Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Bullish. Ty the kiwi also in focus today. Saying theng through belowill avoid it dipping . 60. Trading indian futures and showing a move to the downside. Reflected in the session on friday when we saw a move to the downside again. The rupee holding on to some of the strength that we have seen and that is down to the decision, the surprise decision not to do anything about Interest Rates. There, 6. 6 . Ing up one rate cut had been factored in and it did not transpire. Let us find out what is news. Ing first word su the latest on japanese gdp. Japan moved faster than expected. Ratedl investment was higher. 1. 8 in september. Much quicker than the initial reading of 0. 2 . And three times as much as what the commoners were expecting. Continued strength in business investment. Downplayingt is recent missile tests in north korea saying the north Korean Leader is too smart and has too much to lose if he acts in a hostile manner towards the u. S. The envoy said talks on denuclearization are off the table and pyongyang said kim had overseen a test of a longrange missile launcher. The crown prince of saudi arabia has called President Trump to express his condolences for the killing of three u. S. Sailors at a u. S. Naval base in florida last week. Being accusedt is of a terrorist action. Eight other people were wounded in the incident. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan and this is bloomberg. Get you back to the top story. Chinese exports unexpectedly falling last month. Let us find out what is behind it. Help us make sense of the numbers, selena. What does this mean for the mainland economy . Declinethe surprise underscores the impact this is having on the chinese economy. Falling for the 12th consecutive months. Expectation that the pressure well let up anytime soon. Because of the week Global Demand especially from chinas Global Trading partners. Some of the goodwill measures. Imports is aase in sign of stabilization in the chinese economy. Juliette what is the latest on the trade front . We had comments from larry kudlow. The weekend he said that it looks like everything is up to President Trump and he does not look ready to sign the phase one trade deal. There are still Sticking Point in terms of agricultural purchases and the chinese demand for the rollback of tariffs. Are notinal strokes there. We are coming down to short strokes. We have been there. Some of the most delicate matters have to be adjudicated and evaluated. He meant to an agricultural purchases as being one of the delicate issues. Wouldday, china said it roll back some tariffs on u. S. Products. The picture is still very murky. May come into effect on december 15. Rishaad thank you very much for joining us from beijing. Here in hong kong is brett mcgonegal. Thisont like the idea of starting a trade war, but what is it . Brett it is almost to the point now where it is laughable. Larry kudlow is out. The hawks were out on friday on the jobs report. It is nonsense. Larry kudlow wrote a report in march before taking the post in june saying how tariffs are the worst things in the world and now he is on tv saying how powerful they are and how strong the president is. Is this affecting the economies . Without a doubt. The uncertainty is affecting them. Not that much has happened to. A lot of headlines but not a lot of followthrough. We are long on the story and short on the deliverable. Hopefully, the deliverable will be that they are going to come to terms. Rishaad this is edge. Hard to maintain a friendly atmosphere. As we have been hearing about what is going on marketina, the mainland is down. The export side what is the rate from that . Side, on the agriculture if it came down to china purchasing more products come it would be done. China would purchase the Agricultural Products it needs anyway. I dont put any merit into that. Police i. T. Theft . There is no International Body to determine that. I think we are trying to solve a problem that largely can only be solved by a headline that says we have a way forward. There is no way they can police what they say they are policing. I understand they want more stringent laws and it sounds well and good. How do we get there . We could spend 10 years formulating a body to do this. Idea is lost. Hole the hope is that they can get to an agreement, they can begin to act friendly, and then they can start doing stuff as a cooperation and than act as partners going forward. I think that is where we ultimately,. I dont think this is that shaky to be honest. Juliette picking up what youre talking about in terms of the data especially on the import side. Does that bode well for some of the other economies like south korea . They could see a pickup in their exports. Brett i think we all have to be aware that there are a lot of anomalies in these numbers. I dont think one month of a number means that much. I have cautioned before that the fed gets excited about the jobs number. I dont know if we will get a clear read through. The bureau of statistics in china is quite sophisticated. I dont necessarily think that something that will korea. Fit in south i would caution that we need a couple more months of that to make something positive out of it or it least have a better handle on whatever we have today. Juliette you are going to stay with us from capital link in our hong kong studio. Still ahead on Bloomberg Markets asia brexit and beyond. Polls have johnson heading for a majority. Hong kong is seeing its biggest prodemocracy march in months. Will there be more unrest next year . This is bloomberg. Rishaad you are back with Bloomberg Markets asia. In hong kong, they are calling for a general strike. We are out in the Central District of the city with yvonne man. What are you seeing so far today . Yvonne this general strike was not really widespread. Some rail lines this morning were perhaps disrupted a couple of minutes or so what it was not as big as perhaps some were anticipating. Was as after what relatively peaceful weekend. Numbers, turnout in 800,000 showing up in the streets yesterday in the march. This was the first rally since august which was approved by police. That prompted a lot of people, young, old, families, to come out in numbers. Deja vu from what we saw six months ago. Where the rallies brought hundreds of thousands if not millions of people onto the streets. You can say momentum has not died down. And it was tame. A lot of questions on whether it would escalate we did see some clashes with radical protesters and police but we did not see tear gas at being fired or Water Cannons being used. There was some then alyssum. Protesters targeting chinese banks for example. And there was a court of high it was a all in all, pretty peaceful weekend. Juliette a lot more peaceful then what was anticipated but there is still a fear that these protests will continue into the new year. He was spoken to the hong kong managerial authority. What is next for them in terms of trying to stop any capital outflows from the city . Yvonne at this point, it seems the economy, while it has been dragged into a recession, it has hit the slave the Retail Sector ism sector. R otherwise, it has been quite stable. With beijingew news, they say they see no signs of capital outflows. If the economy weakens further and if there are signs of deterioration in the property sector, they are willing to perhaps lower the buffers for the banks and there is some room for that. They have not gotten to that point just yet. There are also questions about how beijing is weighing in on this. We spoke to michael about carrie lam and this is what he said. My understanding is that they are looking for a backup successor regardless. The chinese president has come out and given his total support to carrie lam. If that is the case, carrie lam really needs to show her courage and somehow convince whoever twoever parties there are look for the inquiry. This is also important. Thene no response from government on this weekends events. We have seen some signs that beijing is making its presence hurt. Over the weekend, the American Chamber of commerce was denied. Ccess to macau he was told to leave with no reason given. Perhaps this is a sign of retaliation from beijing. Sanctioned some human Rights Groups as well after President Trump signed the hong kong bill into law. Farave not seen it go this where they are perhaps targeting business groups. That could be a development. At this point, they just hope it is an overreaction to the Current Situation and businesses can still forge ahead. Rishaad good stuff, yvonne man in central hong kong. We will have more highlights from that interview. Stay with us. Brett mcgonegal is still with us. Evolving in hong kong . Brett i think last month was a little bit of a wakeup call for everyone that is in and around hong kong. When the protests got into central, things were a little different and they were highlighted by those that have not seen a lot of it. Everythingrday, looked like people would take the Higher Ground and allowed the legislators to move forward. I think that would be a great thing. I caution all the time that in an age of double in an age of diplomacy, if you dont choose your words wisely, you get something that you cannot put back into the bottle. I dont think we are there. There is some sort of level head that is come into the situation. Hopefully, people can get to the table to talk about what they need to because i believe that at the end of this whole movement it was being driven and nobody knew what principles were really driving it. They had gotten so far from what started it. I hope this can be that levelheaded opportunity where both parties can get to the involvedh less emotion and come to something that makes sense for everyone. Juliette what does that mean for the points of the economy . We were just talking to Yvonne Council said that the had not really seen a lot of capital outflow. At my chart, we have also been seeing hong kong dollar deposits. After the slump in august. We know the technical recession part in the retail sales slump, is this positive that were not seeing capital outflows . Brett i do think it is a good sign. I think the pain has been held on the retail level. The independent shop owners. It does not seem as though rents have been adjusted the way the economy is performing. It is pushing people into a situation where they can no longer keep the doors open which is a problem. Those things do not change overnight. Acutesue is i think very in hong kong. The hong kong residents and shopowners especially. I do not think large pools of capital will reallocate. I do not believe that they will kong dollar. Ng i think that is a baseless concern. I think the large macro drivers are still in tact and they will funds barriers that keep here and i dont think we have to worry about that going forward. Has gotten a lot of peoples attention is that in the last two or three years, u. S. Politics they have gone right and become very hawkish with regard to their view of china. How has that changed as the narrative . Brett this unfortunately is the downside of donald trump not having the benefit of the doubt in the international community. The bill that has been passed in the u. S. As it relates to hong kong has nothing to do with him. He can veto it. Rubio, something done by the neoconservative side of the Republican Party which is really hellbent on getting some sort of blood from chinahong kong. Think wemerican and i have no business in being involved in this. Even bethink we should saying anything let alone passing laws. I do think there has been conversations between donald trump and the chinese president saying that he was not behind this and not supporting it and it was more of a Political Tool being used against him. I dont think it will have that much of an impact at the end of the day. I dont think the u. S. Will interfere in Hong Kongchinese politics. As far as this bill is concerned. Juliette brett mcgonegal, we want to get some more of your thoughts including on your favorite topic, brexit. And a screen make her stock and a screen maker stock that is popping in hong kong. That is next. And this is bloomberg. Is is bloomberg. Rishaad let us have a look at the latest headlines. Goldman sachs putting gold on a high. The Justice Department and other federal agencies discussing penalties. Less then what some observers had been expecting. Hsbc has begun shaking up top management ahead of the arrival of a new top executive. The retirement of their chief risk officer, mark moses. Hsbc could focus more of its resources on asiapacific. A better return on shareholder capital. Take a look at milk. The surprise resignation of the ceo who leaves just after 18 months on the job. Be leader onill and interim basis. We are looking at au optics which is rising in taipei. Jumping the most we have seen on record. The most since 2000. This is after Morgan Stanley raised the stock to overweight on a rebound. Saying a cyclical upturn last year well help a profit turnaround in the second quarter. You can see it has not been a great year for au optronics. When you look at analysts recommendations, they are more neutral on this stock. Thesen get a glimpse of stocks on your bloomberg terminal. Plenty more ahead. This is bloomberg. Juliette it is almost 11 30 a. M. In singapore and we are in the middle of the trading day. Flat ins and a poor. Also, were hearing that singapore has a property glut that could take years to clear. The city state has an overhang of almost 32,000 units. Sales have averaged about 2500 homes per quarter. It could take about four years to clear the glut. For now, let us get the first word headlines from su keenan in new york. Su starting with mexico which says changes to the successor to nafta must respect what it calls its red lines. The foreign minister says the u. S. Proposal for steel and carmaking originating in north america would only be successful after five years. While washingtons demands on aluminum are impossible for mexico to meet. Negotiations are expected to resume on monday. Indian lawmakers are set to approve legislation. This is the latest move in the hardline hindu nationalist program. Indiasainst constitution. The proposal allow citizenships for hindus and others who ived here legally illegally from pakistan and bangladesh however, muslims are excluded. To the middle east and qatar which is holding talks with saudi arabia. The latest on the standoff in the gulf may soon be resolved. Kingcomes after the saudi invited the a mere of qatar to. Ttend the summit of gulf doha of funding terrorism and having close ties with iran. Australia Emergency Services on high alert in queensland as hot and windy weather continues to stoke devastating bushfires. More than 2000 firefighters and 100 aircraft have been involved in attempts to halt the flames which are threatening to in circle sydney encircle sydney. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Keenan and this is bloomberg. Equity trading. Getting some direction. Mostly to the upside. From the tailwinds from new york on friday. Betterthanexpected jobs numbers. The 0. 9 . Ther than hang seng up 28 minutes after the opening session. Indian open in about 12 minutes or 13 minutes. Looking flat. Fair values slightly deeper decline. Look at the indian 10 year yield best because the reserve bank of india on thursday decided not to cut Interest Rates when virtually everyone out there thought they would. Rupees for a dollar. Juliette bond trading adjusting to that shock. Polls suggest Boris Johnsons conservatives will win a healthy majority unless brexit can find a way to coordinate against him. Analyst joins us now from seoul. We saw a rally in sterling. What do we expect . The consensus is that the option market. Risk reversals. We are seeing a bigger premium for the options. Markets are positive on this. Insuringheir bets and the options. The dollar. Sus if it reaches 134, it could go quite quickly. Levelte the resistance youre looking at to keep the rally going . 132 is the may high. 134 is from march. If it reaches those levels, a quickly opens up the market quite a lot. To 136. O quite easily we will get an initial pop in sterling. Look at the Economic Data next week. We will have economic information. Even though you may have this week could, the be a could start boe sounding dovish. Rishaad david, thank you for joining us from seoul. Is the chairman and ceo at capital link. We are entering some sort of endgame. It must be a relief for many people. Something may well happen here. Brett something is supposed to happen though we dont know if it will or not. We have spoken about this many times. I did not think there ever would be a brexit. I think it is a very delicate issue. As we know. I think it has been politically bifurcated. I heard someone in whom i have a lot of faith over the weekend saying that even with the majority, Boris Johnson may not actually do it and they may not brexit. And then what happens . Rishaad all bets are off at the moment. Perspective,tment how do you look at this . Thought thatlways the idea of fidelity to brexit a brexit happens, i think if brexit happens, i think it gives the u. K. A Strong Foundation to build a very business friendly environment going forward. What do i mean by that . Athink the eu is not at all certainty that every country stays in. On the there is a wobble southern part of this. Solidifyk. Can themselves, they can go on to pro business tax cuts, some sort of economic regime that is well understood, a compliance and Regulatory Environment that is business friendly and they can attract people that will be more likely to want the certainty of what is going on then the uncertainty that sits across the pond. I think that is a great thing. Otherwise, im not an expert. It is not something that i can dive that deep into but on the surface, i think that would be very important. Juliette you are an expert in my opinion because you are when it if you that called it. But i want to get your thoughts on what david was saying. The pound has been buffeted by the uncertainty. As weappens to sterling start to see this coming through between the tories and labour . Brett think you probably go to the 136 level as he said. It feels like it wants to go that way. I dont think there will be a tremendous surprise. E have been surprised online social media has been somewhat of a hurdle. But i think with the conservative majority that the pound will rally and whatever happens politically from there will be about how the deliverables come out, the timeline, and how people rally behind the newly formed government. Juliette i want to get some of your other thoughts on Investment Opportunities you are looking at. Everything is positioning towards 2020. Goldman is coming through on gold. And youre saying bitcoin might be another way to go. Brett bitcoin is sitting in an interesting position right now where there is a huge blockchain incentive coming from the g20 nations. I think blockchain will inevitably be a part of what we hear a lot of in the next few years. There will be a lot of initiatives undertaken by china and other powerful governments. To play no real way blockchain in my opinion in a clearcut fashion other than bitcoin. I dont think that bitcoin shed rally as it is bitcoin. I think a rallies because it becomes the identifiable, that will bein able to embody the movement, the positive scale of block chain. I think we are in the early stages of blockchain and government rolling out and building into the space. I think bitcoin becomes the benefactor of that. And i think it goes much higher from here. The whole the magic the whole thematic will play out for a long period of time. What will quick be the top issue in 2020 . Internet. Nese indias coming up, lopsided market rally has investors weighing their options. This is bloomberg. Juliette a quick take now at the headlines. Fined as part of the ongoing affair. Securities and exchange. Carlos the rest ghosn. Wrongdoing. Y Hong Kong Airlines has avoided becoming the first carrier to lapse from the city in more than a decade. It has to it has sufficient cash on hand by a stipulated deadline. And must maintain that amount in the future. It has been hard hit by the protests. Travel demand has collapsed. I led tell you is reported to be considering jumping from the jumping to the star group of airlines. Closer to lufthansa. Management will 200 lower thanes previously reported. Time to take a look at Indian Markets. Investors are weighing the stocks. F you can see that smaller indian firms have been underperforming. The white line is the index. And the other index is the blue line. Tohaad let us get over mumbai because the markets have just opened. We have a look at what we can expect from todays session. Seconds to go until things get underway there. Get let us get straight to the numbers. At this point, there is some concern evident. Some concerns with respect to the economy. A lot of that has to do with the weakening of the banking index. At this point, we are seeing the ices opened marginally in the green. We are seeing some minor weakness in the banking sector. The broader margaret the nifty 500, marginally in the green. Begunlio investors have starting to sell into the Indian Markets which could be a problem in the near term. Rishaad having a look at at those numbers. The biggest faller, 1. 4 . What has been catching your eye . I am looking at the banking sector. This morning, Morgan Stanley came out with a note on the entire Financial Sector and there are concerns coming in. There is a suggestion that the loan growth is slowing and the balance she has not been improving. Profitability has not been up to the mark. Some of the Smaller Banks is where the problem lies. There is a host of big names. We will watch to see of the weakness will continue. Besides the larger banks, they are expecting weakness in 2020. Juliette have a great start here trading week. Coming up on Bloomberg Markets asia we are seeing singapore is property glut hurting real estate prices and it could take years to clear. We talk about some of the implications next. This is bloomberg. Rishaad Hong Kong Legislative Council member michael cam says the protests on sunday show the support for continuing the unrest. He explains where he sees things going now. Peacefulthere is a march with supposedly 800,000 people saying we still want our thends and we now control district council. We still want our demands to be heard and i think the public is still supporting this particular course. Not necessarily what the radicals are doing. But this is a situation where they do not support the behavior of the radicals, they somehow felt the radicals are what is needed to put pressure on government. Tom do you still think carrie lam will be replaced in 2020 . Michael it is hard to say at this point. I think most people would agree that she will not go on to a second term. Happened to what the leader in 2003, 2005. He stepped down in 2005 after the march. So far, it has been only six months. Two years from now is about the time, 2022, when she will go to a second term. It is hard to say whether she will step down before 2022 or basically accept at that time. My understanding is they are looking for a backup successor regardless. The chinese president has come out and given his total support behind carrie lam. If that is the case, carrie lam needs to show her courage and somehow convince whoever parties there are blocking the commission for inquiry. This is also important. How important has that been to galvanizing the protest movement . Michael the human rights bill . Tom yes. Michael i have openly stated that whatever hong kong has received as an advantage, or special treatment, by the u. S. Can takeing that they back at any time. Basically, it is more of a political gesture rather than any substantive move. But the implication about the democrats in hong kong going to the u. S. Seeking help and getting it i think it is a bad move because it is going to drive beijing and especially the more conservative portion of the beijing camp to really stand to consider any protests from the protesters. Rishaad how is business doing in all of this . Michael my business is peanuts. A Retail Business in hong kong. My sales are going to pieces. The downside i will take a big hit this year. Hopefully, i can survive and then i am going to cut my inventory for the future. I am cutting down on my footprint in hong kong. We dropped about 30 year on year. Juliette that was the Hong Kong Legislative Council michael kim speaking to us earlier. Living to singapore. A property glut could take years to clear and it is threatening to weaken a budding recovery in prices and even push them down. Our real estate editor katrina is with us here in the studio. How do we get to this point . The roots of the current glut can be traced back to the property boom of 2018 and there were about 32,000 unfinished, m. D. , or in the planning stages apartments in singapore. Accident, prices were blooming and land was relatively che ap. Toperty owners banned gather to sell to developers. That is what is coming to the market now exacerbating the glut. Rishaad tell me, how many years is it likely that this glut will need to be cleared . That is the big question. Apartment sales in singapore have been running at a rate of 2500 units per quarter. Economic outlook is uncertain at the moment. Some market watchers are saying that sales could drop between 5 10 next year so it could take longer than that. Juliette they are still building. Every saturday i am awakened by construction noises. There is a lot of construction going on. There are pockets where the glut is worse than in other areas. In the outlying areas, there are examples where there is an apartment block of 1400 units. Only 38 have been sold. Orchard roadthe shopping area where you have good access to transport, good schools, shopping there is a glut there as well but those apartments are being snapped up a lot more quickly. Juliette katrina nicholas, thank you so much. Rish, we are at the start of a new trading week. Import data out of china there could be an upside in terms of market reaction. What are you seeing . Rishaad the nikkei is up by a third of 1 . There is a lot to be looking at this week. We have heard a look at that japanese gdp number, 1. 8 annual place annualized year on year. Better than expected. You alluded to the chinese trading numbers and the hong kong protests playing out on the hang seng. Have theek to come, we Interest Rate decision by the fed, the European Central bank and on thursday, britain is going to the polls in an election that may well decide the future of brexit. That is where the stakes are. We are looking at a rocky time of it, arent we . Juliette we absolutely are. Looking at some of the other assets. We are seeing quite a bit of upside coming through with copper futures. An interesting point on that trade front. Even though we saw those exports from china drop significantly, and the upside of imports from korea rising. Sign ford be a good the overall south korean economy as well. Futures are looking pretty solid. Goldman sachs was busy over the weekend of adjusting their forecast for 2020. At 58. Cast for wt oil they are quite bullish on the gold front as well. Demand for driven the precious metal and we are seeing a little bit of a flat to move when it comes to gold, Holding Around 1640 an ounce. A little bit of a mixed start to the trading day today. Rishaad absolutely. Looking at sterling. The eurozone, 1. 10. We also have the bloomberg daybreak middle east next. Sef this is Bloomberg Bloomberg daybreak middle east. Weaker than expected shipment shows why china needs a trade deal. Increasingly hurting their mainline economy. Yousef thousands join the biggest demonstration and months. The citys Monetary Authority says it still has room to act. Investors are counting down to the final policy decisions of the year. The coming dayspring announcements from the fed and the ecb. Yousef also a big week for saudi arabia as aramco alleges readd is good read is going iyadh is going to cut government spending. This is bloomberg daybreak middle east. Im yousef gamal eldin in readd. Tracy im Tracy Alloway in hong kong. All you need to know is reflected in the yield. That shot as high as 1. 86 on friday after the blowout jobs number, Still Holding above 1. 83 , or 1. 84 , i should say, this morning. How do we square that lot jobs data with prediction for a slowdown in the u. S. Economy, or even a recession . How do we square the strong data with the fed that is still in easing mode . Those are the questions for markets. Analysts say its hard to tell if job growth is slowing at all. , recent revisions having it steady around 180,000 per month. A bit of tension in the market. Yousef in the meantime, weve made it down here to riyadh, gearing up to be a massive week for the kingdom. Let me break this down for you. Monday, the important budget announcement, the expectation of a gradual removal to stimulus. They look to tuesday for the gcc summit as regional leaders come together. Is qatar going to be brought back to the fold after the multiyear standoff with neighbors . And then on wednesday, you get the important saudi aramco share trades, proceeds of wifi . 6 billion. Billion. Of 25. 6 that may be the largest ipo, but will that make a difference . Down allng to break the key angles of this story. Lets get to other quarters corners of the market. What is on your radar . Good morning. Juliette good morning. We are seeing a Third Session of gains in asia to kickstart the trading week, a cautious turn in markets because we are reacting to the data out of china over the weekend were you saw exports dropped 1. 1 and down 23 to the u. S. , the worst results to the United States since february. You can see pressure there. Hong kong markets are flat. We had protests over the weekend but its not showing too much action in the city. To, as tracy was alluding Goldman Sachs has come through saying the nikkei has been diversifying into gold, as strong as ever, citing fear driven demand and saying investor should diversify longterm Bond Holdings with gold. Tracy . Tracy and we also have the Indian Markets, which have opened up. Whats the story there . Linere not exactly in because we are looking at weakness. There are concerns. We have started selling into markets after there was concerning and challenging economic variables coming through. The other aspect is a lot of brokerages are looking at the Financial Sector there with some concern. Because of that, we are looking at marginal declines for the nifty and the sensex, down half a percent. Morgan stanley coming and saying there are concerns with respect to loan growth, as well as troubles with nonperforming loans in india here. As far as the indian ruby is concerned, that remains flat. On the whole, we keep and i banking sector, where Morgan Stanley is just one of the many broking firms. Andy thats Juliette Saly agam. Thanks for the update. Lets check in with first word headlines with annabelle droulers. Annabelle the crown prince of saudi arabia called President Trump to express condolences of three u. S. Sailors the killing of three u. S. Sailors. Its being treated as an act of terrorism. Riyadh pledged to cooperate with authorities. Eight other people were wounded. Iranian president submitted a budget for the coming fiscal year designed to offset americas maximum pressure on the islamic republic. Sanctions led to oil exports and tehrans increases in revenue from taxes, fees, and penalties to compensate for the losses. Theco says changes to success of the nafta must respect what it calls its redline. Theforeign minister says u. S. Proposal for steel and car making to originate in north america would only be acceptable if implement did after at least five years implemented after at least five years. Are set to resume later monday in the u. S. Japan grew faster than expected as Capital Investment was revised higher. Expanded, much quicker than the original reading of 2 10 and three times as much as economists were expecting. Continued strength is assigned of concern global slowdown has yet to hit global sentiment. Hundreds of thousands of people joined hong kongs biggest dumbest ration in months and assign popular unrest will continue into the new year. Protest organizers say 800,000 people marched through the city while police put that number below 200,000. The rally was the first promoted by the civil rights front to win an official permit since august. Emergency Services Remain on high alert as hot, windy weather continues to stoke devastating bushfires. Within 200,000 firefighters and 100 aircraft have been involved in attempts to halt the flames, threatening to encircle sydney. Air pollution hit record levels and was ranked worse in some cities in china next week last week. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Im annabelle droulers. This is bloomberg. Yousef . Yousef thanks. Lets get back to our top story, chinas exports unexpectedly fell due to a combination of the trade war and Global Demand. Lets bring in selina wang. These numbersat are a bit surprising. How soft is the data that came in really . Selina thats right. This was a surprise. We were expecting them to increase in terms of exports, but they fell more than 1 . If you look at the data, the impact of the tariffs is a stark. You have that dropping more than 20 , the 12 straight monthly decline. Even if the two sides reach a trade deal, a phase i deal, this isnt going to let up that pressure given the longerterm issues, which is the weak Global Demand, especially from chinas trading partners. The one bright spot was the pickup in imports. You saw imports from the u. S. Increase. That could be because of goodwill gestures in terms of boosting agricultural purchases. Theres an old saying that nobody ever got fired for buying ibm, but that may no longer be the case, based on a report of beijing trying to limit the report of foreign technology. Walk us through that report and the implications for the trade situation. Selina thats right. This is according to a Financial Times report, which is that beijing ordered all government offices and Public Institutions to remove foreign Computer Technology and software within three years. Thats a pretty big task and it could be a big hit to Companies Like hp, dell, and microsoft. Bloomberg news has not confirmed this, but it has been framed as part of chinas broader effort to reduce its reliance on foreign technology. This effort has been accelerated by u. S. s effort to curb the export of sensitive technologies to china, as well as putting chinese technologies on the blacklist. Trade deal or no trade deal, it does seem signs of a technology decoupling are still underway. In terms of the trade front, it does seem these issues are being separate. We got those comments from larry kudlow, saying we are not down to the final strokes, but we are down to the sort strokes short strokes. It seems decoupling is underway, trade story or not. Yousef thank you very much. Lets wind up the conversation and bring in the head of market strategy. Lets get straight to those figures. We have dtv on the blumberg to get additional perspective, an important move in the amount of exports, unexpectedly. Really moving ahead while imports return to growth. How does this way on your outlook on some form of deal between china and trade . Guest good morning. Guess the key is theres a lot of seasonality and distortion between monetary figures. From an export point of view, theres a big drop, but many chinese manufacturers are well aware of the risk after this sunday, december 15. The u. S. Bump up tariffs. We believe perhaps the drop in exports is because the frontloading of increase in exports will be done over the past two or three months. That may explain the larger than expected drop. , weimportant numbers noticed a strength, particularly in the commodity space. Strongerthanexpected. Next year, lunar Chinese New Year is so much newer, middle of january. So, the chinese would have to import and restock earlier than expected. When we look at trade numbers, just be aware of this distortion. On your question about the trade expectation, we are still of the cautious view that this will be a longterm, multiphased discussion. We apply a 60 probability that talks will go on and on, phase i, phase ii, so on and so forth. We should get some sort of phase one view next week before the end of the view. But for lack of a better word, the skinny trade deal is just to push things across to continue the conversation. Tracy its good to see, as always. I understand your point about seasonality and distortion in the data. Given the general trend line, and also given the risk of a skinny trade deal, as you put it, do you think the chinese authorities, are they doing enough to stimulate the economy . Guest i think they are doing a lot. If you are looking at it since late august, when they started reforming the rate, theyve done little tricks to the key benchmark rates, whether its the mrf or the repo rate. Its a cautious, calibrated, slight easing of Monetary Policy. Not a lot, but to send a confident message that the pboc is behind and trying to cushion that drop in the economy. Again, what we are very cognizant of is with the chinese authorities are trying to do, is make sure we dont have a big fall of in growth, that we go dont go to 6 to 5. 5 . You want to cushion things down, a slow, gradual move. Difficult, in this longterm conflict between the u. S. And china. Yousef so 60 , theres going to be some kind of deal. 30 theres a tariff excavation. Escalation. What did you do with the last 10 and how does that translate into recommendations for your client when it comes to exposures for china, specifically . Guest so that china bit is basically 510 that you may get a pullback enters, and unwinding of trade deals, and trade tension, and a comprehensive trade deal. We hope to see that, but at this stage its difficult, given they are what you call physical rate lines that are hard to cross from the u. S. Side. They expect the chinese to commit to huge purchases. They want the u. S. To lower tariffs. These things are difficult to meet and see where we go from there. On advice from clients, we still see gradual remember the 7. 2 ess, not to 7. 5 , but for next year. For all of us across asia, a weaker remember, you need to have a stronger dollar, and thats still a running theme heading from 2018 through this year. Yousef heres a preview of what is still coming up on the program. We talk about aramco because the company delivered on a world beating ipo, but now hard work is going to begin. How can this overhaul the kingdoms economy . We look at what to expect from the saudi budget later. The errorore that is for centralbank shock and awe. We assess the decade ahead for policymakers and rate is the focus moves to fiscal stimulus. It is an extremely busy week ahead for markets. We will have the latest on that in just a bit. This is bloomberg. Tracy as mentioned, it is a busy week for markets as they await decisions from the fed and ecb. But is the era of centralbank shock and awe over . After 10 years of crisis fighting, policymakers are facing a new decade with few good options to fight the downturn. Interest rates around the world are already around historic lows were negative after more than cut 2008, barring kids barring concerns they are doing good. I wanted to start out with that jobs number that we saw in the u. S. , blowout jobs number, much stronger than people expected. Even if you look at this chart, you can see that even the manufacturing jobs looked really strong, the biggest increase since 1998. Does this relatively strong data change your expectation for fed Interest Rate cuts. Say, we had a very strong payroll number on top of what you mentioned, if you look at hourly wage growth in the manufacturing sector, it is up there about 3. 7 on a yearly basis. That way above the average wage growth around 3 . Its a strong set of payroll numbers but one month doesnt take a trend so we like to see the next two or three months to see how things are given, given increasing volatility and payroll numbers. The thing to watch out for is more u. S. Growth, gdp, consolidate around 2 . Most of us are still concerned that growth in the u. S. Will drop below 2 , and the ongoing u. S. Trade negotiations will continue, which is why we still have a q1 view of one more rate cut from the fed by the end of q1. Suffice to say, given the strong job numbers, that confidence of a rate cut is slightly lesser, but we feel much more confident if the fed put in a cut just to stabilize u. S. Growth around 2 . Yousef you talk about comfortable, but lets face it, there is lackluster growth and concern about the trajectory of inflation. You look at the bond yields the last decade, arguably they have gone where not many experts thought they would go. Years, iswo to three there a risk you could run into quantitative failure or Monetary Policy impotence . Because thats what the bank of america folks are talking about. Is that something that concerns you . Listen to all the Central Banks across the u. S. , europe, and asia, there is a recurring thing among all of them. ,here is one important line that Central Banks cannot continue to do the heavy lifting and that governments now need to step into do fiscal stimulus, to do their part. Its good for a start that japan has led it and a few days ago, last week, the government put forth the stimulus package to ensure gdp growth at least continues after the tokyo inditex. So i think the ball is in europes court. In germany, to see if they can do heavy lifting after the ecb. And the long essential question is, in the long run, you will stay low are negative for longer. You notice Something Interesting over the past few weeks. As tracy started this whole segment, 10 year treasuries are back at 1. 84, 1. 85. This morning, expect positive. Tenure bunds were at 50 just a few weeks ago. Now they are at 50. A market in negative bond yields. If it continues, less extreme risks and pessimism, that may not be bad. You may consolidate until it gets more breathing space for the economy and the governments to work things out. Guest i wanted to ask you something exactly on this point. You point out in your research that one measure of the yield curve, the yield curve has stopped inverting. We spent a good chunk of this year worried about what yield curve inversion signaled in 2020. Was the yield curve inversion signal incorrect . Was it wrong this time . Should we stop worrying . When we talk about yield curve inversion, is it the front end thats been going up too fast or the back end . And you notice this year, the bulk of the yield curve inversion was because the back and it dropped too much. In august, the 10 year treasuries were at 1. 5, 1. 6. That is risk aversion, everyone rushing into fixed income. For all you know, what were seeing is a much more normal yield curve. Flows are normalizing. If you look at recession parameters, they stabilize a little bit. We got to see where things go from there. It is comforting to know that inversion did not worsen further and things are stabilizing for now. Tracy well take comfort where we can find it. Were going to have to leave it there. Thank you so much for being with yousef and myself. Before we go, dont forget our interactive tv function, tv. You can watch us live and catch up on past interviews, as well as dive into past securities for blooming functions. You can also for bloomberg functions. You can also become part of the conversation. If you have an idea of what a normal yield curve should look like, let us know. Check us out on tv. This is bloomberg. Yousef first word headlines with annabelle droulers. Annabelle the surprise recognition. Resignation. She leaves after 18 months and will be succeeded by the former chief executive. She says realities hit home about the difficulty of running a company, with main markets in china and the u. S. And the adverse impact it had on her family. Records from japan say nissan may be fined more than 20 million as part of the carlos ghosn affair. They offer no other details but say the securities and Exchange Commission is ready to advise the Financial Services agency. Hosn was arrested a year ago. He denies any wrongdoing. And that your bluebird business flash. Flash bluebird business bluebird business flash. Tracy . Discuss. Are going to this is bloomberg. His is bloomberg. Tracy it is 11 30 p. M. In new york, u. S. Equity features kicking lower, over 1 10 of a percent on a mixed trading session underway in asia. Meanwhile, the 10 year benchmark treasury yield kicking over at 1. 84 . Citigroup analysts say the recession forecast are frightful, but the data is so delightful, referring to that blowout u. S. Jobs number. How do we square that positive data with the forecast for a slowdown in the u. S. Economy, or even a recession . That is the answer investors are going to have to be seeking today. Lets check in with the first word headlines around the world. Heres annabelle droulers. Annabelle the latest opinion polls give boris the lead four days before the election. Brexit seems to be a top the election and they are backing the candidate most likely to win the seat. The candidates worn complacency is the threat to a conservative victory. President trump is downplaying missile test in north korea, saying kim jongun is too smart he has too much to lose. Tweeted and said talks on denuclearization are now off the table and pyongyang said kim had overseen an important test on a missile launcher. The media said they didnt say what kind of rocket was tested. Chinese exports fell unexpectedly last month, another sign the trade war is hurting the economy, as Global Demand also slipped. Outbound shipments declined 1. 1 from a year ago and were down 20 of the United States, the worst since february, the 12th consecutive monthly decline. Shipment had been expected to rise a 10th of 1 . 8 10 of 1 . In modisatest move nationalist program. The proposals allow citizenship for hindus among others who arrived illegally from pakistan, afghanistan, and bangladesh. But muslims are excluded. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Droulers. Lle viviana this is bloomberg. Mix today in asia. It is. We had the export data out of china, which was a disappointment, downside on the csi 300, down by about 2 , and hong kong trading down. There is upside in the key commodity markets. The nikkei firm or by 4. 4 . We had a strong read in terms of thirdquarter gdp rising 1. 8 on an annualized basis in japan, versus estimates of. 61 gain. Announced,opec deal and that has forced Goldman Sachs to come through, upgrading forecasts for 2020 vibrant and a pta. Wti. They say its up 58 a barrel and 63 from brent. Youve got brent at 64. 22. And they are saying you should be looking at gold and diversifying in terms of longterm bond holding with gold. They say the trade dispute is making gold and attractive place to put your capital. Tracy amongst the movers youre watching today, is a type a lcd maker, what is going on there . Juliette Morgan Stanley raising their price targets for both electronics, leading those gains, and also lg display, up 8. 5 . There will be an upturn in lcd panel prices, which should help profit turnaround for companies in the second quarter. To the downside, weve been talking about this impact to the chinese growth chinese drugmakers in hong kong. Your seeing weakness in the region, the government unveiling their latest reimbursement plan. That is expected to have drug prices cut by big margins. Investors feel repositioning a lot in that pharmaceutical space. Yousef thank you for that, Juliette Saly. Lets get back to this part of the world, saudi arabia set to release its budget later today. For more on what to expect, lets get to our chief economist. It suggests a withdrawal of fiscal stimulus is on the table. Given that they are barely holding onto growth, is in the timing awful for a move like that . Question. S a good i think what were seeing is growth has improved recently. Not all growth reached its fastest pace and its showing momentum continued into the third quarter. But a large driver of this recovery was the government fiscal stimulus the last two years in the withdrawal of the stimulus could threaten that. Of course, look at cushion this is they finalize the aramco ipo, so the government could withdraw part of spending, for the Sovereign Wealth Fund could increase spending. But its important to think about the quality of spending, given a large part of the funding was from domestic sources. Its important to see how the spending is going to happen, whether domestically or abroad, and over how many years, 26 billion in a specific year has a different impact than over 10 years. Tracy its tracy in hong kong, so good to see you again. We know saudi arabia has been running a budget deficit since 2014. Yousef and i have been talking about that a lot. They are targeting a balanced budget. How realistic is that, given the dynamics you laid out . Guest it is possible if you look at the government budget, but to look at the broader picture. We had transfers from aramco to the Central Government. We talked about the Sovereign Wealth Fund, spending on behalf of of the government. We had transfers from the central bank to the government. Its important to not just look at the Central Government balance sheet, but to look at the consolidated government thele sheet, which includes National Oil Company as well as Central Government. Thats why measures like physical break can be misleading because it looks at the narrow sense of government balance sheet, not the overall general government balance sheet. Yousef what else would you. 2, as we await the budget announcement . Is there anything else investors might be missing as they look through these numbers, the Bigger Picture . I hear theres a couple of things, one of them the deficit for 2019, the government in the budgets last year they projected 4. 2 of gdp budget deficit. Ourselves,ncluding that it would be higher. It would be interesting to see if that gets revised. The second item is the growth number for 2020. The government is projecting 2. 3 growth for 2020, likely revised down. Because spending is lower and saudi arabia is offering lower oil production, that has headlined growth. Tracy we are going to have to leave it there. Thank you so much. Lets stick with the region. Oil retreated from a 12 week high as optimism spurred was over shadowed by we demand. Weak demand. Heres what some key figures had to say in vienna. Without the best thing to do was to preemptively lower our sure that we make could deal with this as we go into the end of 2020. This was based on further analysis of the market. Revenuexpect that the from this stabilization of the up with amight end better reward. This is good for us because we needed to tighten prices. Tracy joining us now is anthony dipaola. Just going through the statements from opec over the weekend, we can see the share of the deeper cuts are born mostly of saudi arabia, the uae, russia, the usual suspects. Is the political will still there to sustain these deeper production cuts . Anthony i think there was a lot of armtwisting in opec in vienna last week. Going into the meeting, one of the main focuses was on compliance, getting the countries we saw the iraqi minister and nigerian minister speaking there, two of the countries the opec ministers themselves, as well as analysts have pointed out, to having produced over their quota. A lot of that has been armtwisting to get the countries to come back and. That theres to come back in. Then theres the real political armtwisting, working with russia, to where they push those quotas. There was a concession to russia. Not are allowed to now count condensate, a like type of oil. They wont have to count that, so that is a concession to pressure to keep them on board, but we really see it coming down to saudi arabia who took a cut in their quota and then announced an additional cut, saying that they would continue to put produce less than their quota in order to support the market and help things along. Tracy . Yousef anthony, Goldman Sachs put out a note they raised their targets for crude oil in 2020. But they also talk about is an area where if opec a scenario where if opec succeeds, this a comest the sporadic amid study production growth, decent compliance to quotas. How does that strategy work out for them last time in the 1990s . Anthony one thing weve got to look at anyway is stability of the market. And we dont have certainty. So i think in the past were opec has seceded, they have been able succeeded, they have been able to give ramping up production in the late 1990s before we had the Asian Financial crisis come in, and that was really damaging for opec because they were overproducing. Here it seems they are taking a more cautious approach. You saw the saudi minister saying they wanted weakness in the market by taking barrels off the market. But theyve announced cuts for three months. Were looking at these cuts for the first quarter, and they go back to vienna in march for another meeting. This doesnt give longterm certainty to the market, whereas analyst, investors, traders can say heres one variable we know about. Lets look at the other variables we dont know about. The variables they dont know about are the economy. The u. S. Saying they are not ready for a trade data with china. It seems that there is a lot of certainty around not opec supply coming on, u. S. Shale, growing slower than in the past, but places like brazil and other supplies that are going to be competing with opec. So, we will really have to see in that march meeting if there is more clarity in the economic situation, clarity on other supply, and demand is going to be the big issue here. This is a demand driven market now, whereas opec is supporting it by these cuts. Well have to see how that goes forward after march. Tracy interesting to see theyre pricing is relatively anchored at low levels. Anthony dipaola, thank you so much. Up next, the hong kong protest throwable on as thousands joined the biggest demonstration weve seen in months. We are live on the ground in just a few minutes. This is bloomberg. Tracy protesters in hong kong are calling for a general strike after the city saw its biggest prodemocracy strike in months. Yvonne man is out in central. We were supposed to see about of general disruption, but so far it seems quiet. What are you seeing . Yvonne yeah, it was certainly very tame and not as widespread as we thought. We saw some disruptions at the subway rail lines, but nothing i would say put traffic to a stop in anyway. So it was pretty tame after was what a tame weekend. This rally was a pretty big turnout here. We havent seen numbers like this in six months, 800,000 people that took to the streets, according to organizers. Police put those numbers closer to 183,000. But nevertheless, this was the first rally since august that police approved. That prompted many people to come back out. Families young and old that took to the streets from Victoria Park all the way to the Central Business district, and just another sign that momentum has not died down as of yet, six months since this movement began. It was a bit of a deja vu moment. Yousef these protests have so far largely been peaceful over the weekend. Whats the government response been . We havent heard from the government as of yet. We will see if caroline Say Something in the rig the press briefing tomorrow morning. But time and time again, weve heard from carrie lam say once the violence comes down and stops, they can have some meaningful dialogue. Perhaps the government is prompted by this showing that perhaps because it did not end, its time to ask for something, perhaps dialogue or consumption. With michael kent earlier about what to do next and this is what he had to say about what the government should be offering. Take a listen. My understanding is that they are looking for a backup successor. But of course xi jinping has come out and given his total support behind carrie lam. If thats the case, carrie lam needs to show her courage and somehow remains whoever parties there are, walk into the commission for inquiry because this is all so important. So, independent inquiry still one of the key concerns for protesters. As for beijing, we are seeing signs they are making their presence heard. We heard from the chamber of commerce. They were both denied entry. They were detained for several hours and then asked to leave with no reason given. Perhaps you could say its a form of retaliation from beijing after President Trump signed that hong kong dell. Beijing had sanctioned these nonprofit groups in light of that development. But hasnt gone as far as targeting business groups. This certainly is a development. They are hoping this is an overreaction to Current Events and that businesses can still forge ahead. Yvonne, appreciate those insights. Lets get to the story around equities because the main indexed rose to the most in more than a year. Amid hopes that oil prices are going to continue to push higher. Equitiesng in our specialist. Lenders were some of the biggest gainers. Does it boost confidence that much . Earlieru mentioned during the show, this is an important we for the saudi market. Trading wednesday and we did learn about the details late thursday here in the middle east. It was the first session since those details came out and its so important to remember that we have big news from vienna from the opec meetings regarding the cuts saturdays are willing to do beyond the group and all of to reduceents parliament. Its pretty much in line with ground heard here on the from investors as they saw a good deal for locals, for big funds, for those here in the gulf who are willing to buy those shares. It seen as a very provided very attractive demand and with the boost coming from the oil front over the weekend, it seems like everything is in the right place for a good start later this week. That, weveing of been talking about aramco so long, its hard to believe it starts happening over time. What you think people are expecting because it seems it might be difficult given how much emphasis there was on boosting valuation. Its been a while since we started talking about this year, but its a sort of excitement to see this starting to trade in riyadh. Analysts andto those that were the target of this deal since it became much more of a local story, rather than global, they say there are a few elements that are indicating there could be a price increase as soon as it starts trading. Demand fromwas investors, it was supportive. Not let this go first because there is a boost coming from the index inclusion that you have before the end of december. Msci and ftse are saying they will go to benchmarks before the end of the year. This could bring a lot of passive money to the market. Retail has incentive to hold the stock for six months because they get bonus shares after that. There are a lot of elements that are just indicating that this could be a strong start, even though its very hard to say that there could be sustained support for the price in the medium to the longterm. Yousef interesting to see the switch in sentiment because initially, the news around saudi aramco ipo pushed traders to sell because they were worried it would suck liquidity away from other key indexes. Now with this positive change, is that likely to boil across the border into some of the neighboring markets . Yousef, thats a very interesting point indeed. We hear a lot of local managers saying there is a reshuffle portfolio going on right now in saudi arabia. Of course, is the main market in the region at the moment for all of those trying to build new positions will deploy new money, or just reorganize their investment. We do not see a big withdrawal from the other market, lets say the uae and for example, yesterday was traded close to zero. There is not a big impact of money flowing out of the uae into saudi. Collate is trading pretty much on its own kuwait is trading pretty much on its own. We had big banks going through a merger there. It would be interesting to see that once aramco becomes part of the international benchmarks, for example, which is already qatar,red the uae and there could be an impact from the forced money that would have to sell part of their holdings within the other stock market to actually buy into saudi. Tracy yep, definitely a big week for setting markets. Thats philippe . Thank you for that. Coming up, it is bloomberg size and scope. Todays number is nearly 32,000. You can find out what that is in a few minutes. This is bloomberg. Tracy it is time for bloomberg size and scope. Todays number is the very precise 31,948. He to explain what that is is bloombergs cross as it reporter, eric lantz. Eric . Ric it is something we are not seeing often, a property glut. Its the overhang in the singapore housing market. Based on sales of 2500 units per quarter this year, Analysts Expect its going to take four years for it to work through this glut. The origin comes from the end blcokocks property frenzy that happened, where a group of owners would take a block of properties and sell them in a block to a developer who develops the site. There was excess exuberance in picking up those properties and youre left with a glut. Yousef thank you for that, eric lam. Thats the first hour of bloomberg daybreak middle east. Another hour ahead. Well leave you with a Bloomberg Live shot. This is bloomberg. The following is a paid presentation brought to you by rare collectibles tv. The California Gold rush is considered to be one of the most impactful events to impact the economy during its first 100 years and it has certainly had a longlasting impression in numismatic history, as well. The people of california soon needed a way to standardize the new value of gold