Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Lets have a look at the Chinese Markets. This is where we are getting a little momentum coming to us. We have to wait and see whether volumes come through. Look at the equity markets, the range, it does seem like a lot of these investors are on holiday already. Signs of eye for more stability. 10year, and the spread pretty much at the highest level , i think, late 2018. 30 basis points. It is a quiet day across these markets. We will had to macau, 20 years since the handover. I will leave the markets here for now. Su keenan is a new york. We will start with the Central Banks, which will be making a lot of headlines today with policymakers in asia staying on hold. Bankalf a decade indonesia kept its key rate unchanged for a second straight month. Saying the economy and exports will rebound in 20 between. With governoreld kuroda echoing a more optimistic tone of his colleagues at the fed at the ecb. I think the governments stemless package is appropriate i think the governments stimulus package is appropriate. Positive policy move. Xi jinping will make a speech in macau later to mark the 20 anniversary of the return to mainland rule. His visit highlights the differences between beijing and the unrest we have been seeing in hong kong. Visit, thet of his president praised macau for implement measures, such as Patriotic Education in schools and colleges. The japanese cabinet has approved a record budget for the next fiscal year with Social Security costs pushing up the bill. , 940ng will increase billion starting april 1. Social security accounting for third. Japans public debt exceeds 200 of gdp. Flyingplan to resume american astronauts in american spacecraft faces a major test on friday. Boeing prepares to tested star liner rocket. It will make its first trip to the International Space station from cape canaveral. Nasa has relied on rockets to reach the iss since the Space Shuttle retired in 2011. 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. This is bloomberg. Yvonne still questions over the details, but the interim trade deal will be signed and made public early in the next few weeks. Lets bring in our coanchor tom mackenzie. He is in beijing. The devil is in the details, what is expected . Do you think the chinese will get the math right . Tom that is the key question. What we are hearing from the chinese side, they are still in close contact with their u. S. Counterparts. The two sides are moving toward early january for signing off on this deal. Early mnuchin said january. Right translation issues. You are absolute right to say it is all about the numbers. Overall, what the u. S. Is saying is china is committed to buying 200 billion of goods and services over the next few years. It will be about 4050,000,000,000 in terms of agricultural purchases. What we have heard from our chinese sources so far, to get that, they are doing things like considering moving tariffs. Before the trade war, they bought u. S. Ethanol. Keeping also looking at issuing these waivers for private companies so they can buy those shipments. How they meet that 40 billion number, 50 billion number, we are still waiting for more details. Were still talking to our sources in beijing. It will come down to implementation. That is what other investors and economists have said, they want to see how this phase i deal is plummeted. Is implemented. David hopefully, we can put this behind us. Tinker. Ing in mark again. Ice to see you about thest talking phase i deal. The two sides of the story one is, can we assume the worst is behind us . When you look at chinas commitment, they have not bought that much imports for. Might that be a hindrance . What do you think . Two trade wars going on. There is this one, which is about tariffs. Is the new cold war between america and china. From the Investment Investors perspective, that is the much more important one. We are always going to get some dust we were always going to get some resolution on this. We were always going to get some resolution on this. Is at theeal dynamic higher tech end of things. Make will be able to gestures in the right direction. A little bit of this is political theater. Trump needs to get a deal signed. This is a positive thing for asia generally in the sense that taking away some of that uncertainty around the whole tariff business and the Global Supply chain. Broadly speaking, positive. Yvonne i want to bring you some news happening out of macaw. Cow. Maau. President xi expected to make a speech in an hour or so. The chief executive elected earlier this year. We are marking what has been going on their. On there. You were talking about the uncertainty that has been lifted. You can see a little bit of that happening with brexit. Is that enough for the risk assets to outperform in 2020 . Mark talk about nearterm uncertainty. ,ow that we know we have brexit now that we know there is some trade deal, what we can do is price risk. In 2020, you have a different set of uncertainty arising. The president ial elections. I think the uncertainty shifts away from your k u. K. , europe, and asia and back to the u. S. I suspect that means we will have a shift in the volatility away from sterling. I think we will get some volatility starting to go toward the dollar. We will pick up in low levels of volatility and that starts to affect a lot of peoples trade chances. David why is that . Ive always been curious, and i cant quite understand the volatility at these levels. Is that a function of Central Bank Liquidity . Mark the qe we have seen is driven down volatility in all asset classes. Lack of have a certainty we have tended to have a week patriot should weak patr a iation affect. When you get to a potential turning point, you see across all markets. The yen was at an alltime low. Up, how will trades end up looking . That is what we have to think about. Becausehing blows up, some leverage trader has geared up for hundred times in some directional trade. That is what we always have to look out for. Had a verywe have strong trend into the dollar in the last year and a half and if that stops, we will get some volatility in those other asset classes. I would be watching the fx volatility first. Up withif we wake volatility, will let mostly be the dollar youre watching out for the most . They said that last year, too, and it did not quite materialize. Mark when you get to a potential turning point we saw that in november, we got to the end of a long trend. The market is starting to go down a bit. Choppiness. The trend reestablishes itself. We have had a very strong directional trend in the dollar. It feels like uncertainty is picking up in the u. S. Some diversification needs to be going on. People are trying to think, maybe i should start investing in money offshore and that will have a little bit of an effect on the dollar. We will have more from you coming up. We will have him back to talk about more. President xi is set to speak in macau, the 20th anniversary of the enclaves return to china. David the latest on the impeachment drama as nancy pelosi steps up the standoff. This is bloomberg. The houses vote yesterday was not some neutral judgment that democrats came to with great reluctance. And ofthe predetermined a partisan crusade. The next thing for us will be will me see the process set forth in the senate. We will know the number of managers we may have to go forward. And who we would choose. 24 hours from what nancy loseyterday, and Mitch Mcconnell deepening nancy pelosi and Mitch Mcconnell deepening their impasse. Yvonne should i care . Probablyan investor, not really. This is great theater and people will talk about it a lot. Senate toxpect the actually impeach him. Will this disrupt the progress . Might be some interesting revelations that come out. The drama of a double be interesting. More importantly the drama of it all will be interesting. More importantly, how President Trump response to this as far as his campaigning. Maybe we might find that he is talking about things we care about as investors. Banninge things fracking would be really bad news for markets. Almostld thats as a way of most as a way of distracting from the proceedings. It is what we hear offstage rather than the drama of the impeachment. I am sure you have seen 2020 outputs. E of has been biggest risk this dreadful crowding into illiquid assets. We saw that in 2008. It created the same issue where alternatives, people have been forced into, desperate to be onested, unicorns to be sold from the private equity business. The private equity business is not thinking of thinking it sending it to the market thinking of sending it to the market. We have this misallocation of capital which will in wind rapidly which will unwind rapidly. We have a knock on effect. The fed is not about the economy. It is always about the Balance Sheet. We have had this nervousness about the repo markets. That will be something we need to work watch carefully in 2020. We cannot raise Interest Rates because it is so bloated and we cannot shrink the Balance Sheets quickly enough. We have these damage limitations. The fed will be looking at that. Potentially, that is a big area of risk for all markets. It is not about gdp. It is about how we transition from these unbalanced Balance Sheets. David good timing. Mark, thank you so much. Ark tinker i think we are headed back to macau. Yvonne president xi has just stepped up to the podium to mark this government inauguration here today. We will hear more from president xi jinping talking about the past 20 years in macau and how they will diversify away from just the gaming industry and within the tourism industry. There has been a lot of talk about making macau more of a financial hub. Whether that is feasible or not is still up for debate. We will take a break. This is bloomberg. Yvonne taking you back to these live pictures across the harbor in macau were president xi jinping is speaking at this moment in government inauguration ceremony. To hear more about the next 20 years will be for macau as they try to diversify away from the gaming industry. A lot of comments we have heard the last couple of days that are commentsre backhanded toward hong kong. Macau is seen as a golden child. Is carrie lam in the audience. David absolutely. Very interesting conversation. We will track this closely later on. One of the things that we should be thinking about is the fact they are so vocal and supportive right now i am talking about beijing to macau. Expectingople are some kind up of tests some kind of gift. Some kind of gift. Those are some things that could help. Not really fundamental when it comes to gaining revenue but it is the sentiment that helps the whole industry. Lets get the latest headlines. Goldman sachs is said to be negotiating on a settlement on its role in its missing funds scandal. It would include admission of guilt. We are told the deal would include a fine approaching 2 billion. The case is pending in new york. Goldman is separately and talks with malaysia. Shares of new flare plunged. His refusal to sell. Rare takeover bid. He is not selling and indicatednu flare would survive outside the toshiba company. Dining,from tourism to australiaof fires in starting to reveal itself. Michael is joining us out of sydney to tell us the latest. It looks little bit clearer from where you are standing. While the economy escape unscathed . Will there be a longerterm damage . Michael it is an interesting question because obviously, unlike california, are bushfires are focused on scrubland and places that are remote. It is the smoke. We are in the middle of a severe drought. Time e comes at a people tend to dine out, warm weather. That goes by the wayside when you have choking smoke around. That hurts consumption. Sites. U have building poor air quality and visibility hurts productivity. It all starts to tally up. It is a be it is a bit early to be able to quantify it. It could be a potential issue. David michael, thank you so much. Live from sydney. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. It is 9 29 p. M. Here in new york. Washington has confirmed the interim trade deal with china will be signed and made public only in the new year. Cnbc thatuchin told it is undergoing a technical and legal review but will be ready for signing in about two or three weeks. He also said the new north american trade agreement between the u. S. , canada, and mexico will add have a percentage point to u. S. Gdp growth. Lawyers for President Trump want to know if House Speaker nancy pelosi petition to delay sending the impeachment articles means he is not yet technically been impeached. If the president has been impeached, the senate should already have jurisdiction over the process. Set President Trump says it is unconstitutional for pelosi not to send the articles to the senate. The new governor of the bank of england is said to be announced friday. Successors to find a to mark carney was delayed by the turmoil around brexit. The movie black panther is back in the news. The fictional country in the the online tariff tracker showed a detailed list traded. The nations the fictional country was removed from the list after questions were raised in the media and that has prompted the joke that they are now in trade war. 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. This is bloomberg. David happening right now, these are live pictures over in macau where president xi jinping is speaking. Including hong kong chief executive carrie lam. They are marking 20 years since macau was handed back to the motherland, if you will. Yvonne certain things when it comes to remittances. Lets bring in our next guest. What have we heard so far . He has been talking, praising macau. A very good model of what they two systemstry, being, compared to the neighbor hong kong. Likely to be talking about developing plans for macau to a boost its economy beyond gaming. This has been a concern for some time. It really does need to move away from gaming. Things like conventions, tourism related, getting more familyfriendly venues in macau. It all links to people coming in for gaming. They have talked about establishing macau as a financial hub. Establish a relationship in terms with financial ties with china, which are separate from hong kong. He was the only candidate to run for the position and was elected by a 400 Member Election Committee and he talked about the importance of issues such as strengthening education with regard to loving the motherland and loving macau. These are words that china loves to hear. David talk to us about the contrasts between the situation how theyong now and are praising macau. The legacy of the colonial is very different. When the british left hong kong, it was a vibrant International Finance center. It had some rule of law, a judicial structure. Left a the portuguese was rifeclave and it with gangs and dom rated by one person dominated by one person. 2002, it was opened up. That has helped the economy develop. Eight times the size of what it was at the time of the handover. It is very reliant on gaming. This is one of the reasons why they have been so keen we had a guest on earlier who is a University Professor and he was saying politically, sacrifices in order to maintain economic stability. Yvonne thank you, joining us from macau. Our next guest joins us in studio. The rollout the red carpet for the president they roll out the red carpet for the president. The gaming industry has been dragged down by the u. S. China trade war and unrest. With respect to the gaming industry, this does not mean a lot coming to macau. For investors, future visitors, these are part of positive indicators that china looks favorably upon macau. In the end, it looks like xi jinping and administration highly supportive of macau moving forward with gaming and as an overall developing economy. It is part of the greater bay area. I think the crocks of macau crux of macau for the foreseeable future will rely on the gaming industry. David can i assume for the near foreseeable future, the adverse those notcan i expect to be plummeted . One would expect there would be a negative policy measures directed at the gaming industry. That does not mean there are not policy measures that take place that may have an adverse effect on macau. If the economy continues to weaken, if money flows out too quickly for the pboc, and bigger restrictions are put in place, they it that might not be directed at macau specifically but it would have a negative consequence. We have seen at the last 15 months. The money flow has been a situation. About there is talk making macau into the next financial hub. Is that even feasible . I think it is wishful thinking. Macau has talked about diversifying for quite some time. There is a very nice the end nascent bonde exchange. That will continue to develop. I expect the Bond Exchange will bonds,e to list currency which we have seen all year long. When you Start Talking about a proper stock exchange, for , that becomesale much more difficult because it is not just merely setting up the exchange, it is all the infrastructure around it. Macau is not there and it will take a long time to get there. The more important factor is looking at where macau has the competitive bandage competitive advantage. The problem of the problem with macaus lack of people. That is the role of the greater bait. That is the role of the greater bay. It is a critical aspect of future growth for macau. ,f you look at macau today 38,000 hotel rooms running at 90 occupancy. When you think about the mass market, it is a full house. 90 occupancy is what las vegas has. If you look at las vegas for a , we are talking about a city that has 150,000 hotel rooms. Macauomes the area where conductivity. Ove connectivity. Yvonne are you focusing on recovery or the mass market . All the value is in mass. We still have a very positive view that it continues to go next year, probably high single digits. That is possible it is possible to grow faster if the chinese economy improves. Vip is the question mark. We believe there should be some growth out of the vip industry. We are still talking about vip being down mid to high single digits. It still represents less than 20 . As long as the mass engine keeps chugging along, macau should be in pretty good shape. David topic . Because of the inflection and it is a high beta play. David winning pick. Yvonne thank you so much for joining us. We will bring you back to that speech from president xi jinping. Lets listen in. The rule of law is the basic principle and continue to improve the system for administering macau in accordance with the law. Faster to to move produce a smart city and innovate the models and social governance. The objective is to enable better efficient thinking a more targeted approach to social governance and more efficient delivery of services. Reak new ground and innovate a longterm perspective must be drawing developed plans with the goal of becoming one center, one platform, one base. Adopt a holistic approach and implement the plan stepbystep on the basis of macaus reality and rigorous studies. Focus andify the main relevant key projects for the appropriate diversification of macaus economy. Must be a multipronged step. Policy and Financial Support to resolve the most difficult issues. David these are live events taking place in macau with the chinese president talking about the need for the government to further improve governance. Yvonne we will continue to monitor headlines from the president s speech. Keep it here. This is bloomberg. Yvonne a pretty busy quarter when it comes to ipos so far. Quarterion in the last with investors taking the trade war and headwinds in their stride. 2020 gers are saying some bankers are saying 2020 will be just as busy. Pipeline, why the does it look so strong . Bankers seem to be super busy, very optimistic. Busyve come from a very quarter. 43 billion. Hong kong remains the worlds busiest venue for ipos despite all of the uncertainty we have faced in the last few months. It is going to be an interesting the first half of next year, given the comparables will be high. People are gearing up for a busy first half of the year. Especially with the u. S. Elections and site u. S. Elections in sight. Yvonne what areas are you talking about in terms of sectors angiographys . And geographies . We should expect more ipos coming from chinese companies. Deals inle are eyeing southeast asia. Thailand, indonesia. Sectors, consumer, health care, technology should remain pretty strong as well. David and bonuses i would imagine. Thank you so much. Get a sense of where we are at the moment. Check that out. Yvonne our reporters go chart to chart. Have the battle of the charts next. This is bloomberg. Yvonne i want to bring you the latest out of macau. President xi on the stage. Talk about one country, two systems within macau, saying hong kong and macau issues do not need more interference. China will not allow more interference. David those comments are being audience,by the taking a lot of these comments that we understand, just wrapping up. Making his way through the crowd as well. To reiterate, china will not allow for an influence both in hong kong and macau. It was met by applause. There we go. The chinese president. Yvonne shaking hands with carrie lam. Elected by the newly chief executive of macau as well. Watching the movements in the hong kong dollar fall into the week half of the trading. Led inty issues, but has the last couple of days. David there we go. It is time for the battle of the charts. Friday version. From singapore. They will pick their best they will pick their best charts against one another. Access oomberg can bloomberg viewers can access the charts. You can see a simple chart with a strong narrative behind it. Fromrday, the bank crossed market capitalization. The First Indian Bank to do so and only one of three such companies in the indian stock market. This is a middle lending crisis that has been going on for the past 1. 5 years. It is also the most expensive megaa bank in the world bank in the world. 20 ,g net income growth, and strong management. However, the managing director is going to step down next year most likely so that will be momentous for investors. Yvonne ok. Your turn. My chart is going to show the breakout rally in asia stocks is not just built on the optimism that growth will pick up. It is based on fundamental improvement in the economy. Is that line asiapacific index and the white line is singapore container. This is container volume. Singapore is a small economy with the highest trade to gdp ratios. Economy this rebound is coming, even before we have the phase one trade deal signed. Signed, deal is confidence improves. Do you want any kind of fundamental reason why things are going well . David you are judging today. Yvonne that is the one big real . On, are they is it about a sentiment story . David probably one of the best charts i have seen. Good stuff. Congratulations. You had a good one as well. Probably a stock story but. T is an india story as well to quote starship, nothing is going to stop us now. Happy holidays. We will see you on the other side. Best chart of between 19 . David i would not go that far. Yvonne tv is where you go to check out all those charts including the winning chart today. Analysis. N key save those charts for future reference as well. Morgan stanley has raised five and half billion dollars for a third infrastructure fund. A flood of investor demand. The global fund will invest half its capital in the americas, 40 in your in europe, and 10 in asia. Blackrock in talks to start the Asset Management business in china with one of the countrys biggest banks. They have issued a nonbinding agreement. That is according to people who are close with the move. The arrangement would see the firms develop and distribute ls yvonne the shares dip in late trade suggesting some investors were looking for and even figure upside surprise. It is nothing new for nike, the company has been estimates in every quarter but one going back to 2012. David you guys will love this next story. The movie black panther is back in the news. The department of agriculture wakanda as tradeuct partner. It was removed eventually from the list after questions were raised by the media. We all know who would win that. Yvonne i did see a headline on a story. Free trade forever. Guess what is not on there . The most important export. List, if it gets on that the trade surplus narrows completely. Markets, more coming up. You are watching bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. It is a most 11 00 in singapore. We are entering the last hour of the morning session in hong kong. Here are the top stories. Several Asian Central banks stay on hold amid signs of stability. China the latest to keep steady. Doubledigitpects growth in china next year, despite the weakening economy. We hear exclusively from it ceos its ceo. Yvonne four people are arrested in hong kong linked to the antichina protests. This is Bloomberg Markets asia. A little bit next in asian equity markets. Down one quarter of 1 . China leaving its oneyear prime rate unchanged at 4. 5 . Csi 300 remaining about 4000. On zealand still continuing these records. Lets have a look at currencies. According to a bloomberg survey, there is a 20 chance of a recession in australia. You are seeing weakness in the aussie today. We have seen the hong kong dollar we can dollar weaken. Earlier we saw the hong kong dollar hit its highest winning streak. Yuan holding near seven. I am watching the indonesian rupee as well. It is weakening just slightly. What was interesting from the press conference with the governor was that he was wishing people prosperity and to find their soulmates in 2020. Something usually get from not something you usually get from a central bank governor. The e records held in nifty. A record session in mumbai. We are seeing weakness when it comes to the currency. That could help the tech sector in india. Indian yields, a whipsaw for the 10 year. We were watching what is going on in the equity markets. Despite growth at six euros six year lows, investors pouring in 6. 5 billion worth of inflows into indian stocks. That is what is driving these gains on the benchmarks. Thate we have seen is the most influence we have seen since 2014. Start in washington, which has confirmed the interim trade deal with china will be signed and made public early in the new year. Treasury secretary Stephen Mnuchin said the court is undergoing a technical and legal review, and will be ready for signing in two weeks. Usmca, which is about trade between the u. S. , mexico, and canada will add half a percentage point to gdp growth. Of japanese cabinet approved a record budget for the next fiscal year with Social Security costs pushing up the bill for other government a government already struggling with debt. Spending will increase to 940 billion. Social security accounting for one third. Japans public debt exceeds 200 of gdp. To the u. K. The new governor of the bank of england is expected to be named friday. Andrew bailey is the current favorite. The succession of mark carney was delayed by the political turmoil around brexit and the snap general election. In india, the government has banned public protests and shutdown communications as anger at the religionbased new citizenship law rages on. Curfews have been imposed in the anital of new delhi, and entire state. And servicenternet in delhi and elsewhere. Lawyers for President Trump wants to know if House Speaker Nancy Pelosis decision to delay sending impeachment articles to the senate means trump has not technically been impeached yet. The white house view is if the president has been impeached, the senate should already have jurisdiction over the process. President trump says it is unconstitutional, in his view, for pelosi to not send the articles to the senate. 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. Im su keenan. This is bloomberg. Yvonne we are wrapping a week of Monetary Policy decisions, with most Central Banks staying on hold. Indonesia, taiwan, and the u. K. Kept Interest Rates unchanged. Meanwhile, sweden ending a decade of negative rates with a 0. 25 hike. Head of asia to Financial Markets research, michael every. We are seeing a lot of centralbank action. What do we see for 2020 after the fact indicated it will be on hold next year . Fed indicated it will be on hold next year . Michael we do not agree with the fed, just like we did not agree in 2019. In 2020, we think they will be cutting rates very aggressively and we will be headed toward zero again. Other moves on negative rates, that is our question of the day which assets would welcome the end of these negative rates . A difficultis question, because bonds are not going to like it, because you are effectively raising Interest Rates. You have to say equities also, on one hand, shouldnt like it, but presumably they will trade through that. Central banks will probably mutter about steepening yield curves and cash needing to go to work and reaching more record highs. Fundamentally, when you have a debt addled economy and are raising the cost of borrowing, which is what moving away from negative Interest Rates is, i dont see a positive for anything, although some will try to spin it that way. Yvonne the trade uncertainty seems to be behind us. In southa tech pickup korea and taiwan. Ca Central Banks can Central Banks breathed easier in 2020 . Michael Central Banks are already trying to save us from Climate Change, arent they . They are quite busy. There is nothing they are not trying to do, so they can therefore never relax. I dont think 2020 will be any easier for them. The first couple months and first couple weeks in a look very sweet may look very sweet and think there is not a lot to do this year. I think they will be very busy as the year unfolds. I think there will be dramatic action to come. Yvonne what will be the trigger . What do you see as the risks that could put an end to this rally we have seen for the last couple weeks . Michael how long have we got . [laughter] countrytion is after country, we see. Degrees of see various degrees of political crisis. That is really know there rea lly no there there. We dont think china can meet what the u. S. Side claims is in the agreement. Then we have the u. S. Election. We think that will coincide with the beginning of a u. S. Recession. If that is not enough to entertain us in 2020, i dont know what is. You say you called the trump impeachment a nothingburg er. What are you ordering at the restaurant . Michael the impossible nothingburger. [laughter] e on theets can agre impeachment side. It is ironic. Is and headlines that it impeachment that might not be an impeachment. Qe. Ave qe that is not everything is in this heisenberg determinant state. We have to figure out what is going on. It isnt positive at a very fundamental level. This trade deal is not going to hold up, unfortunately, no more than trumps impeachment is. You are not positive on what we could see from phase two. What would that look like if we see phase one signed . Michael we are in Science Fiction territory to be talking about phase two when we cant expect phase one to be stuck to. A structural reform of the chinese economy to look more like the u. S. That is never going to happen. Chinas actions and words make it abundantly clear that is not going to happen. Why should it happen from the chinese perspective . Nothing has pushed it off the developmental path it has been on for decades. Very skeptical over what phase one holds. Centralbankhole expending Balance Sheets. People have been talking about the liquidity side of things. Is that what you think is starting this rally in risk assets . Could the liquidity side of things help offset the risks you have been talking about . Michael that is a great question. Obviously the liquidity shifts we have seen from the major Central Banks is huge, the fed in particular. First of all, that speaks to an underlying problem. Look at the repo market. The fed will be pumping in , etc. 500 billion, not qe we are supposed to be a healthy economy. Where are these half 1 trillion sized holes appearing . Where are these holes appearing from in economies that are ostensibly doing well . The liquidity is the reflection of a problem rather than the positive. Even if we take the asset markets in isolation, it will have to keep increasing exponentially. The fed is throwing in 500 billion now, fantastic. Line,six months down the how many more billions do they have to throw in to get the next leg up in asset prices . How long until it is 1 trillion they have to put in, then 2 trillion . We get into fantasy terms. That is the Second Derivative of debt exponential we need to be traveling along if everything will be fine and dandy. If it isnt, we are in trouble. If it is, we are in trouble for other reasons, because obviously you cant keep throwing in that much liquidity. Yvonne can Central Banks ever get back to status quo . Can we wean ourselves off lower rates, ever . Michael you just turned my beard white instantly with that question. The answer is no. [laughter] how is that going to be done . I dont see how it can be. We have tried it recently. We have seen Balance Sheet reduction. We have seen fed chaos chaos and the fed stepping in with liquidity injection. It wont happen. Is a catch 22 we cant get out of. Yvonne we will have more from you. We will see how much more gray your beard can get in the next few minutes. [laughter] still ahead in this hour, protest continue against the new citizenship law in india. We ask whether the Modi Government can diffuse the tension. We ask whether the optimism after the phase one trade deal is warranted. This is bloomberg. Chinese president xi jinping wrapped up a speech in macau, saying china will not tolerate foreign interference there or in hong kong. It marks 20 years since the former portuguese colony returned to chinese rule. Xi lavished praise on macau and talked for quite some time about the one country, two system way. Hong kong is implementing the system as well. Saying macau has done a great job. A shining chapter in one country, two systems. Smooth adoption of article 23, a security law hong kong rejected years ago. He said it is important to have confidence in one country, two system. Of course, loving the motherland being important and safeguarding the authority of Central Government. He also talked about the importance of diversification for macaus economy. This is something chinese authorities have been concerned about. Macau gets 80 of its revenue from gaming. This has become more of a concern as the chinese economy has slowed down as well. We are seeing more competition growing with casino licenses coming online in japan. They are keen for macau to develop itself away from this singular industry. Say they should Sees Opportunities offered to them by the belt and road initiative. Noticed in the audience was the hong kong chief executive carrie lam. Was sheet sending any messages when it came to hong kong she sending any messages when it came to hong kong . Rosalind certainly. This time around, xi jinping did mentioned hong kong. Never tolerate external interference in hong kong and macau affairs. This is reference to what beijing has been saying for a while, the political unrest in hong kong has been fomented by forces. Orces foreign although there was no direct reference to hong kong, xi in praising macau and its political system so highly is reflecting that hong kong did a good job. Ae unrest in hong kong has different system politically. Macau, its economy much smaller, based on one industry. Hong kong, a very different place. That is because of the legacy left behind by the british. Yvonne lets bring back michael every from rabobank. When it comes to Political Risk they have shrugged off india, may have shrugged off protests, they have shrugged off u. S. Impeachment concerns as well. In terms of different events next year, will you focused most focus most on . U. S. Chinese struggle is the worst worrying for markets. When it looks like the trade deal will collapse, the markets doble in ways they dont when it comes to unrest in any other country. You cant rule out tensions leading up to the u. S. President ial election, particularly when you have a populist left candidate running against trump. That shows there is no real Central Government central ground left, it will be one form of populism against another. You cant rule out black swans, although they are more like gray rhinos in terms of the middle east, tensions in iran, etc. The market keeps focusing on Central Banks in that they keep on giving liquidity. None of this matters until it matters. When it does, it really will. Yvonne most people are thinking in terms of the tariff impact. It has been said we reached peak tariffs and this is setting the stage for for their role next. Rollbacks. Her would that change your mind . Michael if we see tariffs coming down, that is an indication that the trade deal is working, or the u. S. Is surrendering without the trade deal working. It is a tautology. Yes, if tariff are coming down, everything is going well. I think we have seen peak tariff s. The markets are supposed to be forwardlooking. That does not mean in any shape or form that, after the u. S. Election, that tariffs cant go go back go back up. If china doesnt step up to the plate and start aggressively buying goods and services, which it needs to to meet the one billion on top of the 2017 target to 2020. It is a lot of buying. What happens to em . I see this chart showing the gap between u. S. And Chinese Markets reaching this 2002 high. If the trade not deal fails, we should be looking for movement. What do we see for em . Michael our view is pretty negative for ems. There will be positive months during 2020, but the overall path is pretty ugly, even if it is volatile movement other than a straight line. If you take the view that all is well in the u. S. And therefore emerging markets will continue to be recipients of liquidity flowing out from developed into emerging markets, by all means, take the opposite view. It depends on what you think is happening on the underlying level geopolitically. Two strong arguments. We happened to take one, not the other. You talked about the risks in 2020. You mentioned climate. You say that is something your clients are quite worried about. Michael i think everyone is, to varying degrees. If you look at what is happening, for example, in australia with the terrible bushfires. Whether Climate Change is responsible is not something i am prepared to get to on bloomberg. There are a number of challenges ahead which we all need to address together as mankind. This is not just about markets, it is making sure we can continue to put food on everyones table going forward. I think that is a different issue than the ones we are talking about in terms of trade and u. S. Gdp. A lot of headwinds ahead. Michael every, have a great f Rabobank Asia o Financial Markets research. You can catch up with our interviews at tv. This is bloomberg. Yvonne a quick check of the latest business headlines. Shares of a chipmaker plunged in tokyo after its parent toshiba reiterated its refusal to sell. Earlier this week, a takeover bid worth more than 1. 3 billion. Toshiba has repeated its position. Goldman sachs is said to be negotiating a settlement in the db scandal. We are told the deal would include a fine approaching 2 billion via a case pending in new york. China markets are about to go on the lunch break. We are seeing upside. Csi 300 back above 4000 points. According to our bloomberg survey, chinese stocks could start 2020 with the best quarter in a year. You are seeing upside in shanghai. This is bloomberg. It is a must 11 almost 11 30 a. M. In singapore. The dollar set for a weekly loss following disappointing electronic export data. The forecast now turning to the november cpi data, which is due monday. Economist forecast it will creep up to a rate of 6. 1 . Lets get the first word headlines from su keenan in new york. Su we are going to start in washington dc, where they have confirmed the interim trade deal with china will be signed and made public early in the new year. U. S. Treasury secretary stephen saidhin Stephen Mnuchin it will be ready for signing within two or three weeks. Mnuchin said the new north american trade agreement between the u. S. , canada, and mexico, known as the usmca, will add 0. 5 to global growth. Policymakers in occasion staying on hold. Asia staying on hold. Bank indonesia kept its key rate unchanged, this for a second straight month. They said the economy and exports will rebound in 2020. The bank of japan, boj, also held, with governor here hugo kuroda kurdo echoing his colleagues in the ecb. I think the governments economic and stimulus passage is appropriate and the yield curve controls are quite significant. I see this as a positive policy mix. Flynasas plan to americans on american spacecraft faces a test as boeing prepares to test its starliner rocket. It will make its first trip to the International Space station from cape canaveral. Nasa has relied on russia rockets to reach the iss since the Space Shuttle retired in 2011. Finally, the movie black panther is back in the news with the u. S. Department of agriculture listing the movies fictional country wakanda as a freetrade partner. The online tariff tracker shows a detailed list of goods the u. S. And wakanda apparently traded, including ducks, donkey s, and dairy cattle. The fictional country was removed from the list after questions were raised in the media. That prompted the joke that the u. S. And wakanda are now in a trade war. 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. Im su keenan. This is bloomberg. Yvonne lets take a look at some of the markets in the region today. Pretty much a nothing burger, according to michael every. Nothing burger with no signs of a shake or fries. Flat across the region. Irdmonth highs set to be a th straight weekly gain when it comes to kospi up by one third of 1 . Down 2. 3 . Not sure why, but that is the biggest drop since august. We basically just erased the gains for this year. 2 . P down over. Ndian markets, plenty to cheer pretty flat right now. The rupee and indian bonds just starting to trade. The rupee seeing some signs of weakness. We are watching the indian 10 year bond yield as well, down 13 basis points. We were expecting some type of rally from the reserve bank of india. They will be talking about this omo plan. They are talking about bonds maturing in 2020 and buying 2029 paper. The citizenship test continue tests continue across india and rage against the citizenbased law passed by Narendra Modis government. We cross to new delhi. What is the government doing to control the situation now that the protests seem to have a life of their own . The government has been quick to calm down on these protests. Come down on these protests. One state is essentially under curfew. They shut down the natural in the capital of delhi. Hong kong protests have been going on for many months, and authorities there have not touched the internet. It is unclear how further they will crack down on the protests. We are expecting more protests and counterprotests later today. The markets have shrugged off the demonstrations, with indian equities hitting a record high for the Third Straight day on thursday. Yvonne what is the anger behind the protesters . What is fueling this and the broader context for this unrest . Ruth the protesters say the law indias secular constitution. Indias economy is struggling. We have seen unemployment hit a 45 year high. For students and billions of youth, unit indias that is a bleak picture as they enter the labor market. It is not just the citizenship bill angering people in india. Yvonne ruth pollard joining us with the latest. We will have plenty more on this story, coming up. This is bloomberg. Yvonne we want to bring you breaking lines. Bucking the trend from the fixed the selloff in fixed income. We talked about the indian 10 year bond, yields falling 50 basis points on the army is on the rbis operation. Monday, the r. B. I. Said they will purchase 100 billion rupees of the 2019 bond. They will sell an equal amount of debt maturing in 2020. We were expecting this type of rally. The shorter yields likely to spike on that move. 62 for the india 10 year yield. We talked about the protests in india sparked across the country. Our next guest is Niraja Gopal Jayal in new delhi, the author of citizenship and its discontent. Professor, thank you so much for joining us. We were just speaking to a reporter about the aggressive measures the government is doing to try to stop these protests. Are any of these measures legal . Butja yes, they are legal, they invoke a colonial era law. They are legal. The law is on the statute books, but it is perhaps politically unwise to have done this. Yvonne tell us more about what modis ultimate gain here with is thew law what threat to the constitution protesters are seeing . Niraja the protesters are completely right that this law is inherently discriminatory. It is introducing a religious criteria in the definition of citizenship. At the present, this is restricted to migrants from other countries, particularly illegal migrants, in terms of enabling them to become citizens. It discriminates muslim migrants while it fast tracks all other migrants from three neighboring countries. It is discriminatory. The more disturbing thing is it introduces, for the first time in indian history, a religious criteria as a test for citizenship. Creates a sense, gradations of citizenship, a twotiered system. Twinned with the other project that is being considered, which is the National Register of indian citizens. Continue. Niraja no, i was just saying it was a small and innocuous amendment of less than 100 words, but it has the power to actually shakeup the constitutional edifice. Why just wanted to ask you you think the international communitys response has been so subdued. Niraja several reasons. I think the United Nations has come out quite strongly and described this as a discriminatory act. In terms of other countries being silent, there are two or three reasons. India has long been seen as a democratic counterpoint to china. Opportunitiesomic afforded by the indian market. India has an as an investment destination has gotten in the way of a more robust response. We must remember that in other countries, the u. S. Or the u. K. Or even france, this is a period of global turmoil. In many countries, domestic preoccupation is taking primacy. The impeachment in the u. S. , brexit in the u. K. , and so on. The impact ofat, this on our neighborhood is extremely important. Christiann, hindu and organizations have already rebuffed this initiative and rejected it. In bangladesh, which has a sizable population of hindus, they may render people vulnerable. The Afghanistan Government expressed hurt, a government that prosecutes minorities. Clarifications from the government that that took place under the taliban and not the present government. The response has to be seen in terms of the global community, on countries, and other countries, and the neighborhood. In terms of what you are hearing from your neighbors, would any of that be enough pressure to see the Modi Government reversing this law . Niraja i think it is unlikely. Past experience suggests this government is not rollback. The only hope one could have apart from the courts is perhaps it will have a rethink on the National Register of citizenship. But presently, there is no indication it will do so. Government authorities have been repeating the National Register will go forward. Face saver in a totain since if they respond the international community. The damage done by the citizenship Amendment Act is irretrievable, irreversible unless the courts step in to strike it down. Yvonne illegal immigration has been a problem in india. For the a way government to better deal with the issue of illegal immigration without this new law . Niraja yes, it is. The law could be amended to include muslim immigrants as well. You need to legalize everybody here and to secure your border or to guesswork with your neighbors. States, that is not the issue. The issue is that they want no illegal immigration, period. Even if we tweak this law to add muslims, would that change anything . Niraja not for them. They dont want any outsiders whatsoever. They are concerned about the demographic balance in that state. There are no easy solutions there. One thing they are willing to , an amendment of the theyhip act in 1996 are happy for that to be restored and this further amendment not to go forward. Niraja gopal jayal, professor in new delhi. Indias equity markets have just opened in mumbai. We saw a Third Straight day of gains for the indian benchmark. How are things looking on the final trading day of the week . The opening has been flat. One can expect some consolidation. Record high levels, at least for the benchmark in the season. The nifty trading around record high levels. The nifty is trading flatish. No major gains for the nifty bank. Markets, in the ast few days, we have seen listing on the National Stock exchange. Todays focal point will be the currency and bond yields after the rbi announced an operation on december 23 where they will simultaneously buy and sell securities after the yield curve has steepened, despite the rate cut. Pharma. Atching out for that observation is on a test of manufacturing standards. Ubs maintained their rating. The stock has opened with a tad bit of cuts, close to 1 now. A company has acquired 10 stake in Data Management services after they could not recover their dues from the company. It gained 5 . May have seen gains they had seen gains of 10 . Power could be the beneficiary in terms of fed. Yvonne thank you. The latest in the mumbai session. Sales growth in china continuing despite the weakening economy. This as consumers curb their overseas purchases and spend more money at home. Its ceo spoke exclusively to bloomberg and explained his plans to expand the business in china. Not an increase in the number of sources, but increasing the size and experience that we provide those customers in those stores. This is the ultimate example. You can have an experienced that experience that is totally compatible with our new york flagship. It goes all the way to a Permanent Collection of high jewelry. Will you be adding any new Stores Next Year . Very few. That is not the focus of the growth in china. What has been important this year is the launch of a tiffany box in china, a website that is commerce enabled. This is important to reach the cities wheretier we do not want to compromise on the experience to customers. Sales have been strong for tiffany in china. Can you sustain that that th at as the economy begins to slow . Everything the Chinese Government has to increase consumption is an incentive for chinese customers to purchase locally instead of flying to japan or europe. In spite of a slowdown, it is growing positively. Tom at least double digit growth for you in 2020 in the chinese market. Do you look to reduce your exposure to hong kong, given the mainland tourists have dried up . Seen hong kong going through successful moments and difficult moments, then bouncing back. I am really confident about hong future the fact of its role in the luxury world. Tom as you look ahead to the holiday season, is this going to be a strong season for tiffany globally . We have new products, like the mens lines, a new line of watches for men and women. In septemberched and october. I expect it to fuel the holiday season. The numbers are encouraging. I hope the support of customers will continue. That deal is likely to close next year. How do you think that will change the strategy . Satisfactionreat for the current shareholders of tiffany, but also thinking for the future of the sprint in terms of this brand in terms of growth. Tom where are the obvious synergies in this partnership . In this industry, the real valueadded comes from the increase in the expansion of the brand. Tiffany, the value is added to shareholders. Happens, to take over do you stay on as ceo of t iffany . That will be the choice of the shareholders. Four arrested in hong kong on suspicion of Money Laundering linked to the antichina protests. We have the latest shortly. This is bloomberg. Yvonne three men and one woman has been arrested in hong kong on suspicion of Money Laundering linked to the ongoing antitrust protests. Four arrest persons in permanenton with a fundraising pathway for the unrest. The alliance has collected billions of hong kong dollars in the past year. Yvonne it is a fascinating story, how this alliance came about, the mysterious bags of cash used to fuel these protests. How significant are these arrests . They are significant. Already we have tracked 33 million u. S. Dollars for the protests. They represent 70 of the funds raised so far. What are we hearing from the other side as well . There has been speculation that some of the people protesting for lawyer to funds s fees. Shelly the biggest expenditure is not gas masks or food, but legal fees. The legal fees can get quite expensive. Spark was one of the groups that have been providing some of this legal aid. The worry for these protesters is what they will do without access to that money. Thank you, as always. Quick check on the markets on the final trading day of the week. We are seeing the nikkei flat. The hang seng index is seeing an upside. Indias markets holding at record highs. Asian stocks as a whole on track for a third weekly gain. We talked earlier that we are seeing a fall in manilas market, down 2 , erasing its 2019 gain. That is it for this edition of Bloomberg Markets asia. The best of Bloomberg Markets middle east is next. This is bloomberg. I am in san francisco. This is bloomberg technology. Coming up in the next hour, hitting highs, tesla stock is on a writ. Does it have more room to run . You have analyst inside information. What was the most downloaded apps of the year