Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

Japan hits back with an arrest warrant. Kathleen and the latest results from samsung. Shares remain close to an alltime high. Australian markets have open. Sophie, what is the latest . Seeing oil names with the declines along at the start of trade. Checking in on whats happening with the aussie dollar, looking flat after its biggest drop since august. , this morningline still below the level as we anticipate more policy support from beijing. Gold looking likely to continue. First words get the news from new york. The effect of the bush arsenal shag are being felt halfway around the world. About 12,000 kilometers from sydney. Five have killed at least one for people and up to a billion animals. They are generating their own west or system whether systems that can in turn ignite new blazes. The internal investigation that led to the ouster was never about finding the truth and he wanted to be interviewed himself as part of the probe. Hes promising to name people he said engineered a coup to destroy him. Was issued fornt his wife, carol. Spains fragile new coalition the leader managed to edge back into office for a second term and is now trying to pass a budget for 2020. Hes bidding to recoup some of what was spent bailing out of the Financial System. The greek debt drama is finally coming to an end after almost a decade. The imf is preparing to leave athens for good. Record that had some people fearing for the future of the euro and the eu itself. Austerity caused widespread job losses and anger and left many greeks in poverty. 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. Just crossing the bloomberg, a takeover bid by the , concerned about how the been responded to. The approach for some of the companys assets with no certainty of any binding proposal from any of the parties. Generally just a lot of uncertainty. Weve seen a number of speculative proposals. The initial bid was rejected with speculation that the bid would start a takeover battle. Kathleen the u. S. And its allies are on high alert after news comes as crowd overwhelm the funeral prompting a stampede that killed 50 and injure 200 more. Questions continue to swirl about the u. S. Military presence in iraq. I think weve done a fantastic job, but eventually we want to be able to let iraq run its own affairs and thats very important. At some point we want to get out, but this isnt the right point. Kathleen this go back to our National Securities editor who joins us from washington. Donald trump seem to have glossed over the intensity of the issue with iran and u. S. Over whether or not troops can stay. Is he paying any attention to the warnings iran has given that if anybody is helping the United States, and that has to be especially iraq, they will suffer the consequences. I think iraqi fear so that they will be increasingly caught in the middle of a proxy war between iran and the United States on their own territory. That has already happened to some degree and is led to some of the more recent tensions between the u. S. And iran. It is a complicated situation for them. Iran has increasingly had a lot of access and influence in iraq. Massive troophis presence and ability to spend money and invest in the country has also been a major influence, but the hard reality is that iraq is in irans neighborhood and u. S. Forces are a long way from home. I think President Trump even campaigned on the idea that he would like to get troops out of there. Eventually u. S. Forces are expected to start declining into leave. The question then becomes how much greater influence will iran likely have in iraq when that happens . Reactionat kind of have we seen from coalition so far and are we starting to see greater instability in the region . Absolutely. The escalation is added to what was already a very volatile region. We hurt german officials today say they will start drawing down some but not all porsche all forces from iraq. Coalitione u. S. Led with ice is saying it had tos then suspend operation so it could focus on force protection. Now the question will quickly become, how long can those operations be suspended before isis is starting to get a little bit better grip in that region . You might remember this is same question we begin asking when President Trump quickly withdrew or scaledback forces in northern syria. Many analysts and many former Trump Administration officials saying that would open the gate regroup. Ability to haidi were just getting these airbase innes on the iraq coming under indirect fire, according to reports on voice of america. Reporting news of a rocket attack targeting the airbase in iraq. This is the governor of and bar province in iraq, were hearing news of rocket attacks on that airbase which goes to my question earlier that we are already starting to see greater instability and greater military activity in the area. Does this leave a window of vulnerability . Absolutely. Havent seen those headlines, confirmed, it will likely come from an iranian ally or proxy group. The question will be, does the u. S. Consider that to be the responsibility of iran or does it strike back against that ally or proxy . Iran has a lot of proxies and networks throughout the middle 100 but it doesnt have control over them. You could see a situation where group is undertaking a reprisal but is itsuleimani acting with the explicit orders of tehran . It will be a difficult tight rope to walk in the upcoming days and weeks. Are seeing more details reported by the Washington Post. Forgetting more details on that as they become available. Amid the rising middle east , weve seen a bit of backandforth. Have recoveredin to moderate levels. How do investors process how much risk to assigned to the uncertainty over these tensions . Theres a lot of edginess among traders, but in general, the backandforth rhetoric seems to have ratcheted up quite a lot yesterday between the u. S. And iran. Is just something people will have to get used to as it will become part of the fabric for the months ahead. Sporadic attacks like the ones you were just talking about on airbase there is probably something we will have to get used to as well. Traders will have to factory it in as part of daytoday life. Thats probably why were not seeing huge moves in the traditional safe haven assets. The big one watches the oil price. Brent crude isnt showing a huge reaction. If oil prices, brent crude in above 70 asustains barrel, that is a huge risk warning across Asset Classes because of the implications for Economic Growth. It has an inflationary impact as well. We are not really seeing that for now. Most people expect the u. S. Shale producers will come in pretty quickly. 70 a barrel seems really attractive. Say it willean to play out that smoothly as most people are forecasting but everyone is keeping their eye on the oil price. If it is not sustainable, that will suggest that haven assets dont have a long shelf life in being at the higher levels. We are hearing from asian strategists the past few this is not an important, lasting factor for asian assets of all kinds. How is the aussie dollar looking in the last few hours . Weve seen interesting moves in both of those. Related to tension in the middle east, but also there are local factors as well, which are probably larger. The yuan is much more focused on the Lunar New Year thats coming up in a couple of weeks. It is starting to strengthen. Economic that is just coming out in china in the fastmoving indicators for december were the best they have been for several months in china. People are looking forward to better china data in the First Quarter. That will drive the yuan as well. In general, the yuan is on a slightly strengthening path. The aussie typically does get hit and thats what you would expect, maybe the aussie against gold or the euro. There are march more serious local factors. Some are talking about Economic Growth slowing in australia because of the ongoing fires. There are also local factors as well as global issues affecting those. Kathleen he keeps everyone looking over their shoulder. You can follow more on this story and all the days trading blog. Lets get to Sophie Kamaruddin in hong kong for a stock check. Sophie lets check in on caltex australia, which is gaining ground this morning after the company has received other approaches from a number of parties. Kathleen still ahead, samsung post fourthquarter earnings this hour. Analysts expect a nearterm bottom. And ces is underway in las vegas. Forave the vp of risk huawei. This is bloomberg. Haidi youre watching bloomberg daybreak asia. President trumps blacklisting of huawei hasnt stopped the company from growing. A near high of 122 billion. Management, so great to have you on with us. The question is, is this sustainable . It came with the stockpiling before the blacklisting. Will 20 20 be more challenging . Thanks for having me on. 20 20 is definitely going to be a challenge for us. We will continue to work on diversifying our supply chain. Weve had Risk Management programs in place for many years its due to the efforts of our suppliers and other vendors across the globe, working with us to fulfill some of the gaps that we had. Haidi where do you see opportunities, given the political difficulties not likely to be resolved . Obviously will continue to drive this in 2020. We have very specific plans in place to address and mitigate supply chain challenges that weve had this year, in 2019. Obviously we will continue those in 2020 as we move forward. We are hoping restrictions dont get worse, but if they do, we have plan b for providing different applications across our portfolio. Kathleen what is the Current Situation with google and the attempts to get a license to supply huawei with eight mobile suite of software . Tim certainly huawei wants to continue to work with its main suppliers, google being one of those suppliers. Of course we do have plans and contingencies in place. Is not privy to the activities and the approvals of licensing for the various Different Companies that have applied. There have been over 290 applications related to the 12 billion would buy annually from u. S. Companies in goods and services. Google is one of those licenses. That is a discussion between the u. S. Government and those individual suppliers. Kathleen can you sell a lot of android smartphones if you dont have the latest software outside of china . For the one that was recently released a few months ago, we have already sold over 7 million of them. Androidt have the full , they have the base android platform and they are continuing to sell. Sales have increased 20 fold from last year at that period of time. It is symbolic, the taunt weve seen between the tentepowers the de between the superpowers. Will this potentially ebb in 2020 . Caught huawei has been in the middle of this discussion over a period of time. Continuingt negotiation and discussion will resolve some of the tension between the u. S. And china and that huawei will benefit and be able to move forward with resolution up some of those issues. Can it continue in the same way without u. S. Suppliers Going Forward . Timothy absolutely. High silicon is continuing to work independently of u. S. Suppliers. Theyre using a variety of different technologies there from nine u. S. Based suppliers to develop our chips and continue to manufacture them. Kathleen i want to ask about artificial intelligence. We spoke on a panel in las vegas. What does it mean potentially for huawei . Is this an area where you plan to move forward . Is it an area where you could see growth in revenues . Timothy absolutely. If we look at what pricewaterhousecoopers recently published, an article talking about a 15 trillion increase in gdp over the next 10 years related to ai. Of course, ai is ubiquitous and needs to be used across a variety of different areas. I dont think the huawei development is specifically in ai, but how it applies to Solutions Across our total portfolio. We will continue to see a lot of investment in ai. About 18ested billion this year in r d and will continue a large portion of that which is related to ai development. Us,leen thanks for joining plenty more ahead. To procter speak gambles david taylor from ces. We want to keep you on top of the attack thats been reported on the iraq base that hosts u. S. Troops. Iran is confirming that it , arted this attack on iraq very clear message to iraq and to the u. S. , iraq had they had warned iraq that if they support the u. S. They would be under attack. Will have Market Reaction after this report. Pressuretures under and a jump up 1 for new york crude this morning. Were seeing the yen advanced this morning against the greenback on the back of those reports around the airbase attack in iraq. Haidi we will continue to watch that. Will get you more on that as the details come to us. In the meantime, take a look at boeing. Takeecommending pilots simulator training, a change of tune for the plane maker which previously argued for computerbased instruction only. , with the piecemeal way the airline continues to deal with the crisis. Into dramatic piece of news today in terms of boeing actually going this route. This is actually the opposite of , they werewere telling airlines the training would be very minimal and you could do it on a tablet. The simulator is a very timeconsuming and costly process. This took a lot of people by surprise. Haidi in terms of how damaging this turnaround is, does it continue to lead add to the lack of confidence the airline is facing . This is an event that could add to delays for airlines because if the faa and other regulators around the world decide that training will be if they follow this recommendation and at the training, does that add additional time thats needed to get those pilots . . Through that could add a certain amount of expense to every airline as well as looking at when the plane actually gets back into commercial service to make money. Kathleen the whole question of even starting to regain investor confidence, public confidence. I think thats a big part of what they are doing. They want to tell the public that anything that can be done in terms of safety will be done. Boeing both want to push that message as much as possible. If you say theyre going into a simulator and not just looking at an ipad for two hours in the traveling public feels better about that, i think that is a major point for boeing Going Forward. Haidi justin, thank you so much for that. Lets get the latest when it comes to the confirmed missile attack. An attack on the iraqi airbase that is the host to the u. S. Troops in the western part of the country. Weve got reports that a halfdozen rocket attacks occurred this morning. That statement now coming from the Islamic Revolutionary guard. State television in iran saying they have begun the attacks on the base. Lets take a look at Market Reactions. Well get to sophie in a second but were seeing reaction when it comes to the markets. Dollaryen dropping as much as. 3 on news of that are raining attack on the iraqi base. I ran coming out and confirming it is potentially the start of what it has highlighted as a series of potential reprisals and retaliation for the killing of the top iranian general last week by the United States. The s p 500 falling, you can see there on that chart. Dollaryen just falling off a cliff there. Investors were already on edge watching these developments. We will have lots more Market Reaction and the latest on the missile attacks. This is bloomberg. Want to share sombreaking news with you on japans wage data, lower even than forecasts. Down 0. 2 yearoveryear. Quite a drop. They were flat the month before. If you take out inflation, the history is wheres. Is even worse than 0. 4 in october. A lot of bad news for the boj who are hoping wages will rise enough to help boost prices. Lets go to hong kong. Sophie cameroon for the latest on the markets. There is a lot going on in these first couple hours. Terminalumping to my right now. Yen trading athe the 108 spot. We are seeing a boost for haven assets edging closer to 64 per barrel. Haidi seeing that Market Reaction as iran is reporting that have started their attacks on the iraq airbase which is the host of the u. S. Presence. Earlier, its d not an unexpected devel. We are still trying to figure out how severe the attack is. Weve confirmed with u. S. Central command that the base has come under rocket fire. Is inn state tv says this direct response to the killing qasemt him solo money soleimani last week. Sayant to be cautious and that we dont know the extent of the damage. It will them easy immediately it is still an unfolding development and we are trying to figure out how bad of an attack. His is rishaad what im wondering is how does this affect the relationship between iraq ask of a parliament Iraqs Parliament which voted for u. S. To leave and the white house. Are we standing together even more after this attack . Will depend ont where these rockets launched from. You have mike pompeo calling on the iraq government to do much more to defend the u. S. Interests in iraq and to stop foreign forces, iranian backed militias, from being able to launch these things from iraqi territory. It is making for a tense u. S. Iraq relationship, more strained as u. S. And iranian tensions soar. Getting this from fox news saying missiles have been fired at multiple targets in iraq. Citing an unnamed u. S. Official, commenting on the military undertaking were seeing in iran. In terms of how much Domestic Support there is, what do you think . How much u. S. To mystic support Domestic Support . Seen i think President Trumps actions have been backed by the party and his base here in the United States. Its a president who campaigned in 2016 on the promise of getting out of middle east wars. At this point, his base and party is supporting him. The question will be if you see a major ramp up of u. S. Troops getting sent to the middle east or a large number of u. S. Casualties coming back and whether that kind of support holds. Haidi we are hearing from one fox news source saying she is being told that they are looking missiles. Ange cruise multiple u. S. Bases and targets inside iraq. Iranian state television confirming. Lets get you to a roundup of the first word headlines. The effect being felt halfway around the world. About 12,000 kilometers away from sydney. The fires have killed at least 24 people and up to a billion animals. India is on course for its slowest growth in six years. Theeconomy way down by shadow banking crisis. The Defense Ministry says gdp is down 5 through march. The r. B. I. Chief says price stability is his objective. s budget deficit widened last year as spending rose more quickly than revenues. Vehicle registration in new zealand fell for the third time in a decade last year. The Association Says that 4. 3 trations have dropped to just over 154,000. Business confidence fell to an 11year low amid creeping pessimism about the economy. Global news 24 hours per day powered by more than 2700 journalists and analysts in more than 120 countries. Ghosn prepares to name the enemies who brought him down. Japan hits back with an arrest warrant for his wife. This is bloomberg. High feel so much regret i feel so much regret that he fled avoiding his argument against the fiscal system. Responsible to, you know, explain what happened in e globalrnance, in th operations of nissan. Evacuating from this country illegally, im afraid he missed that opportunity. This urgency to review our judicial system. Haidi major japanese executives waiting in on the carlos ghosn drama. Hes preparing for his first News Conference since his great escape from japan. Carlos ghosn says he will be naming names, including officials and government. We had heard that criticism. We have a response from nissan and japanese authorities issuing an arrest warrant for Carlos Ghosns wife. Joins us. Editor its hard to say what to expect given that everything we have seen thus far in this hollywoodlevel drama has been unexpected. Absolutely. It would be a brave man to make any predictions about what we might see next. We saw in the statement that he released from his legal team a couple hours ago. He continues to attack nissan. He gave a response to nissans reaction to his escape. They claimed they are conducting an investigation. He launched a broadside against that this morning, casting doubt on how that in how that investigation was conducted. He continues to attack nissan, the motives for their removal from him. They reported him to the prosecutors in the first place. Canr on tonight, we certainly expect him to start identifying some of the people involved. Until now he has been reluctant. N his interviews he never gave a press conference the entire time since it started. We can expect him today to finally identify some of the people that he sees as responsible for his downfall. As you mentioned, he has hinted in remarks given to fox that he will include names in the japanese government. You neve rknow what him never know what might happen in the interim. Haidi we have some breaking news. Fourthquarter profit estimates beating estimates. Of 6. 5 trillion w on. Fourthquarter sales coming in at 59 trillion won. That is on par with the estimate that we were expecting. Well be getting more analysis on that. A better bit of news for samsung there. Going to go toe sophie in hong kong. What are you watching in the markets . Seeing crudee extending gains on the back of these reports. Wti climbing as much as 3 . 50. 92. Ting as high as the yen jumping against its g10 peers earlier. Lets check in on the nikkei futures which are following more than 2 . We are seeing this riskoff mood take hold in the early asia trading. U. S. Futures kicking off. S p following almost 1 . Lets check in on u. S. Futures if we could. Lower across the board. Were also seeing futures slide and nasdaq. Ow kathleen we want more reaction to the attack. Another headline coming out after iran claims credit for this attack. The Washington Post reports a lot of attacks. The white house saying President Trump has been briefed and is monitoring this. Reporter. G in our where do you start . Look at the havens. Futures, nikkei futures down. That speaks to how underprepared the markets were for the speed and the intensity of this attack. All of today, the conversation was that markets are too complacent, youre not seeing the risks being christ in. Ed in. Ng pricc the markets were not prepared for this. Even its surprising that after a couple days, the news has lost its impact. The market had recovered so quickly. Its difficult to tell whether this is the beginning of the reprisal and what the u. S. Response is going to be. Thats what will be interesting to watch. If you remember on friday, we saw a sharp reaction in the markets, but coming back to the you see themay, saving these moves. It will be interesting to watch the u. S. Response to these attacks. Kathleen one thing we have been hearing since the assassination, the u. S. Taking out one of irans heroes this will cause volatility, but markets settle down. Is notwere told this going to be a lasting deal. , the calculus before tonight the threat of sanctions on iran is enough to keep any retaliation in check. That did not turn out. Should we see oil shoot to 80 per barrel, thats going to have a lot of ripple effects across markets. Its going to be interesting to see if we see that pickup. Haidi thank you for that. It is a moving beast at the moment when it comes to that Market Reaction as we get more detail on what is being reported as shortrange missile attacks on the u. S. Airbase in western iraq that is host to u. S. Troops. There is much consternation and discussion about whether the u. S. Will be withdrawing its presence there. Iran claiming responsibility for the start of these military operations. The the last few minutes, samsung fourthquarter profits looking better than expected. Ofs bettering expectations 6. 5 trillion won. Lets get right to the samsung earnings with robert baer. He has been covering this industry for about 30 years. What is your initial reaction when you get these numbers in front of you. Reaction is quite good. We were looking for 6. 5 trillion one bang. 6. 5 trillion won. Investors will be looking for a bottoming of memory pricing and a better 2020. If investors get nervous, will that affect the price of . Il the consumer side will be affected depending on consumer willingness to stand. We are looking for a positive 2020. There is a new announcement in february 11 of a new model of cell phone. Be hundred might buying global macroeconomic or other issues. Globalered by macroeconomic or other issues. Haidi does 2020 hold more certainty as we are talking a bit more about clarity when it comes to the trades . We will find out once we get the details of the quarter which sectors of samsung outperformed to get us to this better number. We have seen a bottoming in pricing and the makings of the beginning of a recovery. There is not much expectation of the recovery. By the end of 2020 we might see dram pick up a little bit. The smc has been outperforming. Reports like initial out of the Consumer Sector would suggest that tv sales are good. 5g have the five d rollout coming. A lot look forward to. Fori we had a stellar year samsung shares in 2019. This decides 80 of the companys profits. As you say there is still no certainty that we have seen the bottom in that area. It is unclear that we have seen a bottom. Samsung unveils its earnings release, we will start Going Forward. And consumerng demand. Third quarter was stronger for consumer demand. Fourth quarter is typically weaker. Depending on what we hear, we will have some expectation as to the pace of the recovery. Im more conservative. I think pricing is slower to recover. I think that the weakness in dram will persist longer. It will take us longer to get back to a memory market that was as profitable as it was. There is a lot of excess capacity in the market that has taken them offline in 2019. There will be an upper ceiling on memory pricing Going Forward. Haidi youre saying that we are unlikely to see another super cycle . I dont think so. I think the last cycle was driven by the conversion of rotating media to solidstate drives. The increase and the amount of storage in mobile phones and the rest, we dont have quite as much upside in front of us in 2020. What yourim curious price target is and what you think the biggest risk is when you look out for 2020. There is a macroeconomic risk Going Forward. The recovery of memory pricing could be delayed. The rollout of 5g may take longer than expected. Thet is riding on announcement of the new product. There is expectation that apple may be late with 5g. Before thee a pause stock continues to rise. It has done well in 2019 despite 2019 being a down year from 2018. We may see a bit of a retraction before it starts again. Kathleen thank you so much. Now we want to get back to soophie for the latest on the markets. Sophie we are getting a broader look at the reaction across Asset Classes. Oil reacting strongly. Gaining as much is 4. 4 on the back of this news. The 1600 level. While the yen is trading below 108, were seeing the reaction in commodity currencies. Were seeing stock futures also takei hit. Were also seeing a rally in bonds today. Year following is eight basis points. Cashis implying that treasury yields will open five basis points higher at the start of cash trading. This is bloomberg. Haidi United Airlines is taking a 90 million noncash charge in the last quarter to account for a steep drop in demand. Visitor arrivals to hong kong in november fell 56 from a year earlier, including a 43 decline from the United States. Kathleen the london foreignexchange trade Company Traveler has been said to be under attack from hackers. The bbc says that and gaining has admitted they are behind the attack and is demanding a ransom of 6 million. The group is also known as rebel and claims to have hacked into travelex six months ago. Deal to beltiyear the official kick provider for the football club, winning a hardfought battle. Cuprpool are the reigning champions. Terms havent been disclosed but nike had revealed they offered almost 40 million per season. Lots more. Keep it here on bloomberg tv. 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. Haidi good morning. I am haidi stroudwatts in sydney. Asias major markets have just opened for trade. Good evening. I am Kathleen Hays. You are watching daybreak asia , with the latest on a breaking story. Iran launching revenge attacks for the killing of its top general with missile strikes on a base in iraq that houses u. S. Troops. Lets get straight to the reaction witphie in hong ko sophie we are seeing a kneejerk reaction this morning. The nikkei 225 up 1. 5 , joining the decline we are seeing for reaction00, off. 6 in to the latest reports around irans retaliation. We are seeing moves in the currency space as well. ,he korean won getting the drop off. 6 . The yen gaining ground against all g10 peers. Look at the closer reaction. We have s p minis sliding 1 . Crude seeing a jump for this morning. Wti jumping 4 earlier in the wake of this, topping 65 a barrel. Going a look at what is on with other Asset Classes, gold. We are seeing the rally extend for boolean markets. We are seeing a move, a steep move in 10 year yields, off more than five basis points this morning. We are seeing a rally in bonds which earlier saw the aussie 10 year yield dropped eight basis points. Haidi. Ofdi a widespread set reactions in the market. Lets bring in a fellow at the Peterson Institute for international economics. He joins us on the line. Take up, right to have you on jacob, great to have you. I suppose when it comes to the global economy, has geopolitical tensions in the middle east replaced the uncertainty of a trade war . That was the theme for 2019. Jacob right now, certainly, that is the case. I am a bit surprised. I had not imagined that the iranians would do Something Like this. We did hear from the Supreme Leader yesterday, saying that he wanted iranian forces, national forces, rather, for proxy militias, to carry out the revenge attacks. Now, we have seen it. So far, you know, seemingly, mediumrange Ballistic Missiles, which fired from iran proper, which i think is also an important escalation. Hopefully, the distance traveled should have, if the Warning Systems were working properly, should have given troops at these bases may be five to 10 incomingarning that missiles were approaching and they should have had a chance to perhaps go into shelters and other things. We do not know about casualties yet but that will obviously be the key issue here. Then we will have to wait for president s response. But i think there is a possibility president s response. There is a possibility that this lets off some steam on the iranian side while casualties are either nonexistent or low. The Trump Administration will say, ok, we will not escalate further, but we will have to see. Thats a fairly sanguine or even optimistic look at how you think this might play out. That we havense seen the reaction on markets at the moment responding to this news . Is there a sense that again we will see investors and Market Participants take a step back and think geopolitics even at this level has been pretty standard over the past couple of years . Jacob i mean, i think, you are right. This is the optimistic spin on this. There is a lot of possibility another possibility, which is that trump launches a very large scale on iran proper, and then starts a real war. I continue to believe that is a low probability. Areuse i think, when you sort of analyzing this attack, it seems, from preliminary numbers of missiles, etc. , that this is not the kitchen sink the iranians have thrown. This is sort of an attempt at a pinpoint strike with a relatively limited missile. So indicating that what they alloutt not an escalation. Signalcan hope that that will be taken, and of course, it was in iraq rather than u. S. Bases in kathleen when you look at the middle east, iran, right after the killing of general soleimani , was saying if you side with the u. S. , you are in trouble. They have already proven that with iraq. When you look at the middle east, the balance of power, iran has been feared by many countries what does this do to all those tense relationships . Jacob so far, it has not really done much. If anything, you can argue that actually, the iranian regime, from a week ago, has probably been strengthened. A week ago, they were facing dramatic demonstrations in iraq against iranian influence in the country. They were facing they had to launch a very draconian crackdown on protesters in saudi iran, where hundreds of people were killed. Now, all of that is more or less forgotten. You know, iranians now have a martyr. They have a distraction they needed from all their earlier problems. Kathleen what about relationships within europe . Nato, the relationship with the United States . Germany pulled some troops out but germany is hardly a Major Military force or power in europe, and the middle east. How do you think this is affected . Jacob i dont think germany they are not the bellwether here. The bellwether is obviously the french and the british. So we will have to see how this develops. But again, i think i will i would like to note that, you know, there is there seems to be an attempt by iran to localize this really being about american troops in iraq. They could have launched these missiles against american bases anywhere in the middle east, but they chose iraq. And i think that shows that they would actually their strategic goal here is to get the Iraqi Government make a Political Announcement that they want the u. S. Troops to leave. If that happens, you will see the europeans leave as well, in my opinion. But so far, the European Response has been eventually to take a backseat and wait to see what happens while there is deescalation, which has not happened. Kathleen this whole situation seems to be getting more dynamic. Jacob kirkegaard from the Peterson Institute joining us. We want to take a look at wider markets so we are bringing in Mark Cranfield. What impact in asia are we seeing . It looks like it is already there. Every time something happens, it is like it will just be for a day, a couple of days, and then Something Else happens. Mark yes, it does appear that we have moved up to a higher than we sawiety earlier in the week. It is noticeable that the s p 500 futures, which opened this morning in asia, looking a little bit softer. They have accelerated on the downside. We have traded below a point on january 3 that we had when America First launched the airstrike on iran, so its pretty significant. S p futures are looking even more bearish than they were on the first day of the u. S. Strike, so that was a significant change. It shows that anxiety has probably got to a higher level than it was a few days ago. We are starting to see treasury futures they trade up above the levels we saw in late december. That is certainly a serious sign that people are looking for the biggest havens. Dollaryen is below 08 again answer 108 again and starting to move to the downside. Oil futures, we have seen them jump as much as 4 already this morning in asia, and that is the one that will really determine how serious people get about risk aversion, because of Oil Prices Stay higher, that has very serious consequences for Economic Outlooks. People will be watching that one probably more than anything today. We are getting further developments. The pentagon has issued a statement on the Iranian Missile attacks in iraq. The Defense Department has issued a statement on these attacks in western iraq. Missile and rocket attacks carried out against the u. S. Base airbase in western iraq, hosting u. S. Troops. Iran has stepped forward and said this is essentially the beginning of its Retaliation Campaign for the killing of the top iranian general. The pentagon is working on initial Battle Damage assessment. Iran is starting to work on a second wave of attacks on a u. S. Base. That is also something that has just come through in the last few minutes or so. We are getting a few more details about the scale of this attack. Missiles were launched from iran, targeting at least two bases according to the department of defense in a statement. We will continue to watch and wait for these details as they become available to us, but mark, taking a look at gold, that was a one that was one safe haven asset that did not give up gains as the rest of markets kind of snapped back a bit. Right . Mark yes, i think gold is looking at other factors, not just simply about the tension in the middle east. It is looking way beyond that. Gold is also looking at potentially a weak year for the u. S. Dollar. Lots of factors to suggest that the dollar is going to generally trend a bit lower against other g10 currencies this year. That is good for gold. Global yields are extremely low so that is a positive for gold as well. Central banks around the world are still increasing their holdings of gold and it is very popular among the Retail Sector as well so theres a number of reasons why gold is holding its own as an alternative asset even without increased attention in the middle east, and that is likely to stay the case for a few months yet. Kathleen it is interesting to me that the bond market certainly has not shown there was some small flight to safety. I wonder what it takes, how bad things have to get, before investors say, woah, it is time theook, you know, for traditional safe haven. Not just gold, which can be very volatile, not just oil, but something that i think a lot of people thought was not going to be in rally mode early this year. You also treasuries, have to take into account the fed as well. Jay powell made it pretty clear at the end of last year that he would like to go on a pause for some time, possibly through the whole of 2020, so that is a big factor as well. You have to ask yourself what would make him change his mind, what would push the fed to lower Interest Rates again . More froming to, economic sectors. If this situation in the middle east goes on for a long time, if crude Oil Prices Stay very high, if that affects the outlook for Economic Growth, that will mean bond yields can go lower and people will start to calculate that the feds next move is going to be another cut, even though they have said they would like to stay on pause. They are not going to be able to. If the Economic Outlook in the United States gets much worse. Some people might even start saying, well, the u. S. Missed a recession in 2019 but it will not miss a recession by the end of 2020. If those kind of narratives come back into the market, then bonds will certainly start to perform again, just like they did in the year, and of last youll tinto a lot lower. We are not there yet. That is definitely something that will be on the radar for investors. Youleen i want to ask again about gold. Spot gold rising above 1600 an ounce since 2018. We remember when it got to 2000 an ounce. Pretty quick move up. If this continues and deepens, it makes you think gold may have a long way to go, mark. Jacob mark yes, with the record highs we have seen for gold, as you say, closer to the 2000 mark. Somewhere in that direction is certainly possible. If this drives out for more weeks, people will be going for the biggest haven of all. Gold is the ultimate haven in times of military crisis, so that certainly is one that people will be looking at. When you consider that the Central Banks are building up as well, then gold ticks all the boxes for why you would want to hold it. Certainly any level on the upside becomes a potential target for gold. Because of the way it performed towards the end of last year, it actually was coming down. Gold prices were falling back below 1500. So that means that positioning is probably relatively light. It means a lot of people have not yet got involved in it as well. Move up ine a quick gold and it could come down fast. Gold is going to be extremely volatile. Definitely one people will be watching. Thank you so much for that, Mark Cranfield, are mliv strategist, getting more as well. The pentagon clarifying the details of this iranian rocket attack, saying at 5 30 p. M. Eastern standard time is when we saw a launch of more than a dozen Ballistic Missiles against u. S. Military and Coalition Forces in iraq. It is clear these missiles were launched from iran and targeted at at least two Iraqi Military bases. The u. S. The pentagon saying they are working on initial Battle Damage assessments. Of course, also pointing out that appropriate measures have been taken in the past few days to safeguard personnel given the rise of iranian reprisal and retaliations, so we will be getting more details but that is the latest reaction from the pentagon. We understand that the president and the white house have been briefed on the situation. Oil markets now. Aaron clark in tokyo. We have seen a strong reaction to this attack, this after a pullback. We heard everyone from the ceo chevron to analysts saying they gains in oil will not be held because Energy Assets across the middle east have not been targeted. Is that still a risk does that change . Now that we have started to see the reaction and the retaliation action from iran . It is a concern and we will just have to watch the situation Going Forward, and so far, the retaliation is just focused, you know, on u. S. Military bases in iraq. Like you said, there was a kneejerk reaction and oil. In oil. Wti rose. It is trading 65 a barrel now. The concern from an Energy Perspective is if this escalates, if theres further attacks, and if theres a tax on oil infrastructure, iraq is a major exporter, a global exporter. It exported 3. 8 Million Barrels per day last month. A lot of that came to asian refiners in china, japan, south korea, and india. It is a major global supplier. Any disruption to those exports would be a major concern. We have not seen that yet, and theres no indication that iran plans to attack any of those installations, but i think that is the concern from an Energy Perspective, is that iraqi oil exports would be disrupted. Know, i just wanted to mention the japanese stocks are extending their slide. The nikkei down 2. 1 . The topix down. We are seeing a lot of reaction. Oil, 70 a barrel for brent that everyone says is the key level. Want to ask you about the strait of hormuz, because i think iran is giving no indication that it is going to move in that direction, but it seems to me that people who are investing in oil, trading, that is the vulnerable point when it comes to iran, if they really want to strike out. Aaron definitely. I mean, i think about onehird of the worlds seaborne crude goes through the strait of hormuz. Its a major chokepoint. It goes right past iran. They can certainly impact t ifments through the straig they want. There is no indication that that is happening this time around but they have tremendous leverage given that location of the strait of hormuz, so you are absolutely right. That is Something Else traders will be watching, if there is any disruption, or even if ships are trying to avoid that area as they ship export oil through the strait. Haidi our asia Energy Editor aaron clark in tokyo, continuing to watch oil prices as well as some of these other risk assets including the yen. Gold breaking 1600. Reaction to this attack. The pentagon now confirming the details of that attack. Lets look at the broader markets now. Sophie. Sophie we are seeing a severe reaction when it comes to the nikkei 225, off to. 2 . We get more details around the development of that attack on the iraqi base, which hosts u. S. Troops. The cost be under pressure. The korean won off 1 against the greenback. The yen is gaining ground against g10 peers. Abovefshore yuan trading 696 againstnt the greenback. It is actually above that level for the First Time Since 2013. As Mark Cranfield pointed out, positioning was light. We are seeing bonds rally with the aussie 10 yelled sliding as much as eight points as the curve flattens. Not likely to move sentiment. We are seeing benchmark treasury yields, down eight basis points right now. Sos 1. 6 given the potential for any attacks on Energy Producing assets. And that backdrop is providing a lift for asian Energy Stocks which are looking mixed with that regional subsector on oil stops looking little changed. We are seeing it impact earlier gain over 2 in tokyo. Samsung, whichon is gaining ground, climbing on its fourthquarter operating profit as the chip price recovery does materialize and the Company Posted slower than 6. 1 billion dollars. Samsung shares extending 2019s 44 rally. Plenty more to come on daybreak asia. This is bloomberg. Haidi this is daybreak asia. I am haidi stroudwatts in sydney. Kathleen i am Kathleen Hays in new york. Samsung, its share price doing actually a bit better. Samsung fourthquarter profit beat estimates. You can see it is gaining. 5 , so a nice move higher even though people remain pretty positive on samsung. This beat is having a good impact. Lets cross to Bloomberg Intelligence Senior Analyst what drove this beat . What are the details . We believe that comes from the memory business. Given the toplinewise, theres not much surprise, but on the operating profit line, we are possibly surprised by the strong beat. It is typically a slow season. We think the demand, especially know, has you digested inventory and dram prices did not fall as much as feared. Kathleen big focus on memory, on andy, the price outlook amd, the price outlook. Anthea for dram come in the fourth quarter, we are seeing continuing easing into clients, especially in december, where, you know, its a holiday season. Not much going on. But still, it is encouraging to see Contract Prices remain flat, so even though First Quarter is weak seasonally, the decline may not be as bad as before, so the worst of the drop should be over. There should be some signs of recovery in the second half, given that second quarter, the demand will be strong, with all the launches. The our conversations with memory chipmakers, they all believe that prices will continue to recover across all applications. Mainly not because not just because of the waiver. But also, theres not much new capacity coming out, and also, the demand comes back because of price elasticity. Prices have fallen to such a level that only samsung is the one that barely makes a profit. They remain very disciplined. They want prices to recover. That could continue to be the case after the recovery. Haidi what about the device part of the business . We are expecting samsung to show some new products next month. What is your expectation, and when it comes to the fold, are the production and design issues a 2019 story . Anthea you are absolutely right. In the Upcoming Event in february, we expect samsung to have a cheaper version. Not very cheap, but slightly cheaper version. It is their wellknown clamshell design. Smaller,posed to be fits into your pocket, and they are trying to tap into new markets. Putting the smartphones in pockets. Foldablesitive on devices even though last year was only a very small shipment. Less than 4 million. But still, it is wellreceived. Even laptops, we are expecting to have some foldable laptops in this will half, so bode well for samsung not only on the handset side but also on the foldable displays. Haidi our Bloomberg Intelligence Senior Analyst, anthea lai with the latest. Business flash headlines. Boeing is doing a uturn and now recommending Flight Simulator training for the 737 max. That reverses its earlier opposition to the idea and complicates the planes returned to service. Notifyingbegun regulators and airlines of its new position and is explain how to modify positions because of a shortage of uptodate equipment. Kathleen elon musk was so happy about the prospects for his new factory in shanghai that he broke into a dance routine. You can see him. He attended the sayer money to hand over model three cars to local customers. It is that elong shuffle. Elon shuffle. Tesla searched since late october when it reported a price profit and said the model y will launch months ahead of schedule. Haidi beyond meat jumped on reports that impossible foods is no longer aiming to supply mcdonalds. Beyond meat may have already a test of a plantbased burger in canada. This is bloomberg. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. We use Ultrasound Technology to literally look inside your arteries for plaque that builds up as you age and increases your risk for stroke and heart disease. So if youre over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. And if you call us today, youll only pay 149an over 50 savings. Read it again, papa . Sure. Ive got plenty of time. Life line screening. The power of prevention. Call now to learn more. Haidi this is daybreak asia. I am haidi stroudwatts in sydney. Kathleen i am Kathleen Hays in new york. Inund state tv says revenge for americas killing of top general qassem soleimani. Lets get to sophie in hong kong for a check on how the markets are reacting. So far, fast and furious. Sophie fast and furious. We are seeing stock losses across the board. The nikkei 225 meeting that drop. The cost be under pressure, not being helped by the boost we are seeing. Being draggedalso lower. We are seeing a pickup and bonds. The 10 year yield for the u. S. Benchmark now dropping 10 basis points to a onemonth low. The aussie 10 year yield sliding nine basis points this morning as this riskoff rally continues. We are seeing the moving currencies. Lets switch out the board to check in on whats going on with the yen, which is gaining ground among all g10 peers. And the aussie and could be headed to 73 with domestic woes dragging on the currency as the yen, trading at its strongest level against the korean won since august while the offshore yuan is weakening the most, back above 696. Taking a look at what is going on with gold, we have it topping 1600 for the First Time Since 2013, and europe crude picking up steam here, trading at 65 a barrel. We are seeing the oil bulls looking to rejig their forecast for crude. S p futures taking a really big hit this morning. Eminis off 2 . Haidi lets get more analysis on the situation in iran. Aining us on the phone, eal. Ow, n we know the pentagon has confirmed more than a dozen missiles have been launched to two sites in iraq hosting u. S. Troops. We have no information for the extent of the damage or fatalities. Do you see this as a somewhat measured start to the counter attack from iran and if so, can we see it as deescalation . I would actually say the opposite. This is a much more significant initial response than i would have anticipated. I think it would be one thing if you saw scattered rocket attacks coming from within iraq by geo proxy groups. That would be one level of excavation escalation. This is confirmation that these are short range Ballistic Missiles fired by the irgc from bases in iran against significant u. S. Targets, i think that is a pretty significant step and i think the one really outstanding question i think we will determine for how things go from here is what that Damage Assessment looks like and whether there are any u. S. Casualties. Uncertainty is over what happens from here in isms of the now everyone watching for how the president response. Neil yes, and i think, as you have seen in the days after the targeted killing of qassem soleimani, there are a lot of questions in the United States and baghdad about what the Administration Strategy is, whether they have adequately prepared for a response to Something Like this, and i think we will see maybe even in the next few hours whether this statement by the president or the defense secretary about next steps or what their assessment is, so i think theres a lot of open questions and i think the administration has a large credibility problem right now when it comes to explaining what it sees as the path ahead in confronting iran. Kathleen its Kathleen Hays in new york. Attack meants this to underscore to iraq, get those u. S. Troops out . That was one of the first threats iran made not just to iraq but to everyone in the middle east who did not want to be aligned with the u. S. And how do you think this affects iraq . I suppose they are maybe hoping that President Trump will back away from any talk of leaving. He already has, actually, and bring him closer if he wants them to stay. You know, do they feel like they need protection now . Neil they have long said, as this situation has been ramping up, even dating back to may of 2018, when the u. S. Left the nuclear deal, that they did not want to be in the middle of this because they rely on u. S. Support in the counter isis fight, which is now temporarily on hold. They obviously have significant political and religious linkages to iran. They are in a very difficult spot, and we have been seeing statements from the iranian side, basically giving a really stark warning to any country in the region hosting significant u. S. Military assets, basically signaling that this attack could be a precursor of similar action against, for one, saudi arabia, or the uae, could be iraq again, or maybe even afghanistan, where iran also has significant ties to militant groups. This could be the start of something fairly wideranging, if that is what iran feels it needs to do. Kathleen how much resources an earlier gasp said they have posted missiles, all these militias all over the region, theres a lot they can do. He had been crippled, some say, in terms of their resources, by the sanctions. How much can iran do . They are probably scrambling to figure out what their strategy is. So far, it seems like retaliation and revenge, but how far can iran go . Neil that is an interesting question here it as you have indicated with the sanctions, their domestic economy has been under considerable stress, but it has not seemed, at least, in the past few months, slow. According to what he admits ration has been saying, this has all been kicked off by the attack on the embassy in baghdad and previous shelling of u. S. Military facilities. That has resulted in casualties. Whether iran thinks it is in for the shortterm fight or something longer, i think ultimately depends on what the Trump Administration and the president himself decides to do, and as we have seen with a lot of the administrations decisionmaking, theres not a lot of clarity around that, and as a result, i do not know that there is much clarity on the iranian side about how long and how intense they think they can sort of drag this out. Haidi where does this leave Coalition Partners . We have seen, you know, moves from germany to take their troops at least temporarily out of iraq this week. And unraveling of some of the order in the region in terms of the expectations from Coalition Partners there . Neil i think it will be interesting to see whether the administration can do any followup to try to format support. I sent there were a lot of there was a lot of disappointment when there was not a lot of prior notice about the Soleimani Killing to the united kingdom, which maintained a troop presence in iraq and the airbase that was hit tonight has housed british troops in the past, and they all have long disagreed with what the administrations approach is and emphasized that they are trying to find any way possible towards deescalating this. French president macron had talked to the iranians i think today about trying potentially to head off Something Like this. Obviously, that has not succeeded, so theres a lot of questions on the european side, what role they have. And whether they actually have a partner in the administration here in d. C. Thats willing to listen to their concerns. They have been listening to their concerns for the better part of the last few years. Kathleen the first couple of days after the strike on the iranian general, the talk was this is the beginning of the end of the u. S. In the middle east, right . They are going to be losing power. On the other hand, it seems you can argue, no, this is the beginning of the beginning of further entrenchment in the middle east. More troops there. What do you see . Trump fundamental inclination is to try to drop back as much as he can. That is what he promised when he first ran as president , but he did not like these foreign entanglements. He did not like foreign workers. He thought they cost too much money. Goals, other policy including unraveling the nuclear deal and supporting israel, and having a closer relationship with saudi arabia, have also brought us to this point, so its an open question whether he has a very wellformed sense of whether he has a strategy to either disentangle the u. S. And have this as one of the parking shots or if he actually wants to confront the iranian leadership and believes that that includes a significant military role now and in the future. I think it would be helpful if the administration could more clearly signal which side of that debate the president himself finds himself on it because its remarkable that he is not has not tried to, since killing soleimani, to go to the American People himself in a very sustained way, to explain his rationale, and explain what he thinks. He sort of left and that to others in the administration. Kathleen he may still be trying to figure that out, like so many people. Neil bhatiya. Lets get right to ritika gupta for the first word headlines. Ritika the effects of the bushfires in australia are being felt halfway around the world. Smoke from the blazers has been detected in the skies above buenos aires. The fires have killed at least 24 people and up to one billion animals. It is so large that they are generating their own weather system, causing dry lightning strikes which in turn ignite more blazes. Carlos ghosn says the carmakers internal investigation was never about finding the truth. He is expected to hold a News Conference, promising to name the people he says engineered a coup to destroy him. Tokyo is keeping up the pressure on carlos ghosn, issuing an arrest warrant for his wife, carol. Prosecutors accused her lying under last year. Protesters at a Prominent University in new delhi, two days after mass attackers masked attackers beat students and teachers on the campus. They spoke to some of the students who were attacked. The violence at j and yuan sunday comes on after Narendra Modis citizens hipbased law. Pedro sanchez managed to edge back into office for a second term and is now trying to pass budgets for 2020. He is bidding to recoup some of the euros they spent bailing out its Financial System during the economic crisis. 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. I am rich. Ritika gupta. This is bloomberg. Haidi thank you. For more on that developing iran story and other stories you need to know today, you can check out todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also right there on mobile in the bloomberg anywhere app. You can tweak those settings so you only get the news on industries and assets you care about. This is bloomberg. Welcome back to daybreak asia. Market a look at the snapshot. Iran retaliates for the attack of a top iranian general. The nikkei 225 losing the most ground, falling the most since march, slipping below 23,000 points this morning. The kospi losing the most ground since early october, off 1. 5 . Sydney stocks are halting a fourday gain with the oil sector the one bright spot as crude is rallying. Wti topping 65 a barrel, extending its gain since the killing of the top iranian general. Wti call. Ing that skew rising to a september high. That is pushing bond yields lower. The u. S. 10 year yield sliding more than 11 basis points. Percent. Rop to 1. 6 aussie benchmark yields have fallen to a onemonth low while gold is jumping on this move towards haven assets. Spot prices topping 1600 for the First Time Since 2013. Gold futures extending their advance. Kathleen that takes us right to our next guest. Lets get more on gold now. We are joined here in our new york studio by Standard Charter Precious Metals analyst, suki cooper. It has been such a crazy evening and morning in asia, obviously. You know, before this attack, this whole iranu. S. Conflict started on december 19. Your Global Research looking ahead to 2010 three was very 2020 was very upbeat on gold. Given what is happening in the middle east, the uncertainty it has created, have you changed that forecast . Suki we still believe theres more upside risk for gold prices but we were expecting most of thee to materialize in second half of the year. The geopolitical risks heightening has brought forward safe haven buying that had started to slow down in gold. Just two years ago, gold safe haven status had been questioned by a number of investors. The flight to safety now has boosted prices. Kathleen we had this much flight to safety on some very big events. Even so, the question now is where does it go next . Does it escalate . Iran has warned it is going to retaliate, talking about 13 different attacks it could do, broadly and vaguely. If this continues, does that mean you have to go back to the drawing board and say, if this is what is happening, we have an even higher gold price . If so, how high could you see it going in the next six months to 12 . Suki investors tend to scale back their gold exposure towards the end of the year and we did see that. Leading up to these, tactical positioning was lighter than normal so investors not only were reestablishing positions, but also they were adding safe haven risk and diversifying their portfolios, so we have seen and exacerbated move to the upside because positioning in gold is relatively light. Now, we are looking at what risks are Going Forward. Given we have seen it moving higher, we have not seen some of the longerterm investment man coming into play yet. There is more scope for upside and more likelihood we will see prices continuing to rise. Haidi it seems like what is going on right now with the revival of middle eastern tensions is really almost a bit of a cherry on the top for gold bugs, right . The fundamentals seem to suggest that 2020, we are always going to see some pretty strong underlying demand, even on the physical side. Suki thats right. We thought the floor for gold was quite well supported. If we think about some of the risks that have started to dissipate towards the end of 2019, gold prices tested lower levels. It was not physical demand that physical demand that continued centralbank buying as well. Going into 2020, we are seeing michael prices have a much better floor going seeing that gold prices have a much better floor. Of course, the flight to safety is very important, but one of the factors that is important to consider is that when we have seen heightened geopolitical risks in the past, it tends to be the positioning in the first few days that pushes prices much more substantially higher, and then we tend to see some of the risks fading and prices tend to correct as well. Haidi what else do you like in the precious complex . We saw moves and palladium as well as silver, along with this same story. Suki across the complex, it is really the Precious Metals that have the tightest fundamentals, that have reacted the most. Gold prices have risen quite substantially, but if we look at the more industrialized Precious Metals, we have seen much larger price moves, so for instance, palladium has risen above 2000 an ounce for the first time. Other prices have rallied as well. These are two markets being driven by their own tight fundamentals, given we see tighter emissions legislation pushing higher. Kathleen at a time like this, not just because of the u. S. Iran conflict that is developing, but also because of physical demand, surprising demand for gold from india this past year, very, very big fire, very important, do the fundamentals like the economy, inflation, Central Banks, do they just go take a back burner now . Suki what we find is that for much of this year, it was really the estimating trade tensions, so for much of 2019, it was the trade tensions that boosted gold, got interest in gold, and we saw the physical market providing a floor for prices, but then it was Central Banks turning surprisingly devilish around the world that provided that next move higher for prices, so this year, we had estimated that it would be centralbank monetary policy, continue to trade tensions, and risk of inflation starting to materialize again that will be key. The surprise factor of heightened political tensions has added that extra boost to prices. Kathleen it seems like these would argue the trade tensions seem to be easing as this phase i trade deal is signed. If anything, this conflict is potelly a negative for the u. S. Economy. If oil prices rise, if it creates uncertainty, if witnesses do not invest, etc. , which could maybe make this small tendency of the fed to say if we move, its going to be a rate cut. These are the kind of things that would work against a steady rise in the gold price. These two forces working against each other. Suki it is interesting for gold. It tends to follow one factor over another, even when you see mixed signals. When we have seen gold prices being boosted on a sustained basis, it is when the factors are actually risk in global growth. Last year, when trade tensions escalated to such an extent that there were concerns a recession might materialize, that is when we started to see it move higher in gold. We have seen the escalating geopolitical tensions. Concerns start to materialize that this could impact the global economy. That is when we can see a further sustained move in gold prices. Haidi thank you so much for joining us and thank you so much for patiently standing by as we navigate this morning of breaking news. Standard chartered bank Precious Metals analyst neil bhatiya there. That suki cooper there. We will bring back aaron clark in tokyo to talk all things oil. There is a lot we do not know about the severity of this attack, exactly which assets were targeted, and the Damage Assessment we know from that pentagon statement is currently being is taking place now. What have you been hearing given we saw the far back in oil prices, about the likelihood or the risk of Energy Assets across middle east being targeted or being Collateral Damage . Aaron right, well, i think, you know, like we saw, there was an immediate kneejerk reaction to these attacks. Oil rose as much as 4. 4 . Trading around 65 a barrel. So there is a concern that this could disrupt supplies. So far, we have not seen any of that, and the attacks seem focused on u. S. Military bases in iraq, but iraq is a global exporter. It exported 3. 8 Million Barrels a day last month. To asianajor supplier buyers, including china and japan, south korea, and india. And so, you know, people will be looking to see if theres any disruption to energy supplies, and of course, there are a lot the middlessets in east, including the strait of hormuz, and obviously, saudi arabia has major exports, and they experience an attack last year. Kathleen it seems like, over the past three or four days, that a number of analysts have said, yes, this is an upward force, but that there is enough supply out there, certainly within the u. S. You have the shale oil production, that a lot of people seem to think that, at 70 a barrel, there is a bit of a downward force on the price of foil going much higher. Oil going much higher. Aaron theres a lot of supply out there. Zeroan exports are next to because of u. S. Sanctions. Also, iraqi exports a specific rate of crude that a lot of asian refiners me. Need. They are already paying a premium for that. It could shift prices just because, you know, they export a specific grade that a lot of refiners, particularly in asia, need. But there is supply, theres also specific grades that refiners need, and iraq provides a lot of that. Haidi aaron clark joining us out of tokyo, continuing to watch this changing situation. Lets take a look at how markets are navigating all of this. Sophie something that is not changing is the riskoff mood that has taken over markets. Japanese stocks are falling more percent while the yen is climbing against on g10 peers and jgb futures are rising as bonds are rallying. Benchmark u. S. And aussie yields have fallen to one month low. Switching it now to check in on oil, you have wti topping 65 a barrel, so we likely will have Oil Forecasters looking to rejig where they see oil moving from here, given the risks that are cropping up in the geopolitical space. We have eminis sliding as well. Chinese futures are losing ground in singapore. And gold on the advance, topping 1600 an ounce here as we see more momentum for bullion markets, which have come full circle since reclaiming the ground it has lost. We are going to be watching the offshore offshore yuan, seeing if it will move above its 200 line. Moodoks like this riskoff is taking hold and currency markets as well with the korean won under pressure against the yen, two. That is what we are lookingt this morning with the reaction to the latest iran kathleen as the impact of the u. S. Iran conflict increases, Singapore Airlines is now diverting off lights from iranian airspace, so obviously, this is having a spreading impact. Much more on the conflict, coming up. There joined by a member of National American a rainy and cancel. That is coming up next. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. We use Ultrasound Technology to literally look inside your arteries for plaque that builds up as you age and increases your risk for stroke and heart disease. So if youre over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. And if you call us today, youll only pay 149an over 50 savings. Read it again, papa . Sure. Ive got plenty of time. Life line screening. The power of prevention. Call now to learn more. It is 9 00 a. M. In beijing. Welcome to Bloomberg Markets china open. Im tom mackenzie. Yvonne im yvonne man. Glass m david and david and glass. Havens surge as iran attacked pentagon bases in iraq. Gold topped 1600 in u. S. Futures slide as markets assess the implications. Name enemiesing to on,brought him down in this and hitting back