Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240714

If she could. The latest. And counting the cost. We had to miami where Hurricane Dorian is capable of causing billions of dollars in losses. Newseen we have breaking out of south korea. Looking at the inflation numbers. Yearoveryear is flat. 0. 6 in july. Forecast to be up 0. 2. This is now the lowest inflation rate yearoveryear for korea on record. Pointing out they are missing falling into deflation for the first time. If you look at the core cpi, it is up 0. 9 . It takes out food and energy. Energy has been under pressure. If you are at the bank of korea looking at this, you have to think this could raise pressure for the bank do something at their next meeting. Gdp coming in for the Second Quarter at percent. Prior, 1. 1 . A small difference, not superstrong. Yearoveryear, 2 . Probably considered enough for the bank of korea for now. That number will catch a lot of attention. We will see how markets react. Lets look across asian market. You can see the red on my board. Asian trading, set to have more pain. A trifecta of bad news. U. S. China trade relations continue to deteriorate. Bloomberg reports there are doubts whether the sides will be able to meet. Also, continuing unrest in hong kong with officials calling it a catastrophe. Weak pmi data across the world. All sending a gloomy reminder about the effects of the u. S. China trade. The nikkei is leading the losses. Expanding on what kathleen was talking about in terms of south korean inflation data, it was the lowest on record. Rate. D line is the 2 bank of korea is targeting and for a while it has been far below it. You can see the blue line, cpi yearoveryear. The expectation is it was 2 10 of 1 , far lower than the line and what would have been the lowest since the financial crisis 20 years ago. But we got the lowest on record. Lets check in on the first word news with tom mackenzie. Tom paul lets talk about brexit. Boris johnson threatening a snap election if mps rebel. Opposition will present legislation to force johnson to delay brexit if a deal is reached. Uncertainty heading to the u. K. I want everybody to know under no circumstances in which i will ask brussels to delay. We are leaving october 31. Accept going back on our promises were scrubbing the referendum. Has Hurricane Dorian killed five people in the bahamas and has slowed down and is still a highly dangerous storms it heads toward the u. S. The storm will cost 25 billion dollars of losses for insurers, the most expensive Natural Disaster in two years. It could be raised to 40 billion, depending on how hard it hits florida. Argentina talked with the imf about raising Monetary Policy for the month after one day after the government reimposing currency controls in efforts to contain the rising financial crisis. Only the quarterly target is binding for the imf trade program. Kathleen u. S. And china are said to be struggling to agree on schedule for planned trade talks. The impasse comes after the white house rejected a request from beijing. Ek will bank joins us while bank joins us. Where are we now . I feel bad for coming on to your program and starting everyones morning by making their coffee sour. As we said yesterday, they are having trouble getting to the table. Bloomberg reporting moving futures market suggests not only are they having trouble, they have not agreed on a date in september for negotiators to meet in washington. To do it. L planned it has not been called off, but no data set. Been setalso not contours of the discussion, what would be on the table. What are they trying to get to . China wanted some u. S. Tariff escalations stalled. That did not happen over the weekend. The u. S. Slapped on the september 1 tariffs as planned. So we are in a stalemate. It is not a break. But it is a pause. We have more contours of this and it turns out the difficulty is we are not sure what we will talk about where when we will talk about it. Kathleen it seems like everything is fine with the plane, except the wings fell off. [laughter] market, stock futures in the u. S. Responding for the holiday weekend. What does this mean for currencies and equities . Saw the move in the s p futures downward. This is the that end of labor day. We are starting to get into september, historically a slower month. But everyone gets back and volume picks up and you start to see people seriously engaging again. The summer is over and we were back to business. If this turns around and people a datek to the table, if is finalized, people with the it as a big movement forward. A small tariff escalations expected at the end of october. If something were to happen to say that would not take effect, that would be big news. Right now, the white house and loggerheadsre at with the contours of how to meet, never mind what to meet about. Paul if there is a lesson i have learned it is that no matter how bad things are, they can always get worse. This coming from President Trump last week. Approve the relationship with china, lets not do business together, i dont want to do business. So are the chinese digging in . I think the chinese side is digging in for the long haul. There is a new normal people are trying to become accustomed to. Language had bellicose that gets replaced by a nice language and happy talk when he and china meet. So it is a roller coaster. He has said some really harsh things about whether or not company should do business in china at all. He wants people to start thinking about how they can manufacture goods in the United States instead and pull out. That is inflammatory rhetoric. I dont know that people are necessarily taking the president literally when he says these things. You do not cgm and others pulling out their supply you do not see gm and others pulling out their supply lines. There is a sense that people are having to figure out about how to deal with the fact that this is kind of where we are. And this is where we have been the last several months. There is nothing to suggest it is not where we will be for several months to go. It becomes a proven exercise to plan for that to be the same. Wallbank in singapore, thank you. Hong kong has used the word tariff in regards to the growing unrest. City leaders have not ruled out the possibility of invoking Emergency Powers to tamp down the violence. Stephen engle joins us. What is the latest . Secretary,e chief the deputy to carry laying carrie lam use the term terror and it is reminiscent of what the chinese officials in Hong Kong Affairs office said august 12 and 13th when we had the sit in and disruptions at the airport. They said demonstrations resembled acts of terrorism. This has remicade ramifications if they are appearing upping rhetoric calling this a terrorist activity. Then you start justifying emergency power acts or options the government has come above hong kong and chinese. Lam did notarrie rule out invoking emergency regulations. It was enacted by the british in 1922 but last used in 1967 to quell riots. It gives police sweeping powers to arrest and the ability to rigorously search property. They can censor publications and shut down the internet. Grant such ability. Wordu start using the terrorism, you could Start Talking about article 18 of the if a law, which states state of emergency is declared by hong kong, chinese authorities could implement national law in hong kong, which could have all kinds of ramifications, including the potential use of soldiers from across the border. The ones not in hong kong already. Kathleen that would be some actions. What are the words from the chinese so far . They are getting more strident and tougher. A press conference later from beijing. The news agency sunday, when things were hitting the fan this weekend, they warned the end is coming for those attempting to disrupt hong kong and antagonize china. Attempts to underline the mainland are bound to fail. We heard from officials in china late yesterday saying protesting has evolved into extreme violence. And are a for carrie lam Hong Kong Police to control unrest. Option would be china taking control and taking over and resolving this. Ise are saying carrie lam taking marching orders from beijing. I cannot substantiate that. That is what many are saying. Thank you so much. Still ahead, Hurricane Dorian weekends after battering weakens slightly after battering the bahamas. Where it might go next. Kathleen we are counting down to asias first major market opening this morning. Japanese futures, lets look at the dollaryen. Hit as high as 104. This is a concern for the boj as they get ready for their meeting in a few weeks because the , people are beginning to wonder if the boj might have stimulus. Ense of nikkei futures are lower. Equity markets around the world trump andned that have thenot begin to agenda of what they will talk about at the meeting supposed to happen sometime in september. One more reason to see the red. Paul our next guest says global Central Banks are in cutting mode. Oining us is Steve Goldman you are not alone in your attitude. Jp morgan, bank of the more bank of america, say it is time to buy stocks. Since 2010r story where generally, you got paid to take risk in the environment. Paul how much of the action we are seeing on equity markets is due to that, the feds offering easy money . It is a large portion of the gains in equities. Kathleen how much does it have to do with the fact that yields continue to drop . Is now 17 trillion around the world. Bond looks like a three month bill looked years ago. Or equities a big driver . That is the story. Today if you are european or japanese investor, you have paid to keep your money in cash. That has forced investors out of european and japanese bond assets. Into riskier u. S. Bond yields have approached new record lows. That is the story we have seen over the last 10 years. It is accelerating today because Central Banks are still in cutting mode. Kathleen are you saying you would be wise to invest in equities . Which countries . Where do you find the biggest bang for your buck with the less risk . I am a bond manager and it is rare to hear one say you should invest in equities. But i think in this environment, you have to go into equities. Where do they look better around the world . Earnings quality is very high. U. S. Isth story in the still positive. You have a trade and uncertainty. But i like u. S. And australia markets more than european markets, where it is hard to see value in you have a lot of geopolitical risk, talking about the italy coalition, brexit, the banking problem in europe. It woulde world, rather be in u. S. Or australian equities. Paul there is a counterintuitive play going on. The worst the trade war gets, more if you think about what trump has said over the last month, he is getting ready to lay blame on anything but his economic policy. What we have heard so far is that it is chinas problem. They are the enemies of the u. S. And the reason why growth slows in the u. S. Rather than the trade war and economic policy. That thee in my view trade war is a massive negative for Global Business because of the integration of supply chains around the world. He is looking to place the blame elsewhere. Amongst his base, he has managed to do it so far. His poll numbers are similar to where obama was at this time during his term. My guess is that will continue. Paul you are more of a bond guy. But look at the chart. The world that keeps jumping up. I think investors need to get used to lower in lower yield. In japan and europe, negative yielding territory. U. S. Treasury still looks good. But we have a ways to go downward in yields. Quite a call. We will see what happens next. We appreciate your insight. Us. K you again for joining you can get a roundup of the stories you need to know in our days edition of daybreak. On tv or on the mobile app. You can customize your settings to get news only on the industries you are following carefully. This is bloomberg. Paul lets get a check of the latest headlines. The founder of lululemon has made over 30 million in three months. Dennis wilson stakes in chinas biggest sportswear maker has gained 32 after strong earnings last week. That is 70 for the year. Blue orca accounted Kathleen Facebook is considering publicly showing the number of likes and the effort to lower the competitive nature of social media. The project was confirmed by facebook. In the test, only the poster would be able to see the like count. Moneycargill is raising for emerging markets. Fund would focus on india and china and we are told it raised 150 million so far. Capital raising comes at a challenging time with hedge funds predicting a wave. Still to come, Hurricane Dorian joins the trade war. We will have a competitive commodities wrap in a moment. Stay with us. 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. This is daybreak asia. Iran is warning is prepared send a warning to deal if europe does not come up with new terms by the end of this week. Deadline,et a friday for germany france and u. K. Amid signs that the u. S. Sanctions are still hurting the oil market. For the nextpared coming days. The u. S. And china are struggling to agree a schedule for new trade talks this month after washington rejected beijings request that the latest tariffs be delayed. This despite President Trumps of attempts to convince markets that things are on track. The two sides are yet to agree on the basic terms of reengagement. Chinese state media says they are ready to weather the tension. Say carrie lam would sayingit if she could, there is only a limited window to resolve the unrest gripping the city. She said she would apologize and resign if she had a choice. She is expected to comment on the unrest on tuesday. Italy is a step closer to a new government after Grassroots Party members approve the coalition between the democrats and fivestar movement. 69 of Democrat Members said they are in favor of the plan, while 51 percent of fivestar members back to the idea. Prime minister Giuseppe Conte is a deformity government, though it is not clear which roles of fivestar politicians will fail. Reports from japan to the government is planning a new police unit on irelands dispute with china. Nhk says members of the operation will tackle any unauthorized landings on the island, which is disputed. Ties between china and japan have deteriorated to there was for the decades after the other after 2012. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. O i am tom mackenzie. This is bloomberg. Kathleen we are half an hour away from the opening. Selena, what is on your radar screen . Starting out with stocks i am watching in south korea. They woo pharmaceutical, that company was upgraded to buy. ,ts price target was raised applying a 29 increase from its last close. Buy with anserted to price target of 70,001 70,000 won. Considering a joint bid of rcn airlines. Ines. Is asiana airl theyre looking to form a consortium. Japan, jfe, its to buy cogen power from tata steel. Employ nearly 300 foot people. Is making ceramic filters for 5g basic systems. Nomura holdings will be establishing a joint venture with trading securities using blockchain technology. The adventure will be providing consulting and i. T. Services. Bought back ¥18. 5 billion of shares in august. Paul lets get some more and what we should be watching as trade gets underway. Not a great start to september, this despite stocks in asia getting cheaper. Thats right. Not People Holding much hope for this month. Things can turn around very quickly with trade. The strategists here in asia are overconfident that will happen and it will be out anytime soon. The estimated pricetobook ratio is trading below the fiveyear average. Its interesting. They point out september is the where many of the main exchanges have had negative mean returns. Seeing here in asia, cuts are being weighed on the risk we are seeing in hong kong. Taiwan andts like south korea are very sensitive to a slowdown in Global Growth. Interestingly enough, the different a different story in the u. S. Jp morgan are telling people to buy stocks based on positive technicals and monetary easing we are seeing from Central Banks. They believe that is going to outweigh this episode we are seeing with trade. A similar call to bank of america, which last week, they said they like risk assets going into 2019. Kathleen putting a lot of faith in Central Bank Rate cuts. With on to asias highest yielding bond markets, the worst returns in august. What happened . Thats right. India and indonesia gave negative returns to investors, despite yields of 3 . Thats because investors have been shining these less creditworthy markets amid concerns of a slowdown in Global Growth and also the trade tensions. Just to give you an idea, indonesia bonds headed investors lower returns. Indias bonds fared quite poorly. We see these concerns about a slowdown in global expansion. That will weigh on emergingmarket currencies and all these highyielding bond markets like indonesia, a test will come this week after cpi numbers,. We will also have indonesia later this week. Kathleen thanks very much. Hitting 0. 2. The lowest since the financial crisis on their inflation numbers. Speaking of charts, you can test them out, they are at gtv under bloomberg terminal. Unto Hurricane Dorian that is bashing the bahamas and causing massive damage. Jonathan levins tracking this storm. He is joining us on the line. This was so devastating. Where is it now and what is the latest status report . It has apparently stopped dead in its tracks right out there in the caribbean. It has sort of hovered over the grand bahama. We dont know the extent of the devastation or loss at this point. We will have to state wait until the storm moves on. At this point, we are expecting north, which could be good for florida. Again, most of the state of florida is still cautiously optimistic about this. It could take a glancing blow on its way north. Bloween a glancing wouldnt be as bad as some of the things for her has been subjected to. A lot of floridians like to ride it out. What is being done to prepare . More than 4000 national inrdsmen and airmen involved some capacity across the state. Tens of thousands of Telecom Professionals prepared to restore service as soon as it passes through. A member of the Barrier Island communities around the state have been subject to mandatory evacuations. Those folks should be underway at this point. Impacts there been much so far to the economy and infrastructure . Was inspected to come what is expected to come . It will be quite dramatic for the bahamas. We will wait and see how bad that is. Florida, it doesnt help that this storm occurred over state is day, when the a letter tourism. When the state does a lot of tourism. There is no clear plant on the way up there. A lot of very valuable real estate. We will see what this means for the orange groves as well. Tom oil is in focus. As the oil is in focus storm heads to the east coast. Demands set to dampen for gas and diesel. Lets bring in jim thornhill. Far we seen any impact so jim a slightly softening impact on oil prices. Hasave heard of it there there is obviously the devastating human impact. The impact on oil markets it looks like it will skirt clear where there is an oil facility and operation. That will have a marginal impact on supply. We were hearing, it will track north west or in some northwesterly direction. It remains to be seen what impact it will have. It will probably have some sort of impact. It will have some dampening effect on demand Going Forward. It certainly affected for the oil market. Kathleen over the rest of the week, what else could turn out to be a big mover for the oil market . I think the market will look to the api data on u. S. Crude inventories that have been a move mover in the recent weeks. Titan in recent weeks. We will see if that continues. Whether that has an impact on supply levels, it will be interesting. Seeing inventories build with be a lot for the market to take in. Official Government Data comes out on wednesday. Trade wars is still going to be a focus. We have had reports of an eye to the u. S. And china are struggling to agree on a date for chinese officials to come to washington for another round of talks. It is not bode well. One thing you can say is that President Trump does tend to react, if that is the right word, when the stock markets take takes soft drop hard drops. That tends to soft and his reverie rhetoric. We could see a more conciliatory line from the u. S. Any developments in the trade war this week, they will have a key impact on the market. Looking beyond that, we have the meeting of opec, when they will discuss the prospects for projection production cuts to support the price. Kathleen sounds like plenty of things to keep volatility alive and well in the energy market. Onre is 20 more to come daybreak asia. This is bloomberg. Paul want to get you an alert on the bloomberg terminal. The board utilizing its share backed repurchase on the open market. Aaomi to spend 12 million on purchase. Repurchase 12 million net worth of shares on the new york markets. Kathleen emergingmarket currencies on the back foot following their first worst august and 22 years. At,urprise to the culture the ongoing u. S. China trade war. Eric next guest is bearish. Lets bring in lemon zhang. Standard chartererd macro fx strategist. Lets start with the latest news. House, china, cant even sit down and agree on an agenda for their trade talks. The ones yous, for follow, what is the key message . We do not see further material improvement. Its an ongoing process. China has adopted a more patient way. Thats why we refreshed. At 7. 2 threeg against the dollar at the end of this year, to include the impact of higher tariffs, the export market share and weaker economic growth. If you look at asia fx or global we are coming into way sentiment. Weight sentiment. We are currently very bearish on korea. [audio dropped] kathleen what are you looking for with a ceiling on the yen . Lemon we are bullish on yen currency. The assistance of the boj. We think narrowing real yield differentials between the u. S. Dollar and the yen will support the yen currency. That is part of the supporting the central bank. Also, just now, because of the ongoing trade tensions, there is consistent demand of flows going. Currently, we are more bullish yenon versus the korean won. Paul in the context of the trade war, where is the yuan heading . One of the worst months on record. Do you see it getting weaker . We are looking at a slightly weaker level. 7. 23. We think the pboc has changed their fx policy after the escalations. We are seeing higher tariffs, weaker economic growth. We need to highlight that we dont think the pboc will conduct heavy direct market intervention in terms of fx. They will be more comfortable other tools to send signals to the market as a guidance. Very different episodes if you when theow with 2016, capital outflow was significant. We do see that now, but the scale is small. We are not bearish on this pair. Were looking at a slightly weaker level than current levels. Paul one of the currencies most exposed to what is going on in china is in aussie dollar. From bankve this call of America Merrill lynch. They are suggesting to buy the aussie dollar. I am wondering where you will see that going . Have we hit the floor . Lemon we are bullish on the rc as well. Aussie as well. Like to long against the kiwi because of the divergence valuations between the two currencies. Kiwi, thek at the dovish stance from rbnz is very strong. The governor has been talking about unconventional policy measures. The dovish stance helps. If you look at the tradeweighted index, it has underperformed by 3 in the last year. Market see it as a proxy for china on its trade data as well. We think they will cut rates by the end of this year. Pricing,ok at market 20 minute difference of the terminal rate, which we think is not fair. We think the start they will start pricing in a more dovish stance. We will support rckiwi. Aussiekiwi. Kathleen when you look at risks. Negative bond yields, 17 trillion around the world. You messages in terms of what you should be doing in terms of positioning in the currency market . Simon birmingham, australias minister of tourism and trade lemon currently, we are having the largest market share. That gave me two messages. Counter some have encountered inflation territory already. So with think of more dovish tone from Central Banks should be expected. Tone think more dovish from Central Banks should be expected. We are more constructive on e. M. Currency relative to e. M. Local currency. Inflows too see more e. M. Currency debt. Those currencies which are benefit. O inflows will paul check out our interactive tv function at tv. You can dive into any of the securities or bloomberg functions we talk about. You can also become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. You can check it out at tv. This is bloomberg. Paul this is daybreak asia. Kathleen its time for a quick check of the business flash headlines. Some say cash is king and japan think so. Bloomberg data says Japanese Companies are sitting on a record cash pile of nearly 5 trillion. The total has more than tripled in the past six years despite shinzo abe vowing to stamp out Corporate Cash holding hoarding. So investors say it should be invested or returned to shareholders. Paul shares plunged after their shares were going to be sold in Hong Kong Listed wind Power Generator and it may be privatized. It may consolidate all of its wind and solar assets to make a new green energy unit. Kathleen getting ready for markets to open. Watching you what are you watching . It looks like for the second day of trading, asia is set for another lower open. Some week data coming from south korea, as well as week pmi data from around the world, including taiwan, italy and other other regions. I want to dig into that south korean inflation data we had earlier. In august. T zero the lowest level on record. You can see the red line here is showing that zero line. We did find gdp grew 10 from earlier last year. That is slightly below the estimate of 2. 1 . The south korean economy has been dealing with a bunch of issues. Up one a lot more coming daybreak asia and the rest of the show. In the rest of the show. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its 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 a new samsung note. Click, call or visit a store today. Paul good morning asias major markets major markets are about to open for trade. Kathleen im kathleen hays. Beijing. Lina wang in walking today but welcome to daybreak asia. Paul our top stories this tuesday. Stocks set to slide on new concerns about the trade war. U. S. And china cant agree the parameters for a new round of negotiations. From hong kong say carrie lam could have quit if she could. Latest on the unrest gripping the city. Romaine rba dissent kathleen rba decision day. We will discuss it with an excessive chat with simon birmingham. Its get to the latest Market Action. Take it away. Selina were looking at a trifecta of grit bad news today. A new deal insight. Unrest in hong kong continuing at week pmi data looking withrld, the nikkei is down and we will continue those losses from yesterday. Switching boards here. Whats he was going on in south korea. Speaking about the week inflation coming in at 0 . A little bit of a muted change. Down slightly. Data groww the gdp slower than expected it to percent versus 2. 1 . The south korean economy has been adversely impacted by trade spats around the world. Looking at what is happening in australia and new zealand, kathleen mentioned we had a expose of interview with the finance minister coming up. A little bit chain little changed. I also mentioned the new Zealand Dollar earlier. One of those risk assets facing pressure. Rbas keeping threats things on hold today. Simon birmingham is the trade minister, not the finance minister. We will have the trade minister on the show later this hour. Lets get to the first word news with tom mackenzie. Flatlined ton has the weakest on record in south korea. No change in august compared to last year, despite expectations of a small rise. Last week, the be ok said negative inflation was still possible. Longterm deflation is unlikely. Secondquarter gdp also missed forecasts coming in at 2 . The results, bolster predictions of another rate cut in october. Sterling fell as the u. K. Prime minister repeated his vow to leave the European Union in october and threatened to stop an election if mps rebel against his plan. Tuesday andturn on the labour opposition will present legislation to force johnson to delay brexit if a deal has not been reached. The uncertainty is hitting the economy, with u. K. Manufacturing slumping to its lowest level since 2012. I want everybody to know there are no circumstances in which i will ask brussels to delay. We are leaving on the 31st of october. We will not accept any chance to go back on our promises. Tom Hurricane Dorian has slowed after killing at least five people in the bahamas. It is still seen as highly dangerous as it moves toward the eastern seaboard of the u. S. Ubs says the storm will cost at least 25 billions dollars of losses, which would make it the most expensive Natural Disaster for at least two years. To 40 raised its total billion depending on how hard dorian hits the coast of florida. Reports from hong kong say carrie lam would have quit if she could. That she feels there is only a limited window to resolve the unrest that is gripping the city. At a meeting with business leaders, she said she would apologize and resign if i had a choice. Choice. Choice. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Kathleen lets get back to the markets. Mark greenfield is joining us from singapore. Australianching the and u. N. Today, what are you seeing . Even of the american markets were closed yesterday, the yuan still managed to reach a new high for the offshore market. That was mostly in london yesterday. The morning was pretty decent considering it was a major holiday. Its actually quite a lot. People are nervous about what they are hearing. As though anyone is getting much closer to resolving any differences. This is putting off the investors. Can we can further because of this. Its not helping that the situation in hong kong has improved. Put these things together, and they were never really any reasons for people to be nervous. Yuan goingered all further. There was a good demand for options. 7. 4 or 7. 5. Looking for higher levels in the months ahead. When you put this picture together, it can have a good influence on the dollar overall. We saw the dollar go lower as well. When you have a major currency like the yuan underway, it will affect on what is going on the complex. You could see some Dollar Strength as well, which is what we are seeing from china. Paul just want to quickly get some headlines across. Seeing some remarks on the week inflation we saw, flat over the year. The finance ministry showing temporary bit of inflation is expected to end of the year. That is a bit of optimism from koreas finance minister. What is the effect on the british pound . Past 24u can see in the hours, the pound has weakened again, both against the dollar and the yen. Most currency that is tradable is shaky. People do expect an extremely rowdy pressure from the u. K. Parliament. Boris johnson, he seems very determined to go ahead and take the u. K. Out of the European Union on october 31 as planned. Doesnt seem to have any room for a compromise on that. There is a large number of people within the u. K. Parliament who want to go against the u. K. Brexit. Every chance it would come to a confrontation in the u. K. Parliament. Including a noconfidence vote against the government. That would bring for the risk of an early election. Boris johnson says he doesnt want to hold it but he may be forced into it whether he likes it or not. To the complication, he has threatened to remove some of the members of the conservative party. All of this is just piling on uncertainty for anyone that trades the british pound. Salesalso had some retail data out earlier today. Pmis are very weak. Goes on of the economy and on. The uncertainty is making it worse. The politics is muddy. Its hard to create an upside picture for the pound. Lets stick with the uncertainty and turn to hong kong. Underpformed underperforming the hang seng. Whats happening there . Mark whats become clear is that investors are becoming much more bearish on the hong kong play. Moreong kong index is weighted toward companies which make their money from hong kong itself. Index includes companies which get their money from china and the rest of the region. That divergence has become much more serious in the past few days. We havent seen a major divergence of the 248 or nine years. Thats the direction were heading. If we continue to see what happens yesterday and or friday, then you will see a wider gap widening between these two. If theres no resolution to these in hong kong, that we can expect companies that rely mostly in the territory for their income, theyre the ones that will be hit the hardest. That will be reflected in the difference between these two indices. Underperformance in the Msci Hong Kong could go on. People will be watching to see if theres any change in the situation to see whether there would be a resolution. Paul Mark Cranfield joining us in singapore. You can follow more on this story and all the days trading on our markets live blog. You can find it on the bloomberg at mliv. Run downee a market and one click and commentary and analysis from bloomberg expert editors to find out what is affecting your investments right now. The u. S. And china are said to be struggling to agree on a schedule for trade talks this month. The impasse comes after the white house rejected the request from beijing to delay president s latest tariffs. Derek while bank joins us with more. More. Lbank joins us with what is the best we can expect from this situation . Derek you summed it up. Is no meeting date set yet for the september meeting between negotiators on trade between the u. S. And china. It is supposed to happen at sometime in the month of september. So far, there has not been an agreement on when the two sides would be in washington. Not to say that there wont be, but right now, there is not. The second thing is, they havent agreed on parameters for what they will discuss at the meeting. What we are talking here is the broad line you sketch before the meeting that says, heres what well be hearing about and here are the things that we know we wont agree on or talk about. That has not been done yet. That has to get done before they can do things. The u. S. Wanted to set the parameters, that has been rejected. China has requested that before this meeting, the u. S. Would hold off on the tariffs that were supposed to get set for on september 1, but that hasnt happened. There hasnt been a meeting date set. Kathleen will markets just be to move when something is a set, or will Something Else be creeping up on the horizon . People talk about the crisis. Argentina, italy, brexit, what do you think is next . Derek there is no shortage of geopolitical risk at play right now the world markets. You can look anywhere you want to risk look. Are onea and hong kong are two. Been a theme toward all of 20. Theres a lot of geopolitical risk on the board. That will set a date, be a market positive indicator. If they get together even at al. When im talking about concrete action, the two things im thinking about our october 1, a slight tariff rise, then december 15, where there will be a large tariff increase from both sides. The december 15 one is the laptops and stuff. If those two go together, thats not so good. Removed, is delayed or that would be positive. Markets really could have some big moves in another direction. Thanks very much. Still ahead, the reserve bank of bank ofier reserve australia is going to hold key rates after backtoback rate cuts in june and july. What does that imply for the rest of the year . Paul up next, asiapacific stocks are filing u. S. Futures lower on concerns about trade talks. Well talk about the Market Action market ocean open. This is bloomberg. P paul this is daybreak asia. Kathleen easy money from Central Banks will keep supporting global bond markets. Thats the view of bank of cio, who joins us now. A veteran of 30 years looking at this. Did you ever think you would see a world where the u. S. 30 year bond was under 2 , where there was more than 17 trillion of negative bond yields. Are the Central Banks the only thing behind that . Rajeev i did not expect that many years ago. Its truly amazing to see such a quantity of negative yielding debt. Central banks are partly responsible. Zero,hey cut rates below we expecting for the rate cuts, but the markets are also driving because the market is driven by investors who looking for safe havens and bonds, expecting inflation will remain very low, despite centralbank action. Kathleen when you see Something Like this happen, you would think the whole world was in the middle of an even greater recession that we had 10 years ago. It that theis markets are looking ahead and they think the economy will be that bad with social banks cutting rates, or have they realized the world has changed. Inflation is low when its tough to push it higher. Theres a massive readjustment to the new reality . Rajeev its more of the letter. Investors have realized that even when the economy recovers, inflation would go up all that much. Its a struggle for central the 2 o get that for target level. Yields have remained extremely low. Inflation reveal remains so low. There is still globalization going on. Demographics may be coming into this. Less demands for higher wages. Something is different in terms of the cycle and in terms of the cycle of inflation. Paul there is another factor here as well. , number of Central Bank Chiefs weecially here in australia, had the fed chair jay powell paraphrasing at jackson hole saying, he cant fix a trade war. Is that the missing piece of the puzzle here . Do governments need to start stepping up . Rajeev governments could help. Until now, the effort has been on the central bank shoulders. The problem is that governments are limited. In the u. S. , it is difficult to see in additional fiscal boost ahead of the election. That is probably quite unrealistic. A low, no chance chance of any change in the treaties which would allow for more physical expansion. Two of the biggest economies in the world are a constraint the fiscal side. China can expand, and is doing so, but fiscal is not really a cyclical incident instrument. It takes a while to get it work. Something, itid would take a while for to have an impact on the economy. In this environment, you prefer havens, and the yen is one. Hitting 2016ar lows against the yen. How much further do you think the yen has it to strengthen from here . Decidedthe yen has are has already decided to strengthen. Is not comfortable for japanese policymakers to see a strengthening yen. Ways ofone of the improving the economy in japan was to weaken the weaken the yen. Also the face resistance by the u. S. U. S. Resistant to policy intervention. They are talking themselves about intervening to weaken the dollar. I think the tolerance for further intervention, to keep the yen week is low. There are some inflows into japan. When you start breaking these key levels where we are, it does open the way for a much stronger yen. Paul rajeev de mello, cio of the bank of singapore. Plenty more to come. This is bloomberg. Kathleen this is daybreak asia. Paul we are awaiting the latest Rate Decision from australia. Observersibit are expecting them to hold. For more what to expect, lets bring in australian economy reporter our australian economy reporter. Therene is very confident will be more easing. Why are we waiting . There is professional optimism going on. Since the midyear, there have been tax cuts, rate cuts, the dollar has fallen. Big problem in australia has been a weakness in consumption, which accounts for three festive gdp. Australians have massive household debt. Itood that a lot of means that a lot of the cash in a pocket go straight into the mortgage than the local shop. Internationally, the governor is dealing with offshore sharks he cannot control. There is a sense of inevitability about that. Seeink is just waiting to if something moves significantly. Their job is to talk up the economy. Thats one way to look at it. Kathleen many economists are protecting the cash trade will be at 0. 5 by march. That has been mentioned by the rba as a potential lower bound of policy. Will they move straight on if the rate get that low . The Deputy Governor was as this last week. Presumably, at. 5 . They want traditional measures. He did not answer, but they do have a mandate to act to try to reach their inflation targets, and that is the thing that implies that they are still a long way from achieving or moving inflation back toward the two or 3 range are getting employment down to 4. 5 . They probably will have to move. The problem that australia is you have the potential for electoral backlash with the sort of policies. Has been a huge private pension scheme. The governors really will be reluctant to do this unless he has to. Withnk thats what he said the economy being really not doing well. It will be hard to resist. Paul thanks for joining us. Stay with us. More to come. This is bloomberg. G. Isrek tom this daybreak asia. The u. S. And china are struggling to agree a schedule for trade talks after washington rejected beijings request of the latest tears being delayed get we are told this despite this is despite President Trump trying to give bids markets things are on track. Both sides are yet to agree on the basic terms of the engagement. Chinese state media say the government is ready to whether the tension. Opec production rose last month. The first gain since the cartel and its allies launched a new output curve at the start of the year. Led theand saudi arabia rise, which totaled 200,000 barrels a day, taking Oil Production to a fraction below 30 million. Opec has struggled to shore up oil prices amid deteriorating outlooks for public growth at the ongoing trade war. Iran is warring it is prepared to step away from the 2015 nuclear deal if they dont come up with new terms by the end of this week. Iran has said they set a friday deadline for germany, france and the u. K. To offer a feasible way for it to sign to deal with u. S. Sanctions and continue selling oil uncle markets. Headed fors are talks on the issue in the coming days. Italy is a step closer to a new government after Grassroots Party members approved a coalition between the democrats and the fivestar movement. 69 of Democrat Members say they are in favor of the plan, while 51 of fivestar members back to the idea. Prime minister Giuseppe Conte is set to form any government. Its not clear which roles fivestar politicians will fail. Fill. Nhk says members of the operation would tackle any unauthorized landings on the island, which are named by japan. Japanetween china and deteriorated to their worst port in decades after the abe bought part of the disputed chain of islands in 2012. Space is getting crowded. Three months after spacex launched the first of a constellation of satellites, other operators are having to jump to keep their craft safe. The European Space agency said it had to move its first observation platforms to avoid a potential collision with a spacex satellite. Credit, itsso becoming impossible to manually move orbiting spacecraft. 2 global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul lets get a check of the markets with selena in beijing. Selina 30 minutes into the start of trade, we are seeing a mixed and muted open. Not a ton of movement. Overlitics hanging Investor Sentiment over doubts of trade talks. Hong kong protests continuing many weeks. Introducing pressure on the yuan. 1. 2418 level. Numbersvery poor gdp coming in at of south korea. Inflation hitting the lowest level on record at 0 . We will get more on that with aetna. Here, what tods see about what is going on in terms of stocks. We are earlier that talking about considering. In rcn airlines. Considering a bid in asiana airlines. They had suffered a blow earlier this year when their auditors had concerns about the viability of the company and financial figures. That triggered a oneday plunge of 15 . That, to regain some of market optimism ,kumho released a revised plan, which included the sale of the carriers. We will see that unfold in the month. Switching gears once more. Looking at digital gold. Bitcoin rising past that 10,000 10,400 level. We are now seeing the correlation between bitcoin and the ustu. N. Is rising. Se. Usdyuan ri that has risen 2. 2. 59, the highest of sinking together since 2015. Sick ening yen is a signal of geopolitical tradewinds. Gold and its digital cousin can prosper. Great to hear about bitcoin. Maybe its a rise that will last. Lets go to south korean inflation. Quite an important number. The lowest on record. Even lower than the Asian Financial crisis. At the same time, bank of koreas saying it expects a rebound by the end of the year. D enda curran joins us now. The core is not so bad. Both indicators are at levels far below targets. It speaks to what is a global trend. Inflation is going nowhere. Its falling well short of centralbank targets. Korea,case of south there are some idiosyncratic factors going on. There is confident that the level will bounceback. When you look at what is happening with the economy, you have Consumer Confidence that a 2. 5 year low. Nine months of the consecutive contraction of exports. Other issues such as tensions with japan. The reopening of the Court Case Involving samsung. You throw it altogether, you have to say that this mornings inflation data is just another nail in the coffin in terms of the downward pressure that is on south koreas economy at the moment. Kathleen a lot of talks about base effects. Energy prices have been lower. Fair enough. Of all ther stance people you talk to of how bad this downward trend is in inflation and if it is a symbol of things to come . Enda you are absolutely right. When you speak to people about this, they say become it goes beyond the world of central banking and Monetary Policy. A lot of the common denominators or issues around productivity and the need for governments to push through microeconomic reform. The kind of changes of heavy we can work and live and spend that cannot be impacted by Monetary Policy. Thats why there is so much debate about how you get economies going again beyond pulling centralbank levers up or down or using other unconventional methods like buying bonds. That is why south korea is back in that bucket as well. Only 25 basis points be up below the record low. If anything, it might add to fears of a buildup in unsustainable levels of debt. There is a lot of focus on the fiscal side. The korean government are already talking about another for scoble budget. There needs to be more than just fiscal stimulus. And needs a lot of microeconomic structural reform. Its not just in south korea. Theres an appetite for this paul i justrld want to get some comments from the bank of korea. They expect cpi to rise to 1 from next year. Are these credible statements . Enda it will be challenging. They had just about avoided deflation. One of the great defenses of economics is it has quoted them pull them out of deflation. Pulled them out of deflation. There will be a lot of pressure on them to see if this will help them push forward in three months. If a certain number of months nearthe road, we are down zero for inflation, and the benchmark rate rate has been cut again, policy is struggling you are seeing, it in other countries. You are seeing it in australia. People they are talking about. He use of qe what we are seeing this morning out of korea is striking. Its not unique. It goes to a global threemonth theme about what measures are needed to get the economy moving again. Paul thanks very much for joining us. Inc. , is sitting pretty on a pile of cash bigger than the gdp of most countries. The question is, what do companies do with that money . I would tokyo stocks reporter joins us. Our tokyo stocks reporter joins us. First of all, how much caster they end up how did sitting on that much cash . They are sitting on a bunch of cash. That would be a surprise that abes push for higher corporate spending has been working. Part of the reason is that his push for higher corporate andg investment investment has not brought out a big change yet. The underlying narrative where Japanese Companies tend to be conservative when it comes to spending and investments since the bubble burst in the early 90s has not changed. That companies have been growing over the past years in terms of revenue and profit. That is also part of the reason in a huge cashng fund. Its not all doom and gloom. Kathleen can we expect change Going Forward . . Will it ever change . Nowhe understanding right is we cant expect any huge changes immediately. The cash pile is expected to grow further while. Its not that economics has failed completely. Stewardshipced a code in 2014. People are pointing that out. We are seeing increased activism by shareholders. If you look at buybacks, companies have been buying back a lot of shares. According to goldman sachs, companies are buying back shares that are much more faster pace. Its definitely worth it to keep watching. Kathleen thank you. Australian minister for trade, tourism and investment joins us exclusively to discuss the global fallout from the trade war. This is uber. Kathleen this is daybreak asia. Paul with no end in sight to the trade war, australia has been suffering collateral damage. Policymakers repeatedly sound the alarm on the potential for the hit to growth. Scott morrison warned that june the numbers might be soft. We talk with simon birmingham, australias minister of tourism and trade. Thanks for joining us. Well get to this with numbers. First off, the u. S. China trade talks. Is it getting scary because we have a meeting this month, but there is no schedule. Its a concern that there seems to be an impasse that has worth and in terms of escalation of tariffs. Hopefully will get to the opposition has been clear. We see some of the problems with the protection of intellectual property and forced transfer and australia shares those concerns as do many other countries. We dont believe that the unilateral application of tariff hikes is the way to go about that. These ongoing measures are having a direct and real impact on trade volumes. China is so critical to the australian economy. Here ase any risks china slows. Particularly these key commodities such as iron ore and coal. Simon there always risks we seek to manage. We structured our budget in may atthis year, and critically that time, we made sure we put in place reforms to deliver tax cuts in australia. Measureshose sort of can sustain academic activity. We will continue to look as to how people expand opportunities for businesses around the world. Inhave new trade deals indonesia and we started negotiate with the European Union. In all those cases, getting more soortunities and diversity these companies can choose where to send their products and the kit that give them a chance diversify. Kathleen it wasnt so long ago that trade negotiations, things like free trade agreements, they were in the background and every once in a while, it would be news. Hasdays, everything changed, especially in the u. S. Does this environment make it hard for you to sit down with india or the eu and try to reach an agreement . Is it just background noise . Simon we continue to get on successfully when negotiating new trade opportunities. Were the only major economy to strike deals with all of the north asian economies of china, japan and korea. That positioned us to be in the strongest possible condition to export into all of those markets. Persevering with the Transpacific Partnership with the United States, we demonstrated that we could work with other partners, a commitment to open up orders and trade, and to use what has been the conventional and proven way of sustaining economic growth. We will persevere with that. Intensehad a much more focus on a nowadays. And the 16 nation agreement with the group. The content people are focused ,n, how to get the best deal but also the recognition that symbolically could be important at this point in time. If we can seal an agreement like our region,ularly the asia region is continued of to do open markets and trade. Im going to ask a question from one of our viewers. Has the government seen more chinese or hong kong residents applying for residency or citizenship in the past year . Ive not heard of any data that suggests any change in the numbers there. Australia has a well structured migration program. We focus on skills. We also investment pathways as well. People need to meet those standards. Its an orderly process. They are scored on the points basis to see if we need the skills we need in this country or investment criteria, whether they are bringing those dollars into the country in an appropriate way. Negotiating a number with a number of countries. Is it hard to conclude those deals when the climate can change in the breath that takes to type a tweet . Simon simon its always hard to conclude trade deals. I dont think the Global Environment is making it harder. If anything, it is providing political momentum that the other countries of the world are actually determined to demonstrate. To open committed markets and trade and growing opportunities. Certainly from australias perspective. This time of tensions we are seeing, he gives us a reason to double down on our efforts and create new opportunities. We will work extra hard to seize every entry incremental gain we can see. We are seeing many other around the world wanting for both the structure and content of trade deals to do that, but also for the symbolism of demonstrating that we are using the proven method of economic growth. Do you have a deal paul do you have a timeline for when those deals will be signed . Indias a part of the onset negotiations. Its publicly known we are working toward the end of the year. I will be traveling to bangkok again at the end of this week for another round of the asset negotiations. The European Union, i would hope we can settle something by the end of next year. We start a little way to go there. From australias perspective, what we want to see is better Market Access across our services sector, as well as with goods, the traditional agricultural goods that are good for us. Paul i want to bring aspect to where we started. In this uncertain environment, we are seeing the prime ministers softening us up for a soft read on gdp tomorrow. Is there a chance we will get a negative reading . Simon i have laid that to the market commentators to estimate what that may be. This year, the june accord was dominated by the election held in the middle of that. Factorse a number of driving uncertainty at present. Have a stark choice in expectations that were going to be a change in government in australia, and with that, significant escalation of taxes, particularly hitting investments in the australian economy. We have seen confidence comfortably since then, that we are transferring over into economic growth, giving instability to investors, but not all those issues work. Paul simon birmingham, australias minister of tourism and trade, thank you for joining us. Lets get a quick check of the latest business flash headlines. Hyundai have averted a strike after an increase in salary and performance bonuses. Avoiding a strike is crucial as they struggle to meet demands for the latest suv vehicles. Kathleen kathleen we are hearing about talks being taken jm. R of cmae it may do the deal through its Hong Kong Listed unit. Almost 450 million in stake in their Terminal Link unit. Paul shares had a power surge after they said they would buy up shares in hong kong power that would put it that would privatize the business. Consolidateing to to list a new green energy unit. Kathleen saudi arabia has shaken up its Energy Sector has changed the chairman of ram ahead of its anticipated ipo. Its a second time it has been scale back in a week. It already had part of his ministerial job taken away to focus on the market. Thes currently head of saudi sovereign wealth fund. Lets get a preview of what to watch. Selina this chart shows the cost of protecting against further losses in hong kong stocks is rising. Its getting much more expensive. As you can see right here, that is march 2018. That is not a surprise, given hong kong stocks have lost 850 billion in the market flight since early april. We have seen a losses accelerate as the protests become more violent. Speaking of disruptions, to hong mtr, stocks, watching stocks are down 10 in april. Theyre continuing to be squeezed as they escalate. Paul tune into bloomberg tv later on today. Joined forg exclusive interview. Kathleen thats it for daybreak asia. Our market coverage continues as we look at the opens. Paul stay tuned. This is bloomberg. It is 9 00 a. M. In beijing, shanghai and singapore. Welcome to Bloomberg Markets china open. I am tom mackenzie. David and i am david ingles. Lets get to your top stories. New concerns about the escalating trade war, the u. S. And china cant even agree on the parameters for a new round of negotiations. Tom on the edge, hong kong leader carrie lam repeatedly said she would quit if she could. The police warned that some protesters have lost control. David Boris Johnson turns out ricky, he says brexit will happen next month