Shery ahn thousands rally against Police Actions in hong kong. The unrest came up in toxic think china and japan in beijing. A study markets not kicking off trading in the early session. Sophie stocks stay below 6800. Not going anywhere fast given the holiday week. After a three dated decline. As investors consider the earnings trajectory going into 2020. Futures are pointing to gains in tokyo and seoul, adding less inn 1 10 of 1 , wellington. Switching out the board. The aussie dollar set to snap a four day gain. 1. 30ound trading below after being the worst performer ing itsht after cappting i longest lower run on no deal brexit. Yen barely budging as it is set to end the year, defined stronger forecasts. Bojs Meeting Minutes due later this morning. Paul . Paul lets get the first word news with haslinda amin. Slinda thousands rallied in hong kong monday evening against Police Actions to see moneys raised by a crowdfunding group. Police arrested four people over suspicions of money laundering. And 9 million of assets. Spark alliance condemned the police action. Raised the subject telling xi jinping hes very concerned and urged china to continue to exercise selfrestraint. Abe also mention the treatment of uighur muslims saying the International Community is increase of a worried. Chinese state television said president xi agreed that sensitive issues should be handled properly. Five people have been sentenced to death in saudi arabia for the murder of journalist Jamal Khashoggi last year. That the killing was not premeditated and said it did not have enough evidence to incriminate two senior officials close to mohammad bin salman. Hes denied sanctioning the killing but the u. S. Says it could not have happened without his knowledge. Is accused of using Sophisticated Technology to spy on regional rivals. The main group is known as apt32 and is believed to be linked to the government. Experts say it has specifically targeted the Automotive Industry and american businesses with links to vietnam. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery ahn boeing has named a new ceo after ousting the embattled Dennis Muilenburg. The playmaker has been struggling to navigate the 737 max crisis. Our aerospace editor brendan case joins us now. Does this give you an idea then of how long that halt of couldtion of the 737 last, given that that was announced last week and we did not know how long the temporary hold would be . Certainly regulators have been suggesting that its max could bet the approved for flight in february. But there have been so many times during this whole saga weve expected one thing. The markets expected one thing, and it just does not happen. I think you have to treat that of impactas a month for the supply chain but not necessarily, it wont necessarily stop there. Shery ahn we are now hearing that david collin, a ge veteran will come in. How, an appropriate choice is he for the top job . A big question is how different he is going to be. Hes been a boeing board member for a decade. He has been intimately involved with the companys response to the max crisis. And so, what he does to differentiate his approach to managing the company from that of Dennis Muilenburg remains to be seen. Certainly, though, there were signs from the faa that the relationship they had with molleker ha with mullen burke had become so fractured that that could have tipped the board to make this decision. Calhoun comes in with the opportunity to reset that relationship. Paul what is Dennis Muilenburgs legacy going to be . He did do a lot of costcutting. Is that going to be the legacy he leaves, the costcutting went too far . He did preside over a spectacular increase in the backs,price, big time buy dividend increases. Very shareholder oriented approach. But, especially now with engineering problems cropping up pretty much, you know, on multiple programs, the max is certainly the most important because of the people who died in the crash is, but the 777x is delayed. A military tanker for the u. S. Air force has had a lot of stumbles. Even just last weekend boeing had a high profile mishap with its space capsule. So, certainly the costcutting and the pressure on suppliers to give discounts to boeing will also be a big part of his legacy. Paul all right. Our aerospace editor brendan case, thanks for joining us. Lets continue on boeing. Joining us now is a kumble are advisor chairman and cio at cumberland. We did see boeings shares rise on the news that Dennis Muilenburg is on his way. From an investing point of view, does this mark a turning point . Is this the time to get into boeing . Im not sure of that. And i think your interview encapsulated so articulately the management issue for this board. Put had success, as you it, or as the reporter put it, in the financial engineering, stock buybacks, the process. Did they go too far . I do nt remember who asked that question in cost cutting . And did the costcutting result in the crash . Thats still under investigation. And we saw some snippets about possible costcutting effects reaching the max. That remains to be seen. So, what do you do in a management case study like boeing . A cases will become study, i believe, for management courses in business schools. You replace the ceo. That is the job of the board. You bring in the most credible person you can, that you can obtain quickly. Theyve done that. As you just said. They brought in an experienced executive to replace him, and the experience included the internal experience at boeing. You change the personality to get rid of the fragmentation or whatever you want to call the fraction with the regulator, and you satisfy the regular to get back in the business you are in. The question of supply chain and sustaining the supply chain is critical now. My view is this is longer than a month. The cost cannot be telescoped down into a month. It may be many months. Boeing has a long price to pay here. Shery ahn you are taking a look at some of those suppliers to boeing. But, to your point, were seeing that u. S. Aircraft exports overseas being halved from 2017. This chart shows us, given the loss of the 737 sales. The only substantial maker of u. S. Commercial planes. So, given the importance of this american giant, how big of an impact will this protracted for not onlying be the u. S. Economy but also for the Broader Market . Well, you know boeing. Youn the economics area, always took out aircraft when you wanted to figure out what the u. S. Economy was doing because it was big enough to change gdp trajectories. So, its now big enough to alter those trajectories by the absence of those foreign sales. And because there is no ease of entry. There are only two players many consequence. Boeing has opened the door to the competitor. And big time. So, im not sanguine about the outlook h ere. I think there is many more chapters in this story. Substantial once. Substantial ones. Paul david, 2019 was a stellar year for u. S. Equities and boeing lagged in the markets. Into 2020, what is your outlook for u. S. Stocks . David weve had a spectacular year, as has anybody who was in the markets. And our view is that 2020 at best is a singledigit return, and there could be a bump along the way. We know the elements that are opening up in 2020, in the political realm. We know what they are. We dont know about geopolitical risk like north korea, but it certainly looks like its still there. And the evolution of 2020 mostly will depend on a rising earnings trajectory, which is what it will take to sustain a bull market. Theres a lot of questions about that. I see estimates, bullish case being made for earnings right now. But thats usually the case of the beginning of every year. Then they tail down over time. So, i think caution is a byword. We have raised some cash in the end of the year. We did some of that today. A little cash, taking a profit. It has been a great year. There is no reason to risk it all to give it back. Paul in terms of those earnings outlooks, how do they square way with current valuations . And what im really asking is do you think a correction is due . David i do. I cannot say, but if you look at the earnings outlook and you say, look at where we are. If you are 3200 on the s p. What kind of Earnings Growth do you need coming off a year in which you are going to wind up at 162, 163 give or take a dollar for 2019 . I see estimates of 175, 178. Well, if we get those numbers, then we can justify higher stock prices. But will we get those numbers . Im not so sure. I think when those numbers get ratcheted back, we will be up a couple of bucks. And, therefore, this is a ric hly priced market. There is not a lot of room to stumble in any direction here. Will we get a stumble . We never know. I dont know how to read tomorrows newspaper today. I have been trying for 50 years. Shery ahn david, let me just ask you about one of the risks i keep hearing from analysts and it seems to be that inflationary risk come 2020. What is your outlook for prices and inflation sensitive assets . That weell, our view is have little signs in some of the inflation measures that are climbing above 2 . And there are a number of ways to measure inflation. And inflation, as measured by the positional price indices, doesnt take into account asset inflation. So, weve had a big asset inflation. And we do it off this massive injection of liquidity and very low interest rate, and thats a worldwide phenomenon. How long do you get away with that before you start to see things expanding to the price level . The typical forecasts now all around 2 . That would be the baseline. My suspicion is that is going to be higher, not lower. The fed will tolerate higher inflation for a while. They use the phrase let it run hot. That worries me. I remember the 1970s. And i remember when running hot could then become very hot. And another thing. If i have a minute that concerns me now is this large injection of liquidity to stem to repo problem. What are we doing now . Were repeating what i hope is y2k runupor of the in 1999, when we had a large liquidity and fusion and then withdrew it. Large liquidity infusion and then withdrew it. Shery ahn we will be watching that. Thank you. 1. 4l ahead, more than billion in new financing. Details on teslas major windfall from china later in the hour. Paul plus, japan and south korea seek to mend strained tied. S. What we can expect from their first formal meeting in months. This is bloomberg. Vicious cycle created by measures and countermeasures would not be ideal for either country. Japan has requested the related trading authorities to hold talks. But the negotiations have not made progress over three years. Its true. We have lost trust. This morning the japanese government decided to remove list from its white country. It is a selfish act that will wreak havoc on the global economy. Its sure to draw condemnation from the International Community. South korean has committed acts that violate japan korea claims agreement. Breaking International Laws that have become the basis for normalizing diplomatic relations. If japan chooses the path of dialogue and cooperation, we will gladly join hands. We will strive with japan to create an east asia that engages in fair trade and cooperation. South korea is an important neighbor. I urge the country to keep the promises between the two under international law. Shery ahn japan and south koreas leaders traded barbs over the last six month. S. The pair will meet in the trilateral summit in china where those ties and the unrest in hong kong may be discussed. What i find really interesting is that in recent months with this dynamic between two u. S. Allies, beijing may be emerging as a mediator between the two. You would think, of course. Very much likeld to be a mediator to try and not ory resolve the differences help resolve the differences between two of its key neighbors, south korea and japan, but also drive a wedge in between the relations and the United States. Already donald trump in the white house has urged the south ofeans, hey, dont p[ull out military cooperation with the japanese. That will only offer an open need to the chinese. The geopolitics is huge here. The trade revocations are huge, not only between south korea and japan where japanese exports of Key Technology components to south korea have been restricted severely because of the retaliation for south 15 monthsrt order, ago, to demand payment from Japanese Companies for war time atrocities. The 1940sng back in and earlier for the colonial occupation of the korean peninsula. There is lots of historical acrimony here between japan and south korea. Then theres china who also has their historical differences with the japanese as they occupied manchuria. Also, they have differences with south korea over the u. S. Military and the Missile Defense system. There are so many elements to this story. It is fascinating that the three seers, see Jinping Jinping hazmat shinzo abe. But theres a three way summit later today. Paul a lot of bad blood as you describe. In the present day, the south faces aresident moon challenging domestic political situation when it comes to making nice with japan. Absolutely. Just listening to those comments prior to this segment, you could see, you know, who the audience of these soundbites are. It is the domestic audience. You have shinzo abe a couple of years had a general election. Hes been trying to fight the Public Perception game as well. Its worked for him in using south korea as the bad element here. In fact, just before leaving for china abe said the onus is on the South Koreans to make this issue better. The recent study from the japanese government, a poll of citizens found a record high number of japanese citizens, 87. 9 of japanese according to a government poll say relations with south korea are not good. For their part, South Koreans have also vilified the japanese using the Historical Context there. Paul stephen engle, thanks very much for joining us. We have more to come on daybreak asia. This is bloomberg. Shery ahn this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. A quick check of the latest headlines. Aret bank and raising their bid to buy out lion. Valuing it as 12 billion. Engineering a complex deal that would create a japanese tech champion to compete with google and amazon and tencent. Shery ahn Brown Holdings is set to apply for additional banking license in singapore. They will apply for a full license. Grab will try this same thing and other Southeast Asian topanies, allowing nonbanks apply for virtual bank permits. Paul Dell Technology is said to be weighing the acquisition of the remaining shares in secure works. And may make an offer for 13 of the firm. The full takeover would be a uturn from the earlier plans to sell its holdings in secure works. No final decision has been made and dell decide not to proceed. Still to come, we have got tesla lining its pockets with chinese money. 1. 4 billion loan will be used. We will check in on how markets are trading in this broken and shortened trading week. We bring an update of all the news as well. This is bloomberg. Shery ahn haslinda this is daybreak asia. Boeings ousting ceo Dennis Muilenburg after a tumultuous year that saw two fatal crashes and a failed mission to the International Space station. Leaves after being publicly rebuked by a regulator and criticize are pushing to strongly for the plane to be allowed back into service. Hasa on reports that secured 1. 5 billion in financing from china. Is coming from local banks and a formal announcement may come this week. Tesla is preparing to sell the model 3. Car registration in china climbed to a fivemonth high of 5,500. The amount ofer money banks for a bid to reduce borrowing costs for small firms. State media reports that the chairman says the pboc will cut the debt ratio. The plan is part of official efforts to ease a liquidity crunch caused by rising local Government Debt sales. And indian Prime Minister modi looks at an election defeat in an eastern state. Modi struggles to maintain nationwide anger where violent clashes have seen 24 people killed. The government is wrestling with an economy growing at its slowest pace in six years and unemployed at its highest in four decades. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. Im haslinda amin. This is bloomberg. Paul thanks, has. Lets get over to hong kong now. Theies got a check on markets. Sophie checking in on gold. After breaking out of a tight 11. 00 range last week. The relative use of the gold as compared to the stock and dollar bull market. Thats in favor of golds further gains in 2020. We have seen a correlation with the dollar looking strong with the two typically moving in opposite directions. The chart was put together by our colleague at the ny blog. Hes noting in an analysis how a quarter of the week with of gold since 2001 can be linked to the u. S. If thet means even strengthens that may not hinder golds ascent. Shery ahn lets go to tesla. It lined up 1. 4 billion in financing from local banks in china. A announcement couldn come this week. Lets get more from our china correspondent selina wang. Of course, china is tesla secondbiggest market after the u. S. How significant is that they are getting financing from local banks selina this financing is for that shanghai giga factory, the First Manufacturing plant outside of the United States that underscores musks plans to boost sales in the Worlds Largest market for autos. We have seen this financing move add to this monthlong investor optimism since that profit they reported in october. We have seen shares rise more than 60 . Th significancee of this financing is how quickly things have been moving for tesla in china. The close relationship it has built with the government and how that has paid off. Was reported that it took tesla six months to go from permit to getting electricity hooked up in its new factory. This is the first foreign owner plant in china that highlights the relationship it has built with the shanghai government. Paul what kind of challenges is tesla going to face in the china market space . There is competition from foreign makers like bmw which are da debuting local a logical cars. In addition you have a challenging macro environment. We have been talking about china being this unprecedented slump in terms of falling auto sales. You also have the electric field market having slowing sales as china has been scaling back subsidies. But elon musk is betting this factory is going to give it an edge above its competitors. Bloomberg reported that tesla could be lowering the prices of its model 3s in china by 20 or sourcest year as it local components and reduces the cost of making that car. Paul selina wang,in beijing. Thanks for joining us. Libra is still in limbo. And has spurred regulators towards closer scrutiny of cryptocurrencies. More on that story next. This is bloomberg. We are counting down to asias first maker market open major market open. We have not seen that Much Movement on the japanese yen, which has traded within the near range. Investors refraining from taking a large positions during the holiday week. We arer, out of japan still waiting for those bank of japan october Meeting Minutes. Overhauled as Forward Guidance and saying it will keep shortterm and longterm Interest Rates at their present levels or lower. But keep in mind that was before abe announced 120 billion in fiscal measures. Lets turn to other news. An outlook for 2020 in the crypto space. Central banks have traditionally been slow to react to developments in this industry catalyzedoks libra the topic and brought it to the top of the agenda, according to our next guest. Henry, great to have you with us. So, how has libra really change the equation in this space . Henry libra definitely brought the topic of centralbank Digital Currency on top of the agenda. And traditionally Central Banks to react. Slow e change quickly print today around 70 of centralbank are looking at digital currencies. Watch is ones to of the big transnational organizations, the bis or the ecb, the bis released report on the topic and second and more important is what some countries are going to do. And all eyes are on china. That announced the digital electronic payment known as digital yuan. If it happens it will be the first g20 country that has taken a big leap on the. Topic shery ahn it was interesting to hear Mark Zuckerberg and Congress Talk about the reasons why u. S. Should make much more progress in this space. How will the digital yan compete yuan compete . Anthe topic of libra is interesting one. When you look at the country level within china and the u. S. It is not as big as in a crossborder payment. Today, if you look at the average crossborder fees are between 5 and 7 . Theres 500 billion transacted every year. So, this is probably the lowest thing lowest hanging fruit. Libra is when it comes to crossborder payments. Crypto becomes more mainstream and centralbank start to explore this more, what are the implications for the older players like bitcoin . Henry it is a good question. That is when we get often. The mother ofll all cryptocurrencies. A lot of these things are complementary. When you look at libra, the underlying assets are going to they u. S. Rrencies, dollar and the Singapore Dollar and others. I think what youre going to see over the next couple years is not only bitcoin but other cryptocurrencies live sidebyside, each has a different use and many of them have different purposes as well. Paul how about the taxation of cryptos . That is another piece of the picture that has been missing. You like it securities regulators in the last 24 months, there has been a lot of clarity from a regulatory perspective. Today, only 5 of regulators to not have somebody working on crypto. However, it is not the case when it comes to tax clarity. That is one thing we expect to change over the coming months. Only a couple of weeks ago in s put out somer guidance on the topic. Not only providing clarity on treatment ofhe tax Crypto Assets but specific situations like air drop. While nobody likes to pay tax, clarity on tax treatment of assets is something that is very welcome. Shery ahn what about institutional players . Jpmorgan or fidelity in this space. Is this something we have to keep watching and 2020 . Henri absolutely. We are seeing the continuous entry of institutional players into the space. This is going to continue because we have more regulation and more demand from underlying clients. One thing we have to keep an eye are on institutional investors. We had a lot of regulated solutions. Crypto custody and crypto funds and regulated crypto instruments like many of the futures, the cme. I think thats going to be very interesting that these entrances instruments provide traditional players away to touch this crypto system. Shery ahn we have seen hong kong regulators approved digital banks. Is this another trend we will continue to see growing 2020 . Grow in 2020 . Henri the entry of virtual banks is an area to watch. What is more interesting on this topic is the battleground for virtual banks is happening in asia. You mentioned a spate of them approved by hong kong. We are seeing numerous initiatives from malaysia to singapore to thailand to korea. And especially this wave of virtual banks are not start ups, but tech players that have not only tech expertise they have they recognition but also have the trust and confidence of their users. This is something to watch, especially if they have deep pockets. Paul one of the things that you watch that i find interesting is the valuation of assets inside videogames. You raise the point this could be used for money laundering. Are there some opportunities here as well . Thei what we may see is synergies between the gaming industry and the crypto space. Today many of your viewers who are gamers probably have assets within your video games, whether it is skins or special weapons, but a lot of these are assets, they dont own them, and the Videogame Company can put restrictions or reduce their value. Webbing thing we are working on is the rise of nonfundable to kens one of the things we are working on. We know exactly how many of those there are in existence. This is something that could be interesting for the gaming industry which is a 150 billion industry that is growing fast and may provide gamers with an asset that they own and can trade in a nowhere comes from and provides them a sense of how unique it is. Paul pwc, Global Crypto leader, thanks for joining us. Financial. The chinese Online Finance china sees strong credit to mans and a healthy Consumer Sector in china despite economic slowdown. The ceo also discuss the possibility of going public, and the companys investment plans. I think our philosophy is very two fold. We are only doing strategic meaing that investment meaning that investment is fully in line with our overall strategy. Really focusing on strategy investment. And the number one. Secondly, asset management. We have [indiscernible] one of your key partners is pay tm. In india. Are you looking at increasing your investment . They are looking to raise 2 billion. I think pay tm is doing very well. Im very happy, proud of them. I still remember back to five years ago when i first looked at the company, i really liked, actually, i talked to the founder and the ceo, i tod i told him, the first time i look at the company i did not like the business of the company but i like him. Very energetic. Very passionate with a strong vision. India, the whole economy is also, i mean, very healthy. Good positionvery to capitalize on that opportunity. Let me ask you about your future plans for the business. When do you plan to ipo . We just did a new run of financing. The companys very healthy in terms of operating margins, in terms of cash flow. We are happy with the business momentum. We dont have an ipo planned for for the capital raising. We dont have any plans for ipo for now. When we have the plan, i will let you know. Will it be realistic to think you will be ready to pull the trigger on an ipo in 2020 . We do not have a time line now. When time comes, it comes. We will let you know. I think, one thing to add is a goal mean, ipo its of the company. Its one stage of the company. How would you characterize the health of the Chinese Consumer . Still healthy. One example, last week, the national holiday, from the public size you can see the are catering to the Chinese Consumer. There is potential. Are you seein ga slowdown in mobile payment and transaction volumes . On the contrast, we have not seen slowdowns. Market. Also seen the the decent part of china. Mobile payment is very high and consumption is very strong. [indiscernible] thats giving strong support for the local. But other companies migrating, tech to transform into digital economy. Using tech the gap between west east, can be further n arrarrowed. Credit demand is very strong. Weree we are focus seeing that Capital Requirements are still very strong. The economy strong. More want to get into the market and the working capital to support it. That demand is still strong. Shery ahn jing speaking to our china correspondent tom mackenzie. Were still waiting for those boj october Meeting Minutes. This is bloomberg. Shery ahn nikkei futures under pressure as we await the bank of japans october Meeting Minutes. Remember, that is the time when the boj overhauled the Forward Guidance, they also downgraded their inflation forecasts. Well get them to you as soon as they crossed the bloomberg. Becausern to sophie, markets open at the top of the hour. What are you watching . Futures pointing higher while we could see slight gains for the kospi. After the s p rose to a fresh high overnight. Quickly checking on bonds. Treasury futures little change. Aussie 10 years are falling for the six straight. Session. Demand looking solid after the bonds. Back in two year when it comes to stocks to watch reactionatch for that tesla clinched 1. 5 billion in financing from chinese banks. A different story for boeing. Were also keeping an eye on reactions to news that softbank has boosted their bid for lion. Paul thanks, sophie. Lets get more on that story. Our Bloomberg Technology reporter has the story in tokyo. This is a complex deal. Tell us how it all fits together. Thats right. This is a bit of a slowmoving merger. Under the conditions of the agreement that the companies have arrived at, both naver and softbanks core, in japan will existingll the shareholders in line, which is the dominant messaging service and japan and taiwan. As a result hopefully by the end of next year line as yahoo japan which is now owned by softbank, will become one entity combining operations and hopefully producing some synergies. With this new agreement and the new price of 5300 yen, it sounds like they are narrowing in on a final offering price, even though the actual tob will not happen until may or june. It has not been completely decided. There are still some regulatory issues. The main area of concern is cash with payments. Japanine and yahoo compete. Be in choosing to see how they respond. Paul in terms of some of those synergies you described, how does this fit with the vision of making an a. I. Tech company . Pavel when most people hear softbank they are talking about softbank group. Sung has moved on from managing the domestic operations to wireless and broadband services. But this business is still extremely important to his strategy of investing. Its a major cash stores for the company, and profits. Domestically are what really funds his investments with leverage. So, a a lot of analysts see it as softbank has kind of hit in terms of wireless offering. Their strategy is seen as positive, looking to expanded to other areas. There was a time where yahoo japan was a dominant Internet Company in this country, but since then, Companies Like amazon and rocker 1 and ra kuten have taken some business. Shery ahn you and i have been talking extensively about some of the investments made by sons vision fund. Short. They have fallen are we going to see more scrutiny on his future deals . Pavel you can bet on it. Well continue to look at his portfolio. Look, the Vision Fund Portfolio has over 80 companies. Some of them will be great investment and great returns. Some of them already area. Already are. But there are many others that remain in question. Shery ahn thank you. Our Bloomberg Technology reporter joining us from tokyo. In japanay in stay because we are getting the bank of japan october Meeting Minutes. Most members say the Downside Risks remain significant abroad. No increase and the possibility of the momentum loss. Weve seen of overhauling their performers guidance and adopting a new pledge to keep shortterm and longterm Interest Rates at their present levels or lower as long as for the risk of momentum towards that 2 inflation being lost. Billion before the 120 a fiscal measures out of the government in japan. We will have the japan open next. 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. Good morning. I am paul allen in sydney. Asias major markets have just opened for trade. Shery i am shery ahn. Sophie and i am Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Paul our top stories this tuesday, Dennis Muilenburg pays the price for tumultuous year at boeing. Max crisishe 737 and the failed space station