Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

This week. The democrats say there is no rush and that any decision should wait for the election. An exclusive interview with atlanta feds rafael on the prospect of race. The bank of thailand make policy decisions this week. Central banks heading the headline when it comes to the agenda this week. Take a look at markets setting up in the early part of this monday. Liquidity is in session in asia. Japanese markets are off in respect to the holiday. That also means treasuries at cash trading wont begin until the london session. Asian equities are up someone it comes to rebound after tech put u. S. Stocks to a sixweek low on friday. The s p contracts trading law by that the , suggesting downward pressure could continue after three days. Kospi futures are looking positive. That does hold the crucial export data. About half a up percent. Sydney futures lower by 6 10 of 1 . We did get positive developments when it comes to the coronavirus case numbers continuing to trend lower and 11 cases reported over the last 24 hours. Watching out for kiwi trading, down to 2 10 of 1 . Unchangede policy with additional measures expected by Bloomberg Economics come november. We are hearing that fewer further kiwi and is being appropriate over the coming year. Continuing to stay before they hit that negative rate option. Oracletiktok deal has been given a green light from President Trump, potentially unveiling a nap store ban in the u. S. Its a combination of weeks of talks after the u. S. Declared the chinese app is a National Security threat. President trump it will astinue to be named tiktok it was all a long. And thats it. I can say that i have given a deal my blessing. If they get it done, thats great. If they dont, thats ok too. And very interesting. Did you approve the deal . President i approved the deal and concept. Shery Stephen Engle is taking a closer look at this agreement. Be out overms to whether this is a good deal or not for the United States. Of course, stephen the big concern for the white house is that there are National Security issues, and did all those issues be addressed in the deal that donald trump has approved in concept . They have another week or so because the Commerce Department has extended that ban that was going to take place yesterday, to have tiktok removed from the app stores in the United States. That has been extended for another week as the party start to work out this deal. It is quite complicated. Let me run through the positives and negatives from the u. S. Perspective, and from the chinese perspective. The Chinese Government still has as well. E the deal oracle would take a 12. 5 stake. A 7. 5 would be in with stake. Oracle and walmart would have 20 . Bytedance is said to be seeking billion a 60 valuation of 60 billion. If they agree, the 20 stake they would be paying about 20 billion. Some of the concerns are on National Concert he National Security. What will happen with the algorithm at the american ownership . Some of that has been addressed. Bytedance will continue. Thats the Parent Company of tiktok. To havee will continue almost full control of the algorithms, but oracle will be able to have access to see the source code, as well as the updates to make sure there are no security backdoors to allow any entities in china access to the u. S. Data, obviously. As far as board membership, four out of the five members will be americans, including the walmart ceo. And also the structure, while bytedance as 80 of this new entity, because of existing shareholders that include American Companies such as sequoia capital, we are talking about 53 american ownership. Thats what donald trump and the white house are hailing that it is a victory for americans and the creation of some 25,000 jobs for this new company that would be based in texas. To wechat, it comes there will be a reprieve in the u. S. , or the administration running to an illegal hurdle and trying to get it banned. Stephen whichever perspective you take. This magistrate of San Francisco has essentially agreed with the we chat users group that filed a lawsuit so they issued a temporary injunction to halt what was also going to be the removal of the we chat app on the app stores in the United States, again on National Security concerns. That judge basically agreed that the freedom ofon speech with chinese speaking americans in the United States. He went on to say and the statement that the u. S. Governments natural security interest is significant. Scantr, it has produced evidence that its effective ban of we chat for all u. S. Lead u. S. Users addresses for those demands. It is like a Public Square for chinese speaking users and the United States. Obviously the United States and a white house could appeal this decision. Widespread usage by the chinese and across the world. Stephen engle, our chief north asian correspondent, it will not be the last of that story. You can get the latest on tiktok, that deal and other stories you need to know in the monday edition of daybreak, go to dayb if you are a and in theubscriber bloomberg anywhere app. Karina good morning. The threat of military confrontation in the Taiwan Strait is rising as china seeks to have deeper ties between the island and the u. S. Of theportedly breached line between taiwan and the mainland in the last two days. They are dismissing attempts to warn them away by saying there is no medium line. The air force released pictures of a simulated strike that seems to resemble the air force base. Iran is rejecting new u. S. Sanctions as American Allies in europe dismissed the plan and about to stick to the 2020 nuclear deal. Washington said the original accord is silly and does nothing to prevent arms sales. The u. S. Says its three imposing sanctions on iran all signatories say his abandoning of the deal shows his move has no legal standing. European central bank has buying programnd to consider how it should continue and rather and whether its like civility should be extended to earlier plans. It should be included next month, but the ecb has declined to comment. It was created in march at 890 billion dollars, but was extended to calm the market. Governmentian expects a nationwide jobs bounceback as they prepare for a cautious reopening. On infections fell to 11 sunday, thats the lowest total in three months. The 14 day rolling average declined to 34. The government welcomes the numbers as it prepares for the budget next month. Global news, 24 hours a day on air and on bloomberg would take, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Still ahead, the death of Justice Ruth Bader ginsburg draws the Supreme Court into the election meyer. President trump vowing to nominate a successor this week. The democrats are pushing back. We had the latest. To lift the set Worlds Largest Chinese Government bond etf. Why the timing could not be better as investors search for yield. This is bloomberg. President trumps push to fill the seat of Ruth Bader Ginsburg is gaining traction, with the u. S. Election only weeks away, as well as reshaping a campaign and the ideological makeup of the court. Could affect the reputation of the Supreme Court. But there are so many facets to this. We will get to how the political aspect could affect the credibility of the Supreme Court itself. Almost a certainty that a new justice will be ran through before the election . Necessarily before the election, certainly republicans have the upper hand, but they also have the calendar working against them, and they have at least two republican senators who have expressed reluctance to vote before the election. ,ts possible this would happen the Actual Senate vote would not happen until after the election. The right now it appears as though republicans have the votes to ultimately get Donald Trumps nominee on the court. Nomination is pushed through, how could democrats react, and what would it mean for the legitimacy of the court . If they do get their nominee on the court, it would be a huge shift to the right for the court. The biggest ideological court seat in 40 single years. Democrats will come under renewed pressure to add seats for the court. Some of them are talking about that. Its something that congress can do. If democrats take over the senate, they have the votes and they have the white house, they would legally be able to do that. That would be an extraordinary step, but it would be something that people would call on them to do. Liberals would call on them to do to counteract what they see as the unfairness of how republicans have handled Supreme Court nominations in recent years. Haidi we heard from House Speaker nancy pelosi saying that one of the reasons President Trump wants to push through nominations so quickly is to use it to crush the Affordable Care act. How do we see that play out when it comes to policy making . For our asian viewers, its important to note that this appointment, the lien of the Supreme Court has greater implication for u. S. Policy making, even for the outcome of the election in november. The Supreme Court is scheduled to hear arguments on the Affordable Care act a week after the election. It certainly weakens the hands of supporters of the law not to have Ruth Bader Ginsburg on there. But you still have chief Justice John Roberts who voted to uphold the law back in 2012, and Justice Brett kavanaugh, another one of the conservatives who could be a fifth vote, has suggested reluctance to strike down an entire federal statute just because one fassett of it might be unconstitutional. Thats what the case is about. Republicans are saying the individual mandate is unconstitutional because of some tax changes they pushed through and they are trying to strike down the entire law. But even with a new justice on their side, they will have an up here uphill fight in getting the court to go that far. Stpjr with the implications of the changes. We look ahead to a busy week for asiapacific Economic Data with moodys analytics. This is bloomberg. Haidi two Central Banks in asia are likely to be in focus. The bank of thailand and the rbnz has posted decisions out on wednesday. Neither expected to change policy. They could highlight the growing chance of the rates. We are joined now by moodys analytic economists. We have been increasingly hearing a drumbeat towards an inevitability of negative rates come by early next year when it comes to new zealand. Doesnt highlight the extremes the central bank is having to go through for these extraordinary Monetary Policy measures . Are we still going to see the effectiveness for their actions . I agree with you. Have been pushed to their limits by the various economic challenges used by the covid19 pandemic. And it is true that nearly all Central Banks have settled and lowered their Interest Rates to historically lower. But having said that, the zealand, whyof new there is a lot of [indiscernible] Interest Rates, the moodys analytics stalled is cashficient gas rate rate will be held at 0. 25 level. We are certainly monitoring developments and communications by the central bank very closely, and we are not dismissing the possibility of sincegative Interest Rate we had Consumer Spending and the economy is just so strong given the conditions. Haidi the nature of the crisis meant that fiscal had to do more of the heavy lifting. Thehe aftermath and recovery, is fiscal spending still more important in terms of being the more effective transmission . Absolutely. Banks have lowered the Interest Rates as much as they can. This is for the most developed economies and for developing economies and emerging markets as well. Central banks will be preventing triggering are the possibility of Large Capital outflows. And so the scope of monitoring is not in monitoring high conditions. Factnow on at least, if in it has reached its limits and we do expect additional fiscal spending to be the drivers driving force in all the efforts. This is for new zealand as well. Shery as we see that shift, who across asia is most at risk of overwhelming their government finances, given that countries like japan have such huge debt compared to their gdp as well . The public debt is not really a country pacific issue. Countries aret placing additional strain and this will be a more pressing issue in the medium to long run for certain economies like japan. However, we do not expect that this is going to be the primary concern, at least at this stage for revivingerm the significantly big economy. And for most of the fiscal. Ecisionmaking in asia we would not like to single out any particular economy. Of course, having said that, there will be some considerations at play. Since you bring up japan, one of it considerations is that has already gotten significant support with nearly 40 of gdp. In view of that we do not anticipate any steps to be taken over the next two to three months even with the political regime change. In terms of the policy preference, the focus continues to be increased fiscal support over the next few quarters. Sort of what we are seeing in south korea. We have decent job numbers, but most of that has been stimulated by government efforts to support the economy. At the scene time you have these huge numbers of household debts. What are the risks of putting too much in the economy . Stage that isis an unfortunate and downside risk. Turn ill be a medium mediumterm concern. It is benefiting from the strong economic stimulus measures and its one of the reasons why the labor market is also relatively less impacted. The otherkorea, and economies, one of the significance of weakness remains weak and external demand conditions. Supportnfosys on fiscal the emphasis and the argument is also to make sure that businesses are planning their most efficient financing and to make sure employment prospects hold up. You. always great having we have to leave it there. Moodys analytics economists. We want to get you to this conversation, the fed has kept Interest Rates near zero, saying they will stay there for three years. Iticymakers that hope will allow the u. S. To return to maximum employment and the 2 inflation target. They spoke exclusively to bloomberg about the hurdles ahead. One of the challenges that we have had historically is that when unemployment, or when the Employment Level has gotten too low, there has been a concern among economists and policymakers that that would trigger inflation that could not be controlled. Beene action typically has that we are going to try to stop that labor market from overheating, and in turn, that could put a damper on inflation. What we saw over the last 10 years or so is that we could get employment to a very high level without seeing that inflation. So, we wanted to beer we wanted to be very clear in the longer term goal statement. We want to see evidence before we start to take action. I think that is the biggest message to come out of that statement. What is the evidence you would look for . Is there a level of inflation above 2 that is kind of your ceiling . Raphael for me, i would say im comfortable being above 2 , and its more of the trajectory than the levels. We were at 2. 2 and 2. 3 and it looks like we would be stable there for a wild. That would be fine. One. 6 and 1. 7t and been at a stable level. That would be the flip side. Were atrast is out we 2. 2 in the next quarter at 2. 4, now we are at 2. 6, that trajectory would give me concern. The level will be something to Pay Attention to but the trajectory is more important. Where do you think growth, inflation and unemployment will be in three years . Years, in three hopefully we had the pandemic past us, we will have figured out what all the structural changes that have gone on mean, and the economy will be back on the robust path. Our longterm estimate for our models is around 2 growth. Inflation jane doe at above 2 as well. For the crisis, we were headed in that direction. Terms of unemployment, we can see levels approaching the 3. 5 three and three quarters. I am pretty 3. 75. We still have a lot of work to see that the amount of pain and damage that half of this economy has minimized. On the local an immediate term is something we should all try to continue doing for a bit longer. That was the atlanta fed president speaking exclusively to bloomberg. Lets get you a check of the business flash headlines. Holding all flights from hong kong after connecting passengers from india were infected with covid19. Traveler saw had documents that showed they tested negative. They would be refunded or allowed alternative arrangements. The ban is in effect until october 3. Air indiais banning fights after several passengers tested positive for coronavirus. This is one flight from new delhi and passengers have been informed. Air india flights have been suspended last month for similar reasons. Not chartingc is to india. Coming up next, the fed quarter is shaping up to be the dollars worst since all the way back to 2010 and u. S. Stocks are soaring. There could be more weakness by the end of the month. This is bloomberg. Trump says heent will nominate a successor for Supreme Court Justice Ruth Bader ginsburg this week and he is likely to select a woman. Democrats are fighting republican efforts to push through a replacement justice, with joe biden saying theres too much at stake ahead of the election. Ginsburg died on friday and the president has as the senate to consider his nominee without delay. I think we will start the process extremely soon and we will have a nominee very soon. I could see most likely it would be a woman, yeah, i think i can say that it would be a woman. If somebody were to ask me now, i would say that a woman would be in first place, yes. Wouldoice of a woman, i say, would certainly be appropriate. Karina the chinese owner of the tiktok app is said to want a valuation of 60 billion as oracle and walmart take a stake in its u. S. Operations. The two companies will take a 12. 5 and 7. 5 respectively to establish a new Company Called Tiktok Global that has President Trumps approval. Oracle and walmart would pay a combined 12 billion. Servicewechat messaging is also under white house cooney and says it will continue to negotiate a potential u. S. Ban that was supposed to go in effect on sunday. They say they might not be able to accept new users in the u. S. And current users might be negatively affected. President trump span has been halted by a San Francisco judge over concerns about restrictions on free speech. A new investigation by a global journalism Alliance Says some of the worlds top banks have buffeted from what they call dangerous players have benefited from what they call dangerous players. Reports say they moved illicit funds despite warnings from u. S. Officials. It identifies more than 2 trillion in transactions between 1999 and 2017 that were flagged as possible money laundering. The biggest antigovernment protest in thailand in months has ended with calls for a general strike next month as jennas as demonstrators protest the monarchy. An estimated 50,000 people gathered in a field traditionally used for whale ceremonies and delivered a list of demands, including the slogan the country belongs to the people, not the monarchy. Global news 24 hours a day on air and on bloombergs quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Starting today, Global Investors will have another way of investing in chinas global growing bond market. Sophie kamaruddin in hong kong has the details. 9 00 a. M. Is monday at in singapore, trading kicks off for the worlds biggest etf tracking Chinese Government bonds. Growingl likely have interest in the second biggest bond market, valued at over 15 trillion. It is managed by a Hong Kong Asset Management company, of 676 million. Goldman has the inclusion with inflows over time as china opens up capital markets. At 150puts the number million. We are at watch for the debut in cyb inre, trading under u. S. Dollars. U. S. Dollars. Given the policy divergence between the fed and pboc, chinas yield advantage is attractive for the 10 year right now, more than 240 basis points above treasury. That is the widest premium in five years. Stronger inflows will be a driver for you on strength, set uan the best yo strength, set for the best quarter. The yuan basket appreciates further, people could step in. Look at the fate of the u. S. Dollar, it is poised for its worst quarter a decade. The plumber dollar index has plunged close to 5 so far the bloomberg dollar index has plunged close to 5 so far. Lets turn to adam haigh. Arguing thissts could extended to september. Is the move being decimated by the moves in u. S. Equities . Adam you cannot underestimate how much move weve had in this time, the superlative on the weakness of the dollar and going back basically a decade to see that kind of a move, that is a abouten you think portfolio rebalances and the impact that has had on global portfolios viewed what you are portfolios. What you are saying is it strengthening u. S. Equities and global equities. You might have increased volatility essentially coming from the fact that a lot of the rebalancing needs to occur when you see big, exaggerated over a short period from quarter to quarter. Thats where the pressure could be, there could be the outperformance in equities and continued dollar weakness, meaning some people have to take out positions with risk to their portfolios. You could make the argument it puts further pressure on the greenback. The big risk events going into the end of the year continue to be lack of clarity on the fiscal situation in the u. S. And lack of clarity as to what the president ial situation will lead to, the November Vote and how that plays out going into next year. There is a lot resting on the dollar trade at the moment, certainly it will build toward further weakness from here. Shery we could be facing the worlds biggest ipo and receiving approval to lift in shanghai. What is next . Adam it is an important step, known,t that is well but it needed the approval to lift in shanghai. It probably still needs the conversation with the hong kong outk exchange if it turns to be a jewel listing, which is what the market is expecting. As you say, on course for being the biggest in terms of valuation of ipos anywhere in the world this year, it totally smashes saudi aramco in terms of value. Theyre still quite a lot to be ironed out. Plans becomeal public and how they go about that and the investor interest grows. Clearly it is a big one and an important hurdle now that the authorities and shanghai have cleared the way. Usry adam haigh joining from sydney. Trump up next, president applauds the tiktok oracle deal that falls short of his demands. Our next guest says theres a lot more in the deal that people are overlooking. President of Hathaway Global strategies joins us next. This is bloomberg. Trump has given his blessing to a complex plan to bring tiktoks u. S. Operations under american ownership. The majority of the new company will still be owned by bytedance , including tiktoks prized algorithm. Lets bring in Melissa Hathaway from Hathaway Global strategies. She served the obama and george w. Bush administrations and cybersecurity matters and is currently advising tiktok on National Security issues. Late to have you with you great to have you with us. Is this more than the repackaging of tiktok . What are we missing . Melissa thank you for inviting me back. I think when you look at this as theo recruit the deal but Congress Department extended this for at least another seven days while things work out. This is absolutely a istructuring of how tiktok doing globally, creating two separate companies, the first being Tiktok Global, which is what everyone is talking about, a Second Company that is a subsidiary of Tiktok Global, which is tiktok u. S. To address some of the administrations National Security concerns about u. S. Citizen data. Two deals, or a big global deal, and a secondary deal. Shery considering an initial demand from President Trump, how much sense has there been that how much sense does this make for bytedance and restructuring, and considering we havent heard from beijing, does it make sense for them . Melissa i think the most important thing, if you look at it from a bytedance perspective, or valuationtion of the company. Right now theyre trying to get a 60 billion valuation of the allow it to go public or ipo in about a year. Usually when youre looking at these deals and looking at it primarily from a financial basis , you want to drive the valuation up, nick as much money as you can. As you said in the introduction, i dance still has bytedance still has chinese operation and mains control and maintains control of the algorithm, the crown jewel of what makes it special. Do you see this as being a oneoff commercial transaction that was brought about by a little pressure . Or is this the start of an ongoing theme you would expect to see repeated across the u. S. China tech . Melissa this is what i worry about, that this is part of the broader technology decoupling of our companies and we are using different rules or policies or authorities within our countries to drive that wedge. Forcing choices between the overalld customer base, unfortunately. In the u. S. , secretary of state pompeo announced the Clean Networks initiative, a five point plan that specifically called out tencent, alibaba and baidu. Ghosted china ,elecom and maybe even huawei etc. I worry this is the first of initiatives coming out of the u. S. Were aimedve orders at wechat and tiktok and derivative of another executive order that was broader about supply chains and Technology Supply chains to u. S. Tell me communications u. S. Telecommunications and infrastructure that was last may or may 2019 viewed this is the first beginning of the execution against these companies and i fear this is only the beginning. Using the emergency order , which seems unprecedented and quite shocking at the time, does this become the new way of putting geopolitical and diplomatic pressure on china . Melissa yeah, this administration is using the emergency economic powers in unprecedented ways. Really kind of unforeseen and it gives the president sole authority, does not need congressional approval or any other thing to move forward on things that he or the administration believes is a National Security threat. So it Broad Authority and is being used, again, in unprecedented ways and because there are no real checks and balances on this particular authority, it gives the president Carte Blanche of determining the National Security need and allowing him limitwer to block or things. Shery on the National Security concerns, the point about the algorithm remaining in bytedances hands is Security Experts said this could be manipulated by beijing to run influence campaigns and even affect u. S. Election in november. Are those concerns still there if the algorithm stays with bytedance . Melissa the National Security concerns, it was more about the of 100 million american citizens, that that could be used to profile americans, invaded their privacy, etc. ,nder the framework of the deal and again, they will be two Different Companies established, one will be Tiktok Global, which is reported to be headquartered in texas, and then there will be tiktok usa. Between the two, to global is going to have an overview of all of the data and data flows, the physical and logical data flows, and overview of the entire technical operations of Tiktok Global, meaning all of its offices around the world. It will have a review of all of the source code and updates, etc. And there will be a separate tiktok usa that will be responsible for all of the american data and that is really where the National Security requirement of this deal came into. How do you view chinas growing power here . What is your view on not only tiktok but the fact there could be Something Like it tiktok, what does it say about chinas growing soft power where it could really entice millions of Young Americans to use this type of service. Is this a trend that the u. S. Will be very careful going into the future . Melissa i think this is largely by Market Forces. Tiktok in my opinion is not a National Security threat. It was a threat to facebook and facebook users and its growing customer base. When you think about this as political, bringing in the facebook complaint to the president that this was something and then senator rubio decided to have it looked at from a committee perspective, unfortunately i see this as Market Dynamics played out in politics. The Chinese Soft Power is being implemented through its belt and Road Initiative and its digital silk Road Initiative and its companies are actually collecting a fair amount of data, not just on americans but people around the world. And creating those profiles. Wethere is a sense that should be concerned about the broader chinese strategy, but when it comes to tiktok, i think its just competition and Market Forces of American Companies versus china companies. You mentioned the Data Collection concerns already. Should there be more of a concern over the threat of dimock threat to democracy and free speech and censorship practiced in localized markets by apps like tiktok and obviously we know with wechat . Melissa i think its important that we take a balanced view of how all of the social media platforms are collecting data, storing data, and using the data, and what is the overall policy or legal aspect that the mans content delivery or content takedown. Within the u. S. , we need to data privacyhis as and consumer protection, but also from the perspective of freedom of speech and freedom of assembly, which does not trust in transcend around the world. We should be looking at this in a balanced view. How is facebook or twitter handling it . Not just how are Chinese Companies handling it . At that point it requires a broader policy and legal discussion in the u. S. Melissa, great to have you with us. Coming up next, an expose of interview with the ceo of nestle. How the pandemic has affected the food company and where it is growth in nutrition come in next. This is bloomberg. Shery breaking out of south korea, the trade numbers for the first 20 days of the month, the daily average exports falling 9. 8 year on year. Decline, aually a bigger decline than we could have expected given the first 10 days, the decline was only up 2 . When it comes to the 20 days exports, rising 3. 6 year on year but the daily average is still at a decline of almost 10 . Chick chip exports rising. When it comes to exports to the to. , rising 16. 1 , exports china rising 8. 7 . We have seen a little bit of an exportof the declines in numbers, perhaps not as much as people expected with six months of declines and those numbers, a very export dependent economy and south korea. Lets turn to company news, nestle says its Nutrition Business will hit over 4 billion by the end of next year as the Worlds Largest food Company Expands in personalized supplements and allergy treatments. Ceo Mark Schneider told us how covid19 has changed consumer demand. The face of the pandemic has been changing over time and habits have been changing with it. Initially there was concerned about keeping pantries stopped and we saw a lot of pantry loading as consumers wanted to be sure there is enough food supply during the lockdown. Over time, we saw people were gaining confidence that shelves remain stopped and the supply chains in food and beverage were resilient. We also saw quite a bit of initial demand for comfort foods. Clearly this was a very stressful spring and early summer for many of us and so comfort food was in high demand. Think same time, and i this is the longer term trend playing out, there is renewed interest in health and nutrition that advances health and strengthens the immune system, and i think this is here to stay. Certainly throughout the later stages of the pandemic, and we believe beyond that. At your unit,ok which is health and nutrition, how much can that grow . Will it be one of your best performing but also growing units in the next five years . Our Health Science unit has been on a tear even before the pandemic, so a few years back, this was a 2 billion swiss francs nest. We expect to double this to about 4 billion by the end of next year. Growth and organic vitamins and minerals and supplements. M aop of that, very nice opportunity weve utilized over time in the health based nutrition area, and i think this latesttion is just the in implementing that strategy. Over time, this will be one of our key Growth Drivers and something we are proud of. At subscriptions in terms of vitamins and things like that, how much will that grow and are you seeing much more demand for products like that online and will that continue once the pandemic is more dealt with . So this is a category that lends itself to Online Business opportunity and weve seen online demand skyrocketing. This was already a growing sector before the crisis, that it skyrocketed during the crisis because it made shopping so convenient. On top of that, you are right, i think personalized vitamins, minerals and supplements will be the next frontier. We have very exciting offerings on the way. You are moving away from just trade forward supplements, like the vitamin alphabet, a, b, c, d, and you go to specifically what a certain individual requires. Aitially there is testing and questionnaire and based on that, you get exactly the vitamins and supplements made for you. The nestle ceo speaking to francine lacqua. Lets get you the business flash headlines. Jack mas group has approval to list in china. Support after a meeting about connected transactions with alibaba, and reasons for excluding alibaba as a common shareholder. They have declined to share responses. Mitsubishi motors is preparing to sell a stake in a joint venture in china, according to a filing to the shanghai stock exchange. They will offload interest in a project. They currently own 30 of the operation. Made 6. 5mulan only Million Dollars in Mainland China and i can weekend, a lackluster 23 point 23 million Opening Weekend sales. This is bloomberg. Shery welcome to daybreak asia. Haidi asias major markets have just open for trade and these are our top stories. Tiktoks sale moves a step closer with president approval in concept. Owner bytedance aims for a valuation of 60 billion if the deal goes through. Nameresident says it will a Supreme Court successor to Ruth Bader Ginsburg this week. Democrats say any decision should wait for the election. A greens group gets light to list in shanghai. It could be the biggest ipo on record. Lets look at asian markets. So for cameroon and is in hong kong. Sophie kamaruddin is in hong kong. Sophie markets will have a slew includingnk from the rbnz. They are looking like more qe. Dollar and kiwi stocks under pressure. The aussie holding above the 20 day line as virus cases fell to a threemonth low in victoria state. Ozzie stocks slightly lower after capping the first week. Bond investors on watch for australias 2026 sale. Won retreating from an a month high with the latest raise a, exports rose on a monthly basis. Socgen last week said positive momentum for risky em could last for two more quarters. Favoring chinese equities. Futures lower after we saw chinese stocks rise the most ahead of the index rebalancing variousuld include companies while knocking out cte. Zte. More bond inflows expected and investors will be able to pass the market to the biggest china market etf. A group is set to list in hong kong on tuesday and retail demand was last was less for that ipo, also starting to gauge demand for another sale in hong kong. More analysis, lets bring in our guest. Good to have you with us. On a week like this one, we were light on ecodata out of asia. No real change expected in new zealand or thailand. What will be driving the markets . Market will be here. On a week like this one, the market will be subject to the overall flow as well as headline driven by the use flow, whether its to do with the u. S. Elections are tiktok, that will probably drive the market on the light volume. As investors, a week like this is almost is a good the fundamentals and looking for stock opportunities. Shery where are you seeing opportunities . We have been reasonably optimistic toward the equity market for quite some time and things are playing out as expected as some of the fundamentals, economic recovery, seems to be on track, and over the next 612 months, we see substantial earnings improvement across many sectors. The opportunity remains in the companies that have been exposed andhe lockdown impact, these companies, many of them have yet to recover in terms of share price. A week like this, perhaps you will see opportunities that you could step in. Haidi what are you looking for as reentry points into this tech rally . The tech rally is interesting because first you take a step back, thinking about what has really driven the tech rally. Number one, it is really lower Interest Rates around the world, and the fed more recently has reconfirmed the rate is not going higher for another two or three years. But that aside, we know a lower Interest Rate will stay for longer, good for tech stocks. Secondly, the tech sector has proven to be the true beneficiary of the corona impacted world. Theres been a lot of pull forward and a lot of structural growth. We do believe on the earnings front, these businesses will continue to gain share and many sectors have come through the structural tipping point. We expect those companies to benefit. Right now, a bit of selloff across that space, its really just profittaking. Highqualitye businesses as the share price comes off. In terms of managing expectations of the recovery, do you think theres been a reassessment of the likelihood, the timing, the efficacy of a vaccine, and how does that play into looking at the rotation trade and reopening trade . That is a really good question. That is a question on top of mind for a lot of institutional investors. Is this rotation . We know the vaccine is coming, it is a matter of timing, and of course the effectiveness. When the vaccine does arrive, though sectors that have been impacted by the virus will have an a norm is simply because earnings have been decimated and over the next two or three years, earnings will jump significantly. I think from there on, weve been adding a lot of Companies Left behind, highquality companies, with premium assets. They may be shopping centers, private hospitals or airports. These are the stocks that investors should have in their portfolio to drive the substantial return over the next 12 months. Shery you mentioned the noise around tiktok this week. We continue to watch that tech battle unfold between the u. S. And china, the tech decoupling, and also awaiting the listing by and group in china as well. That could be another indicator of the financial decoupling of the superpowers. How do you traded that or hedge that in the market trade that or hedge that in the market . First of all, as an investor, you need a longer term view, which is decoupling is probably here to stay. In the fiveyear view, we expect there will be two sets of Technology Platforms and many other related technology services. Place, then is in make the strategic decision of what type of businesses might benefit from that environment or what type of this is of his this is might be impacted . Businesses might be impacted . Wes just making that call, think the separation will intensify. Hasnt reallyket responded to a lot of those of thees simply because recovery from the corona related impacts. Point this will represent risks to the equity market and create more volatility down the track. Haidi always a pleasure having you with us. Ahead, roots in the Economic Forecast for china. A guest foroined by that and looking at expectations for the latest loan primaries. Oraclest trump says purchase of tiktok is approved in concept. But what does that mean . This is bloomberg. Karina here are your first word headlines. U. S. Rejecting new sanctions as American Allies in europe dismissed the plan. Washington says the original report is silly and does nothing to prevent arms sales to the islamic republic. The u. S. Says it is imposing sections on iran while the other signatories say President Trump abandoning the deal means that washington has no legal standing. The biggest antigovernment protest in thailand and months has ended with calls for a general strike next month. Demonstrators are Challenging Authority and the monarchy. An estimated 50,000 people gathered in a field traditionally used for royal ceremonies and delivered a list of demands, including the slogan, the country belongs to the people, not the monarchy. The threat of military confrontation in the Taiwan Strait is rising. Warplanes repeatedly reached the line between thailand taiwan and the mainland in recent days, saying there is no median line. The airport released pictures of assimilated strike on a runway that seemed to resemble Anderson Air Force base on guam. China is dismissing accusations it is targeting america as it is targeting america as a moves to punish Foreign Companies threat that threaten National Security. Beijing says it welcomes Foreign Investment and will continue to open its economy and insist the unreliable entity list does not target any nation in particular. The minister of economy says it is a small list that puts chinas interest in danger. Global news 24 hours a day on air and on bloombergs quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. The oracle tiktok deal had been given the green light from President Trump, potentially averting a ban in the u. S. It is the culmination of frantic talks after the white house declared the app a National Security threat. And it willeverance continue to be named tiktok as it was all along and that is it. Have given thei deal my blessing. If they get it done, that is great and if they dont, that is ok too. Its great for america and very interesting. Have you approved the deal . I approve the deal in concept, yes. Stephen engle taking a closer look. This a good deal, did the president get everything he asked for . Does it address the National Security concerns that were raised . It addresses the National Security concerns, that go to the does it full hilt of what the Trump Administration wants . Maybe not. We need to get into the details once the final deal is hammered out. Isare hearing that bytedance seeking a 60 billion valuation and i am sure theres a lot of headwind there. The main parties getting into the deal, oracle and walmart on the u. S. Side, if they agree to the price tag, their contribution together would be about 12. 5 billion u. S. Dollars. They would take a combined 12. 5 stake for oracle and 7. 5 for walmart. Americans would have a four out of the five board seats and that would include the ceo of walmart and all of the data would be housed on oracles cloud servers and stationed in the u. S. Headquarters of Tiktok Global said to be in texas. They are claiming to higher 25,000 people. They will contribute 5 billion to a u. S. Government fund to help with education initiatives. On the plus side. On the negative side, who controls the algorithms and source code . Bytedance as the majority owner is going to maintain control of those closely guarded algorithms. However, oracle will have access to the source code and changes to the source code if they come down the pike, as they always do. According to Security Experts and the white house, mike pompeo, can help prevent backdoors from the Chinese Government, as allegations of such activity, from happening. Stay ofa weak execution. Banman has been delayed has been delayed for a week. From there, it looks like we will have a new entity, Tiktok Global, in the u. S. Shery i different chinese app, wechat, also seems to have gotten a reprieve in the u. S. Stephen a separate issue but similar time frames. It was going to be removed from app stores in the u. S. As of tiktok,y, similar to wechat getting a stay of execution for their own sake. Francisco but a san magistrate basically ruling in favor with a preliminary injunction in favor of a wechat users group on the grounds that the ban is discriminatory on grounds of free speech and it takes away free speech to chinese speaking americans the magistrate said the platform served as a virtual Public Square. The interesting point from the magistrate, she said the concerns on National Security are significant, however, it has produced it meaning the government of the u. S. Has produced scant evidence that its effective ban on wechat for all u. S. Citizens addresses those concerns. The u. S. Government and the white house could appeal the preliminary injunction, but right now, there is a stay of execution for the removal of wechat from u. S. App stores indefinitely right now. Stephen engle with the latest on tictac tiktok and wechat. Mournsup next, the u. S. A trailblazer and dives into a fight over the highest court. We have details from washington, next. This is bloomberg. The death of Supreme Court Justice Ruth Bader ginsburg has simultaneously sparked an outpouring of tributes and a partisan fight for the vacancy she leaves behind. Our chief washington correspondent joins us on the line. It was barely an hour since the news of her passing that the debate over a successor began. What does the signal about the fight to come . Kevin President Trump has already said he will name a Supreme Court nominee to replace , and is calling on the senate to consider the nominee without delay. The front runners include Amy Coney Barrett and barbarella gola. Amy Coney Barrett is seen as someone much more can to the likes of justice scalia, a very conservative judge. Whether or not this type of Supreme Court justice would get approved before the election or even in the lameduck, thats what we dont know. Haidi there are huge implications in terms of the timeline, and democratic response. Biden has said in the past hes not in favor of hacking the work because hes concerned about the agenda messy and credibility implications for the institution, but could he come under extreme political pressure from his party to do so . Question,hink without given how close it is to the election, this has been a question mark for the campaigns. I think republicans are saying they were elected to do this and given this could be a contentious election and the Supreme Court might be needed to la 2000, there should be nine members on the court. Democrats are saying they should not have to deal with so close to an election, they should wait until the new president and new Congress Comes before doing this. Very active ate this point. Shery how will both republicans and democrats seize on this moment headed into the election, only six weeks away . Kevin two points i would make, senator Susan Collins and senator Lisa Murkowski said the void the vote should happen that senatorction, Lindsey Graham had agreed with that until some point and now he says he is supportive of there being a speedy push for nominee. The republicans could only afford to lose about four votes, that is assuming republicans dont pick up any democrats for whoever the nominee is good democrats nominee is. Democrats say they need to slow down and wait until after the election to see what the voters want done. Polarized time, just being here in washington, there were protesters outside the Supreme Court, senator elizabeth warren, a progressive from massachusetts, vowing to fight against this nomination. Speaker pelosi taking to the sunday shows saying there are other tactics they could utilize. This is an intense situation. Haidi our chief washington correspondent with the latest. Ruth Bader Ginsburg spoke to David Rubenstein a year ago. She discussed the state of u. S. Democracy, the Supreme Court and the u. S. Constitution. Justice ginsburg i think all of revere institution the institutions in which we work and we want to leave it in as good a shape as we found it. David we have some questions from people attending today. If you could change one thing about the constitution, what would it be and why . Justice ginsburg i would add an equal rights amendment. [applause] i will put it this way when i take out my pocket constitution to show my granddaughters, i can show them the First Amendment that guarantees freedom of speech and the press, but i cannot point to anything that men are persons of equal citizenship stature. Every constitution in the world written since the year 1950 has the equivalent of that statement. Persons equalare in stature before the law. Greatgrandchild to have a constitution that includes that statement, that this is a fundamental premise of our society. Freedom of thought and expression. David what gives you the most hope for the future . Justice ginsburg my granddaughters. [applause] very proud of my oldest granddaughter, who is a lawyer. She cares a great deal about our about its highest values. She and other young people like , will help us get back on track. [applause] ok, and what do you think is the biggest threat to our democracy . [laughter] Justice Ginsburg a public that doesnt care about preserving the rights we have. You know that great speech on said if the fire people,the hearts of there is no constitution and no judge that can restore it. Faith is in the spirit of liberty. Shery the late Supreme Court Justice Ruth Bader ginsburg speaking to David Rubenstein in september of last year. Here is how markets are trading. We are seeing u. S. Futures gaining a little bit of ground, up 2 10 of 1 . This after u. S. Stocks fell to a sixweek low last week. The kospi also gaining ground. We had some daily average export numbers for the first 20 days of trade of this month following 9. 8 . Japan is on holiday, but the japanese yen is stronger. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. This is daybreak asia. The chinese owner of the tiktok app is said to want the valuation of 60 billion as oracle and walmart take stake in the u. S. Operation. Establish a new Company Called Tiktok Global that has trumps approval. Oracle and walmart would pay 12 million. Chinas we chat is under white house scrutiny and says they will continue to negotiate a potential u. S. Ban that comes into effect sunday. Tencent says the app might not be allowed to accept new users in the u. S. And current members might be negatively affected. The band has been halted by a San Francisco judge over concerns of restrictions on free speech. The new japanese Prime Minister has held his first call as leader with trump with the pair vowing to strengthen ties and cooperate on a covid19 vaccine and resolve matters involving north korea. Mike pompeo might host talks with the u. S. , australia and india next month. A new investigation says some of the worlds top banks have profited from what they call dangerous players despite u. S. Penalties. Morgan, deutsche identifyothers they more than 2 trillion in transactions between 191990 and 1999 and 2017 flagged as possible money laundering. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Back to my friend haidi in sydney. Approval to lift and shanghai, clearing a hurdle as the company prepares to what could be the Worlds Largest ipo. Lou has been tracking this from hong kong for a long time. Hearinging the friday with shanghai makes them one which iser to an ipo expected to be the largest in the world. Right now the Company Still needs to hold a hearing with the Hong Kong Stock Exchange to complete the plan but now the is what the relationship was with alibaba. The company did not say answers but that they have the green light from the regulator. Expecting from the hearing from the Hong Kong Exchange and what of the next steps . Timing for the hearing has not been announced but people expect it to happen in the next few weeks and after that when you get approval from both sides they will do the ipo roadshow and expect the final listing day. Do we expect the flurry of regulatory pressure in the last few weeks will continue for aunt ant . It is interesting they have been hit by every regulation coming out from the chinese think theynd some are being targeted but another explanation is its because they have become such a financial entity and their businesses are on everyretary radar and we are seeing them be curved toward lending rates and impacted by the new Financial Holding requirements. Lulu chen. We will speak with betty wang. This is bloomberg. Here is a check of how markets are trading. An upside for u. S. Futures after stocks fell to a low last week. We had the tech selloff. Kospi is up 4 10 of 1 . Korean won at the strongest level in nearly eight months. A little pressure on todays session after having the daily average export numbers for the first 20 days of this month falling 9. 8 year on year. Look at the chart. We do not have japan trading today but this is the japanese yen, which is strengthening. Thisstrength coming into respect for the holiday in japan. Now at the strongest level in more than six months. When it comes to australian stocks, watch out for what is happening. Tech and real estate are weighing on the index. Stockck losing kiwi losing ground. We have a right decision this weekend not much change expected. Looking closely at what is happening on the Global Economic front. We have heard from Brian Moynihan saying the u. S. Economy is 95 back but another round of stimulus is needed for a full recovery. He told bloomberg where he believes support is most needed to bring back the last 5 . Our Research Team is the u. S. Is down 4 for the year and next year will be up 5 or so but the key is to think about it put up a quarter. You had a deep drop in economy last quarter and you are back up to where 95 of the economy is basically restored. Behind will work out but that was 1 to 2 growth economy so the idea of recovering the last five percentage points, it will take a while. Estimate has gotten better rather than worse because consumer activity stay strong. Fiscal stimulus, monetary stimulus, the programs the fed government the administration and congress and what the fed did, they filled the whole to bring filled the hole to bring the economy back up. For probably need stimulus some spaces and difficulty like restaurants, state and local governments, schools, performing venues airlines and other things that you cannot have people do with the rate from before. But dentist offices are back. So Consumer Spending is up. That is good news so we are seeing it start to grow finally. It was growing at 10 and then it fell and now it is back to even and we will probably see it grow yearoveryear. Good news for the economy. Chair powell said we are better off now than we thought we would be at this point but he says there is a lot of uncertainty. Badly do we need further fiscal stimulus . And we do not know about a vaccine. Crisis. Is a health care that. Cannot forget so what has happened in the last six months is we see the potential for a vaccine but better behavior to keep it from spreading. Crest northeast we saw it and infection rates are different than they were earlier. Thats good news. Treatment is different. Because of personal behavior and those at higher risk being more still hurtful but the outcomes are not as bad. That is good news as we wait for the vaccine. Until everyone is vaccinated, you will have to hundred people will go back to their behavior from before. We need more stimulus for the people. Think about the analogy we are all on one side of the river and have to cross. We need a bridge. Some people are across. Some parts of the economy are doing better than they were before. Medical industry is back to normal. Housing is strong. Construction industry is strong. They are across the river, so let them go. The restaurants and things like that need help so the next round of stimulus should be focused on areas that need help. This has gone on longer than we thought it would. That was Brian Moynihan speaking. Tos get a preview of what look at with betty wong. Are we expecting steady as she goes . No change from april to august. Does that reflect the pboc is happy with the rate of economic recovery . Yes. We do not think that will be much opportunity for china to foley cut for the rest of the year. Is in a first in, first out position for the pandemic. They are the front runner in the recovery, especially if we look at the data, Industrial Production and retail sales have started to recover steadily. Not much for the policymakers to do now. The central bank of china has cut rates by 30 basis points. The benefit of the cuts have not translated to the broader economy completely. I think they will wait to see the rate cuts come through before taking further action. Particularly when it comes to support for Smaller Companies in the economy and reducing funding it will beou see lowered in the second half of the year . Yes. Policy rate cut benefits have not gone into the economy is because of the reform in china has not been complete in a firsthalf but in the second half and next year we [indiscernible] rate cuts in the first half of this year will be gradually transmitted into the broader benefitand hopefully the Enterprise Funding costs. Talk have seen analysts about the two track recovery in china with manufacturing and industrial sector doing well but demand like consumption not so well. This chart shows last weeks numbers and we saw retail sales rebound for the First Time Since the pandemic. We finally seen the chinese economy recovery evening out . Agreed. If you look at chinas post virus recovery in the first few months in q2, recovery was and semi automobiles conductor sectors. , itsg at august data retail sales or Consumer Sectors has started to pick up and the service sector, Service Production index we track every month has improved for the which consecutive month means sectors have started to pick up. So the missing part of the recovery is the Consumer Sector and treasury sector have started to climb up on the Upcoming National holiday will be a nearterm test to see how resilient the recovery is. Does this mean policymakers could soon halt all support they have provided the economy . We have seen the barrage of steps by regulators to rein in consumer borrowing and reduce risk. Yes. I think in terms of the recovery pace, it looks better than expected and we increase [indiscernible] we now look more optimistic than earlier. From the policymaker perspective, it probably looks. Ncouraging said china would likely receive above zero positive growth so it shows policymaker confidence and that is why we forecasted the policy unchanged likely stay for the rest of the year. On the other hand, there are still some Downside Risks going on, for example the possibility of a second wave or another wave of pandemic outside of china and the u. S. President ial election coming. So there are still risks outside of china. It is not a time to talk about withdrawing the stimulus. I would describe if we said there is any adjustment to the say it is a i would policy normalization instead of withdrawing. So i think policymakers will be more focused on targeted adjusting monetary or fiscal policyand directing the likemuchneeded sectors Consumer Sectors instead of completely reversing the previous Monetary Policy. Withe authorities happy the level of the u. N. At the moment . Least we have not see negative, from policymakers in terms of the rapid appreciation of the currency. The depreciation is good for exporters. Looking at the rhetoric from policymakers in china, there welcoming Foreign Investment and willing to open up the market not only the domestic Consumer Market at the financial market. So the yuan is benefiting for the policies they would like to see. Currently i have not seen negative comments coming out from policymakers yet. On. Etty, great having you bullard is with us on tuesday i daybreak australia. On daybreak australia. Up next, opposition lawmakers in hong kong are split over whether theesign en masse before Legislative Council reconvenes next month. Details ahead. This is bloomberg. Opposition lawmakers in hong kong are being urged to resign before the Legislative Council reconvenes next month. The call comes after china delayed the elections for one year. Lets get more from brandon scott. We are hearing that lawmakers were going to hold a poll this week. What are we expecting . A publicill hold Opinion Survey in the next few days in order to determine how muchof their support, how of the prodemocracy camp supports them stand on or leaving when the Legislature Reconvenes next month for an extra year. China added the year as part of a plan to delay elections that were supposed to have happened earlier this month, ostensibly because of the coronavirus outbreak. So they are essentially trying to work out if staying on means granting legitimacy to that decision . What would mean if they let go of the platform . It is a difficult position to be in. Yeah. They are facing the same question that a lot of critics of china around the world are facing, whether to engage china, engage beijing under its rule or theer to check out of existing dialogue platforms and tried to confront beijing. Obviously the hong kong democrat are in a weakened position after the passing of the National Security law. Many argue it would be better to stay in and fight for what they think is important within the system rather than check out and lose their own legitimate platform. The problem with that is their heavilyorters are ford resigning. They would be giving legitimacy to denying the election if they stayed on. What does it mean for the future of the city . We have seen so much instability already. Of course, beijing and hong kong argue the system they put in the National Security law and they have been cracking down on activism has been to reestablish stability and by some measure they can argue it has and there are fewer protesters in the street. Some of that is because of coronavirus and fears of spreading the virus if they are out, not to mention the rules that prevent people from gathering in crowds that have been in place for months. So there is that argument on the side of the government. Worried that if people lose their legitimate platform and not allowed to run and disqualifications or forced to resign because of pressures in their camp that it will lead to more radical action as people feel the legitimate means of voicing dissent have been denied to them. Scott with the latest from hong kong. Lets get a quick check of the headlines. Cafe is halting flights from hong kong and connecting passengers from india. Five travelers had previously tested negative but have been infected with covid19. Tickets have been refunded. The ban is in effect until october 3. Hong kong is banning arabian flights for two weeks after several passengers tested positive on arrival. The suspension defects one flight from new delhi. Passengers have been informed. Air india flights were suspended last month for similar reasons. Cathay pacific is not operating flights to india during the pandemic. Disneys the only 6. 5 million in second weekend in Mainland China, a big drop off from the 23. 2 million opening. The movie debuted in hong kong where there has been calls for a boycott. Fewer moviegoers turned out in north america. Motors prepares to sell stake in a joint venture in china. They and mci holdings will offload into rings offload interest. They own 30 of the operation. They are expected to pay 23 million for a stake in the venture. Coming up, more analysis on the tiktok deal and impact on u. S. China tech tensions. From beth kendig about her outlook on u. S. Tech stocks. That is it for daybreak asia. We will look ahead to the start of trading in hong kong. Standby for Bloomberg Markets china open. This is bloomberg. 50 e in the 40 to range. It is 9 a. M. In beijing and shanghai. Welcome to Bloomberg Markets china open. I am tom mackenzie. We are cutting down to the open up trade in the chinese mainland and hong kong. Our top stories this monday morning. Moving a step closer with President Trump hailing it a great response for america. Byte