India may miss growth targets as the virus cripples the outlook. Intel plunged after its new chip reduction process was delayed again. The company is under pressure as customers increasingly turn to rivals for chips. We are just getting pmi data out of australia crossing the bloomberg. The pmi actually rising to a record high in july. This is a preliminary number for services coming in at 58. 5. Manufacturing pmi also higher, 53. 4 from 51. 2. Composite at 57. 9. A big jump from the 52. 7 in the previous reading. That returnecting to some semblance of normality as part of australia exit the stricter lockdown. Going forward will be key given we are seeing a fresh sixweek lockdown from victoria. Lets take a look at how we are setting up this friday session. U. S. Stocks falling to the lowest in about a week after unexpectedly high jobless claims rekindling worries of the economic recovery stalling. We are seeing more recovery when it comes to trading in futures contracts come up about. 2 for the s p. The aussie dollar comfortably above 71 u. S. Cents. The bloomberg dollar index weakening for a fifth straight day, outpacing most gains we are seeing in the strengthening. Euro trading overnight as well. We had to pan off for the fourday weekend. Crude continuing to lose ground on growth concerns. Sick at terry estate mike pompeo has speaking in california, pompeo said the communist partys actions are now the primary challenge to the free world. Lets bring in Tom Mackenzie in beijing. So how significant an escalation is this . Tom this was clearly an uncompromising speech by mike pompeo. He was essentially summing up previous beaches we had from senior members of the ministration including the head of the fbi christopher wray, but also the attorney general and the head of the National Security council within the trump administration. Pompeo took to the stage and he was not pulling his punches. He said that securing our freedom, and i am quoting, from the Chinese Communist party is the mission of our time. He talked about this as being an existential struggle between right and wrong. He warned against bending the knee to china. He said the free world must triumph over this new tierney. Take a listen. New tyrrany. Take a listen. [indiscernible] tom pompeo did not call for regime change but he came close. He said the world should engage with the people of china and try to empower them. Of course we know he has been on a mission to try and build a coalition among allies to push back against china. It was symbolic he was at the nixon library. President nixon, who of course led the reopening of engagement between the u. S. And china in the early 1970s, pompeo saying engagement has failed. He is trying to build this coalition and the speech coming after that decision by pompeo to close an order the closure of that consulate in houston. We are still waiting for the chinese response to that. Haidi we have also heard from the president , and trump has been saying i guess he does not assign as much importance to the trade deal after the pandemic. Investors assign a lot of importance to the phase one trade deal. The one threads that still holds. So it was interesting that President Trump came out and said yes, this is less meaningful for me now, and he accuses china of spreading the virus and undermining the u. S. Economy, forcing the lockdown of large parts of the u. S. Economy. Clearly he is still very angry about that. In terms of how china response to this, we heard from officials saying the u. S. Should think carefully about the direction of travel between the u. S. And china in terms of the relationship. We also heard from the global times editor, who to some extent has the ear of policymakers in beijing. He says in terms of retaliating through the consulate closure in houston, thats something to watch. The South China Morning Post has reported that we could be inking at the u. S. Consulate china being closed as part of that retaliation. But we can potentially expect to get moves later today according to the editor of the global times. Another thing china is looking at doing is ignoring, or at least not recognizing the visas or passports held by hong kong nationals. That is part of their retaliation against the u. K. Fo r their offer to give Citizenship Rights tough to 3 Million People from the city of hong kong. That is another element to watch as well, retaliation from china against the u. K. Beijing. M mackenzie in keeping track of all the tensions on these different fronts. Still ahead, reaction to the latest escalation in the u. S. China situation. Westontone groups chris said he is not concerned at the moment. Plus, how the pandemic is hitting the return savings gap in australia. We speak with cate wood. This is bloomberg. You are watching daybreak asia. President trump is canceling the Republican Convention in florida next month as the u. S. Struggles with rising coronavirus infections. He says it is time to drop plans for the party to meet in jacksonville, and fears cases could spike among delegates. It was moving to florida after North Carolina was unable to guarantee safety as the pandemic rose across the u. S. I will do a Convention Speech in a different form, but we will not do a big, Credit Convention per se. It is just not the right time for that. I care deeply about the people of florida and everywhere else, frankly, in this country and even in the world who would be coming into the state. And i do not want to do anything to upset it. Karina the World Health Organization is heading back at the trump administration, saying his comments about being bought by china are untrue and on acceptable. Secretary of state mike pompeo that justified washingtons decision to pull out. O. Insists its only role is to improve global health. Brexit talks saying a deal is out of reach. Big differences remain and in agreement is unlikely. David frost warns an accord may not be reached before the end of the year. Talks will continue through september ahead of an eu summit a month later. If there is no agreement, businesses will be hit with tariffs and quotas where none exist today. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im karina mitchell. This is bloomberg. U. S. Chinalating tensions are weighing on risk sentiment, but our next guest says as long as tariffs are not being debated or used as a weapon, then we should get used to this titfortat measure ahead of the november u. S. Elections. Joining us from melbourne is chris weston, Pepperstone Group head of research. We just heard from the president himself as well saying the trade deal with china means less right now than when it was made. How do investors feel about the trade deal . Chris think that has become a secondary thought for some time now. And we know that china is not purchasing the right amount of goods. That has come off the back burner. We are watching what is happening at the moment in the shortterm around the consulate withdrawals and a reduction there. We are going to hear something today, the u. S. Consulate in china will be closed. Talk of that potentially happening. I am not sure if the u. S. Will be too upset about that. Maybe in hong kong. You are going to see a lot more of these measures. The market feels quite sanguine about that. Until something is threatened like renewed tariffs, which is unlikely at the moment. Shery what does this mean for the currency markets . Any time we had more tensions between the u. S. And china, we had safe haven moves and a strengthening of the u. S. Dollar, which does not seem to be the case anymore. This chart showing that we are headed towards that fourth down week for the u. S. Dollar, the fourth time in 2020. Given also that we have to measure where the chinese yuan is, what do all these tensions mean . Chris i think people when they see headlines coming through around geopolitical issues, depending on what we are seeing, at the moment you get the shortterm blips were people going to buy volatility, they buy the funding currencies. And that is a very shorttermism, then they focus on other factors. That is what we are seeing. I think this will be a shortterm affair. I think if you are playing the dollar at the moment, obviously we are focused on the eurodollar getting into above 115. My focus is on dollaryen coming levels. The 106. 80 dollar swiss is probably a better player, even though the trend is quite mature. Tactically, dollar swiss is the best. I think the headlines around geopolitics, the u. S. And china, are bare for us to see but they tend to be shortlived. Haidi does the narrative around a strongerthanexpected recovery out of europe, the political wranglings over the hadulus package we have the euro sitting at a 20 month high. I mean, how much more upside do you get from the common currency . Chris i do think id be hesitant to say the Recovery Fund agreement is a genuine game changer for the eurozone. But what it does do is it allows european stocks to have a slightly higher multiple. I think the euro deserve to be above 150. What were looking at shortterm is this idea of what happens in u. S. Data now. We have the manufacturing numbers coming out the next couple weeks, and also the payroll number, which i think will probably see a contraction in jobs. I think the rest of the world is catching up with the u. S. We are seeing capital redistributed around the world. Ever deeper return any bond market is also weighing on the dollar. So i think you have this redistribution of capital, and the u. S. Is no longer that shining light. I think theres still further to go. We like buying eurodollar on any weakness at the moment. The eurodollar move here is extended. I think it deserves to be above 1. 15, but the move is quite mature. Vulnerable first shocks. For shocks. Pullbacks in eurodollar and selling rallies in dollar swiss. Haidi i want to bring up this chart we got this morning looking at another bullish signal forming in this part of the world in asia. As you can see where that pinkish, purpleish line is, as well as a couple support levels were you could see more buying if we see further consolidation from here. When you take a look at asia, the valuations, are we left priced for profession then u. S. Equities are, and so would you find more opportunities in this part of the world given a lot of recovery prospects ardor must are more domestically focused . Chris yeah, we keep our focus in the big developed markets rather than going into the emergingmarket, saying we do not seek huge amounts of flow in that part of the world. But i think in terms of big market, the mainstream markets, we are coming into sometimes now were certainly in the equity world, you are going to see much greater volatility. Markets are higher, markets are lower, the intraday range i think will start picking up after eight period of being fairly after a period of being fairly sanguine. If you are talking about the u. S. Versing emerging markets, it is that concentration risk which is so present at the moment. We saw overnight, a handful of stocks caused such a big move in the nasdaq. I think for fund and money managers, that is a major concern about that concentration risk you see in the u. S. At the moment. Great to have you. Next, the coronavirus continues to ravage countries in the asiapacific, with hong kong and japan reporting hundreds of new infections. We have all the details, next. This is bloomberg. S bloomberg. The coronavirus continues to spread around the world, with the u. S. Remaining the focus with its 4 million infections. In asia, hong kong reported more than 100 cases and japan set another daily record. Yvonne man has the latest. Still no let up in hong kong or tokyo. Yvonne yeah. Another day, another record. Local cases in hong kong jumped to 111. The economy cannot catch a break. We saw a bit of a pickup in june, but that has been halted because of this third wave. We will get a better gauge next week when hong kong reports secondquarter gdp numbers, but economists are not optimistic. Estimates are for a contraction of 8. 7 , nearly matching the record 8. 9 decline we saw in the first quarter. You walk outside and you see why. Empty storm fronts are becoming a common theme. You take a look at vacancy thes, districts are at 24 , Business District of central around 10 . We also spoke to a Restaurant Group black sheep operating around 25 restaurants in the city. They say 80 of sales have been wiped out by the latest restrictions that ban dining in after 6 00 p. M. But there is some hope. The advisor to the government did tell them with third wave could peak in about two weeks time. In japan though, tokyo, virus cases rose to the 300s for the first time. 366, another daily record. Cases are increasing among people in their 40s and 50s. But it is not just a capital. Another place saw a daily record of 96 infections, another with 100 new cases. Been the w. H. O. Has relentlessly attacked by the u. S. For this entire pandemic. And they responded to secretary pompeo that they were bought by china. What did he say . Yvonne he basically hit back at pompeos comments. He said the allegations are untrue and unacceptable. This was one of the most defensive responses we have gotten from him. These are personal comments from pompeo, but we know the u. S. Has repeatedly criticized the agency for siding with china. President trump has ordered the u. S. To pull out of the w. H. O. As well. Critics say at this point trump is trying to deflect the tensions over the Health Crisis in the u. S. Right now. The doctor saying this is just a distraction. Their focus is saving lives. Shery yvonne man with an update. Is shifting consumer patterns and giving a boost to its biggest and most familiar brands. The ceo spoke to bloomberg about whether we have seen the worst of the pandemic. I think what we have seen in the last quarter is the true strength of unilever. Our regular portfolio of us good resilience. On how toown agility respond to these unprecedented circumstances. Meanwhile, we have been working on the strategic future of the company. We are long past the stock phase right now in north america. What we are seeing our big shifts. Things like hand hygiene, surface hygiene. I think a lot of our growth in north america has been driven by our in home foods business as people eat meals at home rather than on the go. That is likely to continue for quite some time. On the other hand, restaurants are struggling in the current circumstances. On howwere surprised well i scream like ben jerrys did in north america, given the fact a lot of tourist concessions had to be shut down. Do you think ice cream and other businesses that you supplied to restaurants, are they going to recover in the second half as more cities begin to reopen . Number ofes a Consumer Behavior changes we are seeing through this pandemic. People worrying about value. One of the things we are worrying is eeverything. We are all shopping online, paying online, consuming media online. And can you believe it, our ice pivotteam has managed to from selling on the go ice cream to take advantage of home deliveries. One of the growth we have seen is ice cream as people enjoying ice cream at the end of the meal as part of a Home Delivery service. That is a trend we expect to continue. I also want to make the point that as we sit in western europe and are bubbles in north america, we must not lose sight of the fact that this disease is still ravaging the global south. It is getting a grip and africa, having a devastating impact in some parts of south asia. We need to be conscience that people are suffering around the world. Of course. That is a very good point. A lot of humility you need to bring when you are discussing the impact on changes of behavior. When you look at those changes in behavior, is there anything you can really harness to maybe create new brands for more stayathome meals . Is there anything you think this pandemic means you will have to look at other brands you can potentially acquire . How did this change your portfolio Going Forward . Alan one of the things that we have seen is that big brands, traditional brands are doing very well in the current circumstances. Now is the time when people are feeling insecure. The trust they have in big, wellknown brands is of even greater importance. We will of course be continuing to look for opportunities to acquire. In this quarter we completed the largest acquisition unilever has done in some time, acquiring into healthy nutrition. Inwe will continue to engage the acquisition process. But at the moment the real news is the strength of the well trust, the big, familiar brands. You also talked about your key business in the latest report. You are keeping some of the key empire inhouse, but sending off some others. What other mna do you think is potential this year, or the oo farfetchedt t to think the industry can do more mna in this crisis environment . Alan i would say our position has not changed over the last six months. We are very disciplined at looking at strategy, price, and goodg, and if opportunities emerge we are in a strong is asian with are very tolthy a strong position take advantage of that. The other thing we have been working on, is we have focused our attention to unify the company, simplify the legal structure of unilever. And further down the road, that could give us opportunities to look at more transformational acquisition. I want to stress that is something on our radar. Shery that was the unilever ceo there. Next, prospects for another u. S. Stimulus package. We will assess how the latest numbers will affect these. And do not miss an exclusive interview coming up in the next hour about the outlook for gold. This is bloomberg. Is bloomberg. You are watching daybreak asia. The coronavirus marches on as Drug Companies race to find a vaccine. U. S. Cases have topped 4 million. More deaths in california and florida. China seems ready to allow a detailed study of the pandemics origin with investigators expected to travel to beijing. The pandemic is likely to see missing budget estimates as finances come under pressure. Spending targets might not be achievable in the current fiscal the a survey expects deficit to widen to 7 of gdp as the pandemic hits resources. Spacex is set to be aiming for a new capital at a valuation 44 billion. They are talking about an injection of one billion dollars at a price of 270 a share. Could change. The most recent funding effort for spacex was 500 million. Morgan stanley says it could 170 5ely be worth billion. China has launched the most ambitious Space Program aiming to join the u. S. In landing on mars. After aet blasted off booster took off from japan peered Chinas Mission will take seven months to reach mars with the rover looking for evidence of water and possibility of ancient life. G global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. This is bloomberg. With white house and Senate Republicans reaching an agreement for the virus relief plan, opening the door to negotiations with democrats as a rise of jobless claims shows how urgent the package is. Kathleen hays has the latest. Where are we with the stimulus package . I think at almost the end of , significant things occurred thursday which allow the plan to move forward. The republican plan. The democrats already have theories in place. Announced first thing this morning that the white house had dropped insistence on a payroll tax cut. Many republicans opposed it and its one thing that got out of the way. A fundamental agreement has been reached but some hope a plan will be today or tomorrow. In charge ofll getting the lawmakers together foundmed that people surprising. He said he will be ready to part of the gop plan on monday. Been pounding on republicans for being in disarray. And nancy pelosi voiced the feelings today. Agree on extending the payroll tax cut 600 a week. Republicans embrace the idea of giving everyone who earns up to 75,000 dollars a year a 1200 check. The biggest difference is republicans want to plan around 1 trillion and democrats 3. 5 trillion so that will mean negotiation. Evidence ofve more the need of the stimulus, an increase in weekly jobless claims. What drove it . The virus. Weekly claims are up for the march when thee lockdown started. Gains in jobless claims the week of july 8. The continuing claims are those who have been receiving checks. Everyone is worried about service workers, restaurants closed down, a lot of people say they are closing permanently with more lockdowns ahead. Flattening asery viruses research as the virus researches again. Bill dudleyoke with discussing the need for more stimulus from congress and he spoke about President Trumps decision to nominate his shelton tovisor judy the feds board of governor. I dont think it creates huge amounts of problems. There have been others outside aremainstream and there going to be seven governors and i think they will have a voice and that will be set by jay powell. The heart of her theory is to go back to another time of a motor a more closed american system and static economy. Today many people who support judy shelton, how do you respond in this time of an open economy . A return to the Gold Standard would result in tremendous increases in the volatility of interest rate. [inaudible] regardless of what was happening to inflation. The Gold Standard is not a good anchor. Now . Ould you really ask we got a flavor things are starting to roll over and now we see it in jobless claims. It looks like the right wing of the v is starting to break. What would that mean for you . Recovery of Economic Activity is flattening out. Distancing is increasing again. I do not think we will have a fall back to where we were but recovery will be subdued and the rate will stay high for quite some time. As a consequence, monetary and theyll be on hold will be looking to what they can do. They do not have a lot of great weapons. I think they will continue buying treasuries and mortgagebacked. Until inflation climbs above level but the focus should be on fiscal policy. We are at the edge of a big with the expiration of the 600 a week at the end of the month. Not replaced by something significant soon, the economy will be weaker than anticipated. Jay powell saying fiscal policy is necessary but the fed has control over Monetary Policy which is in which is pushing investors into equities. A little higher on the day of the open. Even after the worsening labor somethingtatistics, to shoot for. Fed wantst think the to go to any particular level. They want markets to work and be open and wellfunctioning. I think some people on the. Ederal reserve are concerned a couple people talking about Financial Stability issues. I think the stock market is high because bond yields are low. That was bill dudley speaking with us earlier. Coming up, before the pandemic women were facing retirement with smaller savings than men. And the gap could get work. Speak with an Advocacy Group next. This is bloomberg. We are less than half an hour away from the open of trade and south korea and australia. Lets turn to sophie. Stocks headedan for a lower open while u. S. Futures gaining ground as investors assess the implication of the pickup in u. S. Jobless claims. We are watching tech names and south korea and earnings that continue. Dollar extending losses for a fifth weekly decline. Aussie peeking above 71. Activity picking up in manufacturing and services. Pulling up the chart on the the offshore yuan attempted to consolidate around seven. One month supply stalling after two day rise. Seenuch Material Impact trending lower by the yellow line on the chart. Near toustralias trillion dollar pension industry could be on the cusp of more reform. The governor received a long way to review the system later but one issue is clear. Manybefore the pandemic, women face retiring with smaller savings than men and many worry about the gap set to widen. Kate would is the chair of an Advocacy Group. Wonderful to have you with us. Intim prepandemic, one three women and australia retire in poverty. Tiring savings than men. How concern are you about the disproportionate impact of the economic slowdown and the out amount the amount of unemployment we are seeing across female dominated Industries Like services on travel and teaching and how the burden widens the disparity. We are obviously very concerned about that, the industries that have been hardest hit happened to be the ones where women predominate such as retail, tourism, a whole range of Different Industries ande women are employed dont have secure employment in the future. Women were already starting out and less savings than men focused on those under 35, those taken money out, you have lump sums of 20,000 that will not be compound industries compound interest over time. They enter into caring responsibilities either take timeout or lowering employment levels to care for children. What kind of Economic Policy would you like to see from the government being mindful of the fact they are clearly trying to of thee the impact immediate consequences of the pandemic, but longer term what policies need to be in place . Trying through the pandemic, advocating for changes and there are a number of gaps in the system where women are missing out because of the style of employment. With insecure work, a lot of women miss out. Leaveis no paid parental and we have advocated for that to be introduced. There is also a need for some equity in terms of the tax workm but half the female force earns over 40,000 and they get no government boost because there is no tax incentive associated with it. Should be new payments in that area targeted toward women and that would who arempact women entering less income because of caring for others. That theit is critical super guarantee increase to 20 as currently legislated. Women facing difficult times. That theyant is it only withdraw as a measure of last resort . Think it is clearly very important. We understand obviously this is a very difficult time for many workers who may have lost their jobs or been feeling very insecure and have difficulties making payments for rent, mortgage, food. Faced withre being very difficult decisions. We would recommend they think carefully about it and have recourse to other alternatives before they turn to their super because of the significant longterm impact of taking money out at this point and it not being able to grow and for when they retire because the impact is just compounded and could be dire for women. So look to the Government Programs and to what else you can do before withdrawing savings if possible. Women are not represented in accessing early relief is the same extent as men. I think many women are concerned and they are being careful in thinking about it so we commend them for that, if they can make that choice. Models out inny the world that have good Pension Systems where there is not such a stark gender gap . Some of the scandinavian some of these things will be within the super system that impacts before the Pension System where they may just be a employment conditions. So obviously having really good childcare improves womens work. 50 of women and australia earned under 40,000 and that is because they are faced with the stark choice in terms of returning to work or continuing with their careers when they are minding children. Access to childcare and cost of if you work more than two days it starts to be a net zero gain where you are paying for the privilege. There is also parental leave and scandinavian countries where they are shared between men and women and more generous paid provisions which are attractive to your retirement or pension account. I think the tax concessions and australia are skewed toward high income earners. Half the female workforce get nothing in terms of government contributions. So there is a lot that can be done that we also need that level to come through because it is going to be so important now. Kate, great having you. Up next, shares of intel getting battered in a senate trade after warning of more production delays. More on the Second Quarter. This is bloomberg. Lets get you a check of the latest headlines. Consolidate amid fierce competition from amazon. Walmart india operates cash and carry across the country. Wholesale launches in august. Billions have been pumped into Reliance Ecommerce ambitions and amazon has expanded into india. Warren Buffett Hathaway has bank of america stock, piling more funds into the lender despite the slump this year. Berkshire holds 11 of the bank and bought the shares for an average of 23. 99. Secondquarter earnings Beat Estimates by resilient domestic demand. Even as the coronavirus pummels the industry. Sales declined 19 but beat forecasts. South korea was one of the first countries to emerge from the pandemic. Beating stock took a after reported another delay in the process. Amd stocks soared. Su keenan is tracking the action. Expectations on revenue profit but that took a backseat to the production loss. The revelation that a new nextgeneration chip production process suffered another delay and is not the first time sent the stock tumbling. That erased 25 billion in market share from intel after hours. Gained 5micro devices billion in market value from the rally. Method intelhe used to crank out a smaller more powerful chip, a process the company said on the Conference Call is being delayed by about six months. That means the crucial chip will now go on sale one year behind schedule. The chip delay news overshadowed the fact that until beat on revenue and profit. Jump to percent up from a year earlier 20 up from a year earlier. Well in excess of analyst estimates. But production woes have damaged intels relationship on the ceo indicates perhaps it might start boards outsourcing more. In terms of the timing of the delay, how much does it potentially hurt intels Competitive Edge . Timelay comes at a bad just as there is increasing pressure on competitors and customers. Devices, the main competitor, designed their own chip but has taiwan makes them and has been taking away market share from intel, saying they have a new chip that is faster than intels highest price one. Date has left intel in the dust and analysts say that puts on more pressure. Up on daybreak asia, market opens in sydney. Japan is off for the long weekend. We will get a outlook on stocks. And j klein gives us his outlook for gold. This is bloomberg. Good evening from bloombergs Global Headquarters in new york, im shery ahn. Haidi and i am haidi stroudwatts in sydney. Asian markets just open for trade. Welcome to daybreak asia. Geopolitical tensions rise further. Mike pompeo stokes the flames by describing chinas leaders as utilitarian tyrants bent on global domination. The coronavirus continues to dominate, u. S. Infections top 4 million, will hong kong and tokyo seeing you highs. In dma ms. Growth targets as the virus cripples their outlook. A Freight Train running, goals is rising closer to an alltime high. Klein atr from jake this hour. Lets go to Sophie Kamaruddin in hong kong. Sophie japanese markets are closed for a long weekend. People flocked to tokyo for the olympics. Checking in on the open in australia, we are seeing aussie stocks open. 2 lower. The benchmark is still lagging its asian peers. Hong kong and tends to rectify this come at was the hang seng launching a new tech index coming monday. You as futures edging higher after the overnight retreat, which saw the nasdaq clock the worst drop among the three u. S. Majors. Lets turn to the open in south korea. Isnk of korea backed going to start purchasing Corporate Bonds to support the credit market. The kospi is losing ground on. 1 , extending declines for a third day. , withs and kia their report cards. Seeing a beat on sales and operating profit, although the stock is under pressure at the start of trade. The korean won, we are seeing it back up to 100, but it is set to snap a twoweek drop. The offshore yuan looking to test that 7 handle. On the aussie yen, we are seeing it state below 76 after a fourmonth rally. Technicals are pointing at a possible double tap for mission for this pair. I want to highlight a note from alan ruskin at deutsche bank, he describes the breakdown that we are seeing, the correlation between yen and gold, noting how it reflects this new macro environment where we are seeing lower u. S. Real yields sparking gold buying. Japan capital flows are offsetting that. Shery get more on the markets from thereiem t do and asset management. He joins us from hong kong. Whether it is rising infection cases around the world, or geopolitical tensions, does it make sense to stay defensively positioned whether it is cash or those massive Growth Stocks that seem to be coming down . Khiem that evening and good morning. Portfolio, we take into consideration all those risks. Obviously, if the covid19 contagion were to become a bigger issue, that would definitely impact the reopening of global economies. Geopoliticalid, tensions between the u. S. And china could spread and Impact Global trade, the trade between the two largest economies in the world. So we do have to take that into account. But we think that when we look at all those factors and also , as youdefensive assets mentioned, defensive assets unfortunately are not giving us much in terms of returns. Cash is still 0 . 10you were to purchase a year u. S. Treasury bond yield, you would get less than 0. 6 yield per annum. Given all that, what we have done in our portfolio is, we actually have not a very aggressive portfolio, that we have a moderate progrowth portfolio which includes yields, global high some emerging local debt, so that we can extract a little more yield from some of these markets. That is how we are positioned at the moment. Shery for a while, especially when Chinese Markets were rallying, it was seeing almost as a safe haven as opposed to the rest of the world, given that they had the support of the beijing policymakers. We had the Chinese Market rally stabilized at the moment but until you have a breakdown of the trade deal, how positive is the environment in china so far . Khiem i think that when we look at china, that is the first toge economy in the world actually normalize, whereas the rest of the world, say in the month of may or june, or still struggling, and during that time, the chinese economy looks quite good. The Second Quarter showed positive growth. Despite that, there are still some trade frictions between the u. S. And china. But if we look at the details of exports and imports numbers, you wouldnt notice that. Buyersy, the chinese actually have been bumping up underpurchases of goods the phase one trade agreement with the u. S. So, underneath all of these the phaseal tensions, one trade deal between the u. S. And china is progressing quite well, and the chinese economy is actually doing ok as well. Obviously, not everything is firing, and not all parts of the chinese economy are doing great, some parts are still quite sluggish. But overall, we are looking at growth continuing in china. Therefore, we think the strength of the Chinese Market is actually justified. Haidi the u. S. China trade tensions also create an incentive for authorities in china to keep this equity rally going to the sense that it is still sustainable . Is it becomes an issue of National Pride in that case . Khiem i dont think it is such a concerted effort to do so. I think about what is more the government and also the private sectors goal to create a technology center. A very comprehensive Technology China besthave in hnology center and Hub Technology center and hub in china. Obviously, the index is still very small compared to nasdaq, that still, i think it is going to go places over the next few years. I think that is part of the program, to try to take china up one notch to the modernized world, to the Technology Technological heights of what they can achieve. I think that is all part of that program. ,he same goes for hong kong with the Hong Kong Technology index, the Hang Seng Technology index. I think it is actually a good thing to have compared to many other markets which dont have that. Haidi what level of risk do you assign to the restrengthen of the dollar when it comes to your calls for emergingmarket equities also local currency debt . Think,the u. S. Dollar, i has the benefit of the treated as the safe haven currency for quite a while. Actually, it has become quite expensive relative to many fundamental measures. When the Federal Reserve chairman mentioned that they are committed to keep Interest Rates at 0 for the next 12 years, i think that gave the signal to Global Investors that they can actually venture outside of the u. S. Dollar and try to get a little more yield from some other countries. This, together with the fact that the Global Economy is recovering from a very low level seems to suggest that investors can actually try to pick up a little more yield through emergingmarket debt, whether it is a hard currency or local currency. I think there are a number of pillars which allow Global Investors to take a bit to, say, lastared year, or four or five months ago. That is also justified. Haidi the hong kong tech index is launching on monday. You expect this alongside a giant ofs of people will create more rejuvenation for the ipo sector as well as tech listings in hong kong . Khiem we definitely think so. Hong kong investors have been used to buying property stocks and banking stocks and utilities andong time utilities, for a long, long time until we have the listing of other and alibaba and adrs which have just come back to the exchanges. So hong kong investors are very excited about the creation of this Hang Seng Technology index. I am sure it will become a massive success. Haidi khiem t do, great to have you back on. Be speaking we will ask was simply to australias thirdlargest gold miner, Evolution Mining executive chair jacob klein, joining us to give us the outlook for their business. First, a dispute of the wartime labor abuse risks reigniting tensions between china and japan. The south korean culture minister is with us next. This is bloomberg. This is bloomberg. Youre watching daybreak asia. Drug Companies Raise the vaccine. Million, andpped 4 death in california and florida highs. Elcome new the w. H. O. Sands china now seems ready to allow a details study of the pandemics origins with investigators expected to travel to beijing soon. Coronavirus infections continue to rise in asia, hong kong reporting 100 more infections for a second day. The government insists in you lockdown is not imminent. Tokyo said another infection record, with 360 new cases as the country enters a long weekend. Such says cases are increasing new Research Says cases are increasing among 4050yearold. Government finances in india are coming under pressure. The Economic Affairs secretary says spending targets may not be achievable in the current fiscal year. Theoomberg survey expects deficit to widen to twice the governments original goal. The World Health Organization is hitting back at the trump administration, saying its comments about being bought by china are untrue and unacceptable. Secretary of state mike pompeo isd this week that the body on by beijing. The w. H. O. Insists its only role is to improve global health. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am karina mitchell. This is bloomberg. Tensions are rising between washington and beijing, as secretary of state mike pompeo calls chinas leaders as tyrants bent on global domination. President reagan said that he dealt with the soviet union with the basis of trust but verify. Would it comes to the ccp, i say we must distrust and verify. Freedom loving nations of the world must induce china to change just as president nixon wanted. Haidi lets get more from our international editor, Jodi Schneider, in hong kong. Calling thets chinese presidency as a tyrant bent on global hegemony, these are the latest in these escalating tensions. What does this add to the relationship . Jodi this is a very dark portrait that secretary of state pompeo is painting of what he sees as chinas direction. Obviously he got personal here in terms of his comments about president xi jinping. This is expected to really raise tensions higher. This is cold war kind of language he is using, language that was used, harkening back to the language used by the u. S. About the soviet union during the cold war. Atwas making these remarks the president ial library for president nixon, who helped open u. S. China ties half a century ago, or interesting timing and working. Interesting very timing and wording of this. This comes a day after the u. S. For china to close its consulate in houston. Shery so, what sort of countermeasures are we expecting beijing . Jodi we have not seen anything yet. We have seen a lot of threats come in very specific threats from chinese officials, including Foreign Ministry saying that if the u. S. Does not undo this, there will be retributions. Are five consulates in china, u. S. Consulates, and the one here in hong kong come which used to be treated differently. But they are thinking they could really reduce the staff at the hong kong one an order many of them to leave, or close one of the other ones. We are still waiting on that. There is specific retribution threats against the u. K. As well for its support of the u. S. In terms of retaliation over hong kong. Shery Senior International editor, Jodi Schneider there, with the latest from hong kong. Looking at other tensions across asia decades old disputes over forced labor are reigniting bad andd between south korea japan. South korea is seeking to hold japan accountable for wartime abuses at an Industrial Site off the coast of nagasaki. Ministerea culture says they are building a coalition to make tokyo keep its promises. [speaking foreign language] down tonk it comes japan being dishonest about his history, of history based on false information cannot even be considered history. But seeing how japan is treating this issue with the island, japan has always distorted it. It hasnt even acted on its international process. I think it is mainly because japan is afraid of the actual history. I believe it is dishonest of the japanese government to do so. So what will you do next if japan does not keep its promises . South korea will continuously cooperate with unesco and the International Society to make japan take its actions. We will also reach out to other Member States of unesco for cooperation and support and continue to hold International Forums and meetings to make it known this is a distortion of history. Until japan corrects its actions and becomes a trustworthy member of the International Society. It seems like japan has not. Hanged their attitude yet so what will you do next if they continue to do that . Park i truly believe that the counseling of the islands status a a World Heritage site is viable option if japan does not keep its promises. If unesco doesnt, i think it reveals a very systematic problem. I am sure unesco will deal with this problem very seriously. Informationicular within the Information Center are the koreans particularly angry about . If you look at the content of that Information Center, it does not include the parts that japan had initially promised but rather says many people from the Korean Peninsula have supported withoutindustry elaborating how abusive the conditions were come without stating that this went against the will of the korean people. It appears as if south koreans voluntarily done this, as if there was nothing forced in the process. It is an outright lie. A serious distortion of history and also a violation of what japan had initially promised to include when registering it as a historical site. Haidi that was the south korean culture minister park yangwoo, speaking to us. More to come on daybreak asia, this is bloomberg. A quick check of the latest business flash headlines, hyundais secondquarter helpeds Beat Estimates by resilient domestic demand for suvs even as the coronavirus pummels the wider car industry. Operation profits fell, but it was quite as good as the average estimate. Sales declined 19 but also beat forecasts. South korea was another first countries to emerge from the pandemic. Its new chip after process was delayed again. Shares slumped on the news that production would be six months later than recently forcing, with the chip being a year behind targets. Asel is under pressure customers turn to rival Taiwan Semiconductor for chips. Growth saw a record user , however, its business took a hammering as Global Marketing back on spending. Tweet reported 186 million daily users, a jump of 34 on the year earlier, the largest year on year increase since the metrics began in 2016. Shery lets get you a quick check of trading at the moment. Japan is on holiday, but we are seeing the kospi losing ground consecutived session, materials and health care being the declines. Hyundai and kia are bucking the trend, with an earnings beat coming at a time when we just its firstkorea see contraction cometh the worst since the 1998 financial crisis that forced a recession. The asx 200 is down. 9 . Almost every sector is in the red. Tech and real estate leading declines. The aussie dollar is gaining strength against the u. S. Dollar. Kiwi stocks also down. Kiwi export numbers are holding up relatively well earlier today. Is bloomberg dollar index set for the worst month since 2018, and on the flipside, we have the aussie dollar gaining strength today and also set for the best week since may. Slipping, thise after reaching highs would have not seen in a decade or so. Etfss set for the best weekly gain since march. Silver futures under pressure, still remains in overbought territory as we see incredible strength for gold and silver futures. Coming up, coronavirus continues to ravage the asiapacific, with hong kong and japan reporting hundreds of new infections. We will have the latest. This is bloomberg. This is bloomberg. President is canceling the Republican Convention. He says it is time to drop plans for the party to meet in jacksonville amid a cases spike among delegates. The gathering was moved to florida after North Carolina was unable to guarantee safety of the rnc as the pandemic rose across the united states. Pres. Trump i will do a Convention Speech in a different form. We will not do a crowded convention, per se. It is not the right time for that. I care deeply about the people of florida and everywhere else. I do not want to do anything to upset the state. The latest brexit talks broke up with both sides saying a deal remains out of reach. The eu says an agreement is unlikely while the u. K. Says an accord may not be reached before the end of the year. In septemberntinue ahead of an eu summit. If there is no agreement, businesses will be hit by tariffs where none exist today. Aiming foraid to be a new capital valuation. Talking about an injection of 1 billion, although the round is could change. Spacexs most recent Fundraising Efforts Morgan Stanley says it could ultimately be worth 175 billion. China has launched its most ambitious Space Program yet aiming to join the u. S. In landing a spacecraft on mars. A rocket blasted off from china in the weeks Second Mission to the red planet after a uae probe launched. China will take seven months to reach mars with a rover looking for evidence of water and the possibility of ancient life. The coronavirus continues to spread around the world with the u. S. From eating the focus with 4 million infections. Hong kong reported more than 100 cases and japan set and other local record. Still no let up in hong kong or tokyo. Another day, another record. Cases in hong kong jumped to 111. The economy cannot catch a break. We saw a pickup in june, but that has been halted. Next week, hong kong reports secondquarter gdp. Contraction ofor 8. 7 , nearly matching the record decline in the first quarter. Walk outside, you see why. Empty storefronts are common. , Business District and central, around 10 . Sayaurants in hong kong sales, 80 of sales have been wiped out by the latest restrictions of dining in after 6 00 p. M. In japan, tokyo cases rose to 300 for the first time. 356, yet another daily record. Cases are increasing among people in their 40s, 50s. It is not just the capital as well. Saw a dailyectures record of 96 infections. Osaka saw 100 new cases. Indonesia remains a hotspot in southeast asia. How does this play out when it comes to earnings . Bracing for another quarter of missed earnings. We have had company after Company Issue warnings. Earnings tumble 42 in the first quarter. That was the worst since the force the Fourth Quarter of 2018. Everything from your luxury condo developers, the book of business coming from vehicle sales, incomes the client 25 to 25 to 50 ind the first half. Gudang garam says sales could fall 25 . In india, the Economic Affairs secretary saying it is likely india may miss its budget target this year. No new target was specified. The gap is expected to widen to double the governments role. You have the imf expecting a contraction of 4. 5 . Goldman forecasting 5 decline. As whate not as bad Bloomberg Economics expects, which is a 10. 6 plunge. The projection may not turn out. He actually expects a vshaped recovery. Yvonne man with the latest. Next, gold is inching toward alltime highs. We have an interview with one of australias biggest gold miners. He is with us next. While investors continue to pile into gold, its fastest move ever higher, close to that alltime high reached in 2011. Our next guest says government stimulus spending means high prices are here to stay. Jake klein joins us. If you look at elements of broad dollar weakness, is there any expectation you see a stop in this rally . Jake i cannot see why it will stop. It seems like there is evermore need to spend more money buying government by governments is given the pandemic. The community does need this. I think investors are going to need more exposure to one currency you cannot print, and that is gold. Where do you expect prices to go from here . Do you think we will hit that record, and when . There is good reason to believe we will go past that record. If you can tell me when this spending will need to stop and the geopolitical tension would seem to be rising will start to recede, that is when i think gold will peak. Does not seem anyone is prepared to say when that is going to happen. Unfortunately, it is here to stay for a long time. Therefore i think gold has a long way to go. Prices will be strong. Have you ever seen a more positive environment for gold and now in your entire career . I am a paranoid optimist. In 2011 and 2012, everyone was talking about the fact that the governments through the qe programs in the u. S. Were printing money. U. S. Dollars. That is what people are saying today. We are taking the view that whilst we are very supportive of the environment, it looks great, but our job is to make evolution the most attractive Investment Opportunity for investors to be exposed to gold. For us that means focusing on marginal volume, generating in and runningy dollar the business as safely as we can. Silver. Re also in silver is outpacing gains for gold. What are your expectations there . Silver does seem to mirror the outlook of gold. If the gold outlook is good, silver is also good. We have produced 700,000 ounces of silver as a byproduct. Silver price goes up, we make more money. How much of that optimism from silver comes not only because of the outlook for gold but also because it is now sort of trading like an industrial metal . Jake i think it does have industrial use. Gold is seen as more of a currency. Investors in this environment are looking for opportunities. They are looking for asset classes, which do not have exposure to the general economy. They are going to keep looking for opportunities where stores of value are good. I think silver will be predominantly still gaining a bit because of its perceived store of value. 2000 an ounce is a forecast we are seeing for more and more analysts out there. Do you think it can get that high . What is the fastest it would need to fall into place for levels to be reached . Jake it is more of the same. What you have is an environment where governments are needing to print this money. You are getting all these fiscal stimulus programs. Australia announced its biggest deficit ever since world war ii yesterday. There is a need for fiscal stimulus. In an environment where you have real yields now down to almost zero, in some cases negative, you have this wave of money looking for a home. I keep coming back to the fact that gold is the one currency that cannot be printed. It is becoming more and more attractive. Every investor is looking for exposure to gold. To makeat evolution is ourselves an attractive opportunity for those investors. How quickly can you move to capture the high price environment and the momentum we are seeing in prices . Your coal mine in New South Wales is ahead of schedule. Does that mean you have the capacity and ability to add more to production . Jake we are focused on margin over volume. We need to bank every dollar. When can we achieve it . We can do it every day. Every day we are producing gold safely and efficiently. We need to be banking every dollar above our longterm forecast. You saw the last quarter we have record cash flows, paying record dividends. Our policy is to pay up to 70 of our cash flow as a dividend. We are making more money than we have ever made. Thats the critical part. In the past, Gold Companies have tended to follow the gold price and start allocating capital in places which dont deliver appropriate concerns. At evolution, we are focused on the fact we are stewards of investors capital, custodians. If we cannot find a way to spend it that earns them a better return, we ought to give it back to them. We paid 13 consecutive dividends. We intend to declare a final dividend in the next few weeks. We are focused on returning money to shareholders and allocating capital only where it provides appropriate returns for the risks being taken. Tell us about your plans in north america. Where do you see evolution when it comes to canada, north america, and will you look in the future to add further operations . Valuere potentially elsewhere in the region . Jake we bought the mine in ontario, canada in november last year area our experience today has been incredible positive there. We bought a mine that had skeptics thinking, what have you bought . What we have been really amazed by is the opportunity which that mine is presenting. We recognize success over there is our ticket to doing more things in north america. So we need to do those first. We are achieving great things in greenland. We have managed to rationalize the workforce, improve productivity, we are getting Development Rates up. We are making money ahead of where we expected to be. The opportunity is exceeding our most optimistic expectations. But we do recognize that we need to demonstrate success. Job,eam is doing a great but we are open for business in canada. We think jurisdictions like australia and canada, places where you can rely on the rule recruitwhere you can very talented teams of places which are going to be increasingly attractive to investors. How acquisitive are you feeling . Buyers or owners i should say less willing to let go of their efforts . Jake we are in a cyclical business. We are in a very positive art of the cycle at the moment. You need in my view a motivated. Eller to do something there are very few motivated sellers at their the moment because money is easily available. People are feeling good about this higher gold price. I am more tepid on the opportunities for the creative acquisitions. There is money flowing into the development companies. Outmajors have largely sold of what they want to dispose of. Now is the time to be harvesting cash rather than making big scale acquisitions. Always good to have your thoughts. Thank you. Evolution mining executive chair jake klein. Mark mobius is making a call on the precious metal, speaking to Bloomberg Markets earlier, saying investors should continue to increase their holdings of gold. The decline of industries means these emerging markets, their sovereign debt and corporate debt can also move down. The second thing is the amount of money at the world bank, the imf, these other organizations, putting into these markets to enable them to pay back their debts area debt. And do infrastructure spending. Within the countries themselves they have been increasing spending, taking their budget. Budget deficits are going to be greater. The has also been pouring into the markets. It is a combination of these things that have led to an increase. The interesting thing is that gold has done just as well as the equity markets. I noticed that although gold lags, is the beginning of march this year to now, gold has lagged the s p 500. You look at the fiveyear numbers, its exactly the same. Both have gone up about the same , about 75 in five years. We are in a very interesting situation where people are looking at stocks to preserve their capital because stocks will adjust to inflation and also gold. Im glad you brought that up. When i look at real yields, particularly in the u. S. , then i look at gold, it does not say vshaped. In terms of inflation expectations, they are still 100 basis Point Software we were a few years ago. How do you reconcile that . Remember when Interest Rates are high, people tell you gold does not pay interest. But when Interest Rates are zero or near zero, gold is an attractive medium to have. You do not have to worry about not getting interest on your gold. The gold price will rise as uncertainty in the market is rising. One of the other interesting things about gold, and i have looked at the numbers recently, is what the supply coming out of the minds is going to be. Outputvid, i assume mine should be declining for gold. That puts additional pressure on the price. When you look at the u. S. China spat, does that diminish your appetite for chinese assets . Should we assume we are going to see more fights between china and the u. S. . China and the u. K. . China and europe and other countries or regions . We have factored that into our calculations. China is very important. Along with brazil, china and india are very big for us. , chineset china companies, in a separate light. We look at what the global nonus activity is. , Alibaba Financial Services has now teamed up with vota, in south africa to provide Financial Software and apps. These Chinese Companies are moving globally to places where they are not going to be affected by the situation in the u. S. That is where we have to look. There, gold,get are you buying it . Mark i would be buying now and continue to buy area to buy. What about silver . Mark silver will follow gold. But gold is the most important. Mark mobius, cofounder of mobius capital partners. Lots more to come. Flip card has bought walmarts business in india as it looks to consolidate amid fierce competition from amazon. Walmart india operates 28 Stores Across the country which will now come under flip card flipkart wholesalers. Amazon has been expanding in india. Warren Buffetts Berkshire hathaway has bought bank of america stock, piling more funds into the lender despite its 31 plunge this year. Boosts berkshires stake. It now owns around 11 of the bank. Rubber glove maker top glove is benefiting from the coronavirus becoming malaysia yes secondmost elliott. On the back of a dizzying rally. Shares have soared 450 to give the country of value of more than 16 billion. Maybank has a market cap of 20 20 billion. Downside seeing broad kospi. The asx 200 losing ground. We are seeing the kospi led lower by materials and health care, pressuring the stock market there. Losing for a third consecutive session. Technicalreas first recession since 2003. Data showing it was the worst contraction since the 1998 Asian Financial crisis. The asx 200 being led lower by tech and real estate. We are seeing the aussie dollar gaining ground against the u. S. Dollar. The aussie above that level. Thirdcks falling for the kiwi stocks falling for the third consecutive session. New zealand exports have held up relatively well during the pandemic. That was not a bad set of numbers. Let us take a look at how futures are trading when it comes to u. S. Stocks. Jobless claims really reigniting concerns about the labor market and by extension the strength of the u. S. Consumer recovery. Contracts into the s p up a quarter of 1 . Taiwan futures negatively by 0. 25 . King to watchures that reaction in china. Mike pompeo calling chinese leaders tyrants bent on global domination. Also watching the currency sector as well. Back of broad dollar weakness, mind you. Weakening for a fifth straight day as that continues to drive into demand for precious metals. Coming up, more market analysis. On, we will later be joined by the softbank online insurance form policy bizarre ceo. As we get into trading on the spinal friday session, a bit of a mixed picture when it comes to markets. The Msci Asia Pacific muted with losses of just about 0. 25 . The start of trading in shanghai, shenzhen, and hong kong is almost upon us. The china open is up next. It is 9 00 a. M. In beijing. Welcome to Bloomberg Markets china open. We are counting down your last trading session of the week in the chinese mainland and hong kong. Geopolitical tensions rise further. Mike pompeo stokes the flames by describing chinas leaders as bent onrian tyrants global domin
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