Million. America saw 60,000 cases in a day for the first time. Hong kong and tokyo also reporting record tallies. Singapore heads to the polls for an election overshadowed by the pandemic. Disposable wear gloves and observe distancing roles at the ballot box. Lets get to Sophie Kamaruddin in hong kong for the latest. Sophie after u. S. Stocks closed in the red, we are setting up for a lackluster start to this friday morning. Futures are mixed. Kiwi stocks added. 4 so far this morning. S p eminis nudging slightly higher with rising virus infections in focus in the u. S. As well as in asia and on the ecoagenda today, we are watching out for japanese pbi ending acree output and the philippine trade plus chinese credit growth data for june could be released from today. Singapore offline for the elections to be held. Asian stocks could pare the weekly advance but still set for the best five day stretch given the chinese stock rally we saw this week. Flipping the board, china futures have settled lower but staying above the 2015 high that was breached during the advance, which is flashing some overheating signals while mainland authorities have cracked down on margin financing platforms. Hong kong stocks may lose steam after a two day game while the local dollar is steady. It totals 13. 5 billion this year as the city contends with political and Economic Risks as new ascensions room over the National Security law. Haidi. Haidi we will get to our top story. The u. S. Continues to set coronavirus records with new cases topping 60,000 in a day for the first time. In the meantime, hong kong and tokyo setting new marks. Both cities having previously seemingly gotten control of their virus infections and the World Health Organization meanwhile is criticizing Global Leaders for their handling of the pandemic. Facee greatest threat we now is not the virus itself. It is rather the lack of leadership and solidarity at the global and national levels. That is what i said earlier. Every individual should reflect. Our healths bring care reporter, Michelle Cortez, with the latest. Seehe u. S. , we continue to these grim milestones. Is it concerning that days after officials had said perhaps we are looking at, you know, a lower rate of fatalities even if infections are climbing, we are now starting to see the death toll across multiple states hit records. Michelle exactly. You have hit it straight on the head. The numbers were coming and showing the younger people were the ones getting the infection now. The second wave and spreading it to each other and because they are less likely to get seriously ill and die, there was some political belief that this might be a good piece of information. It might be getting some protection, some herd immunity starting to build in younger people, but in fact, but Health Officials said has come to pass. We are seeing record rates of death across the south, seeing it in texas, florida, arizona, california, and not only that, case rates continue to go up at record levels in 40 states. We are having significant increases in cases. A quarter of u. S. States are hitting records. So that means that the numbers are going out. Deaths will certainly follow. Shery even in asia, where we saw that perhaps the pandemic had been reined in, we are continuing to see new virus cases. Michelle absolutely. This virus is not going away. It speaks to what the doctor said earlier. We need to have a coordinated approach to handling the virus because even if you get through at one time, if it was anywhere else in the world, it is one airplane ride away from coming back to the country and that is what we are seeing in hong kong, tokyo. As you said earlier, both places did an excellent job. They did not have to shut down to the extent other places did and they have been able to track and trace patients who have the virus, make sure it does not keep spreading, and they are still having to deal with this issue. Shery Michelle Cortez with the latest on the global pandemic. Takinghead, the yuan is over as the barometer of global risk sentiment as the dollar shows signs of exhaustion. He tells on this, next. Plus, election boost in singapore. Opens at the top of the next hour. A look at some of the issues as the city state looks to reinvent itself again. This is bloomberg. Karina you are watching daybreak asia. I am karina mitchell. The u. S. Is sanctioning Top Communist Party officials over human rights abuses. The move is a major escalation in the tense rivalry between washington and beijing. China is accusing the u. S. Of using lies and fake news, calling on mike pompeo to stop spreading political virus. He blames beijing for covid19 and being a threat to the world. Pompeo has been concocting fake news to discredit china and sew discord. It exposes his cold war mentality and zerosum thinking. Evenare still lies after being repeated 1000 times. Karina the u. S. Supreme court has backed the new york grand jurys request for oppressive entrance financial records while blocking Congress Subpoenas that might lead to their public release. Rulings rejected the president s view of his powers and call for sweeping immunity but probably spare him from scrutiny ahead of the election. The court said no one is above the duty to produce evidence when called upon. Singapore goes to the polls later friday for an election that is almost certain to return the ruling party to power. HasPeoples Action Party led singapore since independence in 19 625. The Coronavirus Response and the economy are among the biggest issues. Voters will be made to wear disposable gloves and will be given five minutes each to vote amid social distancing rules. Ireland has been in the race to leave ministers who shaped the Single Market economy. Donahue defeated the favorite. Of luxembourg to become president of the euro group. He campaigned as a centrist who could arbitrate between fiscally conservative northern nations and southern governments for looser virus rules. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. As the dollar shows signs of exhaustion, the yuan is gaining influence as a barometer of global risk sentiment. A worldwide rally in stocks, bonds, and commodities is increasingly mirroring moves as it builds on its best month since tober. For more, we are joined by the Economic Advisor with silvercrest asset management. Patrick, ray to have you with us. Ust is it really telling about chinas importance in leading the world in this economic recovery . Patrick you are going to see. Ome moves in currencies when we talk about a strong currency or a weak currency, what that masks is the fact that there are a lot of tradeoffs. China in many ways, during the trade war, was edging towards a weaker currency in order to give them an advantage. Skepticittle bit of a that the chinese yuan is going to emerge as sort of the new top global currency in the world. I think there are a lot of obstacles to that happening. That the it is clear United States is stuck in a difficult patch in terms of getting out of the covid situation. We continue to see that weakening in the u. S. Dollar. Let me bring up this chart on the gtv library because when you we knew that emerging markets have lived under chinas shadow but now, this chart showing us china is accounting for 45 of emerging stock values. What is this telling us about the importance of china now and the fact that perhaps we see growing control in the chinese Financial Market as opposed to more financial reforms, how this could distort the Global Markets . Patrick so you know, there are a couple things happening, first of all. A lot of emerging markets have the very heavily hit by coronavirus, the global shut down. Are seeing that that is part of the picture. The other part of the picture is just in the past week, we are seeing this huge surge in the china stock market and it is being, to some degree, it is based on confidence that china is at least somewhat containing the virus and its economy seems to be getting back on track, but the jump in the past week or so really goes well beyond that. And you know, the kind of quotes that you hear people saying, i cannot lose. I will get out just in time. Theresu think that perhaps another bubble in the formation here if the chinese are not very careful about it. We hear people saying this time is different, really dangerous words, particularly when it comes to the chinese stock rally. I mean, are there Lessons Learned . I feel like we have all seen this movie before. Patrick we have seen this movie before. Not everybody in the market has or at least remembers that they have. You know, china has had two very almost vertical stock market bubbles in the past several years. One in 2007. The other in 2015, which was almost an exact replay of it, except that the Chinese Government very heavily intervened to keep that bubble from completely popping. You know, since then, the shanghai composite has traded around 3000. That was sort of the line they wanted at the end of the last bubble. And now, we are really seeing for the first time the market was a lot of momentum move beyond that point. And a lot of it has to do with global liquidity and stimulus, money being pumped in both in china and elsewhere. You know, this is not a unique concern to china. People are concerned about equity valuations around the world, given though Interest Rates, and where that might be needed, and what that might lead to. In the past week, we are seeing that surge take place in china. Ok, being devils advocate, you are seeing valuations still playing catchup when it comes to the csi 300 compared sidebyside. If you are talking about markets driven by retail participation as well as centralbank and fiscal backstop, you can say exactly the same as the u. S. , so why wouldnt you invest in china which arguably has better prospects for economic fundamentals and a domestic recovery . Patrick let me begin by saying that i am not a big fan of making direct comparisons between ratios in different in different markets. They are different for a reason, partly because of just the mix of industries. One of the things that is true in china is that the ratio is pulled down by the fact that you have got a lot of banks accounting for a lot of the capitalization, and those banks are very heavily discounted because people are concerned about the level of bad debt in the chinese economy and in chinese banks and that that is not being properly accounted for in terms of chinese bank earnings. You know, there are a lot of things going on that you have to do when you make comparisons and say this market has peaked compared to the other. I am not making the argument do not invest in china. I am saying that what we are seeing in the past week, while partly encouraged by the return of the economy after the pandemic, the fact that it seems to be getting back on track, is further boosted by liquidity. Now, to some degree, it makes sense that, you know, if Interest Rates are very, very low, that is going to push up equity valuations around the world, and perhaps, for some time. But you just want to be wary when you see a market pop, like is taking place in china. If that momentum continues, you know, it has been encouraged by the Chinese State media over the past week or so, but they are starting to get a little cold feet because there may be some second thoughts because they realize it could put them in a position that they do not necessarily want to be several months down the road. Watch we will continue to with some degree of trepidation. Thank you so much for your time, patrick chovanec, Economic Advisor with silvercrest asset management. Owners. St retail trading has grown to account for about 20 to 25 of the u. S. Stock market this year. We spoke with the head of Execution Services and discussed some of the reasons behind the rapid rise of retail. Have beeninvestors growing as a more significant part of the market for a number of years and selfdirected individual investors and a lot has been a trend for a a while. We saw a lot of functions over the last few months, as you said. , by our retail estimations, because we handle 40 of the retail volume, we have a pretty good sense of how much retail comprises of the market, was about 10 , but towards the end of last year, with the zero commission changes that started getting introduced to the market, we did see that increased to 15 and then if you pass forward to this year, with a lot of the covid related volatility that we saw, we have definitely seen that percentage increase more towards the 20 to even on peak days, closer 25 of the market. Some of that is obviously triggered by structural changes. Some of that is triggered by some of the situations we have. How much remains is still to be seen. We continue to see Retail Investors becoming a more significant liquidity source in the marketplace. Traders areckdown still engaged with the market or are they elsewhere . Joe it is still a little bit of both. We continue to see high levels of engagement by retail. I think we will need a longer period of time to really make a determination to how much of that is driven by current Market Conditions versus the more structural changes. Significantseen a decline at this point. Joe, there is a perception in the market that the retail traders are dumb money chasing the smart money. Do you think that is antiquated now that so much of the market is retail . Joe i always think that has been, you know, a little bit of a misnomer. Certainly, Retail Investors have a different investment horizon and a different profile to their orders, but ultimately, you know, the market has been pricing in all the information it has at that point in time. Retail is clearly a significant force, but they are not going to be the ones that are solely able to drive valuation or market levels. Spreadsake money as widen out and as volume goes up. We definitely saw both of those two things happened a couple of months back. And welooking at markets are trying to work out where the next catalyst comes from and i am wondering whether you guys are anticipating that we do see another bounce of volatility, that we do see spreads widening out and volume picking up. Do you think we are done with the Current Situation . Or do you think we go back to that choppy market that we saw, as i said, a couple of months ago . Joe only time will tell and it is the right question that i think a lot of people are wondering about. My earlierack to comments, the theory around markets and pricing in current information, and looking at where valuation is, clearly, the markets have been normalizing and taking a bit of a view that the outlook is positive, but that said, i do think that, to the extent any new information comes out, whether positive or negative, or anything that is unknown at this point, gets incorporated, then certainly, we could see heightened volatility as the market digests whatever new information comes out. At this point, we are waiting to see how things evolve as a marketplace. So far, the volatility has really benefited the market to the upside. When things get choppy or towards the downside, how is that going to dramatically will it dramatically affect how Retail Investors see this market . Really makingis sure that clients and Retail Investors in particular are able to buy and sell and they want. We as a market maker are there to fill the other side of the orders and we buy when they want to sell him and we sell when they want to buy and our role is making sure that they have a very smooth experience, and it is really impressive when you look back at some of the volume levels that we saw earlier this year, i think in 2019, the highest volume level we saw was around 2 billion shares and our average in march alone was 3. 3 billion shares. I think a lot of people take for granted how well the markets work and how smoothly they function. In times when they are not on the going up but when they are going down. A lot of our focus and our valueadded in the marketplace sureprovider is making that whatever direction markets and showing our role as a liquidity provider, making sure investors have as smooth and experience as possible. Coming up next, the white house sanctions top chinese officials for human rights abuses in shandong. Next. This is bloomberg. Haidi the u. S. Is sanctioning a top member of the Chinese Communist party and three other abuses over human rights abuses. Thats crossover to selina wang in beijing for more. What do we know about these sanctions . Selina the sanctioned individuals include the shandong province secretary who sits on the 25 member politburo. He has the highest ranking chinese official to ever be hit by this type of sanction. He has seen as architect the repressive policies and she and john where the uns as upwards of one million uyghurs have been detained she and john the u. N. Sayse upwards of one million uyghurs have been detained. It is unlikely these officials have any significant financial ties to the u. S. Senior officials have been pushing for this sanction for months but trump had been delaying the move over worries they would complicate the u. S. China trade deal, and this also marks the first time the u. S. Has sanctioned a sitting chinese official under the 2016 Global Human Rights accountability act, which gives the u. S. Broad authority to impose human rights sanctions on foreign officials. Shery we could also soon see sanctions over hong kongs National Security law. What would that mean for global banks operating there . Selina banks are currently assessing how to mitigate the risks of a potential breach of the Hong Kong Security law and how to implement potential u. S. Sanctions without exposing staff in the city so it is a compaq it is situation so that includes having offshore entities rather than local units implement the sanctions. But still, that could bring little relief since the hong kong legislation also claims extraterritorial rights, which is likely to be a main point of legal contention. Retail and corporate banks with big presences in hong kong such as citigroup and hsbc could also be more exposed to the risks from the bills, especially on sizable transactions done through local units. Banks as well including citigroup, goldman, j. P. Morgan, are walking this tightrope between the u. S. And china, given their operations in hong kong and their ambitious plans for china this year. Hsbc is especially under fire after voicing support for chinas security law under intense pressure because of its very dominant role in hong kong. We have also learned that global banks are reviewing their client base to try and identify people who may be exposed to sanctions under the u. S. At and look over agreements to make sure they have clauses that allow them to ditch customers without penalty. In beijing. A wang coming up next, singapores open 30 minutes from now. We will discuss the top issues for voters, next. This is bloomberg. That is what this election is about. Whom do you trust to get you through the very difficult times . Encouraging start to think in this election, you will see some of the opposition parties coming together and coming up with a common message. Meeting people, talking to them. You know, we think that many problems which we have tried to highlight at the same time, we are also long term in terms of how singapore can emerge stronger. We have continued to work with things like 5g. Really, to encourage our businesses to transform itself, whether locally or internationally. They compete for businesses elsewhere as well. Hast will not be about what happened already but what is the anticipation of the future and plans to come to deal with the future of this crisis as well as our country . Shery singaporean politicians and Business Leaders talking about the key issues in todays election. It is said to be the last for the prime minister, who has promised to step down before his 70th birthday, which is around in around 18 months. Thats had to the lion city. Leftuling party has singapore since independence. Is this election more symbolic than anything else . The pa p expected to win the majority, expanding its grip on power. But this election is still significant. It set the stage for the next generation of leaders, the socalled 4g leaders, led by japanese economists, the finance mester. The ruling party is calling for a strong mandate. That means anything closer to 60 , which is the worst showing it has ever had, could as a disappointment. It may prompt the ruling party to review its policies and leadership, do some sort of soulsearching. We talked about how the ruling pap has never won anything less than 93 . It is a significant swing over the years. Back in 1917, it was more than 80 . That dropped to 60 . It clawed back to 69 . The thing to watch when votes get counted tonight is the margin of victory. 60 may be the envy of many parties, but it is not a good showing in singapore. Haidi does that mean we should start looking towards the opposition parties . We hardly ever hear about them. Are they viable . We need well, i think to put it in context. This is only the second time in singapores modern history that thathe seats will be shows a lot. That shows how challenging it has been for the opposition to make a dent. There are 10 opposition parties and the only way forward for them is to work together, but that has not materialized in a meaningful way. Each party is small, elects resources, complains about having to compete against the state machinery. I think opposition leaders have been fined, sent to jail, after defamation. It is important to find out that the opposition is not looking to form a government. It is looking to do power the ruling party depower the ruling it is looking to de power the ruling party. One thing interesting to note this time around is that his brother has joined the opposition party. He said the ruling party has lost its way and it is no longer the party of his father, the founding father of modern singapore. There was a lot of buzz that perhaps he would be a candidate, pitting the two brothers against each other. He said he can contribute without running. Not need yets another government. It will be interesting to see whether he has managed to sway some votes towards the opposition this time around. Shery singapore has one of the worlds shortest election campaigns. How much have we learned in those nine days . Inlinda well, the election singapore has always been about breadandbutter issues, housing, immigration. It is always also about jobs. It is always about jobs. With the economy set to shrink the most since independence in 1965 because of the pandemic, a lot is at stake. It is really hard to say how the vote will swing as opinion polls are not allowed during the election period. It is especially hard this time around because campaigns were done online. Physical rallies due to the pandemic, those rallies have did not happen. If we take a look at the debate online, it has been very vigorous. It is not without controversy. Up fake news law in the lead to the polls to prevent disinformation online and correction orders have been issued to the opposition leaders, issued to several media groups. It has been quite heated during these days. Thei singapore is among first few economies to be holding an election amid the pandemic, so what Public Health policies are we going to see put in place . Haslinda it is against a backdrop of still rising cases in singapore. Government says the spread has a lot ofd, but measures have been put in place for the first time ever. Voters have been given the elderly will be voting between 8 00 a. M. And 12 00 noon. The rest of the population will be anytime from 12 00 to 8 00. Be given to voters before they get into the voting booth. Therell be more booths as well. Each one will handle only about 2000 to 3000 voters to ensure social distancing, so the government has ensured that all the precautions will be put in place to ensure that, you know, everybody is safe during this voting period. Haslinda amin in singapore as singaporeans head to the polls. We will get more on the election in the next hour. Singapore management universitys representative joining us, plus Bridget Welsh joins us later on as well. Lets get you a check now of the first word headlines this hour. The u. S. Continues to set virus records with new cases topping 60,000 gain a day for the first time. Arizona recorded the most new infections in six days while california, texas, and florida, a Record Number of fatalities. Mobile virus numbers are now about 12 million with death rising to at least 550 thousand. A new report says covid19 is bankrupting American Companies at a relentless pace. The greatest net we face now it threat we face now is not the virus itself. Rather, it is the lack of leadership. And solidarity at the global and national levels. That is why i said earlier, every individual should reflect it. The virus is flaring up again and parts of asia with hong kong and tokyo reporting new record spikes or new spikes despite seeming to have controlled the pandemic. Both cities recorded single day highs. Hong kong with 34 local cases. Tokyo with 224. The news comes after weeks of normalized activity and raises the possibility of renewed social restrictions. Covid19ssay ability to spread is still not fully understood. The bank of japan has issued a gloomy regional report just days ahead of its next policy meeting. The survey shows the bank sees the entire economy still reeling from the coronavirus upheaval despite a gradual pickup after the state of emergency was lifted in may. The boj is lowering its assessment of all nine regions, cutting forecasts across the board for a second straight quarter. And chinas leading Auto Industry group says the sector may recover from the virus slumped faster than expected with sources telling us that 2020 sales are being revised to a drop of 10 . The association of automobile manufacturers have been a followup up to 25 in may but the revision would still put deliveries at their lowest since 2014. Sales have been declining in china for two years now. Shery coming up next, diversifying with varsity. Call it general partner has a pitch to investors, funding black entrepreneurs is good for business. He joins us next in the bloomberg equality series. This is bloomberg. Haidi my covid19 pandemic has not been kind to black entrepreneurs in the United States. The economic shut down has slashed the number of black business owners. That is more than any other racial or ethnic group. But long before the pandemic, all the recent Racial Justice protests they have been fighting to tap into an underfunded demographic. They are gibbons is one of those Barry Gibbons joins us now for our bloomberg equality series. Great to have you. This is sort of the same argument you make that we see our class arguments for better representation when it comes to sex or race, which is that diversity creates portfolio diversification. 100 . Tos is something we tried explain to our current investors as well as our potential investors that investing in is actuallygraphics a Business Opportunity and one of the big reasons that we started to collect capital to take advantage of that opportunity. In particular, the venture capitalist base was missing out on it. Haidi it has been seven weeks since the death of george floyd, which obviously was the sort of Pressure Point that set off the black lives Matter Movement and integrated dynamism across the United States and the rest of the world. How much actual substantial progress have you seen across the corporate sector, cross tech in that time across tech in that time . Barry when it first happened, it was a big jolt, and it felt different. I mean, this is not new to us as a black community. We deal with these issues on a daily basis. We have been yelling to the mountaintops about these inadequacies in these Different Industries and how they recruit, black, find black talent, entrepreneurs for us, it was not anything new, but this time, the Community Around us, it did feel different, and so, you have a lot of organizations that have launched different types of funds, and you know, they are investing in social justice organizations, but as the time went on, we are also seeing something that happens every single time as well. Topicit is not a hot anymore, the corporations fizzled away, the dollars start to get a little quieter, so for me, that two weeks jolt, it honestly means absolutely nothing pete i am interested in what we look like two years from now and looking back at all the tweets and messages and seeing who was really trying to lead this diversification effort and who is still in the fight two years from now. That is going to be the most important part. Shery what would you like to see from Business Leaders or funds to really advance the cause of equality . Barry great question. This isf the things probably going to be blunt but one of the things that i see is you cannot be lazy and how you go about your diversity efforts, and i will explain that a bit in that i will speak specifically to venture capital. You do not have to go out as a venture capitalist, especially through a popular fund. You do not have to to a lot of work to find great deals. Entrepreneurs will bring stuff to you, bring your pictures. You will have other investors and advisors who are going to email you stuff. If no black investors or entrepreneurs are in your network, it will take a lot more work. Many times, it is just too much work that venture capitalists and investors are not willing to take on that extra workload. Now, the other option is for investors to invest in the people that are on the ground doing the work. That is what we are doing. A view ourselves as diversification option to lps that may be in other major funds. Funds entails that do not have the bandwidth to go into these communities that they currently do not have at present. We are in these communities. We have already had a pipeline of black entrepreneurs that are looking for resources, looking for funding. These investors not only put more effort into it themselves, but they can also invest in the people doing the work. Shery for your fund, what is the target right now and how Many Companies are you planning to invest in the next couple of years, and what sort of companies are you looking at . Barry great question, so we are going to invest in 50 to 60 companies over the next five years and we are targeting a 50 million fund. Our model is quite different. Not only did we want to diversify peoples portfolio by investing in black entrepreneurs, there is also this really big gap between a Traditional Bank loan and also venture capital. Those two vehicles to get gap in thepital, 83 Financial Markets, so Many Companies that do not fit either one of those two models, we built an entirely new model from scratch that actually takes advantage of that gap in the Financial Markets, so we are targeting entrepreneurs that are looking to run sustainable, profitable businesses, and our model is actually a Profit Sharing model, so the kind of entrepreneurs we look for our a tad bit different, but still, the amount we developed is we plan to have venture level returns. Cv, youru look at your pedigree, and it is exactly what you expect from a startup founder, yet when you were first starting out with the fund, even friends and acquaintances, wellmeaning lee, said that you needed a white partner. Is that still the case in the conversations being had in Silicon Valley and across the tech space . Barry unfortunately, yes. That extremely unfortunate it still happens. Operating myam not business anymore. I licensed by ip to a Larger Company in Silicon Valley. I advised tons of companies in this role and in my role as a director. Unfortunately, this still happens on a regular basis. A lot of times, it is not just the investors stocks but it is just the entire ecosystem that we live in and it is an unfortunate truth that as you go out and try and run your business as a black founder, you also have to sell product into industries that are still antiquated. They are run by racist white males. They may have a hard time selling the product into a certain industry. The investors thinking i have to retire back to my limited partners so it is just an unfortunate situation throughout the entire ecosystem. The only way you start to change that is you have to break the mold, you have to break the system. I do not advise black founders to bring in, you know, or replace themselves with white male founders just to be successful. It is our job to be the images that black youth need to see and also that the Business World needs to see so the next time a black entrepreneur shows up, they know that black entrepreneurs can have really great products, they can really be successful, and that is what we are trying to do here, break the mold for not just our founders, but for the entire business economy. Just quickly, what do you think was the edge that you had in getting yourself here . I can speak for hours on that. It, it ise of grit, being willing to not listen to people who made those comments, when things happen, to not let it bog you down or depress you. Anybody that tells you they did not have a little luck on their side on the entrepreneur journey is telling you a lie. Being in the right place at the right time. Doing the work up front to put yourself in a position to take advantage of that. That is how it comes into place. Us,y great having you with general partner at collapse capital, barry givens. Great insight from him, what it takes to succeed. Plenty more to come on daybreak asia. This is bloomberg. Haidi lets get you a quick check of the latest business flash headlines this hour. Tesla skeptics remain undeterred by elon musks confidence. Be stock is about to the first to hit a Short Interest level. He says tesla is a candidate for a short squeeze where skeptics are forced to close their position which drives the shares up even higher. Wells fargo, the largest employer among u. S. Banks, is preparing to cut thousands of jobs later this year, setting a bleak precedent for an industry that has so far resisted last. Bloomberg understands tens of thousands of positions could go. Wells fargo reports earnings next week and could post the first quarterly loss in decades. Bankrupt brook brothers is set to have received a competing offer of finance that would keep the change running during the chapter 11 process. It is not clear who is behind the new bid but a better offer could take the financing plan that is already lined up. Brooks brothers had arranged a 75 million loan from whd global, but the new offer provides more liquidity. Shery japanese markets just about to open and retailers are in sharp focus today as the coronavirus pandemic takes a toll on earnings forecast. Mccombst more from dave in tokyo. So, any surprises in the result . Dave some of the surprises were to the upside, but they are within specific niche is of ofse businesses niches these businesses. The pandemic hit hard and this is the result of that. There is also much uncertainty going forward, so all of the companies that reported ,esterday gave outlooks earnings forecasts that were below estimate. It is a pretty gloomy picture with some small positive surprises. You had fast retailing, for example. They recorded a bigger than expected uptick in june sales in japan, which is their most profitable segment. Those rose more than 26 . That was a pretty big jump, and some analysts are taking that as a sign that japans recovery at the retail level has more momentum than they had. Reviously expected one of the surprises was that they had been able to cut costs a little more than expect did and profits were up a bit more than they had expected as well, so what they are seeing is that the companys responses to this in terms of cost cuts have been more effective than they had projected. Are we seeing from some of these other retailers in terms of coping with the slump . Dave cost cuts have been a big theme. There has also been some other moves, for example, with fast retailing. One of the high points was that they pivoted to provide protective gear for medical workers in addition to masks. That has been a big product of theirs. Theres been some positive outlooks given that fast retailing does compete at some level with the likes of h m. Those are casual Clothing Companies where retailing is functional clothing. That is seen as a high spot as consumers start looking for that kind of value amid such so much uncertainty, maybe a little bit less for fast fashion, looking for that sort of design value that fast retailing has so that was a positive outlook there. On the Convenience Store side, there was also a mention of this story that broke yesterday. Oft is the Parent Company another big Convenience Store chain here in japan. They are making an offer to buy out the company so there is some sense that it could be similar offers by the biggest shareholders. It is a majorityowned the biggest stakeholder, mitsubishi corp. There is some interest in those shares because they could come in and try to increase their stake in the company as a way to consolidate. Our global mccombs, Business Editor in tokyo. We will get more analysis on japanese retailers in the next hour of daybreak asia. Our guest will be with us out of tokyo, plus polls open at the top of the hour in singapore. We speak with the associate professor about the significance of todays election. This is bloomberg. Shery good evening. I am shery ahn. Haidi the asian markets have just opened for trade. This are the top stories hour. Growing concern about a resurgence in the coronavirus. Infections continue to rise and global numbers copy talking polls opening in singapore for an election overshadowed by the pandemic. Shery japan, korea and australia kicking off trading. A lackluster start so far with nikkei 225 with little change. Accelerated pickup in tokyo virus cases, but the government is not considering a state of emergency. This is the latest data from japan. Expected. Pace than that is compared to the forecast for a drop in 2 . Analysts are questioning the price and benefits. Groundpi gaining some while the korean won is on the back foot. Still set for a weekly gain. We will keep an eye on the region. Stocks, in on sidney keeping an eye on the minors while prices held above. Window toxtending the november 30 as infections pick up again down under. The aussie curve flattening. Jumping into the terminal, chinese stocks are set. Investors have piled in, prompting authorities to clamp down on the financing. Chart on thehe terminal, about 80 of the index is technically in over by territory. Record. Overheated on we are going to start with fx. The one rms of displays into the dollar story. Do we expect to see that elevated status play out for the chinese equities going from strength to strength . Definitely is driving what happens with asian currencies and global currencies. Especially since it has reestablished a period of strength. Importantly, it was the way , thethey rejected the area fact that we did not increase that rally earlier this year. Also, you are getting more confident. Most other nature economies in the world establishing the growth that we have been used to. When we get the gdp data next week, it will probably reinforce the news that china will have a better secondquarter than many countries in the area. Some of the moves in the stock market are helping to attract flows towards the security markets, but so much has to do with the fact that the physical work and Monetary Policy work has been more conservative, showing that the currency has a lot of longterm value. It is going to the background for the time being, so it helps to reduce volatility. That will certainly help to influence the dollar globally, as much as it is in asia. Shery is the china story driving momentum . So far, we have not really seen markets move on the headline. Do with howtly to International Investors view viruss having managed the situation than other parts of the world. That plays into it. Lowuation is relatively compared to other parts of the world, especially towards the u. S. It has been obvious for some time that asian markets design deserve higher. At the beginning of the year, quite a few people were looking at parts of emerging markets in asia as needing to catch up. Along thead not come way that it did, it is likely that most asian markets would be considered higher than where they are already. We are starting to see that come back. Places like taiwan, thailand, philippines, malaysia and singapore. They are seeing for inflows coming back to the market. It will also spill over to currencies as well. Theight help to support local bond markets. Asia was a valuation story and china is the icing on the cake. Overheated. G rather it is very good for asia. Rest ofl look at the asia and say, how does this compare to asia . It all feeds into itself. Mark cranfield in singapore. You can follow many more stories. N bloomberg we are closely monitoring any virus headlines breaking on the bloomberg mexico cases bloomberg, mexico cases rising. Still ahead, dartmouth peter fisher says investors should worry about chinas market rally , given the uncertainty of corporate earnings. The polls have just opened in singapore and we are live to speak with eugene. This is bloomberg. You are watching daybreak asia. The last sanctioning top communist officials over human rights abuses in the zhang in the province. China is accusing the u. S. Of using a rise in fake news, calling on mike pompeo to stop spreading political virus. He blames them for covid19 and being a threat to the world. Pompeo has been concocting fake news to discredit china and so discord. Even after being repeated 1000 times, lies are still lies. U. S. Supreme court has back to grand jurys request for trumps financial records. View ofngs reject the powers and the call for sweeping immunity but will spare him from scrutiny ahead of the election. The bank of japan has issued a gloomy original report days ahead of its policy meeting. The current economy is still reeling from upheaval despite the pickup in may. Itsboj is lowering assessment, cutting forecasts across the board. Theys leading group says may recover from the virus faster than expected. Sales are being revised to a less severe drop of about 10 . They have seen a fall of up to 25 , but the revision would put deliveries at the lowest level since 2014. 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. This is bloomberg. Shery voting has started in singapore. The middle of a pandemic is the last vote before handover of power. Leading to stand down in 18 months. The makings of a watershed election. Eugene joins us now. Happening during a global pandemic. Yes, we have seen the ruling singapore, so how much of this is symbolic and how much is significant . Elections are very significant. Putting symbolism aside, this is an important election. It has consequences, in regards to how singapore will deal with a post covid world, dealing with existing challenges. A question of fourthgeneration whether they are able to be reelected, to establish themselves. All of these are important. Shery we have a Record Number of opposition parties. Why has it been so difficult for the other side to actually get some highly qualified, competent and competitive people out there . The opposition has been able to improve the quality of the candidates. We see a lot more professional inple with experience various sectors and industries. Issue have less of an with the candidates equal to the task. Of concern to the lack of be platform as to what they would do. In some respects, it is changing because when you look at the Party Manifestoes for the general election, they have come up with fairly significant plans , whether tackling covid19, whether it is how to secure jobs or how you are going to prepare for a post covid world. What about the fair and more equal society . Is getting their act together. Is, you arelenge dealing with a little party that has governed singapore since 1969. It is tried and tested. They have delivered on their campaign promises. The challenge for the opposition is saying we can achieve better. In the midst of a crisis, there might be voters who take the position that this is not the time to rock the boat, but at the same time, in the midst of crisis, voters have been able to see how the government has dealt with the pandemic over the last six months, and that would have given them new insight. Covid19 has affected so many of us in different ways. Bad would bethe attributed to the party. Singapore has always built itself as an underdog, dwarfed by indonesia and malaysia, having no Natural Resources but proving to be a success story. How much of a catalyst for change is the pandemic presuming. There is the concern that the pandemic has unleashed an economic emergency. The possibility that there will be an extended global recession. Is a real concern that could affect how singapore will do economically in the years ahead. Is toimary concern now protect jobs. How do we ensure that people will continue to have jobs, even if the jobs they have no longer exist, how do we transition then . , there is also the desire to ensure we are able to find opportunities. There is thinking within the government that a post covid will be a vastly different world. Will singapore be nimble enough to adapt . We need to be ahead of the curve. We cannot wait for the post covid world to arrive and adjust accordingly. The next few years will see significant changes in terms of job creation, in terms of how we prepare for the post covid world. Out to it does not turn be relatively different, the main idea is we should have an economy that is betty to take whatever might follow in the months and years ahead. Haidi changes including a change in leadership, saying he would step down in the next eight 18 months. The leadership is under the terms ofegacy, so in the leaders, does there need to be fresh perspective . Are they focused enough in this election . It is certainly one of the issues in this general election. Whether they are equal to the task. In many ways, the pandemic led bye has been fourthgeneration leaders. But they deales, with issues fairly well. I think they jumped the ball there, but the recovery has been good. That is a probable fear people are overwhelmed by the pandemic, but i think there is also the view that whether the fourthgeneration leaders, being cut from the same cloth as the previous generation. Whether they would be able to have new ideas, whether they , so that wed enough are able to look at the challenges with fresh perspective. ,o be bold, to make changes even changes in policy that have been the main basis of singapores access. Haidi professor, really great to have you with us. We will get more on singapore and the polls later on. Will besh with with us. Family market is extending gains. Buyout offers their. There. Short 9 the stock is at a high at the moment. And falling after cutting profit outlooks. Lowerre offering guidance. Lawson is falling the most at 5. 5 percent. We have put more to come on daybreak asia. This is bloomberg. Shery global thanks at risk of getting caught in the middle between china and the u. S. As the Trump Administration inches closer to enacting new rules requiring banks to comply. Lets get the details. This is coming at a time when global banks really wanted to ask and their global footprint. What exactly could be the issue for them, given these u. S. Sanctions . There is a lot of scrounging right now. It will come into direct conflict. They are caught in a trap. As you said, china has been called one of the biggest opportunities. We are looking at what the chinese responsible be, if this escalates. Counting tolly boost its economy. Haidi what are the implications, given they have been trying to lure investment . Banks do, given that they are at risk of contravening u. S. And western laws or chinese laws, no matter where they land . We have spoken to people here and in washington. Right now, they are going through the books. We are also looking at how to protect local employees in hong kong and shield operations. Hopeful thatare they will take measured steps. Jonas bergman there in hong kong. The definition of between a rock and a hard place. Lets get a check of the latest headlines. Wells fargo is preparing to cut thousands of jobs later this year. A bleak precedent for an industry that has so far resisted layoffs. Positions. Usands of post the firstl quarterly loss in a decade. Already hit by a slew of indiashey have pnb has reported over 495 million of fraud. Ofsays it was swindled out 2 billion. Bp has paid 1 billion for a ke in indias just fastestgrowing energy market. Reliance mobility plans to add 5. 5 thousand stations to its current network. Lets take a look at how we are tracking on this session. From walleak lead street. New infections rising to a record in the u. S. We are seeing a sea of red. Aser trading in the kospi well. Lots more to come. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Shery asian stocks under pressure today. Lets get the latest from sophie in hong kong. Stocks edging lower. Weing a longer term view, still have msci aipac index set for the best week in a month, set to gain 2. 6 over the course of five days. Checking in on treasuries, looking steady with the 10 year yield hovering near a may low. U. S. Yields are taking higher. Is aussie bond curve climbing. Wonhe fx space, the korean retreating, while the dollar holds steady. Monthlds on its best since october, and more support for the currency as chinese bond yields are seen climbing higher. Pnb para these the 10 year refraininghe pboc is from easing measures among the stock rally. Same with china, the csi 300 has climbed for eight straight days, one day away from matching its longest run since 2018, but can this rally be sustained . We are getting into the start of the china open. Lets get over to our team leader in hong kong for expectations for this friday session. It has been a week of circular to us for chinese stocks it has been a week of superlatives for chinese stocks. How is this time different now . Reporter good morning, haidi. We have seen superlatives. The sei 300 is up almost 10 this week, heading to the biggest weekly gains. With leverage picking up and turnover topping for six days now, it doesnt seem like the momentum is easing. In chinavery benchmark in bull territory. Techhinext, heavy on shares, it is above 90. In a way, this is different. We have the scope of the gains at the speed of the rally. It looks like 2014. Now the market cap in chinas equity market is 9. 5 trillion u. S. Dollars, which is not too far from the peak we saw in 2015 at just over 10 trillion. We do have the speed of the but margin financing is about half of what it was at the peak. Urgingave state media more caution and telling investors this is not a market where you should be looking to make millions and billions overnight. The market, that is what the government is saying. As you were saying earlier, the pboc is taking a more cautious approach. It is withdrawing from the Financial System. It does not want to stoke this bubble again. It ended five years ago. Raft that you write in a rout that erased trillions of dollars. Shery what about the recent editorial encouraging investors to support a healthy bull market, that that is really necessary now that we are in the middle of the pandemic . Are we getting mixed signals from beijing . Reporter yeah, a healthy bull market is quite a difficult thing to get in china. Retailu do encourage investors to buy stocks, and we had a story yesterday showing the enthusiasm for retail stocks. There was a photo circulating on social media yesterday of people stocks whileng getting a massage. It shows how far the enthusiasm has gone. A healthy market is what beijing wants, though it is difficult to control. They will want to rein in that enthusiasm and frenzy for the market. They kicked it off talking up stocks, as you said, last weekend with the front page editorial encouraging people to buy equities. It is an important driver of sentiment for the country because a lot of people are invested in the equity market. We have more than 160 million Retail Investors in china. It is more than the population of russia. It is about twice the population of france. When you do have equity gains, it encourages people to spend. It drives up consumption. It helps economic growth. But you also do not want it to go too far. Costa infia horta e hong kong. Blackrocks head of fixed income is warning investors they should worry about chinas surging market rally. Guest the chinese economy for a long time, one of the few places uncertainty about the future can be expressed is the equity markets. The credit slice of the capital structure is fixed. They do not let a lot of carpets default. A lot of corporates default. More of the volatility is going to show in equity markets. That is where it can be expressed. But chinese equity markets have been pretty volatile over the last 15 years. You referred to the most recent episode. It is worth thinking about that. Investors have a short horizon when the future is very uncertain. We dont know about the future income for u. S. Or Chinese Companies over the coming couple of years, so people focus on a very short horizon. I think it is time to worry a little bit. Reporter authorities did crackdown on some margins financing. The rally continued. You have copper at its highest level in over a year and gold at its highest level in nine years, which you can argue that has physical investors coming back to the market. That means maybe they are recovering from covid. Dont really, we know, but you alluded earlier to everything rallying. Buy everything. And maybe that is the case. We have been pressed to buy everything. I would emphasize, we know that we dont know what the path of corporate revenue is. U. S. Have not had the kind of stability of the virus you would like to see to have confidence to know the path of the economy. I would like to emphasize, i think it is sensible for a certain set of investors to focus on the very short run. It is speculative activity, that is what they are doing, and bless them. But when we do not have enough information to say much of the future path of earnings, then we are left with the short run animal spirits driving prices higher. Reporter you take a look at why that is happening. Liquidity is very significant behind the rally, and we will talk about this later in the program with another guest. Do you get the sense that when someook at the money, at point they have become inflationary . Clearly the short term trend is for disinflation, but at some point, i would be curious to get your take on this, do you think at some point that will turn . At what point do i start buying tips . Guest i do worry. Let me talk about the odd position the fed is taking. Current and former members of the fed is telling us the mass expansion of highpowered money and the runup in m2 will not be inflationary because all the highpowered money is trapped in the Financial System and they are paying interest i on it. These same places tell us that is no reason why all assets are rallying. Neither . It is neither of those things . It is neither a way to stimulate the economy, nor is it a way to pump up asset prices . Then why are you doing it . There is something really odd about the way the Central Banks are behaving and talking about what they are doing. The reason for us to worry about inflation, it is a little further off and subtler. Inflation comes from too much money chasing too few goods and services. It is the chasing. It is the growth rate of demand relative to supply, and if demand accelerates more than supply, we can get a little inflation. What we have now, what i would like to describe as a stopgo economy. This part is shut down for covid, that part doesnt work, this nationalist sentiment shuts down part of global trade. There is a lot of disruption on the supply side, some of it coming online, some of it not coming online. I think we need to brace ourselves for the possibility of stagflation. Shery peter fisher speaking to us earlier. We are getting an alert when it comes to the fed in australia, which has gone into a renewed locked down after a surge in coronavirus cases. They are announcing a 534 million Australian Business support package. A group is estimating around 500,000 businesses are likely to be affected. They are being told to shut their doors or operate at a minimal level, as this shut down gets underway. If you are away from a screen, you can find indepth analysis on the big newsmakers on bloomberg radio. We are broadcasting live from hong kong. The app or bloombergradio. Com. This is bloomberg. The polls are now open in singapore for an election that is almost certain to return the ruling party to power. The Peoples Action Party has led since 1965. The Coronavirus Response and the economy are among the biggest issues. Voters will be wearing disposable gloves and will be given five minutes each to vote amid strict social distancing roles. In the u. S. , the Supreme Court has backed a grand jurys request for President Trumps financial records while blocking congressional subpoenas that could lead to their public release. The ruling to reject the president s view of his powers and sweeping immunity will probably spare him from scrutiny ahead of the election. The court says no one is above the duty to produce evidence when called upon. Ireland has beaten spain in the race to lead eurozone financing to shape the economy. Pascal donahue defeated the another from luxembourg. He would arbitrate between fiscal conservative northern nations and nations that want looser post virus rules. The state department has approved the sale of new warplanes to japan as tokyo strengthens its airstrike capabilities. The deal includes 105 fighters and is valued at 23 billion. The approval comes as washington seeks to counter chinas expanding military ambitions in the asiapacific. Japan announced its intentions to buy the f35 in 2013, but it may be another year before the deal is signed off. 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. Haidi . Shery the coronavirus haidi the coronavirus is firing up in parts of asia with tokyo and hong kong seeing a spike in cases, seeing fears that a new wave is taking place. Indonesias infection curve is still rising sharply, reporting a record jump in new infections for oneday. Lets bring in bloombergs health care reporter. Lets start off with japan. Where are we seeing these clusters . Tokyo yesterday put it over 220 new infections. Total, and that is higher than any number reported when the country was under a state of emergency. However, officials are saying this is coming from mass testing of workers and customers at nightclubs, which have been a source of recent infections. A vast majority of the new cases our patients in their 20 are patients in their 20s and 30s, so they dont suffer symptoms where they need to be hospitalized. The medical system is not particularly strained. Obviously, the numbers are but they have not made any moves to restrict businesses or locked down country, per se. Are already seeing a surge in hong kong and actions to curb that coming from the government. Reporter hong kong yesterday had 34 local infections bringing their weekly total to 65. Compared to the case numbers reported in other parts of the world, that does not seem high. But that comes after three months of hong kong being infection very. Infection free. That suggests the virus could be spreading silently at a much wider scale. Lisa du in tokyo. Next, japanese retailers are in focus as the pandemic takes a toll on earnings forecasts. We take a look at the numbers next. This is bloomberg. Shery lets get a check of the business flash headlines. Experiencingen technical issues with users complaining that while the videos are playing normally, all likes have been removed. The difficulties come one day after President Trump said he was considering banning the app for reasons of National Security. Tictac is owned by a chinese company. It says it is working to fix the problem. Skeptics remain undeterred by elon musks confidence with the amount of shares being sold, heading for an unprecedented milestone. The stock is about to be hitting a Short Interest level of 20 billion, according to a researcher. Forays tesla is a candidate a price to close positions, which drives the shares even higher. Brooks brothers is set to have received a competing offer of finance that would keep the chain running during its chapter 11 process. A better offer could overtake the financing plan that is already lined up. Brooks brothers had arranged a 75 million loan from wh p global, but we are told the new offer has lower fees and provides more liquidity. Stake paid 1 billion per in the retail fuel business with entry intoarking its one of the worlds fastestgrowing energy markets. 49 of the business and reliance the rest. Reliance mobility plans to add 5. 5 thousand stations 55,000 stations within five years. ,aidi for japanese retailers they are calling their they are cutting their forecast. Lets assess the health of the Retail Sector with our guest. Great to have you with us. Forecastsle are these and the guidance we are getting, given the impact and longevity of the pandemic is still unknown at this point . Guest guest it is a very delicate situation we are in. Credibility ofhe these forecasts, unfortunately. We are just starting to be out of a tunnel. We are in phase three with restrictions lifted, then we had showing we were recovering. But the late news is there is a big shortterm risk rising of falling back into paralysis because we are witnessing a surge of new cases in tokyo. We had more than 200 new cases yesterday, the highest number since the outbreak. We saw markets surge sorry, continue. This uncertainty will depress activities in the shortterm. Tokyo has 20 of japans economy. They may call for a return to the emergency state. The uncertainty pushes back some of the proposed measures. We have seen retail in real trouble, particularly places like the u. S. , where it seems like every day we have new headlines of bankruptcy. Of that pertains to the Retail Sector, and do you expect things to get to the point of a great deal of restructuring consolidation across the industry . Think there is good news and bad news to that. The good news is it may lead to rationalization of industries that are overcrowded with players. Is there may be rising unemployment with the restructuring and consolidation. It is already creeping up. It is at about 3 already, which is an increase of seven points from 2019. If unemployment is rising greater than the 2008 financial crisis, that will challenge not only the economic, but also the political landscape. Shery how is Consumer Confidence holding up, given the background . Guest Consumer Confidence by the record, the Consumer Confidence index actually rose in june. It was rockbottom in april at 21. 6. Then it went to 28. 4. This is before we saw the uptick in the case count in tokyo again. It may be a fragile state. Will this pandemic help accelerate some of the reforms sector,n japans retail especially when it comes to more Digital Channels being opened . Guest absolutely. I think some of the trends we were seeing precovid will be accelerated. Are increasing their digital footprint, direct to consumer strategy being accelerated. Also, i would like to mention that there is a new phenomena of a geographical footprint for the brickandmortar because the outlet footprint needs to be reconfigured and consumer longterm behavior will change significantly. Lastly, there is structural reform that will be accelerated. This is not new, but the retailers are trying to lower the breakeven point in the era of price consumption and inflation, which is even more pronounced after covid. Therefore, many retail players look to foreclosures for outlets. Art retailers that have exposure to International Markets likely to rebound . Uicker, i am thinking about a quicker than expected rebound in the chinese market. Guest yes, generally speaking, your recovery speed will depend on the portfolio geography you have and how quickly the major geography you have will recover. Right now, since china is recovering relatively quickly and has less cases than others, it will be a good thing to have china exposure in your portfolio. But in the long run, that could create other issues. Shery just an alert on the bloomberg, we are hearing that the softbank founder has endured easing the pressure we have seen in personal finances. Softbanks shares surging to their highest price in two decades, hitting 20 billion dollars on friday, more than doubling from 8. 4 billion in march. You can see softbank right now continuing to gain ground, up more than 1. 5 . Coming up in the next hour, we hear from pimco Portfolio Manager multiasset strategys our othern, and guests. That is it for daybreak asia. We look ahead for the start of trading. Standby for Bloomberg Markets china open. This is bloomberg. It is 9 00 a. M. In beijing and shanghai. Im tom mackenzie. And im david ingles. We are counting down to the last trading session of the week in the chinese mainland in hong kong. Lets get your top stories. Stuck in the middle. Global banks seem to be caught between the u. S. Sanctions and chinese regulations as relations between washington and beijing breakdown. Tom