saying now. Getirst, we will commentators from state media again blasting the black decker for an influence is here and denouncing perhaps the inted states interference internal affairs. Im sure we will get those comments like in the past. These are strongly worded comments. Mitch mcconnell, the Senate Majority leader in an oped piece, three main points. I believe i have a graphic here saying the world is awakening to chinas abusive practices from an trade unfair trade practices to offshore expansion. It seems the white house and other u. S. Officials and all three of these im about to read are from republicans, or at least the administration. Therefore, they are linking trade negotiations with china to the issues in hong kong. The peopleeatment of in hong kong will shape how the u. S. Approaches other key aspects of our relationship. Chinas trading partners including the United States should make it clear any crackdown would have real and painful costs. Mike pence weighing in in a speech in detroit at the detroit economic club. He says it will hard to make a trade deal with china if something violent happens in hong kong. Mike pompeo, u. S. Secretary of state, he supports the hong kong peoples right to protest peacefully and like trump and these others, linking the comments to trade war. The protest to the trade war. In a nutshell, china needs to fill its promises of the one of the challenges of the trade deal. You have to make sure china actually lives up to its commitments. Yvonne i want toyvonne bring in asia managing editor director. U. S. Get involved with the situation between hong kong and china at the moment . Basically, they could use hong kong as a bargaining chip. Comments ofall the late that hong kong is becoming not really important to china, it is being overtaken, its gdp is so much but to measure hong kongs importance to china in terms of contribution to gdp is to be staying within the box. Hong kong is important because it gives china a further soft power. Is its excellent infrastructure, something china doesnt have at this moment. It is a separate customs area which means in this trade war, that is going to be very important. It clears dollars easily. It has changed controls but most important, it has got the rule of law. That gives people confidence and commonlaw, which is practiced in many jurisdictions, means risk is transparent. The legal risk. You know exactly where the risk in terms ofall that chinas economy, hong kong is indispensable still. Yvonne do you think there is a threat hong kong could lose their special trading status . Pauline it depends entirely on cost,ijing weighs its the cost to any options and the itnt is, if beijing thinks is worth the cost of losing hong kong. But on the other hand, the important thing is maybe beijing doesnt think it will lose hong kong. It does things so it can have the best of both worlds. Forme crackdown is in a that is formalized if it is a possible deniability, it could take that attitude. Advisors would say to the government, you could get away with it if you did this, that, or the other. Pauline loong it it might not be chinas actions that revoke those privileges hong kong has. It could be the United States. Mitch mcconnell says he wrote the Hong Kong Policy act of 1992 which extended those special trade privileges to hong kong and basically, they are saying the special relationship among other steps could be changed if hong kongs autonomy is eroded. Is that a possibility . But it ises, it is not entirely a washington decision. Toy need to have an excuse trigger this act. Y cant just say the Chinese Government needs to do something that could be interpreted as eroding autonomy in hong kong and that is where it gets tricky. Withen do you agree michael and others who say this is a golden window. Bank, the next six weeks leading up to october 1 . There is a lull in the violence, if you will. The harder line have restrained from pushing the envelope a little bit. Is there a direct threat coming that ifoss the border the violence and the demonstrations and mass rallies continue, beijing will take an action . Is this a critical period right now . Pauline i think we are going through a critical period every day the Way Developments are going. As well as ontv social media, videos uploaded, coverage, veryg distressing footage of people apparently dressed in what appear to be Police Uniforms beating up a guy on a hospital bed. It is that sort of thing that makes every day a critical period. I do not believe and beijing is so intelligent, it will not give you a timeline so you know when it will do what. Say is more a statement to guys, get it together. I will get tough. When, we wont know. Yvonne sending forces to hong kong will still be the rest last resort for beijing because arent the political costs of this still too high . Pauline it depends on what they decide is more risky. Doing something very public that would lose them hong kongs special status with the outside belief that hong kongs protest is going to be a bad example that could destabilize the rest of the country. Yvonne is hong kong still too important for china to actually do this . For them to actually send these troops out . Pauline they will send troops out. Everybody talks about china sending the pla. Kongare already in hong since 1997 so they dont need to send anyone in. Stephen on that point, there is a lot of disinformation out there. Ive gotten a lot of video of troops or trucks coming in but it is not. That is all regular troop movements because they have 68,000 soldiers already here and those are passed videos. The bigger question goes back to if this is a golden window for the government, Hong Kong Government to act, should carrie lam make some concessions . Give the low hanging fruit that is easily given out, or is that a loss of face . Pauline there is a lot of low hanging fruit, i would have thought, would have stopped all this nonsense. Much earlier. On what kind of instructions carrie lam has been given. I do not believe she has a totally free hand to handle hong kong. It depends on the parameters she has been given and dont forget, this is a woman who doesnt know how to buy toilet paper in hong kong. She admitted it publicly during her campaign. She doesnt know how to use a stored value card to go through the subway turnstiles. Sheally dont know if thinks her present course of action is going to defuse tensions. Yvonne pauline loong, asiaanalytica. Thank you. I want to thank stephen engle, and youve gotten news. David goldman sachs, one line crossing the terminal. Stake applied for a 51 in a china joint venture. Not a lot of details yet but the headline speaks for itself. Rishaad joins a lot of others including ubs. There you have it. Goldman sachs is applying for the 51 stake in china. Lets move to new york with the first word news courtesy of su keenan. Su the latest on brexit. The European Union has rebuffed force johnsons demand for new talks on a break to deal, saying the irish backstop is a vital part of the current agreement. Intended tot is prevent heart border with ireland but the u. K. Says it leaves brussels holding all the cards. The two sides remain deadlocked with weeks to go until the split which johnson insists will happen with or without a deal. Government may delay two key announcements in the latest sign it is considering a snap election. Sources tell us the bank of England Governor Mark carney may not be named until after brexit. While there is speculation the budget may be pushed back to next year. Carney steps down at the end of january having twice extended his tenure to provide continuity during the split from the eu. The country is lowering its forecast for Economic Growth and exports, blaming the rumbling trade war and strengthening bot. Year,ll expand by 3 this almost a full percentage point lower than earlier projections. The estimate indicates thailand is on course for its weakest annual growth since 2014. It has risen almost 7 in the past year. The expert panel reviewing how the 737 max 8 was certified is amidted a breakdown speculation aviators did not understand key design features until last octobers first fatal crash. The panel has yet to find evidence that rules were not followed when the plane was approved in 2017. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries and. Im su keenan. This is bloomberg. China slowdown hitting internet services. We will see how that has taken a toll on xiaomis bottom line. This is bloomberg. Rishaad we are back with Bloomberg Markets as we check in with business flash headlines. A revamped rule has been rolled ruled out on wall street, amended to clarify which trades are credited and layout for banks to follow. They are being seen as less than a shakeup than anticipated. Trading has been radically reshaped by advancements in technology. Isid office share we work under attack for information it has released ahead of its ipo. Upcoming share officer offer is expected to raise 3. 5 billion for what would be the biggest listing secondbiggest listening. Listing. On accusations including calling the ipo a masterpiece of yvonne tumbling in sydney and wellington trade after earnings missed estimates. Fullyear profit came in at 184 is 6on u. S. Dollars, that million lower than forecasts expected but the agency told us she is so positive on progress that the plan to expand into china is paying off. We have invested in the second half of the year significantly in building the brand in china. We are very conscious of the channels that are important to consumers. Our strategy is a multi channel strategy into china and you can see in our results that is proving to be a successful strategy. Rishaad turning our attention to xiaomi, profit is missing estimates, demand for smartphones and that has a cascading effect. Online services was also curbed. Analyst forenior Bloomberg Intelligence is here to tell us, if i read the headline it sounds bad and explains why the stock is falling but you are saying it is not the full story. Absolutely right. Adjusted net profit increased 72 , which is a beat and i suspect the reason why the share prices week today is not because of the net profit, but mostly because of the mi user gain, the operating system xiaomi is pushing and hoping to generate more internet revenue. The total users continued to grow, in terms of in thethere is no growth Second Quarter which could be a problem for future internet revenue. How much is down to internet revenues falling back or being curbed . What is the outlook also for smartphones . I was talking to someone the other day who was dealing with covers you make for smartphones. Is dying a death because people are not buying smartphones. Anthea in terms of shipment, it is pretty bad although there had been some optimism in the second half they think shipments have bottomed out so the decline will ease in the second half. Having said that, looking at xiaomis performance in china, in the Second Quarter, the shipments declined more than peers and huawei was doing better in the Second Quarter. The Company Needs to invest in more r d to gain some share during huaweis difficulties withthe u. S. Yvonne how are analysts viewing the company right now . People were wondering if it is a smart phone or internet company. Have views changed with the ipo . Got a littletors confused and directionless. That has seen many earnings beats by the Company Quarter by quarter but share price is sluggish. Littlers are in confused, especially in the Second Quarter even though adjusted net profit beat but it comes from margin. The vision is to sell low margin devices to gain internet users. Yvonne yeah. Anthea lai, Bloomberg IntelligenceSenior Analyst on xiaomi. The opening of the session in india just an hour away. How is the trade set up looking . Markets are finding it difficult to scale higher across the board . Because weve been seeing selling pressure coming on every time the index is trying to scale higher but as of now, we are trading at a muted to negative start. Yesterdays flows were muted despite seeing gains, the market ended at almost the lowest point. Though the nifty reset markets. There is a lack of participation we are seeing because the turnover in the last trading sessions have been lower than the average we have seen in the last three months. A sigh of relief coming, we saw meagher buying from both institutional and domestic institutions. Overall, the market continues to be week when you look at the Broader Market and there are concerns related to economic slowdown, especially sectors like auto which have seen their first worst slump in the last two decades. David lets talk some names. What companies are in the news today . Fore will be watching out received company has eight observations and received strong u. S. Fda. Yesterday, the stock was up 2 and this plant was inspected in june of this year and received observations. Critical for new launches and this contributes to the u. S. Revenues of the company. Gas has been upgraded to outperform from neutral. Price has been increased to nine rupees from eight. Rishaad thank you very much. Our reporters go chart to chart next, competing. It is the battle of the charts on the way next. Rishaad the liverpool manager in the 1970s once said football wasnt a matter of life and death. It was much more important than that. The same goes for battle of the charts. We have the breaking news. David if you are our clients, you can access our charts. Singapore, in melissa. A surprise uptick in the latest Economic Growth hasnt convinced investors to stay. Foreign outflows are the white line on the screen and set to widen in august. The country has seen 453 million in net selling, the most since may, at a time when malaysian stocks are 5 from a bear market. That is the blue line on your screen. Why all the negativity . The country beat the rest of the region. Analysts said potential and other markets and a delay in earnings recovery has sent investors elsewhere but it is not all doom and gloom. They said stocks are due to pick up in the second half so we will have to see whether that is enough to convince investors to stay. My ex. Yeah, kind of like no reason to stay. Im going to go. Rishaad lets move on swiftly now. Your chart, thanks. Good morning. Interesting chart, melissa. I have a chart to show you that in china credit market are just getting more nervous and how they are saying no to risks is helping get more returns in the market. We are looking at onshore market. The white line is showing the gilt premium between the fiveyear bond over the Government Bond is dropping sharply. Surprisinger the bank seizure and wave of defaults going on. All of this making investors so anxious they have to rush to higher rated names in the market. Rishaad i like that chart, actually. It is very instructive. Im actually giving it to her. David and it is not just because it is your first time we are giving it to you. The search for yield. Melissa, asia underperforming is not really news. I dont remember the last time that market outperformed any market to your point. We are in a bear market. Annie, you take it. Go for all the charts on the screen throughout the morning. Catch up and save them for future reference ahead of your meetings and your week. Checking ahead, we are talking more about singapore. Lets look at how the city state is adapting to climate change. Wwf head of asia Sustainable Finance is joining us, on the way. We have half of the trade left for mainland markets. This is the scene in hong kong. We are flat on the hang seng, initially down. Shanghai are moving more decisively to the upside last i checked. David underperformance today is because of hmo. Thailand is a big story in the next hour so we are just getting warmed up. This is bloomberg. Emily i am emily chang in San Francisco and this is bloomberg technology. Coming up in the next hour, someone has to do it. Pres. Trump somebody had to tick china off. China has been ripping countries off for years. Emily President Trump takes a defensive tone. Plus, more frustration for facebook. European regulators are already probing the social