Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

Good but still will not accept they should be law. Asia is set to follow wall street higher as investors weigh theirdevelopments against cases. The s p climbed for a Third Straight day. Shery lets get you started with breaking news south korea. We are seeing inflation rising faster than expected. Both the month on month and year on year figures now escaping that disinflationary territory. Month on month inflation rising 0. 2 and 18 expectations. The expectation was for no change, also coming out of three months of decelerating prices. When it comes to the year on your numbers, the inflation remaining flat. The expectation was for prices to contract, and its also coming after falling into disinflation for the First Time Since september. Core prices your near rising 0. 6 , which is a faster gain than was expected as well. We have seen a little bit more demand coming from china. The export slump in south korea also easing for the month of june, not to mention exports to china in fact rose more than 9 . Not to mention a little bit of strength of the Semiconductor Industry as well. Lets see how markets are shaping up, haidi. Haidi this is going to add to potentially a bit of an uplift with the strong lead from wall street overnight. The s p 500 climbing for three sessions straight. The nasdaq hitting the record high. We still have that kind of gap between growth and value encyclicals playing out, which is playing a bit more of a concern. We are seeing a bit of a mixed picture when it comes to the trading situations for chicago. Nikkei futures trading a little bit lower. Weakness when it comes to oil as well. Breaking news crossing the bloomberg in the meantime. David clark has resigned. We dont have any more details on this at the moment but we are hearing about the resignation of new Zealands Health minister, and of course, the situation in new zealand has been one of the pandemicles handled sort of response scenarios in the world as they continue to remain pretty much on a border locked down. We are getting details now that david clark the Health Minister has resigned, which Prime Minister has excepted. He has been coming under pressure to step down but has been repeatedly backed by the Prime Minister even though she said she would have sacked him over his personal lockdown breaches during new zealands pandemic lockdown which was highly controversial. Lets get to our top story. The first 24 hours of chinas new security law has led to arrests amid protests in hong kong. The u. S. House of representatives has passed a sanctions bill meant to hit at chinas crackdown. Yvonne man is in hong kong with the latest. What do we know about this and what is it targeting . Yvonne we just learned about this in the last couple hours. The u. S. House of representatives just passed this bill that basically imposes sanctions on banks that do business with chinese officials that have been involved in the crackdown of prodemocracy protesters here in the city. This is somewhat similar but not identical to the bill that was passed in the senate last week, so the u. S. Senate still has to look at this bill and vote on it before it ends up on President Trumps desk for his signature. What we have heard in the last 24 hours, the response from the u. S. The Trump Administration has vowed for further stronger actions if beijing does not reverse course. We did also hear from the secretary of state saying that this new law eviscerates the rule of law here in the city. Here is more from mike pompeo. Free hong kong was one of the worlds most stable, prosperous, and dynamic cities. Now, it is just another communist run city where people will be subject to the party elites whims. It is sad. Frome and we also heard pompeo, adding that the u. S. Has imposed issuing a Business Advisory to companies that have supply chains in the area where authorities have forcibly detained the muslim uyghurs. To roll outparing sanctions against chinese officials over the human rights issues against muslims in the western region. We have also heard that this has been delayed because of the ongoing u. S. And china trade negotiations. It seems like our sources are saying that they are actually moving forward with this soon. We heard from joe biden also saying that he could also he looks to impose economic sanctions against china if it threatens u. S. Citizens First Amendment rights. Shery already under the new law, we have seen tensions rising in hong kong. Arrests being made . Yvonne it was quite a scene that we saw yesterday around the causeway bay region. We saw a heavy police presence, hundreds, close to 1000 protesters at stormed the streets, less than 24 hours after this law came into effect. We saw police fired tear gas, pepper spray, the Water Cannons also came out to disperse these crowds. At one point, they stormed into a very popular shopping mall, times square as well. This was of course july 1, which was a very symbolic day, they hand over anniversary. It is marked by mass protests and we saw a bit of a more somber kind of scene yesterday that this National Security law was kept under wraps, as you know, from beijing, and we really did not hear much details and evenyesterday, chief executive carrie lam admitted she had not seen the full draft either, and what we also saw were the new flags that officers had pulled out to show the crowd that basically if you are holding a flag or banner or even chanting slogans, that would be considered illegal under this new National Security legislation, but we still saw some folks defying those orders, chanting the slogans we heard from last year. Also holding those flags, calling for hong kongs independence. In the end, we did see more than 300 arrests, nine of which violated this new law. Shery yvonne in hong kong. The u. S. Under secretary of state says the reaction from the Business Security to the Hong Kong Security law has been disastrous. He spoke to bloomberg earlier. Disastrous decision. This is to eviscerate hong kongs freedoms and imposing draconian National Security know, if you you look at this legislation that has been enacted, it is taking press, they of the are basically bringing in their forces. The reaction is really disastrous. I think a lot of companies are really worried because i think it is because number 33 that they actually debate nonresidents. Can take it they back to china, where there is no rule of law. Greatk it has been such a with theess for china twoparty system, and now, it is a one party system. Happened what has breaking the sino british know, they only got 22 years instead of 50. It gets down back to this issue with the Chinese Communist party. Who, the united nations, so you know, that highlighted on top of the pandemic, its how can you trust them for anything . I want to come to something that happened earlier today. Secretary pompeo as well as secretary mnuchin issuing some supply chain Business Advisory as it relates to the uyghur camp and the supply chains. How will that impact u. S. Businesses . That Business Advisory, kevin, it goes to anybody who is partnering, investing, buying from, youporting know, products through the forced labor camps inching jong in the area. These are the most severe acts of human rights abuses since world war ii. The whole purpose of this is to force minority groups to renounce their religion and embrace ccp ideology. In silicon valley, we say Corporate Responsibility is social responsibility. Today, that means refusing to participate in Human Rights Violations and deals. I think transparency is a key to making the difference. It is a fundamental business principle that transparency is visibility and visibility leads to accountability. It is magical concept. By shining the light on with the Business Advisory as well as coupled with the 33 chinese firms now on the entity list with sanctions, many of them are the ones that are doing this it isn shandong, incumbent for boards of directors to conduct supply chains, for financial institutions, it is their duty governance principles, investing in companies that violate human rights. And i think even more than that, it is a moral duty. Duty to divest from these companies. Pension funds, university endowments, emerging index funds, mutual funds, venture minimum,ompanies, at a should disclose what Chinese Companies they are investing in. I am confident that American Business will do the right thing. Going onat is what is as it relates to the uyghur concentration camps. I want to ask you about 5g. Secretary pompeo said the u. S. Has turned the tide as it relates to huawei working with allies. What did he mean by that and how has the u. S. Been able to do that . Keith kevin, the tide has trusted 5g vendors and against huawei. Of the worldns that are waking up to the danger of the ccp surveillance state on top of the pandemic. Hong kong, shandong, which the skirmish at the indian border. Announceduary, huawei that they had closed 91 5g deals. The best we can see, it is down to less than two dozen. I think they are just as operating. Haidi that was the u. S. Undersecretary of the state for Economic Growth speaking with bloombergs kevin cirilli, and we apologize for some of those audio interference issues you may have heard throughout that segment. In the meantime, you can get more on the Hong Kong Security bill in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. Getting you some breaking minds when it comes to the resignation of the new zealand Health Minister that we heard a little bit earlier on. Following the resignation of david clark as Health Minister, which has been accepted by the new zealand Prime Minister, she has appointed the current Education Minister as the interim Health Minister until the next election. The new Zealand Election has been called for september 19, which will be a test for the handling of the pandemic, largely regarded as very strict but also successful. The Health Minister with his resignation today really coming under fire against personal breaches of isolation orders as well as the mishandling of quarantine measures. Optimism next, vaccine supporting markets as cases continue to rise. Our next guest says positivity is premature. Carol pepper is joining us to tell us why. This is bloomberg. Keith you are watching daybreak asia. I am Karina Mitchell with the first word headlines. President trump seems to have changed his opinion of the federal reserve, saying he is satisfied with current policy. He says despite months of criticism, he is happy with his performance. He agreed he was not impressed initially but is now more pleased. Powell has really stepped up to the plate over the last six months. The president also says face masks are good. Infections rise. Notold fox he is convinced masks should be law. He mocked joe biden for wearing one and has not worn a mask himself in public despite Health Officials urging him to do so at events. Mobile infections have top 10. 5 Million Dollars with more than 500,000 deaths. Rising Coronavirus Infections in the u. S. Have forced new york city to halt the return of restaurant dining next week with mayor bill de blasio saying now is not the time. Indoor dining was set to resume on monday, but city Officials Say restaurants will have to continue using sidewalk space for now. The state governor says it is a new york city measure only and the rest of the state can gradually return to normal. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery. Potentialimism over coronavirus treatment powered u. S. Stocks to another day of gains, outweighing concerns over rising infections. The prospect of a successful treatment just is not good enough for some investors. Carol pepper is the ceo of pepper international. I understand you are giving your clients two scenarios. Fast vaccine, fast recovery, slow vaccine, slow recovery. The market seems to be pricing in for a fast vaccine, especially with good news coming from pfizer. How do you position in this environment . What are your clients telling you . How do you take advantage of what we are seeing right now . Carol thank you. I would say, as i said, we are looking at two potential scenarios. I manage money for families with over 100 Million Dollars in family offices, so we are preparing both outcomes because it is impossible to tell which one will happen. As you mentioned, the scenario one is fast vaccine, fast recovery. If we get a vaccine in the next 12 months, which is what the market is pricing in, the governments can support the populace until then. The vaccine will come online and hopefully life will go back to normal. In that case, we really want to be focused on the industries over the next year to two years that will do well and have been doing well. Delivery services, things of this nature. Health care potentially medical companies and biotech. Vaccine,two is slow slow recovery. If it becomes evident that these early trials are not successful and not leading to a vaccine, then the market will eventually price in it will take longer than a year. People will have to be locked down for longer than a year and that will be quite a strain in the global economy. In that case, it go back could go back to where we were in march. A big fall through the floor. We are being sustained by all of the money being pumped in by the governments around the world to keep the economies afloat. Can they keep that money going for more than 12 months . That is unclear at the moment. I really encourage all of my clients to do both. Prepare for both scenario one and scenario two. Shery already, we are seeing a bit of a challenge. The gtv chart on the bloomberg showing us how technically, the s p 500 could be a little bit challenging in the short term. If you are looking at this case, you are seeing a market rally but also a bit of a slowdown in those gains, and you are trying to get exposure on those sectors, you mentioned they perhaps will be resilient to any new coronavirus news. What assets, what tools do you use to invest in those sectors . Carol i really like etfs because you can get a broad exposure at a very low price. For example, i love the international intimate etf, up dni. This year, if dni f i also like qqq. And bht. So you can get health care easily. You can get tech easily. You can get International Internet could easily through etf vehicles. I think that is the most resilient way to do it. Individual names, i mean, i love amazon. I always tell everybody, put that stock in your kids College Education fund and you will not have to worry about paying for college. I think really focusing the sectors that are going to win. Things like fedex, like medical companies, things like technology. That is where you are going to be focused and otherwise build up a large cash cushion should be unfortunate scenario happen. Like you arends still betting on overvalue for the next couple of quarters. Carol i am betting on growth overvalue for the next year because growth is text. Whether or not we have pandemic, tech will continue to go forward, and i believe the digitalization of society in every single country in the world will continue to accelerate because people are developing new habits and they are not going to go back to their old habits. Even if we get a vaccine within 12 months, remember, getting the entire population vaccinated does not happen in a day. That could take 12 months. So it is overly optimistic to think that this thing will vanish in six months. That is completely unrealistic. We have to think 24 months before things really get back to where they were. What i amt is kind of wondering, if you are pricing and for the middleoftheroad scenario within your strategies. A lot of people that we are talking to are saying we might get a vaccine, might not be entirely effective. It might not of an overall infections. It might just lessen symptoms. A vaccine will not be the magic bullet to begin with. That is correct. You really want to focus on the one thing you do know is that the virus in some form or fashion is going to be around for the next two years so we want to look at the sectors of the market that will perform well in a virus pandemic pandemic situation. Theres plenty of great stocks that will continue to do well. We want to develop as much savings and budget as much as possible to have cash cushions for downturns and unexpected events. Being conservative on one hand and really focusing on the momentum sections on the other, in other words, a barbell approach, knowing that scenario one and scenario two probably are a 5050 probability right now. Just do not know. That does not mean you cannot make a lot of money in the tech stocks. Carol, great to have you with us. Carol pepper, ceo of pepper international. Coming up next, crude gaining as u. S. Stockpiles are shrinking. It looks like 40 to a barrel will be a tough ceiling. Wti paring back at the start of the Asian Session at 39. 60. Well get more on what lies ahead for the oil patch, next. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Top u. S. Airlines fell despite united saying it will boost it must take schedule next month to roughly half of last years levels. United says International Travel will also improve as it prepares to add about 25,000 services in august. However, rival american is cutting its 2021 summer schedule by a quarter from previrus levels, saying travel demand at home and abroad will be slow to recover. Tesla has officially replaced toyota as the worlds most valuable carmaker, underscoring investor enthusiasm for battery tech over internal combustion engines that have powered autos for more than hundreds of years. The stock has more than doubled this year, climbing again wednesday to give tesla a market cap of 207 billion. 6 billion more than toyota. Tesla remains far below its traditional rivals. Parts and its creditors are squaring off over how to shrink its nearly. 5 million fleet of cars and pay off 11 billion in bonds. Rework its lease to hold onto 150,000 autos as it looks to restructure as a growing concern. Normal practice states it should deal with the car is as one entity. Market watchers say a ruling could upend the asset act securities industry. Coming up next, pfizer announces promising results from its experiment of virus drug. We will have the details, next. This is bloomberg. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Karina this is daybreak asia. Hong kong is waking up to a new reality with hundreds of people arrested on wednesday during protests against the National Security law. Police say 10 of those obtained are accused of reaching the new legislation, which can carry life sentences. The u. S. Pledging a strong response to what it calls a draconian law. The u. K. May offer up to 3 million hong kong residents the right to move to britain. All makers in washington have unanimously passed a bill imposing sanctions on banks that do business with chinese officials involved in the crackdown in hong kong. The house bill is similar to a measure approved by the senate in response to beijings move. Nancy pelosi says chinas actions signal the death of one country, two systems, that has been in place since the 1997 handover. In oil, the corruption trial of the former malaysian prime has been halted in an upcoming local election. Proceedings in the 1mdb case will resume on july 15 with a further delay permitted if he has to attend parliament. The trial involves billions of by 1mdb and 680 million that landed in the personal bank account. Spacex has successfully launched the u. S. Militarys newest gps satellite after a twomonth delay amid the coronavirus upheaval. The new falcon 9 booster fired a payload into orbit before landing on a seaborne platform. The launch was originally set for april. The u. S. Space force held it back because of the virus. The satellite joins an array of 31 gps craft already in orbit. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery, back to you. Shery new Coronavirus Infections continue to mount across the u. S. , but there may be some good news. Early tests for an experimental treatment show signs that a vaccine could come by early next year. Lets get the details from bloombergs am a. How promising is this latest trial . This is certainly good news, but it is very early. These are results coming out of pfizer trials with the biotech company. This vaccine produces levels of virus neutralizing antibodies. That is good news, but again, it is early. Vaccine makers are moving really quickly, unprecedentedly quickly , and fact, but it still takes time to bear out a vaccine, especially because these are products they are going to put in a large group of largely healthy people. They want to make sure it is safe and that it works. We have some assurance about that with some of the new guidelines that the fda released with regards to how they will be doing the approval process for any vaccine . Mma yes, you know, it is a good question. I think that, you know, the vaccine guidelines continue to evolve and its really something that my colleagues have been covering really closely. I think what is important in light of the latest on vaccines is that you are seeing, without effective vaccines and treatments, that we are having these new hotspots emerge in the united states. The Public Health infrastructure is tamping the spread of the virus, so having some of these vaccines come through sooner rather than later is really going to be incredibly important in the next stage of the virus. So tell us a little bit about the hotspots here in the u. S. , because we have seen pennsylvania requiring residents to wear masks. Are we seeing finally a changing behavior in some of these states that perhaps have not been as strict when it comes to these requirements to combat the virus . Is a goodknow, it question. I think we have seen it in many ways. In texas, the governors saying that they could not require masks. The loophole emerging that businesses require masks upon entry, so i think it will play out in probably a variety of ways depending on the state, depending on what they are comfortable requiring. , shouldteresting to see the requirement be statewide or should it be enforced by businesses . A lot of people would tell you it would be difficult for businesses to enforce this, but certainly, some of the activity that has been leading to this has been the result of not taking precautions like masks and other kinds of precautions as well. These things are only going to become more important. People come into close contacts. M a court with the latest. Johns Hopkins University assistant professor of emergency medicine spoke to bloomberg about schools reopening in the u. S. And the continued importance of testing as states emerge from the lockdown. I think the most important thing we can do today is continue to encourage the public to physically distance and to wear masks. A lot of the research coming out is showing that that is working. We have to be vigilant. We all want to move towards reopening, but looking at the growing case counts, looking at the cases across the united states, i think it is absolutely critical to maintain those basic Public Health interventions. It is july 1. Get out the calendar. Backtoschool shopping begins in 42 days. Are we going to go back to school . What does the pandemic due to the classroom of elementary schools, middle schools, and those disease ridden seniors and juniors in high school . Lauren everybody wants kids to go back to school. Probably parents the most. We have to take a cautious approach to opening. We have a lot more research to do on how kids transmit the virus. Theres a few things that are important in the planning, understanding how you can keep keep the and families of the kids and the teachers and the teachers families safe. These are adults who some of them we have to figure out ways we can keep them as safe as possible and that may mean increased testing of kids going back to school, better access to testing more broadly for their families, for teachers, for administrators in the school. Everyone involved in the process. What do you think will be the process when somebody in chemistry class in the 10th grade gets the virus or their father gets the virus . How are we going to do that . It is going to be really hard. Access to testing remains so critical to all of these reopening strategies, and schools are not immune to that just because it seems like kids get left sick or transmit less. There is still a risk. If you have someone back at a school who starts to be symptomatic or who has a simple medic family member, you backcheck. We knowhe things that works, you identify that kid, isolate them from school, report them out of school, do Contact Tracing and symptom monitoring. It is hard work. Rightly option we have now. Those basic Public Health interventions. Haidi how do we encourage people or even force people to wear masks . A mask lauren wearing is politically quite divisive right now and it is really challenging. It is something we have been doing a lot of work on. Intervention. It is safe. We are seeing data that it works. In the early times of the outbreak, theres a lot of mixed messaging. Because we did not have enough masks for healthcare workers, we did not know if people could use them safely. We did not educate the public on how to wear them. A lot of people were skeptical on their utility. Comeve seen a lot of data out to know that they are effective not just in keeping ourselves safe but in keeping other people safe. The message is that my mask is for you and your mask is for me and if we all wear masks, we can get through this a lot more safely with a lot fewer infections and fewer deaths. Shery that was lauren sauer. School ofopkins health is supported by michael bloomberg, bloomberg lp, and bloomberg philanthropy. Coming up next, the Health Care Center has been a winner during the virus pandemic, but will efforts to curb the Crisis Support the sector longterm . We will get the outlook. This is bloomberg. Shery asian Health Care Stocks were the best performing sector in the first half. Hopes for a covid19 vaccine are among the catalysts driving the rally. Sophie kamaruddin in hong kong is taking a closer look at the sector. Sophie. Asian Health Care Stocks had a stellar first half, driven by pandemic related demand, along with the longerterm structural focus, as a spending on Health Care Products and services is growing in the region, making the sector the best performer. Analysts are staying bullish even with the risk of this rally looking overdone. Switching out the terminal, just to show you what is going on when it comes to valuations, they have been pushed to previrus levels and beyond with msci Asia Health Care Index Trading above 30 times estimated earnings for next year. More expensive for u. S. Peers. That is aligned in blue on the chart. Strong investor interest has been a boon for companies that are listing this year amid the health care frenzy in hong kong. There continues to be a steady pipeline on monday. It had the best debut for a health care ipo in the city. Switching out the screen this morning, south koreas sk biofarma is to start trading this thursday. The ipo was priced at the top of the marketed range, raising 800 million, making it the biggest inre sale for south korea 2017. The pharma sector is the fifth largest on the kospi with the top three players commanding a combined market cap of about 100 billion. As for these valuations, that is raising red flags. He sees it happening in the markets. Haidi. Haidi lets get some more insight into this sector. Bernstein seeing a Research Analyst for asiapacific health care. A are seeing just almost frenzy within biotech and health care names as a result of any piece of news pertaining to therapeutics or a vaccine development. Covid19. Ork for how much of this is speculative in what is a hugely speculative incrementally datadriven sector . Yes, so the sector did extremely well in the first half. The Drivers Behind it are partially around covid19, especially the r d folks focusing on vaccines and drugs. Smallally regionally, any its talked about on the news. It is more shifting to her toward a more promising one. Areddition to this, there strong demands for diagnosis. For ventilators. As you can imagine, when the whole virus pandemic becomes global. In addition to this, over the last few months, there are a lot of busy biotech ipos. Biotech,irm runner of aging dialect, it performed very well. Partially driven by the covid19, the investors level or belief it has also improved significantly driven by the virus. That forward, i would say the demand for diagnosis and then also for medical equipment such as ventilators, those are quite solid. Should be very few risks. The question is how much more upside, considering, you know, how much additional diagnosis there will be. , there isor vaccines natural r d risks. Different companies are using different platforms. Preprocess the vaccine innovator. It has rallied so much over the last few months. The covid19 vaccine. They will have data coming out. More are also activated. , those are in china natural risks. Drugs,nt type of different risks. The covid19 opportunities in the runup we have seen in any kind of relevant names, how bullish are you on the Chinese Market . We have had pricing thats been pretty bullish for the sector as well. Yes, the structural changes, awould say, they still pose very strong tailwind for the sector, which is the government keeping accelerating the drug approval and r d process and the talent, private capital, pushing into this. There are a lot of r d breakthroughs starting with oncology. Area fornto the drug the global r d partner for Drug Companies themselves. At the same time, the government is harsh on pricing, so that would be that would be a more mixed driver for the sector. The government wants to reinvest. They can cut the price. Shery are you expecting more ipos from biotech names and are there any that you have seen so far that you are optimistic about . There have been quite a few in the last few months. There will be a few more, including a few big ones. The r dame time, biotech innovator partner will also come to hong kong to gugino listing. Now, the ones that have been properly listed, i have written about it. There fundamentals have different types of strengths, but they performed really well for the ipo. Haidi shan he, great having you with us, Research Analyst for asiapacific health care. Coming up next, citigroup dials back plans to return staff to offices in 13 u. S. States after the latest warnings that america is going in the wrong direction on the coronavirus. Details just ahead. Dont forget, if you are away from a screen, you can always find indepth analysis and the days newsmakers on Bloomberg Radio, now broadcasting from our studio in hong kong. Listen via the app. Bloomberg radio plus, or bloombergradio. Com. This is bloomberg. Shery citigroup is pulling back on plans for returning employees to offices across the u. S. Corona crisis cases coronavirus cases surge in many states. It has efforts to contain the pandemic. Lets get news with the finance reporter. What exactly did citigroup decide today and what are we expecting on this lastminute change . It is pretty interesting. Citigroup had been saying they were planning to return about 5 of workers to their offices starting this week, and you know, after seeing local data on the ground in certain cities, they have decided to stop those plans in 13 states across the u. S. They will go ahead with their plans to return in new york and that is just the northeast. In places like texas, florida, idaho, south dakota, where they have pretty large operations, those votes will continue folks will continue working from home. Know, what i suppose is the effect Going Forward for the workplace and do we expect this to be a pretty ebb and flow type of situation . Historically said throughout this whole process that we will be driven by data on the ground and not have specific dates that we bring folks back, so i think we will just continue to see more of that. If they see transmission data looking the way they want it to look and they see case numbers and hospitalization numbers looking safe, they will bring more people back, but if things start to go the other direction like we have seen in a lot of the southeast or the midwest, they are going to pull back plans and keep folks home and hopefully safe. Haidi what about shery what about not just keep them safe for now but a permanent fundamental change in how these banking how the Banking Industry operates given that not Everyone Needs to be at the office . Jennifer it will be interesting to kind of see how many jobs are made permanent when all of this is over and all is said and done. They did not prepare to declare the death of the office just yet. They fully intend on bringing everyone back. It is just a matter of how long that might take. They are really committed to having their offices reopened and having folks come back. I do think, at least for the foreseeable future, we can expect to see lots of signs everywhere telling people to stay six feet apart. Definitely will see masks, checks at the entrances. Its going to be a very different Work Environment for the foreseeable future. With thennifer surane latest on citi. Lets get you a check on the latest business flash headlines. He has the latest big man money manager to quit the hedge fund business. Forces bet against the Housing Market in the runup to the financial crisis. Turned out well and is converting his firm into a family offer. Be concentrating on his own fortune of about 4. 5 billion. Reports from germany say payments for wirecard in 2018. Report thatve a says wirecard extended loan facilities even though interest on the original deal had not been paid. German prosecutors have including its headquarters outside munich. Chinas rival has all but completed an internal scandal probe, saying fabricated transactions began as early as april last year. It found that its former ceo and coo were among a number of employees who used third parties to invent 300 million of fake sales. They have been dismissed and the board will meet later on thursday to consider the future of its chairman. The founder of chinas highflying ecommerce startup has stepped down as ceo. It has reduced the personal stake in the company by roughly 14 billion. Still holds roughly one third of the company and 80 of the Voting Rights and will stay on as chairman to ensure longterm corporate strategy. The cto steps up as the new chief executive. Shery coming up on the next hour of daybreak asia, i. T. Market analyst kyle joins us at the market open. Plus, china tycoons are flooding hong kongs exchange with 20 billion worth of new listings. We will discuss with ringo choi. On another programming note, joining bloomberg for our annual broadcast of the boston fireworks spectacular. It is the fourth of july tradition from the comfort of your own homes this year. 8 00 a. M. S july 5, hong kong time, on bloomberg television, radio, and bloomberg. Com. Haidi asian markets liking the look of that lead we had from wall street overnight. The s p set for its best we can about a month. New zealand is off the session highs after we had the resignation of their Health Minister. Byni futures just about up. 5 , also after session highs. We should see a nice pop at the open. Nikkei futures have turned positive,. 3 higher. The are seeing a bit of weakness there when it comes to class b futures, lower by. 3 . Lots more to come. We have the start of trading in tokyo, sydney, and seoul almost upon us, and dont forget we have the return of hong kong to trading today as well. This is bloomberg. Haidi welcome to daybreak asia. Shery asia has major markets have just opened for trade. Asia looks to follow wall street with better manufacturing data tempering concerns of covid19 spread. Global infections continue to rise with record new cases reported daily in the u. S. President trump says masks are good, but will not accept that they should be well. Protesters detained under the new security law. Japan, korea and australia are coming online. Green shoot in tokyo. This on a positive development. 4 . The yen yen is on firmer ground. Eye on toyota. An bonds checking in on coming under pressure with an increase of that for the first time under the new issuance plan. We are digesting inflation data. Flat, whichty much could put pressure on the be ok bok. Keeping an eye on financial services, sent to investigate homegrown Asset Companies over the next three years. Well. N i as lets check in on australia. Moving slightly higher. Start ofout. 4 at the trade. Edgingsie dollar is lower, ever so slightly. Of trade data. On tour eye tourism. They will lose about 1. 2 trillion this year and we are counting down to the open in hong kong with market we opening. To look out for volatility. Beatingres have been equity gainers around the world. More of that to come. Carl, great to have you. Overextension to start the conversation, surging above that moving day average with a record high. What weretty similar to saw in february. That was before the downside that we saw. Before the talks of rotation you do not see that happening. No. Here has been a deception they finally fired that shift. I do not think that the covid19 markets think many we might be in a situation where it turns up on steroids. Growth is the only place you can go to chase momentum. Stocks and financials are not allowed to fall. Risk has been underwritten. It is probably going to continue. When you look at the decline in apple overnight, that does not worry you . It does not tell what is to come, given that we see this playing out in the early part with the rally and store closures early in the pandemic echo by all means, the capacity for a correction in the market there is no line. Perhaps some of the central drivers in the market are getting a little bit more bearish. Opportunity. Ys the probably not without bringing the risk market. The growth and opportunity is remaining in the tech space. That is just where the growth will be. Withg to drive investors growth opportunities. It is like we have seen the last couple of years. Out int think able play the mediumterm. They will be major drivers in the future. Shery how about the Health Care Sector . We have seen a lot of enthusiasm given the pandemic. Atrmaceuticals opening 98,001 98,000 won. Is there an opportunity to be found . Definitely. Broadly speaking, it is a defensive growth sector. About. Art to come we are in a market where you want to try to find longterm growth and opportunity in a low return and though growth environment. Stocks will be resistant to some of the shocks that we have seen over the last few months. Digging down more into the inket level, this is major the history. Trading activity and looking for opportunities in health care a much bigger be past time. Some of the challenges they face with opportunities. Let me ask you about the different regions. Whenve seen exceptionalism it comes to u. S. Growth or the market. Will the u. S. Markets continue to outperform . We continue to see the resurgence compared to europe or asia. It, that isok at just because they are so large. They are divorced from fundamentals. A place thatind can give you a yield. Will not to say that there not be sought performance from asia. Overall, there will be a drive for yield. That means u. S. Stock outperformance. Themselvesfind caught up in that as well. Shery always great talking to you. U. S. Ahead, more on the job reports. We break down what might be another long list of reports. Hong kong wakes up to a new reality. U. S. Lawmakers unanimously approve new sanctions. This is bloomberg. To havedent trump seems changed his opinion of the federal reserve, saying he is satisfied with current policy. With the very happy performance. He was not impressed initially but is now more pleased. President trump says face masks are good but repeats that they should not be mandated, even as infections continue to rise. He is not convinced they should be law. He mocked rival joe biden for wearing one. Topped 10ections have point 5 million with mexico over of taking spain with the most covid19 deaths. Indonesia is delaying but the city reported hundreds of new infections. Social distancing rules will be stepped up. Departed currently has more coronavirus fatalities. The indian Prime Minister has quit his social media platform after new delhi banned a bunch of apps from china. Rising economics concerns and a personal issue as well. 150 posts on the platform, including a few posts of him and president jean jinping. Xinping. The u. S. Has a representative unanimously passing a sanctions bill. As theislation passed legislation prepares to roll out sanctions over human rights abuse. Wang for thislina story. We have seen escalating tensions between the u. S. And china. The possibility is very high that it will get to President Trump because the Senate Already past something similar. Must this is similar but not identical to the bill passed last week. This bill does need to be , but thaty the senate is expected to happen very soon, potentially on thursday. This is in response to china enacting the Social Security law that goes beyond what many politicians expected. An increasing concern that it will have a Chilling Effect on free speech and political activity in hong kong. They made their first 10 arrests under the law, including a man arrested for holding a hong kong independent flag. Free hong kong was one of the most stable, prosperous and people cities, now the will be subject to the partys s. Ns whim it is halting shipments of Defense Products and restricting visas of party officials. It is starting to roll back the preferential treatment. When it comes to this sectioning have chinas largest banks 1. 2 trillion in funding at stake. Haidi how close is the Trump Administration to rolling out sanctions on china over the human rights abuses . They have been longdelayed. He is required to punish officials responsible for oppressing minority groups. The u. S. Is now preparing to those sanctions after security thatl President Trump gave the green light. According to an interview, trump said he had previously held off on imposing sanctions on officials involved because doing so would have interfered in his trade deal with beijing. Latest in these frictions over security law in hong kong. President trumps former one ofy advisor the most explosive allegations is that the president sought chinas help to smooth his reelection. All sides understood the president s meaning. Donald trump speaking in english. He did not speak in chinese. Read wasnce that you one that i agreed in the process tothe publication review describe the exact words. Daysat did you do in the and weeks after that . How did you followup . There are a lot of things done in an effort to keep policy on track. There were extensive negotiations underway for what turned out to be a partial trade deal. There was not any way to take those words back. I believe in the records of the theyse government, when are probably released, you will see their notes as to what the president said in that meeting. It was no doubt in my mind that they understood what was going on. Occasiont the only where this comment was made. Jobhave to go on doing the you are assigned to do on a variety of fronts, not just how many soybeans china is buying. This is the big issue that undermines pretty much everything in this book. You are an advisor to the president and you overheard him asking a foreign leader to help him win an election. You have served your country again and again, but you chose to wait to put this information in a book, instead of doing something about it at the time, and i still do not understand why. Straightforward. I have given it to the american people, who are the ultimate judge. Because of how they structured their effort, they basically made it impossible for republicans to participate in an impeachment process that might have led to a different outcome. This is not a hypothesis. Crisis,atergate democrats and republicans worked together. Choiceconclude he had no but to resign. Did what i thought was in the best interest of the country because i was not going to ticipate i have to jump in. Interest ton their put this information in a book . The fact was that democratic leadership, the advocates of impeachment had built a cliff, and they and a lot of other lemmings were headed towards it. It is very clear that had i participated in that because of the malpractice, my testimony would have made no difference, and it is not just my belief. This is something you saw in the debate at the senate. Many republicans thought the argument that even if you believed in the quid pro quo, the famous phrase that reverberated through the hearings, even if you relied on testimony that was given, that the conduct by donald trump did not rise to the level of an impeachable offense. That is a legal argument, and the way it came up was entirely based on the democratic strategy on a narrow basis. It turned out that was not only the strategy of the advocates, that was Donald Trumps strategy as well. Ahead. Plenty more this is bloomberg. Andi teachers rallied those gains were largely fueled by a big klein. Su keenan joins us with the latest. You say the rally was cut by growing concerns. The implications are that these rising cases are going to further put a dent in fuel consumption. If you look at the big picture, it climbed all the way from below zero to just above 40, but it has failed to close above that. That is the plot despite a decline. Decline. Huge look at brent crude used mainly in europe and we are seeing. Rastic output cuts that is doing a lot to reverse the supply. Said, later on the cases in the u. S. And the potential flareup in tensions and they see prices stuck in a range. Where do analysts see the oil price going from here . They are expecting to be in a narrow range, kind of where we are right now with a hard resistance level above 40. , buteally dropping much not really rising. Citigroup is out with compelling research, saying that at its peak, the virus and raced about 30 of oil demand with a lot of drivers off the road during the lot down. Shery su keenan there with the latest on the oil industry. After 18 months collapsing under 30 billion of wildfire liability, pg e has emerged from bankruptcy, saying it has completed restructuring. Critics say the Country Company has yet to fully address the issues it faces. Southbank is about to raise 320 million in an initial public offering, having raised its share pricing amid rising investor interest. Gives it a market value of 1. 6 alien. They led a funding round in lemonade, which values the company at more than 2 billion. Haidi citigroup is looking to return staff after the virus. That there telling us bank will resume normal operations, including in texas and florida. I got an oriole here. Eh. Common bird. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Shery investors are looking ahead to the next payroll numbers. Rights down the most recent data and previews the june report. To issues that began in march. Determining the Unemployment Rate is simple. Did you work during a particular week . Misinterpret the question, especially if you have been temporarily furloughed from your job. Survey takers may improperly classify people when they should have been classified as unemployed. The bureau published a jobless rate but said it is actually higher when adjusted for errors. If trend is improving, but they start properly accounting for who is working, the result may be an increase in the Unemployment Rate. Adding to the confusion, the same jobs report includes monthly payroll figures compiled from a different survey. They worry the payrolls number result. Nd a divergent shery that could prevent significant uncertainty. Our senior u. S. Economist joins us now. How do you expect this collection issue to affect jobs numbers later . Is different. When you look at the numbers for rate wouldemployment have been roughly three Percentage Points higher, had they been correctly identified. , 16. 3 Unemployment Rate is significantly different from routine. 3 . We are expecting a decline in the employment rate in the months of june to Something Like 12. 5 , but obviously, its the Labor Department changes the specification and the way they account for the number, that could rise as well. Haidi you and your team are looking beyond the jobs numbers. What are you looking at for a key indicator is road . Is onot of focus acceleration in covid19 cases. Impacts growth Going Forward, but that is not the only concern for us. Theher thing is unemployment status. The harder it will become for them to join the labor market. Was a significant issue in the last expansion. Delay it affected workers chances to go back into the labor force. I think it is not a problem right now, but in the mediumterm, it could become a significant issue is people stay out of work for a significant amount of time. Numbers, more and more by the time we get to december, a lot of people, millions in fact could become longterm unemployed. Born that a quicker bottoming does not mean a quicker recovery. How could it play out . Referring to an uneven nature of the recovery. Obviously, we are expecting a significant drop in Economic Activity in the Second Quarter of the year. Rebound going into the third quarter. As the economy was we opening, it still is in a lot of states. Simply we opening the economy will result in a significant rebound and activity. It is about the sustainability of the recovery. That is the biggest question for us. There are a lot of different risks surrounding future outlook. We expect a decline of 6. 5 and we estimate that it would take at least three years to get back to the precrisis levels of activity, Going Forward. Senior economist joining us from new york. Lets look at trading in asia with sophie. A lackluster morning for asian markets. Using gains while u. S. Futures are swimming flu swinging lower. Adding about half a percent. Adding. 2 . Jp morgan saying they are on the aussie share market with an uncle incomplete recovery, retaining focus. Asian stocks modestly higher with health care leading gains. A debut. R welcoming pharmaceuticals soaring. Shares at 127,000. This is south koreas biggest share sale since 2017. Doubling down. Whichng in on that stock, is under pressure after suspending its ipo given the Investment Sentiment has been weakening with unclear increased uncertainty in the global economy. Up next,ming uncertainty surrounds hong kong as a Global Business hotspot. Fromtopping chinese tech wanting to list. You will get to the specifics with ringo choi. This is bloomberg. This is daybreak asia. Lawmakers in washington have created a bill. The house bill is similar to a measure approved by the senate. Speaker nancy pelosi says it signals the death of one country to systems that has been in place since the 1997 handover. Hong kong is waking up to a new reality with hundreds of people arrested on wednesday during protests. Accusedose detained are of breaching the new legislation that can carry life sentences. The u. S. Pledging a strong response. We make clear that if china continues down this path, we will introduce a new route for status to overseas enter the u. K. , limiting the ability to live and work in the u. K. And apply for citizenship. That is precisely what we will do. News, Vladimir Putin won an attempt to stay in power. Approval ratings remain at historic lows. He seeks to stay in control until at least 2036. The corruption trial of a Prime Minister has been halted to let him campaign in an upcoming local election. 15ceedings will resume july with a further delay permitted if he has to attend parliament. It involves billions of missing inlars and about 680 million the personal bank account. India is considering a major shakeup of its Massive Railway system, asking private companies to run trains. It would see the private sector investing to provide services on the scrawling network. It would introduce modern technology and create jobs while lowering costs. More than 8 billion passengers in 2018. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell and this is bloomberg. Quick check get a on markets trading. We are seeing the japanese nikkei under a little bit of pressure at the moment. Continue to see Technology Stocks dragging the index lower. The japanese yen is Holding Steady at that 107 level. He had seen the japanese yen rising as investors dial back on risk assets. We are seeing the kospi gaining ground. Tiny bonds are looking to hong kong to head their bets. Took. Com is one of the latest ones. Beijing ist as tightening its grip on hong kong, casting doubt on its future as chinas Financial Hub. Leader,ing in the ipo ringo choi. We have seen tycoons flooding the exchange with the hands of dollars of money. Is hong kong still the best bet for all this chinese cash or for chinese foreigns to go to internationally, given that they are facing more scrutiny the u. S. . Kong is one of the best places. Traditionally, the u. S. Has been good. You can see a lot. Some of them are because of the new business model, hong kong or mainland. See those great in a more mature stage. Kongof them pick up hong to bazemore funding for their campaign and for future expansion. You mentioned between the tension between the u. S. And china. That might be one of the reasons. Where these tycoon companies are working with is on the mainland. Engagen have better and when they go back to hong kong or be there. Shery all of these chinese inms listed, most of them these new economy companies. How does this add diversity in the exchange . Think that will be one of the key drives for the exchange. People understand that it. Ill be crucial and increase mind, it is crucial is hong kong, which traditionally in Development Company or economy sectors. With these upcoming companies, i can see that it will increasingly show importance in the overall market cap of exchange. With the pressure coming down on the chinese government, with all that is going on politically, do you expect to see any measures or policies that can be taken to broaden the appeal of hong kong and maintain its position as the Financial Hub in asia . Now, there isht because we pressure can see more and more companies being listed in hong kong because of new regulation, but on the other side, hong kong is doing a lot of marketing, showing the world that hong kong has kept the news very and is exemplary close to International Policy or trading practice. Important tovery maintain the core value of hong kong as a hub for the ipo market. At those ipos, especially the mainland, i would say it is still far away from hong kong to become a Real International hub. There are only around 10 companies that had a small market cap doing the crossborder and using hong kong as an international hub. They choose hong kong as a listing place. In terms of governance, they are meeting a little later today. This dos a case like when it comes to the reputational aspect and concerns over transparency and some of these companies . I cannot comment on that specifically, but in general, thinky governance, i around the world, that a lot of companies have been reported for such matters, including others so ithe u. S. Or the u. K. , think that people are getting more and more concerned over the spending for the government. Toy would like to introduce comply or minimize the risk in their organization. They will improve their system and the authorities. They pay a lot of attention to those companies and working parties. There will be a lot of rules and asking them to do the whistleblowing, in order to protect the property investors. News we have seen more about potential challengers to hong kong as a Financial Hub. We heard from japanese government officials, launching ideas on how to be more attractive for international firms. Do you think could be a real competitor in asia . I might be a little bit biased. Hong kong has the highest chance. Reasons like languages. Listing,go for a japan the language might be one of the issues on order is. The regulations in japan might be more complicated or not as wellknown known to the rest of the world than in hong kong. With the history of the here, it being listed to hook up those investors the hong kong stock market. Chinese,ow, mainland the number is top of the world. A lot of companies would love to tap into the investor base, so the Company Liquidity can be secured after their listing. I would say hong kong is one of the best. Other places like indonesia, when you compare the market cap i still believe hong kong will be the Asian International hub. Differenturs are very than new york. Asy might choose hong kong one of their listing places. Haidi we really appreciate your time. Asiapacific ipo data joining us. If you are away from the screen, you can get indepth analysis on Bloomberg Radio. We are broadcasting live in hong kong. That is Bloomberg Radio plus or bloombergradio. Com. This is bloomberg. Shery lets get a quick check of the headlines. Suspicioustform made loans worth hundreds of millions of dollars to three companies in asia. Report that says they extended loan facilities, even though interest on the deal had not been paid. Raidedprosecutors have offices. Astartup has stepped down ceo. Still holding roughly one third of the company and 80 of the Voting Rights. Towill stay on as chairman oversee corporate strategy. The ceo will step up as the new chief executive. Haidi we are counting you net down to the market open. The first day of that National Security law bringing out protests on the streets of hong kong. Financial markets elsewhere were relatively calm. We expecting any alarm to play out in the markets despite the turmoil that we saw on the streets . Expecting what we saw at the end of may. This, the markets have stabilized. The hang seng is where it was before it was first announced. We have seen the hong kong dollar stabilize. The market shows not that much demand to speculate against the currency. A lot of mainland capital flowing into hong kong. It does depend on what kind of impact. It would not be the first time the market reacts to the rule. That to support the markets . It has been a record year in terms of inflows. Market. Ill in a bear it is really supporting. Sentiment is still pretty decent. We will look ahead to the open there. Coming up, we discussed the latest sanctions with former counsel general. That is it from daybreak asia. Our market coverage continues. Standby for Bloomberg Markets china open. This is bloomberg. It is not 00 a. M. In beijing and shanghai. Welcome to Bloomberg Markets china open. I am tom mackenzie. Yvonne and i am yvonne man. Our top stories this hour. Hong kong wakes up to a new reality. Protesters detained under chinas new security law. Tom global infections continue to rise