Fed president Robert Kaplan this hour. President trump orders chinese to shutdeo app tiktok down in the u. S. Next month unless there is a deal with microsoft or another leading american company. Breaking news out of south korea. The cpi numbers for the month of july year on year, a growth of 0. 3 . This is of course after inflation remains flat for the previous month year on year. We have seen somewhat muted demand. Perhaps weighing on the month on month numbers. We are seeing inflation at zero growth. This really missing expectations that prices would rise 0. 1 if also inflation is decelerating from the previous month of june. Core cpi take out oil prices, and you get a rise of 0. 7 , in line with estimates, and slight acceleration from the previous month. We have seen brent crude prices recover somewhat from aprils slump but still down 38 year on year also. The are also expecting tokyo Inflation Numbers within the hour so take a look at what japanese futures are doing at the moment. 106japanese steady at that level. We have seen significant strengths on the japanese yen but for the past two sessions, we have seen a little bit of weakness against the u. S. Dollar. Japanese futures at the moment unchanged. They rose yesterday. The nikkei rose after falling all of last week so watch out for the japanese markets which we did have for the first ,uarter gdp contraction unchanged at an annualized 2. 2 from numbers yesterday. U. S. Futures flat after stocks rallied. We have the tech sector leading that rally. Crude prices under pressure again, headed for the 40 a barrel level. We do have opecplus starting to unleash crude again after historic cuts. Haidi. With tech. S stick our top story, President Trump the u. S. Should get a big cut of any sale of tiktoks american operations. Pres. Trump the United States should get a large percentage of that price because we are making it possible. Without us, its like the landlord and the tenant, and without the lease, the tenant does not have the value. We are sort of in a certain way the lease. We make it possible to have this great success. Is just one example of how any deal between microsoft or tiktok would be complicated one. Melissa hathaway, president of Hathaway Global strategies. Wonderful to have you. Really appreciate your time. I want to take a step back because one of the points you made i thought was quite interesting and this is really kind of a personal issue for President Trump because of tiktoks role in the tulsa rally and attendance there. Does this mean it becomes a nonevent if we get a change of leadership in november . Melissa i think that the microsoft talks are important for creating it to be a u. S. Based company. Inre certainly was concern the United States based on the amount of data that tiktok has access to from 100 million americans that was raised by congress but i dont think the president stepped in until it became personal to him. The lack of attendance of the tulsa rally that was really, you could point to kapok and k pop and tiktok working in adjacent markets for that matter. September 15 is going to be a big day, whether or not microsoft can cut a deal to take over this social media Success Story from china. There are myriad issues with regards to a short timeline, the pricing you see given the political pressures on the business, despite the fact that it has been such a pandemic Success Story. Im wondering how ideal is microsoft as a partner from the u. S. Government point of view, given his history in helping build the great firewall, and having been in china . Well,l melissa microsoft understands what it takes to operate in china, and then taking over a key platform, just like they did with skype from estonia in 2007, and they left it as a whollyowned subsidiary so one would hope they do the same thing for ,iktok and really take it over being a u. S. Company broadly. Understand the transparency of how the data is used and repurposed and allowing it to continue to be the sensation it is. A securityiktok threat . Melissa i think that any company that is collecting data about its users is a threat, whether that is tiktok, google, twitter, facebook. The important thing is to get to the data handling transparency. Isre is the data stored, how it used, who and how is it repurposed for market gains . All of these platforms are having a similar problem. It is just a question of when they come into the political crosshairs, whether it is here in the United States, in china, or in europe. Shery in the case of huawei, they insist they do not have access to personal data, so how much of a Security Threat does huawei pose, and when it comes to huawei meeting in the network space, that seems to be a more beijing policy drive. Is an economic versus a political motivation for china . Melissa well, i think that huawei is a different story from tiktok, and i think that their technology is very good. But as part of the china 2025 strategy, huawei is one of the key National Companies core to and asng china 2025, such, they are getting assistance from beijing. For are getting subsidized the price point of their product, and they are trade preferences part of the belt and road initiative, so i think huawei and how it is being treated from beijing is very different than how tiktok is being treated. Haidi the way that tech has become the new front in the u. S. China world and chinas pursuit of dominance in this area and the threat of a bifurcated internet and bifurcated world of tech, what is a better alternative strategy for the u. S. Government to be pursuing here . Melissa i really think the u. S. Government should be thinking about how do we what technologies do we really want to champion as we are Going Forward and where do we want to be 10 years from now . Because this is truly what china did a decade ago. Start to chart that pass through trade preferences and negotiations, through preferential research and Development Tax credits, through protecting these particular companies and technologies that we think are important to our economic future. A 10 year strategy, not this quarter by quarter or term by term. We need to think about the longterm Economic Health and wellbeing of the United States for the companies or the western alliance broadly. What are the true priorities in the ways that china is building its own National Champions . What should the u. S. Be prioritizing . Melissa we need to be really mindful that the chinese and. Heir strategy are transparent they are published. They are published in english. Think the thing that maybe surprises the americans is that they are executing these strategies. Many republish but dont actually follow and execute. That is completely different over there. They have broadcast quite clearly what they want and the sectors they want to dominate in from biotechnology to agriculture to smart cities and smart technologies, quantum computing and the like, and so, you know, they are investing accordingly. This for be looking at where we are going to compete and where are we going to coexist and how do we Work Together . Right now, we are forcing our allies to choose between us versus them, and we have a very with. World to work the asiapacific region, our colleagues in singapore and indonesia and thailand and vietnam and japan and philippines, etc. , are feeling the tension more significantly than our european allies and allies in other parts of the world. Shery melissa hathaway, great to have you with us. More perspective on tiktok ahead with your ration geotech analyst later. Pimco says more firms will be allowed to fail as policymakers tighten support. The outlook for debt defaults with the apex portfolio manager. Plus hong kong bans facetoface teaching until further notice. This is bloomberg. Karina you are watching daybreak asia. I am Karina Mitchell. The United States remains the focus of the coronavirus pandemic at several areas are starting to see improvement. California and arizona reported positive trends on new infections although they admit one week does not change the overall picture. U. S. Fatalities are over 155,000. Global infections are above 18 million. The pandemic adding one million new cases every four days. The u. S. Treasury has outlined how much it needs to borrow to keep the economy going for the next three months. Amid unprecedented spending on the coronavirus fallout. It expects to raise almost 1 trillion in debt through september, more than 270 billion higher than it projected in may. Since then, virus cases have surged, forcing congress to consider new fiscal stimulus. The more senior another round of relief is critical for the u. S. Economy. The fed is due to expire and congress is divided on what to do next. Charles evans says any failure to launch new support would be hugely damaging. His dallas colleague says enhanced benefits have probably kept more people in work. The australian city of melbourne enters new stricter lockdown measures from midnight on wednesday. There will be a curfew from 8 00 p. M. To 5 00 a. M. Large parts of Manufacturing Centers will be shut down and people will only be allowed outside for one hour of exercise. Victoria fights a spike in virus cases. 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. Staying with the pandemic, cases in hong kong have slowed while experts warn india is flying blind on its virus data. Yvonne man has the latest. Lets start where you are. Some signs things may be easing in hong kong. Reported cases on monday here, which is the first of 12. The number of daily cases actually not surpassed 100s, the triple digits, so certainly, theres signs of perhaps some kind of easing here although a quarter of those 80 cases were still untraceable, but one day does not make a trend. You heard from the government yesterday, extending these social distancing measures for at least another week. Dine out after 6 00 p. M. And 5 00 a. M. Has only allowed bars and gyms to remain closed. I buckle experts did arrive over the weekend to help when it comes to expanding testing, makeshift hospitals have also been created and set up here. Still not a time to let your guard down. We heard that hong kong wants to resume classes soon but the government saying they are banning facetoface teaching and classroom learning until further notice. On the Online Learning is allowed. The kind of questions over mortality rates continue to confound, particularly when it comes to india. Or tell eddie rates relatively low despite having the worlds Fastest Growing epidemic. Mortality rates relatively low despite having the worlds Fastest Growing epidemic. Yvonne the reason why india is seen as a Success Story, but more and more so, hearing from independent experts saying the data is outdated. Failing, the country is to properly record the number of deaths. To show you a chart and comparing it to some of the top infected countries in the world, indiana remains pretty low on that list. The mortality rate, 2. 1 . The death rate is nearly 20 times lower than the u. S. Despite india having the thirdhighest number of virus cases. India has when it comes to testing capacity, it is also one of the lowest among most infected countries as well. Just last week, we heard from big cities like mumbai, new delhi, chennai open. They revised their covid deaths significantly upwards for the month of june and experts say the big problems still remain but the data is mired with a lot of red tape and that is why we are seeing these delays. One even likened it to a pilot on an aircraft flying blind. Still no signs that in india, this virus is getting to the worst of it at this point. Last week, we saw every day 50,000 new cases have been added. Bady it would be really for Southeast Asia as well. We saw some markets slump on news of lockdowns in the region. What is in store today . Yvonne we will see how this plays out but you kind of see how these markets react. Anytime you see headlines of more stricter restrictions or even lockdowns being reimposed, you do see markets slump. Indonesia and philippines were a clear example of that yesterday. They were the top two losers in the region on monday. This is on news in jakarta. Delaying the easing by social distancing measures by at least another two weeks. Iny were seeing a surge cases once again. The jakarta composites fell as much as 4 . The rupiah has also been under pressure. It fell more than 3 after the stricterrought back a lockdown starting today. You know these two markets, indonesia remains the highest in terms of virus cases in the Southeast Asia region. Philippines is a close second so investors at this point are probably weighing whether to pull back from these markets. They are a little bit worried that when we get these secondquarter gdp numbers, they may be worse than what is expected. Keep in mind, indonesia reports gdpe gdp numbers their numbers on wednesday this week. Haidi yvonne man in hong kong. Earlier, we spoke with device unit of Johns Hopkins rubric school of Public Health. She told us things could get worse once the flu season rolls around. It is a major concern. I think the worlds hitching records and the total number of coronavirus cases, so we are really in the thick of the pandemic and we are seeing surges in the philippines and in vietnam, which have not had serious coronavirus outbreaks to date, and even japan has had the highest number of cases that is reported. I think in japan, i think the answer very clearly is that they clearly opened up, acted like the virus was behind them. That is a mistake that every single country in the world will make at its own peril. The other countries, they have been almost completely stared at the beginning and people wondered whether there was some special thing. It probably was just a little luck and very Good Public Health work and they will need some of those under control. How should we be looking at this . Is it better to be in a full lockdown for a shorter amount of time to save lives than the kind of open not so open phase a little longer . Joshua it is different for different countries. A lockdown is necessary to really control the spread and then when it comes way down, you cannot stay locked down forever. Just have to be prepared even some bad luck will lead to a resurgence. You have to be able to have the capacity to respond to that. We are going to see the Public Health systems of vietnam and the philippines tested and that is not just walking down. That is all the chase and come all the testing, all the things that have to happen. I think japan, even though it is having a surge of cases, should be able to respond to this. They are still relatively there are still relatively very few deaths in these countries. If they can respond effectively, they should keep this down. It is not surprising we will see these surges from time to time. The key is whether people can get them back. Are the northern months are those months going to be worse . Joshua it is hard to imagine much worse because the value vis in so many places, rising so quickly, and our rates are high. Its possible it could be worse, particularly as the flu comes. If we are able to control the coronavirus through distancing, the flu may not be so bad. On the other hand, we are not able to control the coronavirus through distancing so it may be even worse with the flu season. We dont know. It was not long ago that people were saying the summer is going to be better. It is very hard to predict with this virus. We just need to be focused on the severe situation we are in right now. What drugs work to try and cure the sick and which ones dont . Evidencehe drugs with are remdesivir, steroids, inhaled immuno modulating drugs, and we know hydroxychloroquine and do not have evidence for them at this point. That the i would say other thing that has a growing amount of evidence and may be even more widely used cm is convalescent plasma, using the antibodies from people who have. Ecovered to treat there are definitive studies happening now but there is emerging evidence from repeated studies of a benefit there. Sharfstein. A the school is supported by michael bloomberg, founder of bloomberg lp and bloomberg philanthropys. Do not miss our exclusive interview with singapore tourism boards ceo. He will be talking about singapores campaign to spur Domestic Travel as the asian hub is hit hard by the coronavirus. This is bloomberg. Shery here is a quick check of the latest business flash headlines. Zoom is to rely on thirdparty operations in china to reduce the chance of a ban in the United States. America remains its biggest revenue market and companys with china are under increasing pressure from the antibeijing ceiling in washington. Zoom is facing stiff competition in china where other companies have more revenue and user numbers. Twitter is under investigation by the federal trade commission for using phone numbers uploaded for security purposes to target people with advertising. The fec alleges the social media platform violated the 2011 agreement to better protect users personal data after it was found to be misleading consumers. The latest probe may lead to losses of up to . 25 billion. Almost 6s selling billion of bonds with rockbottom yields in the largest corporate no sale in the environmental, social, and governance sector. It wants to support black entrepreneurs as well as Affordable Housing and Small Businesses hit by covid19. Alphabet has only borrowed in the investmentgrade market. The last issue was four years ago. Get you thewill latest on the stimulus deal as President Trump says it is considering an executive order. Details, not. This is bloomberg. Haidi we are just getting Inflation Numbers out of tokyo. Cpi excluding fresh food year on year, coming in higher than estimate. 4 . We were expecting a gain of. 1 . Picking up the pace from junes inflation of. 2 , year on year number for cpi at. 6 . Estimated, andan excluding fresh food and stripping out volatile energy prices, we are seeing a gain of. 6 , again picking up from the previous month and better than the. 3 that had been expected. Take a look at where dollaryen is sitting at the moment. We had been trading at the 1060 handle and that is where we are. We will get a little bit more analysis on that, but typically, tokyos inflation is sort of a nationwide indicator and that is better than the expectation that we are going to see a largely unchanged picture in the month of july. Lets turn to Karina Mitchell now for the first word headlines. Karina good morning. President trump is ordering tiktok to shut its operations in the u. S. By september 15. Unless there is a deal in place with microsoft or another american company. He is also demanding a substantial amount of money paid to the u. S. Government as part of any deal. I could stop says it remains interested in tiktok and has talked directly with the president about a purchase. Pres. Trump the United States should get a large percentage of the price because we are making it possible. Without us, it is like the landlord and the tenant. Without the lease, the tenant does not have the value. We are in a certain way the lease. We make it possible to have this great success. Karina in other news, the u. S. Is further raising the hes on china, saying a type of computer malware seen in recent years is tied to the government in beijing. The fbi and others say the cyber actorsed by in china. They are offering no information about the malware and who if anyone has been attacked. Say it hasity firms been in decline recently. Alibaba warns the pandemic is allowing governments to track people more closely than ever. The cofounder and chairman says the digitalization of information through ecommerce and other apps gives authorities unprecedented access to personal details. Speaking at the virtual launch of the simtech festival, he said benign intentions are morphing into official control. 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 republicans and democrats struggle to hammer out a stimulus plan that both sides can agree on, President Trump is looking to take matters into his own hands with an executive order. Here with whats he said and what is expected now. And never going an evergrowing list of executive orders for President Trump. What is he saying now . Kathleen it is an Election Year and we have got the two major stills still at odds, apart on passing some kind of stimulus package. There has been some rumblings of maybe President Trump finding a way to extend stimulus benefits Unemployment Benefits. They have run out. The moratorium on evictions has also run out. This is where trump said specifically today he thinks he can do something. Lets listen to what he said at the white house. Pres. Trump if you look at some of the states, i will not insult anybody by naming those states, but you know what they are. They want bailout money. They are not interested in the people or unemployment. They are not interested in evictions, which is a big deal, the evictions. They are going to evict a lot of people. I am going to stop it because i will do it myself if i have to. Withe a lot of powers respect to executive orders, and we are looking at that very seriously right now. Kathleen as for what happened in washington today, the big four met again. Steve mnuchin, the white house advisor, chief of staff, mark meadows. Nancy pelosi, speaker of the house, chuck schumer, the leading senate democrat, and in fact, they came out of the meeting with minasian and pelosi pelosi. In and say oneans trillion is enough. The Unemployment Benefits extension. Thae republicans want to bear it the republicans want to pare it down. The president at is talking also about extending Unemployment Benefits and evictions as well although this is very near and dear to anybody who is in a position where they really need it. Talks continue again tomorrow. The deadline, in a way, is friday, so that is when they get ready for the august reset. Pressure is on. We will see if we get up and do something. Haidi despite all of the uncertainty over the size, the scope, the details of the stimulus package, the treasury has announced borrowing estimates. What is the key take away here . Kathleen they are borrowing about 1 trillion. It will be a Third Quarter borrowing record. The Second Quarter was bigger at 2. 75 trillion, but here is what they have announced. It is estimated at 947 billion. 270 2 billion less than this, but the virus is here, the virus has picked up in many states, and this is why they are looking at more spending than they thought. The Congressional Budget Office is saying this will be part of what we are looking at as a record thirdquarter deficit, budget deficit, of 3. 7 trillion. One more interesting our Bloomberg News team picked up is the record deficit along the bottom. That thebalance treasury holds could soar. They could create havoc in money markets. We will see how that plays out. It treasury secretary told bloomberg that the number they put out as a placeholder until they see what sort of stimulus package is actually passed. This is something the Federal Reserve is watching very closely. We have Charlie Evans from the chicago fed speaking today, saying the ball is in congresss court. They have to do something. We have jim bullard at saying president of the st. Louis fed soliding he expects a second half. The virus is receding. Importantly, we have rob kaplan from the dallas fed saying, like other fed officials have said, if you extend jobless benefits and put money in peoples pockets, that could help the economy. Bloombergs kathleen hays. We are staying with kaplan, where he is calling for an extension to the unemployment benefit despite concerns the aid package is making hiring harder. Robert kaplan also saying the u. S. Economy will weaken further if the stalemate in congress continues. He told us this exclusively. He sees a more muted rebound. Robert it is still our view that we will contract for the 5 to 5 . T 4. We had a very healthy rebound in the Third Quarter and fourth quarter. Is morethat rebound muted in the United States now think has caused me to that the Unemployment Rate, if we do not do a better job managing the virus, the Unemployment Rate is likely to be above 9 , between 9 and 10 . We have moved up our unemployment forecast, so i think we have got a rebound, but it is much more muted than it was, and if we do not do a better job managing the virus, we are going to have lower growth and a higher Unemployment Rate so i have been spending a lot of my time talking more about the virus than anything else because it is so critical to the recovery. The 600 extra unemployment bonus, eviction moratorium, they are gone now. Has your staff modeled the impact of that on the economy, and second, should we expect a wave of defaults that might affect credit markets . Robert we have looked at it and one of the things that is unusual about this downturn that we have just had is incomes have stayed relatively solid and a big part of the reason is these Unemployment Benefits. So we are normally in a downturn and you see a drop in income. We have not seen that here. It is still my view that in some form, we will get an extension of Unemployment Benefits. I am quite hopeful that that will continue, but if it did not, you would see a further weakening in the economy. In particular, because consumers would not have as much money in their pocket to spend. Any Business People telling you that 600 bonus was keeping people from coming back to the labor force . Robert a lot of Business People were telling me that, honestly. They were telling me that it was challenging to hire people. We looked at a number of studies. We have done our own work. We do not see it as much in the data, but i can tell you i am hearing it from Business People. Is, ier the right answer think you still are going to need to see extension of unemployment. It may be restructured to some point from the 600, but i think it is important that we see an extension of and i think the increased incomes, while it may have made it hard for certain individual businesses to hire, it helped create jobs because it has helped bolster Consumer Spending so the net effect still has been positive for the economy and for unemployment. Was Robert Kaplan speaking to us earlier. Coming up next, more Company Defaults as policymakers cut back on broad support. Our guest gives his views on that. This is bloomberg. Haidi debt issuers in asia are boosting cash profits with record amounts of bond sales. Sophie kamaruddin has a closer look. What are we seeing in terms of investors addressing risks to credit quality amid the debt binge . Sophie given the continued warnings that we could see default rates pick up to the double digits, bond buyers want to avoid the value trap that is being presented by the recovery scene, and that could mask the rising risk of fallen angels. Yield premiums have fallen for a 14th straight week and that story is also playing out in the junk corner with risk premiums narrowing further while distressed debt levels shrink amid the rally in credit given support from policymakers are twitching out the terminal, that has generated returns from even the least creditworthy borrowers. Ferreting out the weak links will be crucial. Signs of stress and merge with defaults and missed payments. India, for example, that spark to jump in reading related bonds as Balance Sheet health deteriorates. Pulling up the board over in china, the potential for defaults is rising as onshore debt sales came to a february low last month. Borrowing costs have climbed, a stark contrast to robust sales. The funding gap is most pronounced for a lower rated name and real estate firms are particularly at risk. Nonetheless, the global hunt for yields, that is compelling with a mounting pile of negative yielding debt. Goldman expecting bond spreads to keep tightening and strong issuance likely to continue after dollar and euro debt offerings rose to a record in july. Last week, we saw the corporation of china pricing a dual currency offering and there are a number of issuers at the start of august including from chinese issuers, share a. Shery. Shery lets continue on what this means for companies. Robert need is pimcos head of Portfolio Management in sydney and joins us now. Great to have you with us. We have seen companies being supported by not only fiscal action but also monetary action. What are you seeing in the months ahead . Witht we have discussed bloomberg before that theres been a little sort of blunt policy in the first phase. Forward,as we move whether it be a Fiscal Authority or monetary authority, the nature of policy will be much more targeted Going Forward. That applies to companies, consumers, sort of broader households in particular. That is the change we are anticipating. We have already seen bankruptcies rising in japan. Where do you see Investment Opportunities and how do you really defend yourself . How do you state offensive in this environment . Stay defensive in this environment . Robert theres a broad cohort of beneficiaries, whether it be in companies that have been exposed in a positive way, the utilities, telecoms, cable, very Important Health care, pharmaceuticals, etc. , for technology. As a whole, a large cohort of companies that are actually benefiting from the pandemic, whereas some others were a little cautious. Clearly, the retailers, the traditional oldschool retailers , some parts of the Energy Complex that are very susceptible to week oil prices or week gas prices wa oil prices or Weak Oil Prices are gas prices. In order for economies to recover, there needs to be key factors that are protected. Whether that be things like tourism, education, it will be those areas that provide ongoing provide with ongoing Government Support rather than just temporary support. See, as we continue to earlier today, some of the spreads on the risk yields for your u. S. Junk bonds, how much dislocation or masking of the real risks is going on in this market because of these unprecedented policies . Robert its one of these issues where if we find that there is a reasonably fast exit from the Health Issues that we are all grappling with, then the majority of these companies will be survivors. I think that is what the markets are hoping for. We are a little bit more cautious though. We were very cautious going into the crisis, thinking highyield markets were already fully priced. We thought bondholder protection was very weak, so we have been pretty selective in terms of our holdings in highyield. We are much more focused on structured credit markets where bondholders get legitimate security or structural benefits, so we are already cautious and we think that moving forward, if we are correct and if this policy support becomes much more targeted, then there will be an increase in defaults. All of that said, we are quite active at the moment in the primary market because the new deals that are coming provide much stronger bondholder protection. In some cases, they provide actual security so we think there is that other cohort of outstanding deals that were done over the previous few years that are much more vulnerable than the current production. The portfolio still hold during these times, do you just have to look harder within that 40 . Ifert 6040, i dont know that is the right number or not. Its a great question. We do think bonds still have an Important Role to play, but it is also a matter of assessing the backdrop before you decide on where to invest in the bond market, so we have very clear guidance at centralbank policy lows,remaining at their somewhere around where they are now for potentially two or three more years. Given that backdrop, and given the fact that very highquality part of the corporate sector, as i mentioned before, the structured credit sector, many of those companies have already termed out there debt. They already made some very harsh decisions in terms of ising sure their business reliable and sustainable so moving out of that very low rate in terms of government bonds and into the highestquality part of the corporate sector, we think is probably the best way to build a majority of that, if you are doing 6040, that is the place to start when youre building that 40. Robert, always appreciate your time. Cohead of asiapacific portfolio joiningnt, robert mead, us. Australia in focus. The rba decision day today. This is the first Monetary Policy decision since the virus worsened in victoria, leading to these stricter restrictions. We will have a preview, next. This is bloomberg. Shery a quick check of the latest business flash headlines. A Brazilian Development bank is set to be considering the sale of 1 billion of shares offload 1 billion of petrobras, taking advantage of this years stock market risen inly, which has value since the new year while petrobras has almost doubled in the same period. They hold about 8 of the oil producer and 6 . Aig has posted a mere 8 billion secondquarter loss, driven by the sale of a majority stake in a business of onoff policies along with rising costs from the coronavirus and civil unrest. The sale of Fortitude Group announced late last year and completed in june was used to do you risk the Balance Sheet. Adjusted net income of 66 Cents Per Share beat the estimate in a bloomberg survey. U. S. Aviation regulators have given boeing a long list of fixes required to allow the 737 max back into service. Shares rose as the faa demanded specific upgrades to systems linked to the ethiopian crashes that grounded the plane as well as broader changes to improve safety and reliability. The stock is down more than 50 this year. The worst performance on the dow. The bank of australia makes its decision later on rates, the First Time Since the crisis in victoria took a turn for the worse. The rba is expected to stay on hold but Economic Forecasts may take a hit. Lets get a preview with alexander of in sydney. Almost hearou could the Economic Forecast being ripped up over the weekend. What can we expect to reflect that from the rba today . Is ahead of this their forecast update that is due on friday. No change as you suggested is expected to the cash rate or the three year yield target but given these developments that we are seeing in melbourne, this is australias second largest city, where the state of disaster has been declared in a record to contain the coronavirus and we would expect a more dovish tone to enter the rbas statement this extended lockdown and nighttime curfews will clearly have negative implications for the economy and the labor market. The key question for the rba is whether these events overshadow and offset better than expected outcomes across the broader economy that would have otherwise been revising up the forecast when they were last updated in may. The key concern for the rba is there inout a vaccine, and out of lockdowns. Firmses this give confidence to invest higher and how does this give households confidence to go out and spend, leading the extent of the economic recovery muting the extent of the economic recovery . This is something the rba is watching very closely in the weeks and months ahead. Shery what is next for the rba . They really have not done much lately. Reiterates it rba does stand ready to resume bond buying if needed but has not purchased bonds as part of its Quantitative Easing Program since may but this is because the market has been keeping the three year yield around its target of 25 basis points, and this is really what the rba hoped for when it commenced its program. It is happy to stay on the sidelines. It has acknowledged there is a high bar for policy measures. At the last board meeting, the rba did an evaluation of the package it introduced in march. It concluded that there is nothing more that was needed to be done and rates remain off the table but there is a growing discussion around Market Participants as to whether the rba might lower rate to 10 basis points from the 25 that it currently is that. But economy recovery remains muted or if we see some more moves from other central banks. This is what could see the rba go down that path. Shery our editor, alexandra veroude. Coming up, we will have an exclusive interview with Richard Lancaster after they release results. Just ahead of that, we will get more Market Analysis with the associate director. The market open is next. This is bloomberg. What happens when a wireless carrier puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Good evening from bloombergs Global Headquarters in new york. Asias major markets have just opened for trade. Welcome to daybreak asia. The top stories gains after you futures are higher in hong kong and tokyo. Investors welcoming halted of data and potential stimulus news. Global virus cases top 18 million although there are signs of a slowdown. Rba has melbourne is in lockdown. President trump owns requires tiktok to shut down in the us all unless there is a swift deal with microsoft or another american company. Shery japan, australia coming online. In japan, we are seeing gains for that nikkei 225 adding to the monday events. It is staying above 22,000 points. The yen study around 106 this morning. Jb be traders will be focusing on a 10 year option around midday. From japan, inflation data. Coolg virus cases could the momentum. Turning to south korea, ppi rose in july for the First Time Since april adding to signs of bottoming for the economy. Adding 1 at the start of cash trade and the korean juan holding step korean wan holding steady. And on the agenda from south korea, the potential announcement to increase the housing supply. In australia, the aussie dollar falling. The expected messaging bear. We are also going to get Second Quarter retail sales later this morning from australia. Get some more on what to expect from these markets. Alice browne joins us now from dixon. Particularly in the u. S. , the rally continues to be dominated by tech. Is there any reason to veer away from that . Even if valuations are skyhigh given the situation we had last week . [no audio] lockdown return across asia but up next, tiktok talks roland. President trump sets conditions on a possible deal and demand payment for the federal government. The latest is ahead. This is bloomberg. Thank you very much. I want to start by providing information let us get more with alice barn from dixon advisory, the associate director. Just wanting to get your views. We are bracing for what is bound to be a pretty horrible earnings season. A lot of the numbers in the u. S. Were not that bad though. Alice good morning. If we take a look at the australian reporting season which has now come in, it is expected to unfortunately be a grim one. Earnings are expected to fall by about 16 . The Market Reaction today has been relatively muted. Investors are looking to move through the shortterm pain to a longerterm outcome. There is still a risk of negative shock particularly to the banks which is where we have the most concern. And the rates for travel and technology. The couple of bright spots will be in energy and mining and consumer discretion. Taking from profits from sectors that have performed well, they are looking to add to companies where you can be confident that the impact is temporary. What about tech though . We continue to wait for the sector rotation but with the gains we continue to see, is that somewhere you would want to stay invested . Alice it depends on where we are talking if we are talking about the u. S. Tech space, that has made up these remarkable gains we have seen to the course of the year. If we look at the s p 500, the other 494 companies are still in negative territory. I think if we take a bigger picture, we have to be mindful inwe are investing in tech the states and in australia. At this point in time, there are a number of risks that converge later that are typically macro risks. Given the high level of infections. And the disappointment around the timing of the vaccine. We have the allimportant u. S. Elections and the flareups with china. Ish these valuations, there tle room for error and surfacing. We are already seeing some signals when it comes to the u. S. Dollar, gold, and bonds. The markets have yet to move in that direction. Hereve seen tech stocks and in the u. S. Continue to rally. We are seeing the rally in gold. We have seen almost unanimous consensus that gold will benefit. It is very attractive given the macroeconomic environment. If you take a look at this from our viewers can see that as goldred to the s p 500, and silver have not really offset a years long slump relative to the s p 500. How strong is the Investment Case for gold when it is already at record highs . It broke the alltime high last week. The Investment Case for gold remains strong in continues to grow. We have talked about the renewed all attila day. It has been a change in theiment surrounding reopening of economies and the geopolitical tension and market valuation. Fact that global money supply continues to expand at a rapid pace. That is on the back of the extraordinary stimulus measures and that increases the potential for inflation and currency debasement. We have been advocating for an underweight position in equities and overweight cash and gold. We think there is room for the gold price to further rally. It is closely correlated to real interest rates. And a real yield of negative put the gold price at about 2000 u. S. Dollars per ounce. Adding to the gold position or Retail Investors come you can always look at gold index funds which are very easy to access on the asx and they provide the purest form of the exposure and then you dont take on any of that Operational Risk as you might with those individual gold miners. When it comes to the individual valuation, at least thear they have lagged Broader Market rallied we have seen in the more developed economies. Alice when it comes to emerging markets, there have been a few articles of late talking about august historically be in the worst month for currencies. We know this week we have a number of essential banks in emerging markets likely to reduce their interest rates. Including indonesia and brazil. We think surging cases there and also in indonesia, they are expected to announce a 4. 7 contraction in their gdp. But the markets have not really reacted. There seems to be a level of complacency around some of the risk. We do view those risks to be very serious. The emerging markets typically have less capacity to cope with the Health Crisis due to their infrastructure. They also have poor fiscal positions which makes them unable to provide meaningful stimulus and they also risk a sovereign debt crisis. This is the area where we have most concern and we have been recommending for some months and ive spoken about it here before for investors to reduce their broad emerging market exposure because it is going to be a really risky place to be invested over the next couple of years. What about china about . Does that fall into the warning that you give . Or does the fact that we are make it robust rebound more paramount there . Alice china fits outside the emerging market warning that i have just given. We have seen it very strong recovery in china and overnight we saw a very strong rebound in manufacturing. The economy is recovering much faster than was expected. We are still very comfortable to remain invested in china. Alice browne, always great to have you with us. Director for dixon advisory. And now we turn to Karina Mitchell. The United States remains the focus of the corona virus pandemic but several areas are starting to see some improvement. California and arizona reported positive trends on infections. Overtotalitys are now 155,000. Global infections are at about 18 million with the pandemic adding a million new cases every four days. Melbourne enters new stricter lockdown measures from midnight on wednesday. There will be a curfew from 8 00 p. M. Until 5 00 a. M. The retail sectors will be shut down and people will only be allowed outside for one shopping trip per day and exercise. The philippine markets are set to open later at their lowest level in six weeks. Metro manila is back in severe lockdown as coronavirus cases search. The number of infections is a above 100,000, the second in Southeast Asia. Financial and economic officials have supported the lockdown are against the lockdown saying the company cannot of cannot afford it. Economic activity accelerated despite the rise in virus cases in the capital. Consumer prices rose 0. 4 . Forecasted an increase of just 0. 1 . Prices were flat after falling in the previous two months. 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. Haidi coming up next, we will have the latest on the tensions surrounding tiktok. Can find subscribers the story on their terminals to check that out. This is bloomberg. President trumps latest assault on tiktok has opened a new front in the trade war with china with restrictions on Tech Companies that could have big ramifications on the biggest economies. The president has repeatedly insisted that any sale of Tiktok Tiktok operations would have to include a substantial payment to the u. S. We are making it possible. Without us i use the expression that it is like the landlord and the tenant. Without the least, the tenet does not have the opportunity. The seniorus now is international editor, jodi schneider. The president claims the United States should get a percentage of that sale but it is not clear under what authority he is making this case on. Be prettyould unprecedented based on recent history for the government to collect a part of any transaction involving companies. The government does not hold a stake in this company. He said the money would come m china it is unclear. The president said it should because the government has helped in some way to broker the deal. Theaid he could ban companys action with an executive action. It appeared instead that he got involved in talking to microsoft about its potential purchase of the app. Know aboute do we how this potential deal could take place . We know there are many hurdles to this. Microsoft said it still aims to complete the deal for tiktok operations in the u. S. As well as in australia and new zealand. That thea deadline white house has insisted upon, september 15. This could prove very difficult to do. The details regarding the price have not in work out. And there are higher hurdles given the fact that this is a chinese company. There are a lot of hurdles to get there but it sounds like the white house wants this to happen. The administration is behind it which could give it some fuel. What happens we have seen some negativity coming from the white house. Peter navarra talking about the relationship between microsoft and china. Could President Trump still moved to bar the app . he could and we have seen him go back and forth on this. On friday, it sounded like he was about to go and do it and even take action against other Chinese Software. Now, it seems he is backing away from that trying to extract some money for the federal treasury from the deal. But i think we will see a lot more of this back and forth. And President Trump is looking to ratchet up pressure on china ahead of the november election. Bids part of his reelection being tough on china so that could affect the deal and anything else involving china. Bloombergs Senior International editor, jodi schneider. Moreotential for uncertainty. We will get more perspective on tiktok. Let us get your quick check of the latest business flash headlines. Japan airlines has purchased its biggest in eight years as a fallout from the coronavirus has impacted travel demand. Most89 million loss is the since it was listed in tokyo. Came fromother loss januarymarch as a pandemic took old. Southwest airlines is scaling procedures. G its average turnaround time is about 45 minutes. Southwest will no longer clean armrests and seatbelts. Willer, tray tables continue to be disinfected. Aviation regulators have given boeing a long list of requirements to allow the 737 back into service. Specificemanded upgrades linked to the two crashes that grounded the plane as well as broader changes to improve safety and liability. The stock is down more than 50 this year, the worst performer on the dow. To the beer industry, heineken says the impact from the virus on beer sales deepened in the Second Quarter but there were signs of recovery in june as lockdowns. Sales dropped 20 but there was some pickup later. The ceo told us he remains cautious about the outlook ahead. We did see a sequential improvement in the Second Quarter. We want to be cautious and not look too much into the exit rate in june. We expect the markets to remain very volatile. Andill be two steps forward one step record. We have seen renewed lockdowns in the South African market. There are parts of mexico closing down again. We want to air on the side err on the side of caution. Speaking of being cautious, you want to focus more closely on your expenses. Where do you think you will be able to make cost cuts . What is your focus going to be there . First of all, i think it is important to reiterate our commitment of no structural related to covid until yearend. That is a promise we have made. We are doing an amazing job in the middle of this crisis. I cannot tell you how proud and impressed i am by our people all over the world. That does not stop us from taking a look at our cost base. We took out a half a billion to make sure that we are right citing our expenses where needed and we will continue to do so in the second half of the year. It is finding the balance between minimizing the impact on our people and safeguarding the health of our business Going Forward as well. Talk to us about the second half of the year. Where are you bullish . General, what we see is the tale of two stories. Highlyiness has been impacted. We see declines of 40 50 . That part of the business will remain volatile. We see a lot of growth in the off trade. Doubledigit increases. The European Market is very strong. We are growing market share in the off trades. The of our business with good results with certain brands. Muchpublicized, some brands are doing very well. Heineken happens to be the most trusted International Beer brand in the world and we are seeing good results there. If it were not for the South African lockdown, we the brand would be in positive territory. We are seeing doubledigit growth in 14 important markets all over the world. 00 is still doing very well with doubledigit growth in all of the regions. Lean towardsnue to the off trade business, the premium portfolio and the heineken branch. And of course, ecommerce. Ecommerce is really picking up. Platform. Ilt a it has doubled its revenue. It is over 3 Million Consumers that order daily and weekly there. But there volatile are a lot of good parts in our portfolio. Weh markets and brands that will continue to lean into and invest in. That is the heineken ceo. Let us take a look at how asian markets are shaping up. Tokyo cpi coming in better than expected. About one 225 gaining point 5 . Australia also surging ahead on rba decision day. This is daybreak asia. The u. S. Treasury has outlined how much it needs to borrow to keep the economy going for the next three months amid unprecedented spending on the coronavirus fallout. It expects to raise almost 1 trillion in debt through september. More than 270 billion higher than it projected in may. Since then, coronavirus cases have surged, disrupting the fragile reopening and forcing congress to consider new fiscal stimulus. More senior fed officials are weighing in on stimulus, saying another round of relief is critical for the u. S. Economy. Unemployment benefits are due to expire and congress is divided on what to do next. Chicago fed president Charles Evans says any failure to launch new support would be hugely damaging. Robert kaplan says enhanced benefits have probably kept more people in work. President trump is ordering the chinese video app tiktok to shut its operations in the u. S. By september 15 unless there is a deal in place with microsoft or another american company. He is demanding a substantial amount of money paid to the u. S. Government as part of a deal. Microsoft says it remains interested in tiktok and has talked directly with the president about a purchase. Pres. Trump the United States should get a very large percentage of that price because we are making it possible. Without us, i use the expression, it is like the landlord and the tenant. Without the lease, the tenant does not have the value. Possible to have this great success. The u. S. Is further raising the heat on china, saying a type of computer malware is tied to the government in beijing. The fbi and others say the variant is used by cyber actors in china. Although they are offering no information about the malware or who, if anyone, has been attacked, Cyber Security firms say it has been in decline recently. We will be watching out for chinese tech stocks when trading kicks off in shanghai. They jumped on monday commensurate by expectations beijing with step up support if the u. S. Moves against tiktok end of their Chinese Software company. David watkins joins us on the line from hong kong. What are we expecting given the overlay of the fact that tech continues to drive the nasdaq and Broader Markets higher in the u. S. . How much is Political Uncertainty weighing . We have a mixture of factors, obviously. China will step up support as it looks to preach Greater Development at home. There seem to be expectations for policies for the technology sector. Chinaomes at a time when is moving towards the domestic economy. It helps to domestic demand. Strategy whichis is looking at the domestic market first. Dont really have a clear idea of the intentions. Shery this group rising at a time when we are seeing the tech Growth Stocks gaining ground around the world. How much of a tailwind are the new economy names getting right now because of the uncertainty out there . David well, we have seen huge shanghai tech startups. Yesterday, it gained 10 point 3 , a record gain. China, overy, in the past month, we have seen a big rampup in stocks. We have seen beijing actively encouraging that. I think will continue to see the next few weeks progress. Market. Ull in order to keep everything steady. It does not want to see things get too hot. There will be a continuation of that. They are tempered by down days. Shery David Watkins there. In the company to cross tussle is hsbc. The lender is walking a fine line as it navigates the tensions and looks to limit the fallout of the virus outbreak. In an exclusive interview with bloomberg, the cfo discussed the banks Restructuring Plan amid a hugely outlook. We have incurred just under 7 billion of expected credit losses in the first half. Impacted in is most the u. K. , one point 5 billion of additional credit losses in our bank. Commercial banking amongst the customers, just over 2 billion of expected credit losses. I think the big driver in the Second Quarter was a negative curve in terms of the Economic Outlook of the Global Economy in 2020. 2021 notcovery in enough to offset the sharper recession that everyone is expecting. Expecting 500 million in cost savings in the second half. Is that Program Going to get accelerated Going Forward, and are the targeted cuts of 35,000 still going to be sufficient or does that get changed . Does that need to be increased . Ewen we are pleased with the progress. We went into the start of the year at the full year results anticipating the costs were going to be flat. We are signaling we expect them to be down 3 this year. We had a 7 reduction in the Second Quarter. Somewhat byened very subdued activity in the bank on things like travel and some of our head office costs, delivere on track to what we announced in february, which was a substantial Cost Reduction program over the next three years. We are pleased with the progress we have managed to achieve in the first six months. Headlined that banner 35,000 jobs. You paused and restarted. A reality moment we need to face that the job cuts and reorganization is going to mean more than the 35,000 that you guided at the start of the year . Ewen it was never a target in terms of head current where headcount. We had 4000 employees and contractors leave the bank in the first half of this year. Theid what we thought was appropriate thing to do back in march to pause the redundancy program. We have restarted a month or so ago, speculation as to how many people were involved. Down need to take costs even the revenues we are seeing in the bank as a result of covid. Your guidance depends on a variety of scenarios coming from where the economic recovery is going to go from here. From what we have seen in the data, the conversations you have been having from some of your peers in the industry, what are the next three months going to look like . Ewen there is a substantial amount of uncertainty at the moment, whether it be in geopolitics, brexit, covid. I think over the next three months to six months, it will be important to see the impact of second and third wave and what impact that has on various economies around the world and iso, you know, what the path to a viable vaccine sometime in 2021. So i do think we will learn a lot over the next six months or so as we broach fullyear results. We should also get some clarification on the path of brexit as well over that period and that is why we have come out today with quite a large range of expected credit losses this year of 8 billion to 13 billion. That was the hsbc cfo ewen stevenson. Exclusivenext, an interview with Richard Lancaster. We ask him how the business is holding up amid restrictions and lockdowns across asia. This is bloomberg. Shery lets get you a quick check on how markets are trading at the moment. Japanese stocks gaining ground for a second session as we have a slightly weaker japanese yen which is now falling for a third consecutive session against the u. S. Dollar. Sony is gaining ground after macquarie upgraded the stock at of earnings. Kospi at the highest level since october 2018 as we see carmakers climb on rising u. S. Sales. It is gaining more than 2 at the moment. Banks, iron miners, climbing. Gold stocks are weighing on the index. The s p futures at the moment flat. This after we had u. S. Stocks rallying with tech leading the gains again. The bloomberg dollar index higher as g10 losses led by the aussie as well. We have seen a little bit of strength for the dollar to a oneweek high on Short Covering as well. Larger of hong kongs two power utilities, reported a 12 drop in revenue in the first half of the year as the regions lockdown measures took a hit on demand and the company says the outlook remains uncertain as the coronavirus pandemic continues to weigh on the markets in which it operates. Lets bring in the ceo. He joins us exclusively from hong kong. Richard, always great having you on. Tell us a little bit about what you expect in terms of consumption demand this year as we continue to see this virus resurgence in hong kong. The patterns have changed with people working from home, with factories closed down, so it has been a dramatic change right across our markets. Overall, consumption has been down by 3 on average, but for us, the impact has been more how to keep the business running, how to keep our operations secure, how to keep our staff and our customers safe. We are not a business that can shut down. How do we maintain operations as normally as possible while still recognizing the health risk and looking after the health and safety of our people and our customers . Shery you had experience with sars as well. How do you gauge the Economic Impact not only in hong kong but also the mainland . When it comes to industrial production, when do you expect china to return to previrus levels . Sars was relatively shortlived and we did see a bounceback in the economy. Hong kong was perhaps the it did hit by sars but bounceback relatively quickly. We have never experienced a prolonged lockdown that we have seen with covid19, but in different markets, we have seen very different characteristics. In china, there was a very Strict Lockdown industry, almost completely shut down, but once the virus was under control, we did see a strong recovery and a strong bounceback around may. China, we have seen sales bouncing back. Here in hong kong, there has been some impacts but we have relatively little industry in hong kong so people working from significantuch less impact on sales. Australia, we have seen a second and potentially an extended period of lockdown, particularly in victoria. It had a more dramatic impact there. On how theepends spread of the virus, how lengthy the lockdown is and also the structure of the economy to really see any impact on electricity sales. You mentioned victoria and we have a bit more visibility as to what these latest restrictions on industry across Retail Services will look like. What is your best guess scenario as to how that impacts your business . Us, we have to maintain our operations. It comes down to how we manage just the normal keeping the lights on, keeping our power plants running normally, keeping our Contact Centers running, and doing it in a way that reduces the risk, so people still have to go to work in our industry. We cannot afford just to stop maintaining equipment. It has to be maintained, otherwise it would break down and the lights would start going out. For us, putting in place very strict working practices, making sure we keep distance and separation, having split working teams so it is quite a dramatic change in the way that we conduct our business. What do you see as the impact on power demand as a result of the latest shutdown lockdowns in victoria . We have already seen a 5 reduction in demand for electricity across the National Electricity market in the theern states so while extent of the lockdown now in victoria has been extended and is much stricter, we do see some reduction, but whether people are in their office or at home, they still need electricity and when even more in urgent you have the economy in a very fragile state that the Electricity Supply does keep its high levels of reliability that people expect. Imagine how disastrous it would be if the lights started going out, if we started losing the internet. That is really where our focus has to be. Haidi the broader industries, we talked about the rapid growth in solar and wind capacity in australia. That would bring forward the coal plant retirement in australia. Do you see a risk of that . Ewen Climate Change does not go away. The carbon icing the Electricity Supply is something we still have to do, even with covid19, developing projects and developing Renewable Energy, Energy Storage, shifting from coal to gas, all of that needs to go ahead. We cannot just put that on hold. In australia, our Subsidiary Energy australia has acquired an storage scheme in queensland. We are continuing to absorb more Renewable Energy into our system , and looking at what we can do to firm up that renewable capacity so we can keep the grid running reliably. Building more gasfired generation and extending some of our gas stations in australia and also New South Wales has been an important task for us. That increase in Renewable Energy is important for australia to make its Energy Transition and we have to have the replacement capacity with Renewable Energy plus the ability to make that stable with Energy Storage and Firm Capacity in order for that transition to progress. Shery what do you make of the Nuclear Power business in china . Because we have seen the piece of new Nuclear Reactor approvals in china, virtually to stand still. What is happening there . The Nuclear Industry is growing. It is still a relatively small part of chinas energy mix, but clp has been an investor in Nuclear Energy going back into the 1980s with the power station which supplies around a quarter of hong kongs electricity. It has been very reliable and a very fundamental pillar in our decarbonization strategy, so we extended our investments into the Nuclear Power station in that as an see important way to d carbon eyes carbonize an de energy sector. Price has the issue of cuts to support local businesses following the pandemic dan issue in terms of what you have seen in your bottom line, particularly in china . We have been trying to support businesses as far as possible. We work with our customers in hong kong. We have been providing support in terms of making extended payment plans for customers that are seeing cash flow issues. But in small ways as well, the restaurant sectors have been providing hand sanitizers on a massive scale has been a way we have been able to support customers. Each industry is affected in different ways and each sector has specific needs. We have been able to use the scale of our operations to help them in many different ways. Haidi richard, always appreciate your time with us. Richard Lancaster Joining us. Ising up next, tiktok, time running out for microsoft to work out a final deal for the u. S. Operations of the popular app. We will bring you the latest, next. This is bloomberg. Here is a quick check of the latest business flash headlines. Staff areed circulating details on how to anonymously share salaries and pay rises amid rising tension in the industry over wage disparity and executive compensation. Blizzard makes games such as world of warcraft. Last year, an internal survey found employees were unhappy with their pay and the company says it would act to ensure fairness. Is under investigation by the federal trade commission for using numbers uploaded for security purposes to target people with advertising. The ftc alleges that social media platforms violated a 2011 agreement to better protect users personal data after it was found to be misleading consumers. Twitter says the latest probe may lead to losses of up to . 25 billion. Video conferencing platform zoom is to rely on thirdparty operations in china to reduce the chance of a ban in the United States. America remains its biggest revenue Marketing Companies lint with china are under increasing pressure. Zoom is facing stiff competition in china, where tencent and in alibaba subsidiary have more revenue in user numbers. Haidi microsofts attempt to acquire tiktok is looking increasingly complicated as President Trump says the u. S. Should get a big cut. If it works out, the deal could pay off big. Lets bring in our columnist. This is intriguing and complex from so many different perspectives. Lets start with President Trumps claim that tiktok is really only successful in the u. S. Because it is in the u. S. , saying it is sort of a landlord tenant type relationship. How could this potentially work if they are saying they should get a cut of the profit . Tom i think that sounds like that is my opinion. That is not the way deals go n, so its a little bit of for me personally, it is setting a scary president. There is of course taxes that the u. S. Does levy on all sorts of deals, transactions, revenues, profits, so forth, that would be part of normal tax revenue. I dont know. It doesnt smell right to me. That is a bit of a concern. The idea that there are landlords, that the u. S. Should get a cut because they are operating in the u. S. , that does not seem to go with freemarket capitalism, which the u. S. Is known for and proud of. Theres a lot of weird statements that get my backup, i have got to say back up, i have to say. Shery some officials have been skeptical of this deal between microsoft and tiktok given microsofts history in china. How much sense does it make to you . Tim this reports out there that navarro andke peter a few others. Generally speaking, what i am seeing is that various Senate Republicans are in favor of it. They tweeted in favor of it. I think it ends up being a good deal for the u. S. Overall, theres definitely going to be people against it. Even the hawks can come out of this with the win. At the end of the day, they would be able to wrestle tiktok away from its chinese owners and operate in the u. S. , and giving it to someone like microsoft it is a trusted company. People go down well. Uld shery tim culpan there. We have an alert on the bloomberg right now. The editorinchief of the global times now saying that china could target u. S. Journalists in hong kong over visa issues. We continue to see the escalating of tensions between china and the u. S. The china open is next. This is bloomberg. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. It is 9 00 a. M. In beijing and shanghai. Welcome to Bloomberg Markets china open. I am tom mackenzie. And i am david ingles. We are counting down to the open of trade in the chinese mainland area hear your top stories today. President trump opens a new front in his tech or with beijing. Video app tiktok is told to shut down in the u. S. Unless there is a deal with microsoft or another am c