Minutes 20 minutes or so has seen lows across safe havens to dollarchina as well. For eighttrack volumeheavy daytoday. Day today. We are on track for 35 billion today. It is a busy day of trade. Trades inxas, 55,000 the first 60 minutes on a front and contract in west texas. Iran is launching what it calls revenge attacks with missile launches onto bases that host u. S. Troops. What to me know so far about irans actions what do we know so far about irans actions . It was a series of attacks on these two bases. The Islamic Revolutionary guard corps claimed responsibility quickly. In the be interesting uns u. S. Response. There has been a lossoflife and how much damage was done . They were on high alert with those facilities, because i ran have thes thought to highest amount of short range missiles in the region and this was thought to be the retaliation to expect. Iran has been saying that they will avenge the death of the general and are calling it a terer operation murder martyr operation. They are planning to attack more targets, but we are still waiting to see details about how much damage was done and the loss of american life. That will be a large part of what determines the u. S. Response. David donald trump they will respond to anything iran does. Do we know what the white house tilt is . We have not heard directly from the white house yet. The press secretary said President Trump was briefed right away. We know congressional leaders have been told about this early on. Esper and the secretary of state were at the white house. Obviously, meetings are going on. We have heard various things in previous days. Saying heard tough talk, that if iran did anything, there would be a response. He used the word disproportionate. In the past if there has not been a lossoflife, President Trump has not responded immediately. The attack on the general used as a strong, but whether he would come back with another strong move or wait and see is really the question. The other question is what else does iran do . Yvonne Jodi Schneider joining us in hong kong. Policyet to our guest, a director at defense priorities in washington dc. Your reaction . Obviously, it is incredibly risome in the possibility and the possibility of escalation remains potent. I hope the white house is restraining itself. This crisis is of their making. The United States walked into this problem and i think it is not too late to back out by refraining from a belligerent response to this particular attack. Predictable attack. It was a terrible choice to leave troops to observe protectable attacks. Predictable attacks. David how would you describe the acts of iran in terms of it being proportionate, perhaps symbolic . Benjamin it may turn out it was largely symbolic. Last i heard, there were 15 missiles fired. , but we of them hit dont know what they hit. If they intentionally fired in a way to do the most damage or missile strikes, it would show they werent going to be knocked around but were not intending to do lots of damage and avoid escalation. I think the United States left iranian leaders in a position where it was almost impossible for them because of domestic , thats, pride, deterrence they had to do something. They werent going to stand for it, but something that would not lead to further u. S. Strikes. Yvonne does iran have the capabilities to stage a confrontation . The economy has been deteriorating already due to u. S. Sanctions. How far can they see this through . Iranians are no match conventionally, but the United States only has a few forces in the region region. 6000 in iraq and more nearby. We have the capability to bomb iran a great deal, but they have 80 Million People about proxies around the region, a lot of nationalism that will make it hard for them so surrender to surrender and would be exceptionally dangerous for the United States. Moreuld be substantially costly than the iraq war. Seen the response from iran and what would you be telling donald trump right now if he might want to deescalate this . Benjamin i dont know if we have seen the extent of the response. I hope so, and i hope they have tried to do something that is of a limited damage so they can get out with their pride and without a major war. ,hat i would tell the president youve made your by killing soleimani and its time to back down. If you say you dont want a war, its time to stop listening to people in your cabinet who seem eager to pull us into war. Start listening to someone, anyone, who might have an idea about how to avoid it. One way to avoid it is to keep your powder dry and start iraq, asng forces from iraqis man we do. Demand we do. David benjamin friedman, policy director at defense priorities. Do you fade risk . It is a tough one. Thing to buy weapon and security firms. What is happening cant agree is people cant agree. It is not that donald trump or iranians wants to be extreme. Thingneither American People nr iranians agree on what needs to happen. Neither can brits. 50 of people did not vote for brexit at all. Position where a people cannot agree on the right path forward, politics cannot find the right answers. If they cant find the right , security and surveillance firms is the right strategy. Whether iran has responded, i think it is doubtful. Nevertheless, i think it is not as relevant. If its not going to be iran, its something else. David there are different types of geopolitical events. There are times where every week you have something. Then you have Something Like this. Is this different . It is. It is a step up, primarily because it is a geopolitical mistake. But once again, people tend to forget how volatile and explosive brexit could have been. People tend to forget how expensive hong kong can be. So yes, it is a step up. But im just saying similar steps up and down will go on. Reflected inshould equity markets is a big question mark. The longer Central Banks applied liquidity, investors expect Central Banks will fix economic problems and politics will fix geopolitical problems. That is why equity markets remain placid. As soon Central Banks stop supporting the market, thats when volatility will come through. Yvonne we will have more from you coming. Sue japan has posted more news,istic economic indication that tightness in the labor market is not translating into consumption. From arnings slipped year earlier. Governore and the boj have reiterated calls for Japanese Companies to raise pay. Star hasably would bollywood star has joined protesters at a university in new delhi. Local media say the actor stayed at the rally and spoke to students. Comes after at jnu significant anger at Narendra Modis religious citizenship law. Ghosn says theos internal investigation that led never aboutr was finding the truth. He is expected to hold a News Conference, naming people who engineered a two to destroy him coup to destroy him. Has a arrest warrant against his wife. Bushfires inf the australia are being felt halfway around the world. Smoke has been detected in the skies above buenos aires, argentina, 12,000 kilometers away from sydney. The fires have killed 24 people so far and up to one billion animals and are so large they are generating their own weather systems, causing dry weather strikes lightning strikes. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. David still ahead, samsung is out with prelim earnings. On the up next, more market impacts of the conflict in the middle east as tensions rise. This is bloomberg. David relatively good news if you are bullish. U. S. Futures are low on the day. We have recovered half of 1 on u. S. Futures. Live picturesg at of the barrel of the iranian general killed last friday burial of the iranian general killed last friday. Iran has been saying it is not after war in a letter to the Security Council. Did not get a statement from President Trump, so perhaps both sides are having a more measured response. Our guest is still with us. A Global Markets strategist. I know the fed is on hold, but should they give up hope they will raise rates this year . Viktor yes, i think they should give up hope. The only question is how much liquidity they put into the marketplace. They put in a search of 650 billion. That is being reflected in higher on a supply. That is not going into the real economy, it is going into Asset Classes. That is why they performed as well as they did. Is, will Central Banks continue to pump that level of liquidity . The biggest risk for investors is when the Central Banks become complacent. But Central Banks believe the economy is in the right spot. Thats the time to stop worrying. Markets canhat, no improve with neutral Central Banks. Capitallower cost of and a mix of the two. When we dont get them, thats when you get asset price the deratings. Is there a reason for Central Banks to push back on liquidity . Viktor in early september, the s p was looking at negative performance year to year. Curves wereield inverted. Emerging markets were really collapsed. What happened in a time of three months . Not a great deal. Central banks changed policy. If they dont pull back, i guarantee you all of the isms could be down and will be sitting in the same chair discussing how things changed quickly. So from my point of view, there is a recovery and a liquidity optic going on. This should keep us a broadly neutral, neither are they contracting. The question is whether that growth rate is in line with earnings expectations built into the marketplace. , andeling is its not thats why i cant see how they are going to pull back. If anything, they have to add more as they progress. Its almost slightly perverse for markets to expect the Global Economy not to improve. If money continues to go into the markets, do i expect the same trades to be relevant . Viktor thats right. Why would you buy cyclicals and value when not of it israel . Is real . What you do is buy everything that benefits from monetary stimulus. You dont by value or cyclicality. Any world that is just driven by cyclicalitys, value the only works. Is working not to mean revert. So why would you buy strategies that are predicated on mean reversion . Theres no sense. At some point, i do think strategists will change. I do think policies will change, but thats not today. David always great to get your insights. Up not just on our interview but all of the conversations we have this morning. It has been a busy news morning. You can become part of the conversation and send us messages. This is bloomberg. Yvonne taking a look at markets here, things are looking a little slower here given the steep moves we saw following the iran tensions. Seeing a little more green on the screen. David spots earlier were completely red. Get tomeantime, we would some of your business flash headlines. In fact, im being told we are going to your market check. The computer is going berserk. Here we go. Samsung. Yvonne Quarterly Earnings estimates after memory chip prices climbed out of a rut. Fell, but thate was better than expected. Exports are being boosted the easing of trade tensions. Boeing is now recommending Flight Simulator training for the 737 max, reversing its earlier opposition and complicating its return to service. They say they are exploring how to modify similitudes from an older 737 model. United airlines, take a look at markets. The Energy Sector in focus today. At 10 when you look sector groups within asia pacific, i can tell you of the depths of todays session. We are looking at four sectors in the green across the asian benchmark it benchmark. Oil is up about 2 . We were up almost 4 on brent races. Prices. Material is down. Why would you get into cyclicals anyway . The benchmark is down, about a 1 drop. A lot more news flow coming through in terms of what policymakers are doing. Isdo know indonesia intervening to stabilize its currency. We are headed into the lunch break with little bit more momentum. This is bloomberg. Im su keenan with the latest bloomberg first word headlines. Iran says it is not seeking war after firing a series of rockets at to u. S. Bases. They have thought to downplay their actions while state television says the attacks marked the beginning of an operation to avenge the killing of a Senior Iranian general. President trump has been briefed the Administration Says there are few, if any, casualties. With the economy way down by the shadow banking causing weak investment in a slump and spending. 5 from march, down 6. 8 from a year earlier. The forecast comes as the r. B. I. Chief says price stability is his objective. Deficitas budget stated last year as spending rose more quickly than revenue. Weaker thancture is the forecast but slightly below estimates the finance minister offered last month. Grew atnesian economy the slowest pace since 2016. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. David lets focus in on the Energy Markets right now and see where we are. 2. 2 on west texas. Aaron clark has been helping us watch the story. Where are we right now . Oil give upeing some earlier gains. Are both up about 2 or so right now. Some of the concern is easing. Limited tohas been military installations. The largest concern is the strait of hormuz. Waterway where one third of seaborne crude passes through. They have threatened to shut strait in the past, so the initial spike in Energy Markets was from concerns the conflictould escalate. Risk is thebig of a threat from iranians . It would hurt themselves as well, so how likely is it . It is something they have threatened in the past. , one thing we were reminded of is the vulnerability of Energy Assets in the middle east. There was an attack on a byility that cut production 5. 7 Million Barrels a day. It had a huge impact on supplies and any disruption to shipments could impact shipments for days or weeks. So these assets and chokepoints are very vulnerable. So far, theres been no indication iran is going to go there. So far, is limited to these military installations in iraq. Lets try and help our viewers map out what the next few hours might look like. What are you and your team talking about in terms of the angles to watch . People are watching for the u. S. Response. Iran has made this limited response. We will have to see how much damage there is to these military bases. So far, it seems very limited. Depending on what the u. S. Does and if that targets energy infrastructure, then there is a whole new ballgame. Seems specific to these military sites. If it escalates to Energy Assets or infrastructure, then it is a different scenario. Clark, our asian Energy Editor joining us from tokyo. I want to mark some lines from the Energy Ministers saying they took proportionate selfdefense measures. There are talking about how the moves were symbolic, but they were saying this was selfdefense. Still no word on a statement from the white house. David they are not seeking to reiterate their letter to the u. S. , more details on this to follow. Whats more coming up. Lots more coming up. This is bloomberg. David welcome back. The latest updates on. Evelopments in the middle east to the u. N. Letter saying they were not seeking more and they were taking appropriate selfdefense azures. Notto reiterate they were seeking to escalate war. When you look at how Market Reaction has moved, it certainly in line with the narrative we are seeing. More lines here. Iran concluded measures, not seeking more. Font to look at this at what this means, this is their response. They have concluded measures and are not seeking war. Perhaps the is first direct retaliation. Trump , president yes, that is the figure you are seeing. Half of 1 . You can see a little bit more buying into these markets. Brent, goldt texas futures now coming well off their highs for the day. Elevated, but i would imagine it is pointing to a deescalation. Yvonne you see gold futures are back below 1600. It is certainly more welcoming. Take a look, up to 1. 8 as we speak. Over to our senior you,st and bring in daniel a head of global investment. Is this all about chips . I believe so. The stock price has done well already since last year. We expect that memory chip demand has already recovered and will continue to stay strong. Though chip prices continue to. Ecline, the decline is easing sentimentwise wise, it continues to support check prices. Recovery continues in the first half. David i know it is primarily a chip story, but things like smartphones and Smart Devices . They probably did not do as well as thirdquarter. Remember it did beat expectations that was driven by market business. Third, they probably faced strong competition from iphone fact that while ways concerns seem to be alleviated. Fourth quarter shipment was probably sluggish, but going into 2020, the company is going to have at least two foldable devices. Yvonne and 5g. Correct. Samsung claims they took more than half of 5g phone market share. But having said that, we expect more competition from chinese vendors. Yvonne xioami was one to come up with a phone around the 2500 range. David cheap 5g. To burn your pockets for that one. Lets bring in our guest. Your thoughts on the latest results . In fairly is coming as expected. As you heard, the coming in slightly lower than expected. The chip business seems to be showing signs of recovery. Itsat operating numbers, coming in at 7. 1 trillion. Because of that, stock prices are moving. What we have to look into is whether samsung is actually changing in terms of the picture on the Corporate Governance side. We are seeing improvement in the , so ifte payout ratio overall price recovery is expected to happen and numbers improve, then we think the samsung price should do even better than it did last quarter. Yvonne everyone is saying it looks like weve seen a bottom, but are we going to see anything similar to what we saw in 2018 . David sure. We were hoping the prices should recover in the Fourth Quarter. , that is know seasonally weak season. So we are expected to see inventory drop and we do expect to see a recovery in prices going into the Fourth Quarter of next year. Know that foldable phone demand might be picking up. Penetration on a global scale is still very low. We will see that number pick up in the future as the u. S. And china aggressively invest into 5g. If that happens we think demand should pick up and therefore numbers start to improve. Upid last year, samsung was 44 already. Isnt the good stuff all already priced into the stock . Yes, i think we should be somewhat nervous. Index is onlyst slightly up. Were looking at costs rising whereas samsung will. Robably only showed 25 upside but we could be worried if we search see most of that recovery we had expected to come through and picking up prices actually happens. But for the time being, i think prices are quite stable. That if youearlier look at the overall corporate payout ratio, it is less than 20 whereas samsung is picking up to 40 . Clearly, there has been an improvement in Corporate Governance, and because of that, we think there is more room for improvement. As we know, samsung is trading at massive discount. David is just flagging to us that samsung stock is close to a record. Do you see more upside . With earnings bottoming out, investors continue to be quite complacent about demand. The expectation of recovery should be in the second half last year. But still, they keep waiting. They think it will come that it would take another two quarters. The possibility they continue to be patient, knowing ,hat without the super cycle they note demands will be there because of 5g. David thank you so much. Research, shes a Senior Analyst covering the sector. Korea with the latest lines. Yvonne this is a tweet from President Trump. Well,ing all is assessment and casualties taking place. He says he is going to make a statement tomorrow morning on iran. There are reports you might have spoken today, but we will have to wait until tomorrow morning. We will talk more to a the quality and speak guest from the Hong Kong Monetary authority about equality in finance. This is a bloomberg. Is bloomberg. David welcome back. Bloomberg equality features forwardlooking conversations with Business Leaders about paving the way to the future. Monica joining me today is clara chan, chief Investment Officer at the Hong Kong Authority to discuss gender diversity in the current investment climate. Thank you for joining us. You have a 5050 gender balance in your team. Why is it so good and port for workplaces . That is a great question. Is not gender diversity something thats only trendy to talk about, but something important. There is atason least half of the population being female, so it is only logical and right for us to have the voices of females heard at the table ranging from politics finance, investment, and industry. Is other angle i can share in my real roland work, i see fromand tangible benefits having diversity and equality in my team. Role, we look at alternative Asset Classes and real estate infrastructure. We look at many different kind of sectors and find out that that are certain sectors female colleagues naturally feel more attached to. For example, there are with ,uxurious brands, and usually female colleagues will become to and upon whether the design of the handbags are good or if this is a brand that will be competitive. Later, el collings will focus on the pricing of management, for example. But this is not wrong. There are cases where we look at, for example, acquisition of companies which own videogames and have sports clubs. Those are cases where male colleagues were attached and commenting on the qualitative. Ize side thatim trying to say is theres nothing wrong about how or areas upbringings of interest. It is just right for us to have different perspectives and voices on the table. More voices allows us to have more of an impact. How so . You know i joined the government before lending. The reason i started their was because i was hoping to help individuals who make mistakes. But gradually, i found at this approach lacked the scale because i can only serve one or two clients. So i switched hoping to contribute to policy formulation. In that approach, i had scale while lacking efficiency. I switched gear again and now im in finance and investment. From the belief that we can choose not only to do the right investment and make returns but to do investment right. By that, i mean for every dollar we make from the portfolio, we are accumulating wealth. And as a responsible, longterm investor, if we incorporate the right standards into our due diligence, you include gender diversity. We are pushing the world to change. And the entrepreneurs and asset owners who want to work with us a gradually eating aware of the need to change that is important. One more quick question and then i want to switch to the current investment climate. Hong kong is facing a number of problems. How is this impacting investment appetite. Clara it is actually a very difficult world. We have been trying very hard in terms of working hard to deliver our best. For this climate. Obviously, there is no onesizefitsall approach, but i would usually use this approach to summarize what we are doing. Which make sure you know geographies and sectors you are investing in. This may different from , buttution to institution make sure you know your blueprint. Make sure you have discipline. Dont be dismayed by the other voices and particulars in the market. We are a longterm portfolio. Tightore, we need to sit and write the cycles. Ride the cycles. Important is the mindset of being dead defensive and diversified. Butter how well you plan, there are things you cannot really expect like brexit. These are the kinds of things you have to have in mind. The last two are peoplerelated. Due diligence and diversity in your liberations deliberations. Thank you so much and congratulations on your dive under on your gender diversity. Back to you. Session theisk on we are off the lows here today with President Trump tweeting all is well. David plenty more ahead. Di a turbulent wednesday almost 10 00 in bangkok. Ivanka we are entering the last hour of the morning session here in hong kong. Is wellt trump says all after iran fires missiles at u. S. Bases in iraq. Tehran insists it does not want war. Slide as investors assess the implications. Japan heads for its biggest fall since march and boeing changes course. It is now keen on simulator trading ahead of the 737 maxs return. Regulators and airlines have been informed. We have plenty more. This is Bloomberg Markets asia. Yvonne we are continuing our coverage on the middle east situation. President trump said all is well, and iran as well has spoken, saying that they do not want this to escalate into an all out confrontation. Off the lows here. Pretty much flat when it comes to gains. We have given up post of the gains when it comes to the session. We are watching, of course, the equity markets. Sawl not as bad as what we a couple of hours ago. Some aggressive as we have seen. We are back below 6330 one for wti. We touched 1600. Could be a better session, relatively speaking for india today. Take a look at what we are seeing. We did see futures start lower, but we did see a bit of a spike in the last couple of minutes or so. Ruby as well. We are giving back some of the losses and seeing some strength coming through to the currency six. 55 atyear yield the get go. We will try to get a little more information on what has been going on on the ground. Back to our top story, though, iran launching what it calls revenge attacks on the u. S. For the killing of its top general with missile launches on two bases that hold u. S. Troops. Our Senior Editor joins us with the latest from singapore. Keep us up to speed. Seems both sides are a little more measured in their response following this attack this morning. Yes, certainly from the iranian side. The foreign minister came out and said that this is sort of a contained strike. It was retaliatory. Iran has notified the United NationsSecurity Council of a similar statement. President trump out on twitter with his first remarks saying exclamation point. He will have a statement in the morning. I dont have to tell you, but that is going to be so incredibly tightly watched to see what is happening. Remember, the last time President Trump was talking about iran, he was talking about if you do anything, there is going to be a major retaliation on our side, and certainly strikes on two military facilities counts as doing anything, but what president is coming in the morning. Markets on because taking an assessment of what has just happened before the president speaks in the morning. That is currently where we are right now. As you see on the screen, President Trumps comments saying all is well, so far, so good, still assessing, statement in the morning. Still assessing. How much clarity we have on the damage . Does it warrant a counterattack from the u. S. . In terms of assessing the damage, i think the biggest thing youre looking for right now, and i say this with a Family Member in the military he is not deployed there, but the biggest thing you are looking for is lives lost. Where u. S. Service members killed, injured . So far, the assessments that weve seen from the pentagon suggest few, if any, u. S. Service members were lost. I think you have to check and see if any coalition members, any other nations that may have had military members on or around those facilities that were targeted, if at have any casualties, what were the iraqi casualties, and the response because lives lost i think is the biggest indicator of what is happening next. Haidi thank you so much for that. A formeron iran, undersecretary for the state department in the Obama Administration joins us on the line, currently the vice chairman of kissinger associates. Good to have you with us. His tweettrump and saying all is well. Iran saying it is not looking for a war. Are we looking at a possible deescalation . I think we are. A couple of hours ago, i was worried that this would escalate, but i think the combination of the fact that it appears as if there are no american casualties is a otherwiselement in an very complicated situation. The foreign minister of iran has indicated that they do not want to take this any further, that they want to deescalate, and then the president s tweet, which also seems very encouraging, that things are not getting worse. If anything, it is a combing statement, rather than an escalatory statement. If the information we have now and the indications we have now hold, then there is a possibility, i think a good one, of deescalation. Presumably, there are also contacts going on through the swiss or some other country to clarify positions on both sides. Haidi is diplomacy at all possible given the both sides have reacted, both sides have launched attacks . I think diplomacy is possible. A type of diplomacy which would enable both sides to sit down at a negotiating table right away, but the diplomacy of the moment really has to be focused on avoiding escalation and moving the situation toward deescalation. The u. S. Has taken actions. The iranians have taken actions, and now perhaps there can be a period of calm, some reflection. I dont think either side really wants a war. The difficulty is sometimes emotions get the best of people and they drift into war as a result of that. But i think the president has made the decision not to go on tv tonight. That is a positive thing, and it means there is an opportunity for reflection, for communication, and probably when he speaks tomorrow, the odds are it will be deescalation. Maybe tough talk about the what the u. S. Could or would do to iran, but not a tough set of actions to back that talk up at this point. Are you surprised by irans attack this morning . A lot of guests we spoke to a we wouldys ago said see more or ls,ess aggressive tactics from iran, proxy attacks or cyberattacks, but this was some type of attack that was focused more on military bases. Does that strike any kind of tone to you on what iran could do next . That is an interesting question. I think the general thinking was that iran would respond but take its time and do it in a way that perhaps could not be attributed to iran directly like actions through cyber, for instance, and i think also, there was a feeling that maybe it would use she militias in other countries to take action on its behalf rather than do it on its own, but this is probably the fact that these Ballistic Missiles were apparently iraq is from iran into symbolic of the fact that iran has demonstrated it has the capability of shooting off Ballistic Missiles, and most experts have known that, and it also demonstrates to the public in iran, which was very supportive of general soleimani, even people who did not like the regime particularly were supportive of soleimani, so i think the iranians wanted to demonstrate to their own people toughhey were taking action, but they also did not want to kill americans because then the probability would be that President Trump would take action. In this respect, they have shown that they can launch Ballistic Missiles. They came very close to these bases but not areas where there were americans, but presumably, from what we know, they did not kill americans but demonstrated two people at home that they had taken tough action and were capable of tough action, so dont mess with us anymore, but without triggering a war, and i think the president of the United States has concluded he is not in a position where he has to respond because americans were not killed. I could be wrong, and tomorrow morning, he could decide he wants to take tougher action, but it seems to me that if you read the tea leaves now, it looks more like deescalation than setting the predicate for more escalation of the moment. Perhaps more deescalation. Does this mean they Iran Nuclear Deal can that be saved in some way . I think that is a scratch at this point. The president has made a very strong point that he opposes the deal. Of reinstituting the kind of negotiations that mr. Zarif and secretary kerry is highly unlikely at this point, so i would not hold my breath about resuming the nuclear conversations, but i do think avoiding a military confrontation is probably the best we will get at this point, and i think at least that will be a positive step forward and maybe open the opportunity to more conversations. Perhaps not directly. Perhaps to the swiss or british or french or others, and maybe setting up the possibility of at of a some conversations somewhat less tense relationship than the kind we have had over the last couple of years anyway, but not moving back to the table on the Nuclear Issue because i dont think that is possible at the moment given this administrations view and the politics in general in this country at this point. Thank you so much for your insight, bob conrad, former understatement unrsecretary for the state department. Lets look at where markets are right now. Joinso of Vp Bank Group us out of singapore. We have seen how markets are paring losses. Perhaps cautious optimism at this stage . I think deescalation is the right word to put in here. Earlier this morning, it did look like that. There was a bit of shock because retaliationke ,purring and escalation spiral and markets take that positively, i guess. Haidi you talk about markets being in a state of shock. Is it enough to revise your 2020 targets, to take into account what we are seeing so far . No, not yet. This was clearly not the best start into the gear. There is a lot of nervousness in markets right now, but at the moment, i think the best guess is it has more of a shortterm impact, a bit of nervousness, but it does not have a longlasting effect on the Global Economy or financial markets. Yvonne what do you do as an investor at this moment . Obviously, equity markets had been on a tear at the end of 2019. Is this an excuse to trim some of your positions, or would you actually be buying on these types of selloffs . I think it is a bit too early to buy. We were in a good position at the beginning of the year. I think what this episode shows political risks are still present, and it is important for investors to prepare for that. That, usually it is a good thing to do to diversify your portfolio very well. So you are staying defensive right now, underweight equities. What would make you change your mind at the moment . Everyone talking about earnings projections. That could suggest things are on the rebound when it comes to fundamentals. Are you seeing any signs of that . Yeah, we see signs the this is slowdown, that bottoming out. Economic leading indicators, sentiment indicators had positive signs, both for the economy and financial markets. If we get a bit more confidence and support, it could be a good time to buy. On the political side, if you trade dealse one and between beijing and washington being signed next week, this would also be another positive sign. About beingalk overweight gold. How much gold do you hold, and is gold the best hedge . I think old is a very good hedge in this environment where Interest Rates are low. We have added 5 gold to our portfolio. Yvonne thank you so much for joining us out of singapore. Lets get to first word news. Su we got su keenan in new yorksu . Star hasbably would joined protesters on a Prominent University in new delhi just two days after masked attackers beat students and teachers on the campus. The actora said the spoke to students at the rally, which comes amid simmering anger at Narendra Modis a new religionbased citizenship law. Budgetle, indonesias deficit widens to 2. 2 of gdp last year as spending rose more quickly than revenue. The final figure is lather larger than the initial forecast of 1. 84 but below the number the finance minister offered last month. Finally, the effects of the brush fires in australia are being felt around the world. Blaze has been seen in the skies above buenos aires, about 12,000 kilometers away from sydney. The fire has killed 21 people and up to one billion animals. The fires are so large they are generating their own weather systems, causing lightning strikes that in turn generate more blazes. Im su keenan. This is bloomberg. Thank you so much for that. Still ahead, strong reaction from oil and gold after the iran strike. I strategist joins us for more analysis later. Turn oneings big new pilot training. Maker ish the plane now recommending. This is bloomberg. Boeing has performed a late uturn and is recommending pilots undertake Simulator Training before the 737 max returns to service. The plane maker had previously argued for computerbased instruction only. This is something boeing resistive for some time. Why the change . Youre right. This is a big selling point. It meant you would not have to pilots would not have to go through simulator trading. They could do it on an ipad over an hour. That was a big selling point. There were some tests conducted in december. Obviously, boeing has had a lot of trouble with the two tragedies, and they want to ensure customers that there were some tests in december, and it turned out some of the pilots and the simulators were not following the right emergency procedures. They were relying on their own flying skill. It became clear they needed to face more simulator trading Simulator Training. Haidi what impact will this have on airlines . Obviously, the rollout for ungrounding of this plane has been delayed. They will have to now train of all their pilots on these simulators, which they might have done anyway regardless of boeings recommendation and the faa still has final say over , butboeing recommends there are only 34 of these max simulators around, so you have to take pilots off their rotation for scheduling. Getting paid and if they are in Simulator Training, they are not flying, so that will be a difficult issue for airlines to try to rebalance. Heir schedules a new challenge for airlines. Thank you for that. This is bloomberg. Yvonne a quick check of the latest business flash headlines. Samsung Quarterly EarningsBeat Estimates after memory chip prices began to climb out of a rut. Operating income well operating income fell, but it was better than expected. Easy inboosted by the trade tensions between the u. S. And china. Travel is said to be under attack from hackers and has been forced to suspend operations in at least 30 countries. The bbc says a gang has admitted is behind the attack and is demanding a ransom of 6 million. A group also known as rebel tried to hack into the system six month ago and seized five gigabytes of data. United airlines is taking a 90 billion noncash charge to account for a steep drop in demand. United says the cost is due to. Lumping seat sales when it comes to rhetoric between the u. S. And iran, things have taken a bit of a step back, and it looks like iran is saying they do not want to escalate things to a full out war. President trump saying all is well here, so at this point, you take a look at markets, after the Positive Side when it comes to ema future and Dow Jones Futures as well heading higher and you look at oil heading in the opposite direction. W t i also in that similar pattern. Watching what is going on in the india session, that is certainly something to watch. They are the most vulnerable to any kind of spike. Higher asres a touch we speak. Plenty more to come. We will watch what goes on when it comes to all the moves we are seeing in the market. Still a risk obsession, but better than the last couple of hours. Plenty more coming up. 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. Yvonne want to bring you some breaking lines, more on iran here, a boeing 737 jet has crashed in iran according to the Iranian Student News Agency isna , saying this was due to a technical issue, but, yes, that iran after into takeoff. Erhaps not 737 maxis want to stress this is a 737 jet. We will have plenty more coming up once we learn more on the situation. Thewe are going to go to u. S. Now where President Trump well as thel is damage is assessed from a series on a rainy and rocket attacks. In a letter to the United NationsSecurity Council, iran says it is not seeking a war. Attack was to avenge americas killing of senior general Qassem Soleimani last week. Meanwhile, spains Fragile Coalition government says it will make the bank pay. Picture minutes to edge back into office for a second term and has to find a budget for 2020 including higher taxes for lenders. Recouping some of the euros he spent bailing out the financial crisis. The imf is preparing to leave athens for good. The imf led the efforts to save greece from record debt. The record bailout brought years of austerity, which caused widespread job losses and anger. Troubled nissan boss carlos ghosn says the investigation that led to his ouster was in his words never about finding the truth. He is expected to hold a News Conference letter promising to name the people he says engineered a coup to destroy him. Pressure,ing a issuing an arrest warrant for his wife. Prosecutors accused her of lying under oath last year. Global news 24 hours a day on air and on quicktake by bloomberg. Im su keenan. This is bloomberg. As weve been talking about, we are off session lows, but still plenty of red on the screen this morning. We are still lower by 1. 3 percent, but we were falling as much as 2 earlier. Hang seng also down close to 200 points here. Samsung has been a bit of an outperform or after earnings deed beat expectations onchip recovery. Many had been pricing and an sydni also looking a little better, lower by about. 3 . It is all about india, though, in the next hour or this hour, i should say, and things are looking slightly better. Bit,ve pared back quite a and the weakness in the rupee is still going to be a focus, given that oil prices, we have eased off on the spike, but we are still elevated and the india 10year yield 6. 58. For more on the latest development in the middle east, lets bring in the senior commodities analyst from daniel heinz. Continue to beil on the upside. What are you making of the risk premiums . I think that is the real key here. We were definitely surprised following the attacks last year and how that risk premium really evaporated pretty quickly after such a significant disruption, and that comes against what we thought was a pretty high risk backdrop. Plenty of issues bubbling in the background, but considering, i suppose, the issues around the trade war, this is unsettling. Now that that has sort of eased and we are seeing that phase one trade deal, that focus has returned to fundamentals, and that is clearly what the market is trading on at the moment. This issue just brings back to focus some of the things that have been bubbling away in the background. I think that risk premium that , whenked about last year it was around 10 a barrel, is likely to come back into place, and i suspect that is being developed and we see the implications of this latest issue in the middle east, and i suspect we will continue to see that type of premium placed on oil prices. Haidi is it too early to be talking about the potential closure of the straits of hormuz, which could potentially disrupt Global Oil Supply . I mean that is one of the possibilities at the moment, but certainly, you know, i think the risks of that occurring are relatively low. They were higher last year when we actually saw attacks on tankers there. For me, it is more the risks and,d iraq itself obviously, some of the other actors within the industry in particular. Ifhink for a rat, certainly, the conflict does widen within the country, then we have a significant issue. It is the secondbiggest opec producer, and certainly the u. S. Its own emboldened by supply to react to disruptions within the middle east, so that does raise, i suppose, the possibility of disruptions in that country. Probablyela, it emboldens the maduro government with the u. S. Focused more on the middle east and we are likely to see ongoing issues as the venezuelan industry really impacting output. There are so many implications i think the risks to ongoing disruptions in the industry are very high. s focuses a lot on the potential supply risk. Members and that opec or not opec, do they have the potential to offset the potential disruption in supply . Suppose that is the sort of wildcard. Saudi arabia and the rest of the producers have agreed to that Production Cut late last year and im sure have these issues in mind. They certainly have the ability to boost output relatively quickly. Certainly saudi arabia has. Also, the market is torn between the implications of that, but clearly in the shorterterm, the disruption would still have a pretty sizable impact on supplies. For us, it means that we will continue to see these spikes in of the market replay that geopolitical risk premium on the market, but i think for me, any anything significantly above startd70s would really i think being slightly overvalued considering the longerterm sort of implications output from rising saudi or even u. S. Yvonne you mentioned the u. S. Because it seems like that could be the potential buffer. Im sure many are ready to step in given this potential price spike. How much of that put the cap on how high crude prices could go . Is certainly banded around as a bit of a buffer, but from the growth wee, have seen last year we believe is behind the industry now and 2020 does represent a bit of a stagnant period as producers come up against a lot of bottlenecks within the industry, but more so around, you know, financial or economic considerations. Clearly, there will be a point where producers will see the increasing you know, production or drilling activity and boosting output, and i think for the moment, you know, 70 a barrel probably is not quite there yet, but certainly, when pushed into the high 70s, you would see a reaction from the ministry. Obviously, gold is pretty much in play. The question is how much silver . Plenty to jump, right . Yeah. Clearly, silver tends to track the path of gold, but think these periods, you find that it tends to outperform as a consequence. Investors are looking for that us, weafety, and for still place our stocks in the gold market considering the longterm safe haven status it holds, and clearly, you know, the driver of the Precious Metals sector. Could we break above 1600 and stay there . Absolutely. We feel the conditions are quite amenable to further upside in gold. Gold valuation models suggest spike weve seen over the past ,ew days is slightly overdone but in saying that, i think the geopolitical risk premium we are seeing come back into the market is quite strong. If these types of tensions remain, i suspect we will see much higher prices from here. Thank you so much for joining us. Thatng the latest lines on jet crash in iran according to the Iranian Student News Agency, saying that crash happened after take off. They also said this was due to a technical issue and some more lines coming through saying that had 180h ukrainian jet seven passengers and crew. No word yet on the conditions of these passengers and crew, but we will keep you up to speed once we do get more information. Lets get to india now. Economy is on track for its lowest growth since 2013 according to the statistics department. Gdp will grow 5 in the year through march. Lets find out what is weighing on growth in the indian economy. Tell us more about this number we got from the government. How long is the slowdown expected to last . It is not good news, thats for sure. The shadow bank crisis is casting a long shadow on the indian economy. Statistics areal showing, that the Manufacturing Sector will probably grow at levels faster than the Agricultural Sector while the Services Sector will probably hold, but the big thing is the the key takeaway is that the government is expecting private consumption to revive and push growth to around 5 . Some economists say that as optimistic given that there is a bit of a gloom and doom scenario right now in india. The other part, oil higher. Oil prices will probably cut into disposable income and push that consumption recovery the government is banking on. There is a sense out there the r. B. I. Has done everything it can to help prop up growth. What can policymakers do to revise the economy . That is a very good question. All eyes are on the budget. You have to give it to the Narendra Modi government, that they have been trying to do things here. They Just Announced a 5 trillion push to infrastructure. They have given a 20 billion dollar giveaway to corporate. The key question or the key push economists are looking for is putting cash into the hands of citizens so that there is a little bit of demand push coming into the economy. That is going to be very important because what far,mists are saying is so the government has not taken care of supplyside economics, and the demand side is still not being taken care of, and that is what the budget will probably look at. The room is very limited, but i think what we are given to understand is that the government has to give a big push to the economy to get it to the 6 or 7 growth that it wants. Thank you for joining us. Futures down 100 points. This is bloomberg. Haidi asia paring losses on a risk off day. Lets get to india. Indian markets have just open. Take us through what to expect from todays session. Good morning. It is risk off trade even for indian equities. That is what the opening suggests. It is a countdown opening, even as we indicated, even on nfte futures. We have reached a psychological mark, trading down 100 points. The bank has been underperforming the last few sessions. In fact approaching its simple 100day moving average. The Broader Market index has also seen cuts of about 1 . The indian rupee is back above the market, and that has precisely to do with the rising oil prices, india being a net importer. That will have an import impact on the current account deficit. Haidi apart from those Energy Related stocks, what other stocks are you watching . Companies have been indicating they have been increasing prices. Weve seen prices going up for the Third Straight month. This morning, we had a note. Oming from hsbc they also expect realizations for the Third Quarter to fall about 20 on a year on year positive onhey are long producers. They have upgraded steel to hold , and the reaction for majority of stocks this morning has been on the downside owing to geopolitical factors, middle east tensions weighing on indian equities across the board. Back to you guys. Yvonne thank you for joining us. Risk obsession in india today following the rest of the region. We are looking out for one thing as well today carlos ghosn set to give his first News Conference in iran since his escape from japan. He says he will be naming names including officials and government. All,him set to bear japanese employers and his former employer nissan are readying to battle. Tokyo issued an arrest warrant for his wife carol, with prosecutors accusing her of lying under oath last year. Carlos ghosn issued a statement countering nissans claim. Lets get to our reporter. What are we looking out for most in this tell all . Nissan does have some things to lose as carlos ghosn tells the public and the media about what he faced while he was in japan. He is expected to say that nissans internal probe was fair ford not at all carlos ghosn. Meanwhile, nissan issued a statement monday saying their internal probe found he was guilty of misconduct, underreporting his income, and misusing Company Funds while he was at his post at nissan as chairman, so we will see, but nissan definitely has some things to lose as carlos ghosn gets ready to go in front of the microphone, in front of the cameras later today. Haidi some japanese ceos have voiced concerns about the japanese legal system in the wake of Carlos Ghosns escape. What are we hearing and what is being done to address that . Carlos ghosn is slamming japans legal system, calling it rigged and unfair. Japanese officials have come out, not making superstrong statements, not very often, but when they do, they say it is fair and that they will continue to prosecute carlos ghosn, despite his escape from japan. Remember, lebanon and japan do not have next tradition treaty, so it may be hard for japan to get carlos back into the country. We were just talking to some japanese ceos in light of this whole saga. Lets listen to what they had to say. The weakness of japans legal system has been exposed. This should not be taken as diplomatic issue. It should be dealt with in the legal system. I feel so much regret that he avoiding hisan, argument against our judicial system, legal system. Argue againsto japanese authority, so i think we have to adjust the judicial system to some extent. So we have obsolete, to look around at global standards. Maybe some change to the legal system. Do you think that the government will listen . We will see. Japan has been trying to get anything they can from carlos ghosn to get him back into the country. They have issued the arrest warrant for his wife, carol. Interpol redd this notice on carlos ghosn after his escape, and the cabinet secretary has said most recently that he hoped for cooperation with lebanon when it comes to this case with carlos ghosn. Haidi we know there is no extradition law, but some are saying there could still be an extradition of carlos ghosn. What are we hearing on that . Government officials definitely want him back. They are saying they will do whatever they can. The Justice Minister talked on monday saying, you know, there is no official treaty, official agreement between the two countries, but there could be some sort of agreement if she worked with lebanon, so they could come away with something, maybe, hopefully, to get carlos ghosn back in the country and face trial. Thank you so much for that. It is a risk off day and we are getting headlines from Malaysia Airlines now saying it will avoid iranian airspace due to the conflict. It does not fly over iraqi space. More to come. This is bloomberg. Yvonne boeing is doing a uturn and now recommending Flight Simulator training for the 737 max, reversing its earlier opposition to the idea and potentially complicating the planes return to service. It is exploring how to modify simulators in an older 737 model because of a shortage of uptodate equipment. Tesla shares extended their record run in elon musk was so ecstatic about the prospect for his new factory in shanghai he broke into a dance routine. He attended a ceremony to hand over chinabased modelthree model three cars to local customers. Late has surged since october when it reported a profit and so the model y will launch this summer months ahead of schedule. Hedge funds staged a recovery in 2019, but it still was not a year to celebrate. The industry returned 9 gains after posting a loss in 2018. Those gains were far off with data showing 2019 investor outflows of funds more than doubling from a year earlier and the industry continuing to record more closures than launches for a fifth straight year. Final check of the markets, things easing off a bit when it comes to some of the risk off moves. We are still seeing some red when it comes to u. S. Futures. We are down about. 20 5 . Dow jones down 152 points. Asian stocks also off their lows, but still lower by. 6 . A look at that, quite a different story over the last couple of hours. That whipsaw pretty much flat on the chinese currency as well. Sides, more measured following that attack this morning. President trump saying all is well, iran saying they dont want to escalate this into a full out confrontation, so certainly thingsy things lookina her witht, cal brent at 65 things looking a calmer. It this is bloomberg daybreak middle east. Our top stories this morning over baghdad. Around fires a series of rockets at two u. S. Iraqi airbases in the First Response to the killing of general custom soleimani. Investors are would last as they reassess middle east risk. Tops 1600and gold an ounce. We will have all the latest arc it news. Carlos ghosn is promising to name the people he says engineered a coup to destroy him. We are live in