Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

Shery President Trumps impeachment moves forward. The house formally notifies the senate but a trial could begin tuesday. Lots of headlines to digest today. Australian markets have just opened. How are they reacting . Sophie investors probably liking to play defensive today. Nudging slightly higher belittle change as it is looking to crack the 7000 level. Futures looking elsewhere just nudged slightly higher at the start of cash trade. Youre keeping an eye on resource stocks. We had would side an update. The Energy Player expecting growth on energy and liquid production and aluminum minors in view as well. Deal isng the new trade the best catalyst for demand. Lets address the board to check in on currencies. We are seeing steady currency markets just below 110. Trading near a july high. Dollar not budging much. Bond moves to the upside. 10 year yield on the upside. Back to the aussie dollar, i just want to highlight the snapshot. It is unlikely that they will be shifting their position on the currency as it is trading near 69. It has been on the back foot since the trade war erected. That would hurt australian up australian imports. China has pledged to buy more American Goods. Expecting the aussie dollar to slide 5 this year. Shery lets stay on the trade deal. After putting pen to paper, President Trump claimed that this will have a significant impact. China has made substantial and enforceable commitments regarding the protection of american ideas, trade secrets, patents and trademarks. China has also pledged firm action to confront pirated and counterfeit goods, which is a big problem for many people in the room. Shery joining us to discuss his u. S. Chamber of commerce senior a of asia, charles freeman, former trade negotiator with china. Great to have you. What part of this phase i trade deal does your chamber like best . Charles we like the fact that it exists most of all. We have needed to put a floor under the relationship for some pointand getting to this and getting real tangible agreements in place is critical. We are delighted and look forward to phase two. Shery how much significance will this trade deal have if it is not followed by a phase two, especially given the state subsidies not being addressed . Anna normas is the complex relationship, and a very rent a very different political environment they on the United States. There are lots of challenges to get. We have to give credit where credit is due. Theynk they came together, got a really good effort letser, so i think celebrate while we can and we will regroup and move on. Haidi are you optimistic about compliance and enforceability . Charles i know that the enforcement tools are there, and i believe that both sides are sincere in their willingness and desire to get it done. This is one of those agreements where both sides could actually agree to do these things and get them done. This is not a case where china is not able to comply with the terms it has agreed to and it is not a case where the United States is not going to comply with its side. I think with the best of intentions, we can bank this and hope that it goes forward and we can begin the hard work of negotiating on subsidies. Our previous guest from the asia society was lamenting a pretty dark day for the wto in terms of its relevance and mandate going forward. Is this a real win for proponents of managed trade as opposed to freetrade . Charles in the best of all possible worlds, we would be having to negotiate specific Market Access openings based on the market and not based on precise purchase numbers. Lets be honest. The bulk of purchases in china, the goods we are talking about are by a state owned enterprise. Specifically that are not operated according to the market. I think we have to recognize that fact. Chamber stands for the principles of the market, and i think as we look forward to phase two and beyond, those are the challenges that are really going to be coming up. Ery we still have tariffs coming up, as this chart shows. 360 billion of chinese imports facing 25 tariffs and 7. 5 tariffs. How does that affect your members . Charles our members have been deeply affected by the tariffs and i think certainly we are delighted that some of the tariffs have been rolled back and the tariffs on 120 billion that was supposed to go in effect on the 15th did not go into effect. There are a lot of challenges ahead. I understand that part of that is negotiating leverage, but as we have said since the beginning, the United States consumers and businesses are paying the tariffs and we will continue to hurt as long as they are in place. Shery the president seems to define success in these trade negotiations focused on lowering the trade deficit. That seems to be key for the president. What constitutes success for the u. S. Chamber of commerce . Charles well, if you go back and look at the original 301 report that kick this thing off, where there was focus on technology transfer, forced technology transfer, intellectual property challenges and the like, these are the things that ultimately are at the heart of our relationship and at the heart of our concern with doing business in china. , getting toe clear we havere we are effectively put that floor under the relationship is a critical first step. I dont want to take anything away from the administration or the chinese side. Haidi is there enough in this trade deal to restore confidence among your members when it comes to making this an Investment Decision . Charles we all need some good news. This is certainly good news. There are other things happening in the relationship, in the global economy. The uncertainty that has been caused in significant part by having some floor put under that relationship should establish some modicum of confidence that we can get back on track. I certainly hope so. There is more work to do. How much uncertainty or anxiety among membership going into this Election Year . Without it ha been regard to election, the last couple years, there has been enough uncertainty to get our membership because if they have thought about Investment Decisions. I am not sure i am prepared to comment on how the election impacts our membership in terms of Investment Decisions but i certainly think getting the usmca done, getting this deal done, getting some good work end of the legislative calendar and last year is a really good sign. Great to have you. U. S. Chamber of commerce Senior Vice President for asia. We will have more details on the trade deal signing and trade relations later on bloomberg. We will be speaking to the eu chamber of commerce in china president and Fulbright University vietnam associate professor. We will be getting you caught up with the first word news. AnPresident Trump will face impeachment trial in the senate next tuesday after the house of representatives formally launched proceedings. Nancy pelosi signed documents detailing the charges against the president and the house members who will prosecute the case. The economy grew at a modest pace at the end of last year while a decline in manufacturing belies the tight market. Layoffs in a number of areas, especially transportation and energy. It also shows inflation continues at a modest pace indicating no imminent moves. And a new warning that hong kong is heading for a banking crisis. Capital founder has been shorting the local dollar and says they are facing a similar situation to those in iceland and ireland one decade ago. He points to recession and collapsing retail sales after unrest and told bloomberg there is worse to come. You are going to see a fullscale banking crisis because you have got such a tightly wound economy in a stage of reform of freefall. The head of the European Commission says officials are ready to work as fast as possible on a brexit deal with eight months available for negotiations. Adding the brexit extension would be the choice of the u. K. She says Border Controls following the split will be overseen by the eu. Global news 24 hours a day on the air and at quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery think you. It still ahead, speaking to hsbc deeper ond to dive the trade deal for the dollar and the yuan. Haidi coming up next, more analysis as the u. S. House sets the impeachment trial of President Trump in motion. If this is bloomberg. Haidi we are taking a look at early trading here in sydney. Seeing record highs for u. S. Stocks and other intraday record highs, the sixth consecutive session with a signing of the phase i trade deal between the u. S. And china. Seeing new highs in sydney trading. The s p 200 crossing 7000 here. Up by 6 10 of 1 . Little bit of upside we are still under 70 u. S. Cents. Morentinue to get markets than expected but still a positive signal for the trade deal. Elsewhere in the u. S. , Mitch Mcconnell has announced that each might trial for President Trump will begin tuesday after the house formally set in process set in motion a process over the last hour. Our editor joins us from d. C. Talk us through what happens from here and the significance knowing that we are almost certainly going to get an acquittal. Joe right. There are a number of steps they have to go through. The trial process itself kicks as just a little while ago house impeachment managers and prosecutors walked over with the articles of impeachment to the senate side. They will be accepted tomorrow and the senate will go about taking a number of steps, chief Justice John Roberts swearing in jurors, sending a summons to the white house for trumps appearance or rather his defense counsels appearance and also setting up the rules for the trial. Battles been a major between democrats and republicans in the senate. Mitch mcconnell, the majority leader has not acquiesced to the demands by democrats. He guaranteed that there will be other witnesses called during the trial, but they will be able to get votes on whether to call witnesses later on, probably in about two weeks after the house impeachment managers and terms defense counsel make their cases and senators have questions answered. It is not entirely clear that there will be senators who would vote for calling additional witnesses, but four of them have said they are open to the idea. It could be that we do see some witnesses. If that is the case, things will extend further, probably another three or four weeks, bringing it well past the state of the union andess, Iowa Caucuses perhaps New Hampshire primary as well. Once they get to that point, they will also be taking a vote on whether or not to acquit the president or proceed ahead with more witnesses. It is all but certain that if the president is acquitted, there are 67 votes required for conviction and there are not that many votes among republicans in the senate. Hearing from now secretary mnuchin saying that the white house is not particularly concerned on impeachment. He has already said that there 5070 basis point growth increase in the u. S. Economy due to the u. S. China trade deal, not to mention the usmca. When we are headed toward a president ial election, how will these two factors weigh in . Undoubtedly, the impeachment will be the top issue. Theas drawn attention from public. Voters are split on whether the president should be impeached. Theyority have said that view that what he did with ukraine was wrong but ultimately votes based on their pocketbooks, whether the trade usmcaith china in the ,reates accelerated growth which most analysts have said they dont expect to see, but the fact that those deals are done, they removed some headwinds from the economy, that is going to be a net positive for the president and it is clear that he is ready, willing and able to go through with these other things even with impeachment hanging over him. Shery thank you so much with the latest from washington, d. C. Coming up next, wall streets biggest bond trading desk continues to post spectacular results. We dive into the results. This is bloomberg. Haidi this is bloomberg daybreak asia i am haidi stroudwatts in sydney. Shery i am shery ahn in new york. Wall streets biggest trading desk continues to pull strong results. Goldman sachs and bank of america surged past expectations for fixed income trading in the Fourth Quarter. Goldmans comeback was marred by the ongoing scandal in malaysia. Didfinance reporter, what you learn about the scandal hurting goldman . What we learned today is that goldman set aside 1 billion to deal with the upcoming settlement theyre hoping to achieve with authorities. Goldman has said they are going to try to bring this matter to a close as soon as possible. Theyre working with authorities and have undergone a period of reflection. That is the major take away. That charge really undermined the rest of the earnings. We had that legal charge overshadowing a comeback quarter. What about fixed income . Lananh the fixed income story is spectacular on wall street. We have seen a 63 increase in trading at goldman, which is a massive number. That follows hot on the heels of some other investment banks across the street as well. On top of that, goldman did well on equity investments. It made almost 2 billion on those and exited its position in uber. A few highlights that were overshadowed by this legal charge. Shery lets turn to Morgan Stanley, the last of the big u. S. Banks, whether it is a high bar. What should we expect . Lananh definitely a high bar. Everyone is going to be looking at trading to see if Morgan Stanley was able to compete with its peers. On top of that, we also see Wealth Management as important for Morgan Stanley. Bank of America Today has a big Wealth Management business. It has said that fullyear client balances reached 3 trillion. Were going to have to see whether Morgan Stanley can boost its client balances. Shery what have we learned so far when it comes to the health of the American Consumer for Consumer Lending . Is there anything new about the American Economy we have gauged from these results . Lananh the ceo, even with all the uncertainty, is really talked up the u. S. Economy. They have said the economy is strong, consumers are bullish and spending money. What is interesting is some of the uncertainty around trade and geopolitics has eased, so we mentioned on the call this week. We do have a sore spot with bank of america with consumer business starting to show signs of weakness. Much forank you so joining us. Our finance reporter. Its get you a quick check on the business flash headlines. Blackrock is top of the heap. It solidified its standing as they Worlds Largest Asset Management in the Fourth Quarter hitting a record 7. 4 chili and dollars in assets and expanding its dominance. Bolstered by Investor Confidence and a surging stock market. Inflows surged past 400 billion. Shery investing almost foreign should Million Dollars in a flying taxi startup. The californiabased company has attracted previous funding from a range of names including intel capital and is the best funded of a fast growing network of flying taxi ventures. It can fly for 100 miles on a single charge up to 200 Miles Per Hour and carriers for passengers plus a pilot. Chinese electric car maker has confirmed it is in funding talks after a report of potential investors it is discussing financial and strategic opportunities but insists there was no definitive agreement. An earlier report says wenzhou auto was pumping millions into the company. Shery target humbled after missing expectations on the Holiday Season and slashing sales output. Sent a warning for the entire Retail Sector that tough times may lie ahead. Inparable sales rose 1. 4 november and december, far less than last years 6 growth. The lackluster report follows weak results from jcpenney and kohls. Haidi coming up next, dallas fed president says tensions between the u. S. And china will remain. We look at more highlights in our exclusive interview ahead. This is bloomberg. It is a beautiful evening in washington, d. C. Youre looking at capital health. Just capital hill. Receivedents ago, we word of the articles of impeachment delivered to the senate. Those proceedings start tuesday next week. U. S. Futures higher at the moment. Treasury secretary Stephen Mnuchin says huawei is not included in the phase one trade deal and will be handled separately as a National Security issue. The Chinese Company is still facing the Cold Shoulder in the u. S. With white house economic aid larry kudlow saying it cannot be part of the 5g rollout. The director of huaweis Congressional Affairs says there is no need for concern. Huaweis mission is to connect the world. The issues enumerated by the u. S. Government about huawei get to basic issues about trust and security. The goals for huawei and the u. S. Government are the same. We provide robust and secure networks. We share the same goal. The dialogue needs to center on how to get there most effectively, to the benefit of global consumers, but specifically in the United States. Medvedev has been replaced by a lowprofile technocrat. Putin is constitutionally bound to step down in 2024, but he may take another role. Police are considering blocking access to more towns near a volcano in the philippines to prevent residents from returning home. Experts say an explosion eruption could return at any time. Thousands have refused to leave their homes, or driftedsatellitr lake has drained, and new cracks have appeared. An increasing number of australians say they are concerned about Climate Change as the bushfires rage on. At least four in five people and to be worried, a rise from a survey in july. There are concerns that smoke from the bushfires may affect next weeks Australian Open tennis. 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. Haidi the president of the dallas fed says trade tensions between the u. S. And china will linger for years. Robert kaplan spoke exclusively to bloomberg about his expectations for growth. If anything, my estimates for 2020 have firmed a bit. Setting aside some unpredictable event, i still think Global Growth will be sluggish, but stabilize. Manufacturing growth will be sluggish, but stabilize. Business investment will be dragged down by energy spending, then will stabilize. Combine those with a strong consumer i think we will have a solid year next year. My confidence might be improving. Consumers are fairly confident at this point. The scare of last summer is in the Rearview Mirror . To put it in a different way, there may be months where the but the pulls back, capacity of the consumer is solid. Balance sheets are in better shape. The job market is pretty tight. The consumer has the ability to spend. Over time, i think they will. The president is signing the phase one trade agreement with china today. What are ceos in your district telling you about that impact . It is positive. It creates stability. It doesnt remove trade issues. We will have trade issues with china for years. A phase one deal is much better than the alternative, which would have been continue the september tariffs in place and escalating tariffs. It is not that the deal itself for businesses i talked to is significant, but the stability is significant. You combine that usmca being ratified. It doesnt remove trade issues, but it creates a little bit more predictability and stability. That is positive. Should we see more business spending, then . Not necessarily. On balance, anything that helps reduce uncertainty will help business spending. I think it will get a little bit more stable this year. You offset that with a big part of business spending being energy. We think energy capx in 2020 could be down as much as 15 to 20 . On balance, all things being equal, less trade uncertainty will help that. The fracking industry has gotten more productive. As we see the decline in Energy Infrastructure spending, do we see some job losses . We have seen some job losses. You are right. The industry is more productive, can do more per rig with fewer workers, but all things being equal, job growth in the Energy Sector is going to be very sluggish. Haidi dallas fed president Robert Kaplan speaking exclusively with bloomberg. Lets turn back to sophie and hong kong. Enthusiasm for the trade one sick phase one trade deal. The sydni sharemarket gaining ground. Rising. Easing boosted their boe bets. We do have it on course for a second weekly loss. U. S. Retail sales are due later this thursday. The offshore yuan not budging much as the trade deal signed. Currencies,eal on not much new. Sticking to a 6. 85 forecast. We do have onshore options traders anticipating more yuan withess given the risks the next talks and u. S. President ial election. Avoidsgreement competitive devaluations, but currency watchers mostly unimpressed. Lets take a look at what this means for the dollar and yuan. Global strategy, david bloom, joins us. Investors were unimpressed because this isnt outdated is an outdated story. I want to throw up this chart to yuan. E runup in the the highest in july since the signing of the phase one trade deal. Going forward, are the drivers in terms of influence going to be sustainable for the chinese currency if you consider we may not get a phase two deal this year . Lets be frank, the problem is not the renminbi. The renminbi is a sideshow in all of this. The u. S. Is looking for a political solution. Tears, but inu to 1985, the u. S. Had a similar problem with japan. They had a problem with japan. To solve the problem by changing the value of the currency. S, theyd not do tariff changed the value of the dollar. It failed. The u. S. Has a different country and is looking for a different solution. Sideshow to all of this. Dontre saying, look, move the currency around, lets see if the trade deal works. It could move up or down 2 , but we should seek stability and the renminbi see stability in the renminbi when the deal is signed. You could never bore us with your opinions. Last time we spoke, you said the dollar was like a bad hotel. What about 2020 . David the reason i said it is a bad hotel is because there is lots wrong with it and you get ready to leave, but when you get outside, there is garbage everywhere, so you get back inside the hotel. You showed this chart of 10 year yields at 117. Foreign ownership of australian bonds has plummeted. This is the problem. If you want to make me buy some market that is not the most liquid instrument in the world and you are going to pay me less, why would i buy that . It is a highyielder with the most liquidity and the safest. It is beautiful. Everyone is saying the dollar is going down. I cant see it. If you are seeing the dollar gaining ground, what does it mean for gold . Could inverse correlation break that inverse correlation break if we see more financial strains in 2020 . David it is breaking already. Everyone is doing the barbell strategy with one weight on one side and one on the other. What if everything goes wrong . Let me own gold. This is the strategy we are seeing in the market. The rand is doing quite well, which shouldnt, in our eyes. You are seeing high yields, so people must be buying them. It seems to be the markets playing this barbell strategy. I think you could see a stronger dollar with higher prices. Absolutely. How much of this will be helped by the u. S. China trade deal . Secretary mnuchin saying we will see Economic Growth in the u. S. Of 50 to 75 basis points more because of the trade deal. David who is saying that . Treasury secretary mnuchin saying that. [laughter] i dont know where he is getting the numbers from. David there is a difference between having to actually forecast it and being a political representative of a country. I have not seen anyone changing their forecast. Everyone has Slower Growth in the United States, eurozone, china. Everyone has Slower Growthin Slower Growth in 2020 than 2019. All of the big boys have Slower Growth going into 2020. That is the consensus. We are going to get more politics. Are you saying, when it comes to sterling, the influence of politics will be less influential this year . Will we see cyclical factors . Leadrk carney going to with the swansong of easing this month . David it is possible he could cut rates. Economists are looking for rate cuts. The Political Risk has diminished. The risk was very negative for sterling. We have taken one negative factor and chucked it away. We think the court risk has gone down. The Political Risk has gone down. Did you see the numbers from europe the other day . Did you see the german gdp numbers . They have been awful for 15 months. There is no sign of a pickup in europe. The beautiful thing about sterling is it is cheap and it is good. If you are looking for the alternative to move outside of the bad hotel, there is one across the road called sterling, and we think it is great. What about this part of the world . How do you feel about the aussie . David you just showed me a chart of australian you at yields at 117. Why would i buy something in australia with Australian Dollar risk with it being a much less liquid currency and earning less than my bonds in the United States . We have seen ownership of australian bonds falls. The currency has fallen a long way, and we dont expect it to recover much. An economist and currency strategist in australia has had a brilliant call, down to 68. We think it can hang around there. Kiwi, very similar story. You have yields less than the United States. Why would you want to buy them . Foreign ownership of their bond market has fallen. If you start offering the less than the market dollar offers me, the currency goes down. I dont know why anyone has the weaker dollar. It is the third year in a row they are going to fail. They got egg on their face last year, the year before, and now they are going for the triple egg. Whether it is the aussie or the kiwi, where are we seeing Currency Pairs that have priced in a more optimistic forecast for the u. S. China trade deal . What opportunities can you find there . David people are looking at risk assets. The fed has been increasing its Balance Sheet. Japan is doing a fiscal package. China cuts its rrr rate. People are edging towards em bonds. We can understand that. Bond yields are going down in emerging markets. They are not buying growth. They are buying bonds in emerging markets. Once those yields come down a long way, what will happen is you will wind up like australia and new zealand. You have developed market yields, but emergingmarket risks. That is after the great rally we will see in em. We could see at some point later this year or next year suddenly you are yields are just too low for the risk involved. David bloom, you are sticking around. We want to talk about the japanese yen, because we have japan releasing machine orders in a few moments. This is bloomberg. Lets get you a quick check of the latest business headlines. Initial investigations into the jumping of jet fuel near a school in los angeles says the crew failed to notify air traffic controllers. The faa says there is a legal requirement, but it is common practice not a claim can be renegotiated that a plane can be renegotiated to an area. Itsalaysian Airlines Says upcoming deliveries of the boeing 737 max to become the first Southeast Asian carrier to carry it since march. They say it is unclear when the max will return to service. As qatare not as bad airways. Its ceo says losses for this fiscal year will only be have of what the carrier be half of what the carrier budgeted for. Qatar has been grappling with higher fuel costs and the saudi led quotas across the region. Ceo says he aims for profitability in the next two years. Breaking numbers out of japan. We are getting core machine orders for the month of november surging 18 . That is a huge beat, because the expectation was for growth of 3 monthtomonth. This coming after four months of contraction. That is big. We were expecting the number to be higher because there was some reconstruction efforts, but bear in mind demand has been weak. Orders for auto i machinery has been low. 5 ers year on year up instead of a contraction. Ppi growth 0. 9 matching estimates. This showing we are seeing a second consecutive month of growth for producer prices. We have seen that boost coming from the sales tax hike in october. Public Investment Construction demand ahead of the 2020 tokyo ppipics should boost numbers as well. David bloom still with us. What do you make of what is happening with the japanese economy when you factor in that yen is a safe haven, but at the same time we are seeing easing policies out of the boj . David japan, much like switzerland, doesnt follow the cyclicality of the economy. You dont really look to the economy. You are not looking to japan for growth. They had massive qe. We have not seen inflation, yet the yen remains quite strong. Their debt to gdp remains strong. Yen is a safe haven currency. Machine orders doesnt really change the way the yen operates. Also, machine orders are very volatile. I would like to pick up on one thing you said. You said somehow the olympics will cause a change to some of the numbers. What usually happens with big sporting events is actually building the infrastructure in the five years up to the actual event is what matters. The actual event itself in the context of gdp is miniscule, and you never see any impact, unless it is a tiny economy. But japan is an enormous economy. I am saying he will not see much impact from the olympic you will not see much impact from the olympic games. You have already seen it. We have heard he has previously said he sees a crisis in the hong kong dollar. Says . As disastrous as he should you go long dollars . David not at all. If you want to go on tv and make a name for yourself, you say bizarre things. Someone like myself, the hong kong dollar we never get it wrong. We will not get it wrong this year. I dont believe the hype and the fancy stories. These are people trying to claimant their way onto your show clamor their way onto your show. C head ofbloom, hsb foreign strategy in hong kong. David will be joining Bloomberg Radio and the next hour. You can listen via Bloomberg Radio plus or Bloomberg Radio. Com. This is bloomberg. The markets open in tokyo and seoul the top of the hour. We are anticipating modest moves. Nikkei futures inching higher. We will be watching chipmakers with only three stocks on the soft index gaining on the day. A share falling as much as 3. 4 in u. S. Trading on a report the u. S. Government is piling on pressure to locally produced some i conductors for military use. Produce semiconductors for military use. We are looking at shares of japanese antivirus spyware makers after the report of the new viral pneumonia. Stocks rose in june 2015 when a virus killed two people in south korea. Coming up in the next hour, a j. P. Morgan Asset Management asset manager joins us. A moodys associate tells us what to expect when we get the latest readings on chinas property sector. The market opens in seoul and tokyo, almost upon us. This is bloomberg. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Haidi a very good morning. Asias major markets have just opened for trade. Shery good evening from new york. Sophie i am Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Haidi our top stories, the u. S. And china signed a phase i trade deal that has been three years in the making. President trump says it writes the wrongs of the past. Hong kong is told a banking crisis is coming. Struggles w the mirrored the struggles of iceland a decade ago. Shery the impeachment case against President Trump moves forward. The house notified the senate where a child could begin on tuesday. Japan and south korea modest gains for tokyo stocks. Negate stocks adding. 2 . Higher. Nis nudging on the data front we have already had november machinery orders from japan jumping 18 month over month versus the 2. 9 estimated. Producer prices coming in higher. 9 on a yearly basis. Lets check in on south korean markets. Kospi opening little change. Korean yuan is on the retreat. In sydney, asx 200 topping 7000 points for the first time ever. Aussie dollar nudging slightly higher above 69. We have pressure coming through, given the implications of the u. S. China phase one trade deal on australian exports. Lets check in on what is going on with bonds. Aussie bonds tracking the global rally sparked by the u. K. As markets are boosting. Treasuries expected to stay in a tight range. Traders watching the dojs bond buying operation five to 10 year. Offshore holding below 689, strongest level since july. Little reaction to the signing of the phase one trade deal. More on the get trade deal between the u. S. And china, the signing finally happening. Lets cross over to beijing. Selina wang is in beijing. Is the reaction similar to beijing . Selina you could already see the contrast at the signing. You had u. S. Officials hyping up this trade deal, trump saying it is righting the wrongs of the past. The chinese delegation much more subdued, focusing on all the work that still needs to be done. Overall a cautious but optimistic tone in Chinese State media. Also has some questions about whether the deal can fall apart. The global times writing in a commentary, asking if a deal like this is even possible, given that the u. S. And china strategic relations are clearly in decline. What is interesting is you have state broadcasters run 20 minutes of trumps live remarks, then published commentary afterwards about how this is focused on mutual respect, this is an equal treaty. You have a big push from state media to frame this as a balance to treaty, not one where china is giving us a lot of concessions. Peoples daily saying this is a step in the right direction, iso an effort to show this in line with chinas attempt to open up its economy. In terms of the u. S. Political establishment, we do of course have key democratic figures like joe biden, nancy pelosi, really giving scathing remarks that this deal does not give up much from chinas part in exchange to a lot of damage to the american farming community. There is also a focus on the fact that this deal does not touch on the core issues like chinas state policy of cyber theft. Shery perhaps there is some truth to what they are saying. We saw several pledges coming from china, but it makes me think, havent we seen this already, and isnt beijing already carrying out some of those measures to open up their 45 trillion economy . Selina that is exactly right. You will see if you read through the whole 90 something page text, there is a significant chunk in terms of financial reform, but a lot of that has already been announced in terms of chinas domestic lands to plans to open up its financial market. This trade deal commits for china to accelerate that. This is largely in chinas best interest. They are trying to boost their domestic economy and Financial Services market. To quickly run through what those accelerations are, plans for foreign banks to fully own their local units. Also Credit Rating companies being able to fully also plans to make it easier for foreign insurance companies. Also have some notable improvement in terms of the Payments Market. That has been a big point of contention in this trade war. China saying it will take no longer than 90 days to consider applications for visa, amex, mastercard. You had a couple of those ceos in attendance. It is important because at the end of the day, this is all about enforcement, all about how it is executed. Because china has been making these commitments on financial operating,financial unprecedented changes the last couple years. But what American Business people operating in change in and china say is there are still hidden barriers like lengthy approval processes. It is all about how this part of the deal and the other parts of the deal are implemented. Shery selina wang, thank you so much for that. Joining us now from hong kong is Market Strategist hannah anderson. Great to have you with us. We have been discussing a little bit of skepticism about the phase one trade deal with salina. Seems like investors are cautious as well. U. S. Markets rallied but it was a defensive rally in the reaction seems muted in asia. The selby stack moment for Global Markets . Hannah i do not necessarily think it is sell, just being more confident and the price you paid for confirmation of the facts. You have to keep in mind that we goth people what we were looking for in terms of clarity on specific provisions with the release of this full text of the u. S. China trade deal last yesterday. Most markets had already priced in, and most investors got the headline information they cared about, which was basically the u. S. Will postpone further tariffs, china would agree to increase purchases of u. S. Exports, and that information was good enough for markets. I think a lot of the risk on rally you would have seen from this was already priced in. Shery when you look at the text of the deal, we have several different areas including chinese purchases, tariffs still in place, we have stuff on ip, tech transfer. What is important to you, and what is treatable in the next few months . Hannah something that is really interesting and what was included in the specifics of the deal was commitments china has made around timing of opening up its markets. Those include things like setting a specific schedule for a time in which they will approve foreign entities coming into china. Combine that with some regulatory changes we have seen in china around what banks are allowed to do with their reserve, and promoting development in the fixed income space, i think that is a pretty positive signal overall for financial firms, as well as the broader equity market in china, which could see a lift from east of elements as they work through it the next couple months. One of our guests earlier so the best thing about this deal is the fact that it exists. In terms of that level of expectation, is it enough to keep stocks going higher, particularly u. S. Stocks . As we see any excuse or reason to keep pushing higher despite the late cycle. Hannah i think this deal on its own is not necessarily a reason for any action in equity or fixed income markets. Yes, having something on paper that the u. S. And china has agreed to is a positive development. That is not in question. Financialknow, markets are forwardlooking instruments and we are all trying to anticipate native element of the real economy and price that into our portfolio. What im looking ahead for is when does phase two, which the u. S. And china have said will be in the works shortly, when is that coming about . Is the u. S. Committed to keeping tariffs at their very high levels on imports from china . And do those higher costs, which are borne by u. S. Businesses and consumers, continue to eat into margins, hold that Consumer Spending . And what does that do to business confidence, as we have so many other issues within the u. S. And china that are likely to create headlines throughout the year, even ones that were not tackled in phase one . Haidi on the balance of what we know from this trade deal, who is the winner out of this . Hannah based on the commitments we have, i think china has really protected its core interests. They got some concessions, particularly around Market Access and increasing u. S. Exports to china. However, the really core sticking areas of the dispute between the u. S. And china and they have been the core sticking points since china its around chinas subsidies and National Industrial policies, neither of which were tackled in this deal. From the Chinese Government perspective, keeping those further off into the future for discussion probably feels like a win for beijing. Shery secretary mnuchin would disagree because he said this would lead to 50 to 75 basis points of Economic Growth. Continue to invest in the American Consumer here in the u. S. When we have seen the likes of target, for example, tumbled today, and really not showing a positive picture for retailers overall . Hannah i think when it comes to the u. S. Consumer, it is fun to talk about the trade war, what that does, and it is certainly a fast moving and developing story we can talk about when it comes to the u. S. Consumer. But overall there are many more factors that determine exactly how much less conceivable take out of their wallets in a given month. For those we need to take a step back and look at what has happened in wages, inflation, and employment. Employment overall in the u. S. Has held up remarkably strong over the past couple the last year despite the wages report which showed a little less growth than we were expecting. Overall it is still a pretty robust picture for the u. S. Consumer,. When you translate that into investment you need to look at where consumers are spending their money. We are seeing several large physical retailers not do as well this earnings season, just because consumers are changing where they spend their money. But that is not particularly a comment on the u. S. Consumer. Haidi all right. Always a pleasure having you with us. Hannah is sticking around with us to carry on that conversation. Lets get you the first word news now with ritika gupta. Ritika Steven Mnuchin says huawei is not included in the phase one trade deal and will be handled separately. Larry kudlow says it cannot be part of the 5g rollout there. Huaweis director of affairs told us there is no need for security concerns. Huaweis mission is to connect the world. The issues enumerated by the u. S. Government in the past about huawei get two basic issues of trust, but also basic issues of security. The goal for huawei and the u. S. Government are the same. We provide robust and secure networks. We share the same goal. I think the dialogue needs to center on that and how to get their most effectively to the benefit of global consumers, but specifically consumers in the u. S. Ritika President Trump will face an impeachment trial in the senate next tuesday after the house of representatives formally launched proceedings. Speaker nancy pelosi signed documents detailing the charges against the president. Presentnagers will impeachment articles to the full senate later thursday. The latest Federal Reserve survey says the u. S. Economy grew at a modest pace at the end of last year, while a decline in manufacturing employment they note scattered layoffs in a number of areas, especially transportation and energy. It shows inflation continues to rise at a modest pace, indicating no imminent rate move. The head of the European Commission says officials are ready to work as fast as possible on a new brexit deal with eight more months available for negotiations. Ursula von der leyen says she is watching the runup to the split at the end of the month closely, adding to any brexit extension would be solely look choice of the u. K. She also says Border Control following the split will be overseen by the eu. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Shery whats not check in on some of the stock movers this moving. Sophie a6 jumping as much as 7. 8 on a report that nikes recordbreaking shoot may be banned from competition when the world athletics introduces new rules. Benniesf antivirus gaining ground in tokyo following a report that a traveler was founded by japanese doctors to have a new viral pneumonia. Ahead, Steve Schwarzman says the state the phase one trade deal signals a big change in u. S. China relations. Our interview with him is later. Shery next, kyle bass has a warning for hong kong. He says the fullfledged banking crisis is on the horizon. This is bloomberg. This is bloomberg. Founderim on capital kyle bass has a warning for hong kong. A fully fledged banking crisis may be on the arising. He is maintaining his short bet on the hong kong dollar. He explains his rationale. Kyle when you look at hong with what you have seen the enormous protests and revolts against the authoritarian chinese regime and the failed leadership of carrie lam and her government, is you have seen retail sales collapse. In the retail sales have actually collapsed to presars low and financial crisis lows. What you are seeing in hong kong today is a collapse in their economy, and that is an economy that is the most highly levered economy in the developed world. They have banking assets to gdp at all most 1000 . That is exactly why ireland and iceland and those other countries in the eu collapsed back in 2011 after the Global Financial crisis. In 2020 you are going to see a fullscale banking crisis in hong kong. You have such a tightly wound economy in a stage of freefall from an economic perspective. So i think when you think back to the u. S. Financial crisis, our Financial Markets, specifically our credit Mortgage Markets collapsed in mid2007. Bear stearns did not go down until march of 2008, our lives did not go down until september of 2008. Others did not go down until september of 2008. You are going to see if fullfledged banking crisis in hong kong next. How are you trying to profit from that . Kyle i think we will see it in 2020. As a firm, the way that we are hedged for this eventual outcome is we focus on the Exchange Rate between the u. S. Dollars and hong kong dollars. So, i think that there are a lot of levers that can be thrown by the chinese and by the failed Hong Kong Government to prevent shortselling and things like that of equities. We do not carry any positions in equities. I would be careful. If you are an owner of a banking hong kong, i would be careful owning the equity for the next two years. I think youre going to suffer significant losses. Just to jump in, does that include hsbc . Kyle yeah. Hsbc, on know, Standard Chartered and hong kong have been doing the bidding of the Chinese Government recently, which is really interesting. They were freezing the accounts of alleged protesters, and basically freezing their financial transactions. In fact, i sit on the board of a foundation that is promoting the rule of law in china, and they froze our accounts, because of course we were doing something that contravenes chinas national government. Hsbc froze our accounts. So it is interesting to see what these british banks are doing, the bidding of the Chinese Government. Charter,sbc, standard they are all in real trouble in hong kong. Shery that was kyle bass. Still with us is Global Markets strategist hannah anderson. Kyle is well known for being a permanent bear when it comes to china, now hong kong is his target. He has spoken at length about his views on the hong kong dollar and the yuan. Does he have a point . I have been wondering why the Capital Market has not been as affected. Is this the year when we do see that impacted in hong kong . Hannah when it comes to hong kong, you have to keep in mind what a unique place hong kong is, in that the vast majority of Companies Listed in hong kong do not derive their revenues from hong kong. So what is going to influence markets in hong kong is what is happening in the rest of the world, particularly with trade. A substantial amount of the substantial Financial Services in hong kong are linked to trade. Logistics and the broader trade environment. Because 2019 and 2018 were such tough years for that part of the global economy, i think we are seeing that seep into equity prices in hong kong. It is not 2020, exactly a great environment will for global trade but it should be better than 2019, which because of all the linked industries i mentioned, overall are going to improve the Investment Climate in hong kong a little bit. Could how big of a loser hong kong turn out to be from the china u. S. Trade deal, if some of the provisions include rerouting some of the trade perhaps from hong kong, not to mention the liberalization of Financial Markets in china that could make other chinese cities more relevant than hong kong as a Financial Hub . Hannah hong kong has already lost a lot from the u. S. China trade war, because that slow down and trade has really hurt a lot of the industries in hong kong. The question about financial theices, and what exactly development of that industry onshore and china is supposed to be and how that relates to china and hong kong, because hong kong has really been the source of a lot of those Financial Services for the mainland, is a very longterm question, and one i have been thinking about for a long time. I think in the nearterm, the next two years or so, nearterm in the economic sense, i would see not much change. Theres an opportunity onshore in china and it will take a while for the industry to become a robust competitor to any global Financial Services hubs like hong kong. Longrun, a 10 year time horizon, there certainly will be competition from the mainland against hong kong for the source of what will it make sense as a risingservice all these and wealthier consumers within mainland china. Shery hannah anderson, thank you so much. We have to leave it there. We have breaking news. A Japan Health Ministry confirming the first case of new coronavirus. We have seen this outbreak in china and the World Health Organization just this week warning this week that there could be a possible outbreak, a wider outbreak not just in china, within families. You are taking a look at some of those firms that produce the antivirus and we are seeing a big gain. Again, the chinese Health Ministry confirming the first case of the virus. This is bloomberg. S is bloomberg. Get a quick check of the. Latest business flash headlines. The greatest Credit Card Companies are a step closer to entering the 27 trillion Payments Market in china. Part of the phase i trade deal says beijing will take no longer than 90 days to consider applications for a visa, mastercard, American Express and others. Mastercard and their partner set up a venture last march that is still awaiting approval for the peoples bank of china. Investing almost 400 million in applying taxi startups. They have attracted previous funding from a range of names including intel capital. It is now the best funded out of a fastgrowing network of flying taxi ventures. They can fly for 150 miles on a single charge and speeds up to 200 miles an hour and carry four passengers and a pilot. Shery a confidential reality agreement with a regulatory finding says the report comes after caltex offered to reflect its true value. This is bloomberg. This is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Phase one will be a truce. A truce. Not a resolution. A handshake opportunity. Largely priced in. Not going to be a fundamental trade deal. Fairly limited in scope. Nothing has been resolved. There are no details. There are still much heavier issues to be tackled. The markets like at least we are not escalating. I do not think you can rely on just the trade news. Fundamentals have been improving. Supporting the markets. The Balance Sheet is the main focus for me, absolutely. Views some of our guests on the u. S. China trade deal. Stocks trading mixed in asia. Nikkei,the kospi has swung to. Easing earlier gains. Sophie checking in on currencies and bonds, the dollar looking itll change. Yen, just Holding Steady below 1. 10. Korean yuan back below 11. 59 against the greenback. Offshore yuan holding firm near a july high. We are seeing the aussie and kiwi dollar lead gains among g10 this morning, while aussie bonds continue that rally we saw spark and global bonds as we are seeing hype around doe easing bets. Overall over the course of the day we expect momentum around asian stocks could peter out, given with rsiindicating there could be room for corrections for asian and u. S. Stocks. Steve schwarzman was one of the Business Leaders present at the white house for the phase one trade deal signing. He told bloomberg what the deal means for businesses. Stephen this got to be a deal basically because it has been going on for three years, since we really started this. It was two days before davos three years ago. So, we have had a lot of near success, little bit of and now a lot of success. And i think it takes a while for each country to figure out what it really wants to get out of a trade agreement, what it wants compliance,f the the opening of its markets. You have toa, remember that the u. S. And china, other than the wto deal in 2001, fundamentally has not had a trade agreement since the 1940s. So, what has been achieved is very, very significant. The two countries want to work together, that is a huge change. The tariffs are starting to be reversed. There are major purchases of things, not just agriculture but other things, intellectual property has been reversed separately. In decembertions which is sentinel, killing over 50,000 americans a year in china, has really made huge strides to cut off the supply of fentanyl. So, what we are seeing are countries that are competitive, but also have this huge relationship, tradewise. Together, these two countries, hard to believe depending on how you calculate it, have between 35 and 40 of the worlds economy, just in two countries. So the idea of decoupling and everybody going their own way on virtually everything is impractical, and it is also not good for the world economy. Countries haveo done now is figure out where they can start the dialogue, how they can implement it. It is a very positive feeling. This was not a grudging type of deal that has been entered into. Obviously you have been playing a bit of a role, a statesman going back and forth between these leaders. At the end of the day you are an investor. What does this do for you as a businessman, an investor sitting at blackstone . Does it amplify . Does it accelerate investments that you may be making around the world, specifically in china . Steve it provides a baseline of a better world economy. I think you are seeing in the markets over the last whatever you want to measure, the last year, certainly the last few months as this agreement has come together, it is not the only reason for strong markets. The Business Community globally telling you that things are better now in terms of prospects than they were before this agreement was entered into. Shery blackstone ceo Steve Schwarzman speaking to jason kelly. As part of that phase one u. S. China trade deal, beijing has agreed to accelerate the opening of its Financial Sector with a raft of reforms set to start in april. Lets look closer with this with our reporter lucille lu. Chineselook at the Financial Markets, the futures, the Securities Market already is mired with restrictions. The insurance sector has lots of local players as well. What does it really mean for Foreign Companies . Lucille thats right. We weregoing into this worried maybe this would be a repackaging of a lot of previous pledges because financials has been there hasve seen is been enforceable deadlines. Securities for securities firms. They have brought forward the timeline from december 1 to april 4 and they have also said they would review applications from Electronic Payment Services providers in less than 90 days. So, there have been some new measures announced. While there are still restrictions, and some have complained about the slow application processes, there is a bit of optimism in this deal. Of the foreign firms that are affected, which ones in particular will be looking at these having an impact on . Lucille this is something that is really going to affect the global giants in this space. Jp morgan has been very vocus vocal about wanting full ownership. We have had half a dozen fund managers, including blackrock vanguard, say that they are ownership go for full from each of the companies starting on april 1. And of course this is also something, this deal includes some chinese firms. The u. S. Said that it would consider expeditiously pending requests from cicc, china reinsurance group, and committed to nondiscriminatory treatment of Payment Providers such as union pay. So there is something for everyone here, but of course the global giants who have been waiting for decades for full ownership in the china market, this is a pretty big day for them. Shery and of course this all comes at a great time for china, when the economy seems to be slowing down. What are the expectations for how much money could be injected into that economy . Lucille yeah. China has certainly seen its current accounts basically go towards the deficit. And it is looking for foreign inflows. We have had some estimates of how much money could flow in. Bloomberg intelligence estimates that four security firms in commercial banks, they are looking at maybe 9 billion in profits by 2030. In terms of how much money is coming in, there are quite varied expectations. Liu, thank you so much for joining us. We will have more insight when it comes to the phase one trade deal. Global trade relations as well later on. We will speak to the former u. S. Assistant trade representative and more. Lets get to ritika gupta with the first word headlines. Ritika clashes erupted again in beirut with Police Firing tear gas amid street battles outside the central bank. The unrest stretched down one of andcitys busiest districts came after a day of antigovernment rallies. Protesters are turning their anger on lebanese banks and businesses, denouncing a ruling elite they say has failed to save their crumbling economy. The russian Prime Minister has fuelss president putin speculation he is aiming to extend his grip on power. Is being been replaced by a low profile technocrat. Putin is constitutionally bound to step down in 2024, but observers say he may take on another role to ensure his continued influence. Police are considering blocking thess to more towns near taal volcano in the philippines. Explosivey an eruption could come at any time. More than 80,000 are in Evacuation Centers but many more have refused to leave their homes or have gone back despite warnings. Satellite images show the lake as drained and new crack seven. Cracks appeared. The devastating bushfires in australia ray john. Almost rage on. More than 40 are worried. Weather conditions have eased slightly but there are still concerns that smoke from the bushfires may ask may affect the Australian Open tennis next week. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Shery next we will be joined by rudys associate franco leung to look at chinas new crisis. This is bloomberg. Is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Here to discuss the outlook is moodys associate franco leung joining us from hong kong. Great to have you. Outlook for 2020 is pretty stable by and large. Sales pretty much flat. Pricing for the much flat. Are there more risks to the downside than up . Franco moodys has a stable outlook on the property sector because we think the sales flourish, and also because the inventory levels are generally healthy, which would support property prices to a certain extent. However, we do see the credit because ofin, mainly the environment, public developers, as well as the weakening demand in the lower tier cities, particularly in the weaker economic regions in china. Haidi at the same time, borrowing costs are at their lowest in about two years. So you are seeing a surge of issuance of dollar bonds. Is this really something you are seeing for the biller bigger developers or is it Smaller Developers you are seeing the potential risk when it comes to financing . Franco sure. We saw the beginning of this over the past two weeks or so. We have seen a pretty robust issuance activity by developers. Particularly we have seen a lower funding cost, as well as a lengthening. Because of the high funding needs of the developers, as well as the more favorable investment appetite in the markets. Tend to bevelopers the larger and financial stronger runs. Under the current situation, there is a pretty clear sign of industry consolidation, in which the larger developers with more financial muscles will benefit from a stronger access to funding. And that is at the expense of the smaller, more financially weaker developers, which usually struggled to find funding in the markets. Shery so what are we seeing in terms of the inventory levels nationwide . The inventory level nationwide remains healthy, although we have to look deeper into which cities we are talking about. In general, the first and second tier cities will have lower inventory levels. They will look at the past few months, the inventory levels have been pretty volatile, pretty much because of the policy measures in different cities. But if we look into the lower tier cities, there will be differentiation in that in general, in lower tier cities, the inventory level will be higher, and particularly in the weaker economic regions, we see that inventory levels have picked up. But compared to the historical average, the inventory levels remain at Pretty Healthy levels. Have you seen any signs of the government changing its policy controls on property right now . Generalas you put, the policies on property are strict at the moment. And we expect that the general policy directions will remain stable, and it is unlikely that we see a broader loosening of the policy measures nationwide, and that is really because the government wants to have a more stable Property Market. Recent official statements, the State Government said they will not use the Property Market to stimulate the Economic Growth in china. So what that means is that we are not going to see government policies, but there will be more possibilities for local government to fine tune their local policy measures. Many of the local governments will have the possibility to adjust measures based on their local economic condition. Shery franco leung, great to have you with us. In chinesesouring markets ahead of the trade deal signing. We will assess the prospects for the open next. This is bloomberg. Next. This is bloomberg. Huawei director of Congressional Affairs says the company and the Trump Administration share the same goal. Huaweis mission is to connect the world. The issues enumerated by the u. S. Government in the past about huawei get two basic issues of trust, but also basic issues of security. The goal for huawei and the u. S. Government is the same. We want and provide robust and secure networks. We share the same goal. The dialogue needs to center on that and how to get there most effectively to the benefit of global consumers, but specifically those in the u. S. Shery the u. S. Says huawei cannot be part of a 5g rollout and is reportedly further blocking its access to tech. Bes see how they will impacted. We have their report in a few hours. We have seen in past quarters being helped by advanced purchases from huawei. What are we expecting from these earnings . For fourthquarter earnings tsmc, we will hear the numbers in about five hours. We should remember that apple is a very important client as well, qualcomm, nvidia, and a lot of u. S. Companies. What we are looking to see for the quarter for the year is a little bit of growth. Net income year on year will fall flatly but generally people are optimistic. Revenue came pretty much in line, slightly higher than expected. What people will look for is the Fourth Quarter, the quarter we are in now, it is generally a dip. No new iphone coming out for example. If there is an upside is there would be growth year on year. I think what we will be looking at more closely at rather than Fourth Quarter numbers is First Quarter outlook and what is going on for consumers in terms of are they buying devices, but also in the industrial, such as servers, and 5g equipment and telecom rollout. Shery what do we know about tsmc resisting expansion into the u. S. . Tim i do not think it will be fair to say they are resisting. They have always said they will do what they are required to do. They do not have any great desire to expand into the u. S. They have one facility in washington state. It is a relatively old facility which is more than a decade old in terms of technology. Most of their facilities are in taiwan at three major sites. It is not that they are against being in the u. S. But there is not a lot of upside to it. Havingpany comes from factories someone near each other so engineers can shuffle from site to site, putting out fires so to speak, and getting the factories up and running so you can run 100 , 20 47. If you are in the u. S. You are losing that efficiency. Sending people between headquarters and wherever in the u. S. They just do not see upside to it. I do not think it is fair to say they are refusing to do it, but if pressure keeps coming down the line from washington to do it, and certain sections are put in place, at some point they will have to pull the trigger and spend the money, but they are holding off on making that decision for now. Haidi what is it that people get wrong about them . Tim i think a lot of people misunderstand that they are not a Chinese Company. It is worth noting that the two chairman in the history of the company were both american citizens. The founder was an american citizen. I take that information directly from tsmc own annual reports. Both of them were born outside the United States, but they are american citizens. So they are very invested in america. The Company Really operates by international standards. A lot of people think they are in taiwan because of cheaper labor. There is nothing in terms of labor that matters when it comes to running a highend manufacturing facility like this. It is because the engineers are here, but the Business Model was founded in taiwan. Haidi thank you so much for that interesting insight, tim. Lets check the latest business flash headlines now. Things are not as bad as first thought at the airways. The ceo says losses will only be half of what the carrier had budgeted for thanks to a higher load factor and sales drive he called very aggressive. They have been grappling with higher fuel costs and saudiled air closures in the region. He is aiming for profitability in the next two years. Shery neo confirmed they are in funding talks after a report of a potential investment. Neo says that is discussing financial and strategic opportunities, but insists there is no definitive agreement yet. An earlier report said auto with repairing to pump 1 billion into nio, sending shares soaring before being halted. Fitnessn Australian Program back by after Mark Wahlberg it provides High Intensity Group work out and sells franchises. The company was founded in sydney and is now based in los angeles. Mark wahlberg bought a Minority Stake last year and they are valuing the company at about 450 million. A preview of what we are watching later this morning and markets as mainland markets in hong kong come alive in the next hour. Sophie when it comes to company downgrading, sachs it will take many years for the company to replace lost earnings in its core developing unit. Focusing on the exporter here, citigroup cut its type price target tony 1 21 . A little more about the nio story, the carmaker denying reports it plans to invest 1 billion into nio, saying it is input luminary talks with a cat at 150 million. Announcing tentative plans to close 25 of stores in hong kong in 18 months after posting a 35 drop for the third quarter. More up next. This is bloomberg. Is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Beijing. 9 00 a. M. In welcome to Bloomberg Markets china open. Tradeare coming down the to markets. The devil is in the detail as the u. S. And china signed the days when trade deal. President trump says it writes the wrongs of the past. Commitment to buy more American Goods and avoid manipulation to gain an advantage. Tom investors generally welcomed the news, although they are still going through the fine print after