We have world coverage here on daybreak asia. We will look at chinas latest move to boost the economy and find out why bhp has cut its copper forecast. Here in new york we look at the risk surrounding trumps tracks tax plan to be unveiled. And netflix trying to break into china. An incredibly contentious investor wells fargo investor meeting in seattle. More members narrowly surviving that shareholder vote. This is daybreak asia live from bloombergs u. S. And asian headquarters. I am betty liu where it is just after 7 00. I am yvonne man. We will hold onto the big gaps we saw after the French Election. We are talking about hitting records again on wall street. It seems earnings was a big driver today. Earnings as well as the anticipation we will get and be delivered this immense tax reform which includes a big tax rate,he corporate that will bring the animals. Back to the business world. We have seen it so many times, the anticipation of this is enough to drive the markets to these records we have seen. Will we buy the rumor and sell the news . We will see, come tomorrow. Yvonne will it be just tax cuts, or permanent tax reforms that the democrats can side with . That will be key. Lets see how asian markets are faring. Wall street and new zealand, shares up 6 10 of 1 . The kiwi unchanged at the moment. Australia, we did see futures farm here ahead of those inflation numbers. Were expecting them to go back to the 2 target. The aussie at. 7541. Japan, it is day one of the two day meeting at the bank of japan. The yen dipped down to the two week low. It is continuing to unwind, holding above 111, pretty good right now. A pretty positive day for stocks here as well. As you mentioned about this tax reform announcement from trump, they have stressed it is going to be a policy blueprint, a framework for now. We might not get details until june. We could be seeing disappointment, too. Betty we could come of a is always in the details. The nasdaq soared past 6000 points for the first time. Corporate resolve the boosting this rally. Joining us now with more is su keenan. Su a lot of excitement about the tax. If you cut taxes, wont you cut revenue . It will all come out in the wash. On the screen it looks like somebody bought that. Lets go into the big movers, we talked about earnings. We see mcdonalds and caterpillar up in a big way. Check out themsteel story, ak steel down. Story, akut the steel steel. . 83 versus the . 43 gain that was expected. A lot of this has to do with a shipping slow down. That will be a big story in the wednesday trade. Lets talk about the trade war. Hop into the bloomberg. Canada a chart of sending more and more lumber to the u. S. Now President Trump has decided to flag the tariffs of up to 20 22 on a battle on protectionism. It could hurt our relationship with canada. Observers say, is playing the violin and setting the mood for similar actions up ahead. Yvonne a little pressure on the homebuilders, as well. Lets get to the big mover after hours on earnings. Seeing much move in Texas Instruments in trading. They see secondquarter revenue at 3. 4 billion, 3. 7 billion. The estimate came in higher than the expectation. They see strong chip demand in auto and industrial sectors. Estimates. T analysts that is a win. Few hours up after hours. Wynn, thed by steve billionaire. Palace is a gambling enclave of macau. Vegas come up credited credited with the biggest growth increase in a few months. After hours. Ying they bounced back from the 2015 crisis about e. Coli. There is a concern about a data breach that has not yet been resolved. Back to you. Yvonne su, thank you. We will delve back into those wynn earnings. Lets get first word news now. U. K. ,na has joined the brazil, and other nations in questioning whether the u. S. Is doing enough to meet climate conditions. Several countries have asked they u. N. To support the progress. The potential humiliation or retaliation the administration could face as they face whether to abandon the pact. President trump try to pull money from sanctuary cities. It is his administrations second major policy to be declared unconstitutional by court. The president has already loss to the attempt to ban travel from citizens from six mostly muslim countries. The Goldman Sachs chief Economist Says the bank does not expect President Trumps growth target to be met this year or next. Bloomberg television the nearterm risks of a u. S. Recession is quite low. They expect the president to lower taxes for both corporations and individuals. The white house is to release initial tax proposals wednesday. We do expect something that is not deficit neutral, that does increase the deficit, relative to what it would have been. That will increase disposable income if taxes come down. It delivers a modest boost to growth. Rbnz surging the most surging the most, now shadowed outputs this year. Freeport is preparing to ramp up production. Copper was that i highest year to date total in february. Bhp has cut copper guidance by as much as 18 after production fell during the sixweek strike at its mine. They have now returned but will resume next year on an unresolved wage dispute. Bhp also lowered forecasts for iron ore because of bad weather. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne china says it will maintain prudent policies after the economy saw an unexpected pick up in the First Quarter. That is according to a report on a briefing shared by president junping. Jinping. Report,ding to this chinas First Quarter gdp rose and that was driven largely by domestic demand. Accelerationirst in seven years. The Economic Growth notched up to 6. 9 in the First Quarter. Jobless numbers fell as well in china. In the First Quarter, it it fell to a 14 year low, just at 3. 9 . The government is expected to cut jobs from the old economy. 3. 4 million. There is a trust issue sometimes. Actuallyrs coming out, back them up. Some are stronger than the ones that were released by the government. If you look at this chart we bloombergsws climate tracker. This is the white line. The blue line annual gdp targets and the yellow line is what the gdp is doing. They have achieved the target currently. But the task shows growth far ahead of what the official numbers are showing. These numbers are perhaps not too dubious this time around. Betty this sounds like this good news is pretty backed up area but what is the bad news . There is always bad news. In the Fourth Quarter they say there are challenges remaining. Restructuring will be arduous, and they stress financial risk. They want to contain the financial risk. This is a key priority for china, even especially among this leadership reshufflement at the end of the year. They want to improve financial support. The index showed growth, as well. Are supported,rs those old Economy Industries are coming back to life again. That is something china is trying to move away from. There is growth, but they won a make sure it is in the right places. Risks do not seem to be going away anytime soon. Yvonne thank you so much. We will see a lot more about china in the next couple hours. Losing ahead, hyundai traction in the allimportant chinese market. We will find out what is going on. Tax plans under scrutiny, the potential impact. This is bloomberg. Isty good morning, this daybreak asia this is betty liu in new york. Yvonne i am yvonne man in hong kong. A new casino in macau is playing out to wynn resorts. An improvement back home in las vegas. Macau is jumping back from a threeyear slump triggered by chinas focus on gambling in excess. It rose 13 in the quarter. The strongest growth since the recovery began in august. Betty a rebound from airbag related losses is expected to push honda back into the back for the last quarter. Also forecasted its Profit Growth more than 60 . Most of hondas japanese rivals will post declines due to the stronger yen on friday. Yvonne a group of japanese lawmakers will lobby the government to put National Interests first on the sale of toshibas chip business. They say it is a Security Risk in the transfer of technology abroad. Toshiba is selling assets to raise money after the bankruptcy of its Westinghouse Nuclear business. Betty china merchants saying one of its largest commercial banks is raining and its nonconforming loans to rick reduce financial risk while raising the Government Campaign against shadow banking. Details in this exclusive interview. In fact, China Merchants Bank has had risks in the loan center. We are very cautious with the banks in that financial or operational situation. Once weve seen any indication of potential issues, we will pull out as soon as possible. This is a crucial policy for us to keep a healthy, nonperforming loan ratio. 2015 we have exited many Zombie Enterprises to lower central risk. What do see as the future for World Management products here in china . Regulationsecent are aimed at ensuring the Safety Development of commercial banks in china, and getting them back on the right track. I think these regulations are very necessary. Wmp should not become a second Balance Sheet for commercial banks. That was our exclusive interview with the Vice President of China Merchants Bank. More to come here on bloomberg tv. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Betty i am betty liu in new york. Saturday marks trumps 100th day in office. American voters remain unfulfilled, including a new health bill and comprehensive tax plan. Lets discuss it progress and a fall from grace. Great to have you with us. Thank you for having me. He says twotrump things. It does not matter what i do, it is a fake deadline, the first 100 days. And in the first 100 days he tried to do as much as possible. Lets take tax reform first because we will hear some details tomorrow. What do you think they will be . One day be as positive for business as it seems the investors are indicating right now . The president has indicated it will be a 15 Corporate Tax rate, coming down from a 35 rate. It raises questions as to how this will be funded. He has discussed this with secretary mnuchin as well. So we will hear more on that tomorrow. With regards to the 100 day deadline it is important to say were still in an education phase with the new administration. That always takes time. We remember that from previous administrations. It is higher education. What we are for is a cadence coming out of the statements and the ability for investors and companies to be able to discern what is statement and what is, in the case of tax reform, push it through congress, and how long that will take. Rate iso think a 15 going to be pushed through congress . Alexis we have yet to see. I think it will take time. The statement might cannot tomorrow, we are looking for more statements in june. It is just an issue of time. Betty it will absolutely be an issue of time. We were at a panel yesterday here at bloomberg that talked about what can get done in the white house. What i kept hearing over and over again from ceos, it is an administration that wants to get things done. It is peppered with people from the business world, we heard from wilbur ross, steve mnuchin. What indications do you get that they can actually get things done . Alexis if we look by executive order, certain things can be done. We saw movements in canada today, for example. As an economist, i think about the longerterm Economic Impact of decisions. Yes, we want to get things done, but if the administration focuses on job creation and andomic growth, which cohn mnuchin expressed last week in washington, then the longerterm prudential questions have to be asked and address. Such as, how do you fund this tax relief . Yvonne great to have you. Someey can actually get type of tax reform through, what is it mean for health care and infrastructure plans . Does it clear the way for infrastructure . Alexis as we have seen the imf put up their global stability report last week in washington, the first few macro risks they highlight is around the ability to follow through on policy reform. As is something we are concerned about over the longterm. It raises some uncertainty with the administration to be able to follow through, starting with health care, of course. On infrastructure, there is a last of several ready projects going forward. Very economist at put out forecast that an uptick in Economic Growth will take at least until 2018, perhaps 2019 to take effect. Both in terms of job creation and gdp growth. Yvonne do think this 3 projection from the bulls on the u. S. Economy, is that too overambitious . Alexis in my opinion, yes. Yvonne what is President Trump going to need to concede, moving forward . Will it be about the wall, a border adjustment tax . What is the biggest concession the president needs to bring forward . Alexis it is not necessarily a concession, but a futurelooking mindset about where job creation needs to happen and where the jobs and skills Training Needs to go on. Cohn mentioned last week in washington, we need to be training workers for 21st and 22nd century jobs. If you look at where the jobs are created an Healthcare Services and technology, the focus is, have you shift workers from older manufacturing and Industrial Products sectors into the newer economy sectors . That is where the emphasis needs to be placed. Yvonne i want to go more global right now. In look at not just policies the u. S. , but around the world. I am curious to get your take on the French Elections and whether we have hit a peak of populism. Have weight . And ushered in brexit brought trump into the white house. Alexis third time is a charm. We saw the linen markets responded on monday morning, everyone knew that, the way the currency and baking sector would respond. Positive movements, still two weeks ago. Betty the polls are right . Alexis the question becomes, who comes out in the polls. Whittemore come out in the second round than in the first round . That is a serious question. We look at the polls for brexit and the trump win. Those were not necessarily accurate. Itty do you think ir peaked . Will populism accelerate. I have concerns over italy coming going forward. And Angela Merkel and germany and translating her actions in refugees and how refugees are being incorporated. Populism as a backlash may continue to rebound but we have seen strong Economic Growth coming out of europe going forward. These are great indicators. Yvonne from politics to geopolitics, can you help us look at locations, like north korea. Some of it seems to be just noise at the moment. Is there really a chance of headline risk . We did not see nuclear test yesterday. Does that mean north korea recognizes the risk of miscalculation . Alexis i think the ultimate focus and emphasis needs to be placed on the fact that President Trump is engaging in an impactful dialogue with president xi, Prime Minister abe. That was a strong component from the maralago summit. Going forward, President Trump began the week on sunday night by calling the respective leaders of japan and china. China is absolutely pivotal in any situation and solution that happened on the korean peninsula. It is north koreas largest trading partner. President xi has emphasized he will carry out economic sanctions on north korea. It is very reassuring for companies and investors that President Trump is engaging in an effective dialogue. Betty thank you so much for joining us. The global opportunity practice. A lot more ahead on bloomberg. Weather, industrial slowing production. The guidance from bhp billiton on is gloomy. This is bloomberg. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Yvonne a cloudy look out there. This rainy hong kong morning, 30 minutes away from asias first major market open. Betty gloomy here in new york, as well. 7 30 p. M. Tuesday in new york. We are not showing it because it is that ugly. I am betty liu in new york. Amnne miami van mom i yvonne man in hong kong. Maintaining prudent Monetary Policy in a proactive fiscal stance. They accelerated in the First Quarter, german by domestic demand. There are signs sentiment is recovery recovering. Jobs ine pledges to cut industries with excess capacity. Republicans have voiced relief President Trump seems to be retreating from a government hisdown by relenting on demand congress immediately start funding the Mexican Border wall. Gop leaders have offered a new federal spending plan that does include building for a while. Trump tweeted that it will be built in his position has not changed at all. Confident its agreement with chemchina will close on time. The two companies met with regulators to see if the merger will be subject to further investigation, or whether the commitments offered will be effective. Extended bid closes on may 4. Syngenta closed up almost 1 . Resign oveready to the devastating earthquake and tsunami. He told someone it was good the disaster happened. He later retracted the comment, saying it wouldve been far worse if the earthquake had happened in tokyo. Japan posts holdings to book a 3. 6 billion charge on its investment in australias logistic company. He later retracted thea 350 mi. A cut jobs in the First Quarter and will ask 1400 more axe 1400 more in march. Toll, given its significance in the asiapacific, was a great ride buy. However, we miscalculated the state of the australian economy and paid too much. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Down toe are counting major market opens in the asian pacific. Lets head to adam haigh in sydney. The yen dropping to a twoweek low while stocks stretch high. . Oes this rally have legs adam good morning. That weakness in the yen is pretty key this morning. That will feed through to the Japanese Equities session at the tokyo open in 25 minutes or so. Ofis part of a broader sense being in of appetite to take a little risk further here. U. S. Equities have pushed further overnight. We have been hearing decent Earnings Results coming out of the industries, like it caterpillar and mcdonalds. The tricky one to call is china. It has been through a tough patch, lets see how that we sees, and whether further weakness or buying coming in from the national team. From a currencys point of view, the aussie data will be closely watched from aussie traders. Especially what it means, and the implications for the them as they address interest rates. A fairly light economic calendar, but that data will be key at 11 30. Betty if we do see it get back whicht target of the rba, we have not seen for some time. I know you are looking through the fortunes of the world stockmarket, particularly the u. S. And china. We have seen the most since 2008. Can we breathe a sigh of relief for the bulls there . If you dig into the bloomberg and take a look at the chart, it shows the divergent divergence. It is quite stark. We have the depth of the crisis, an economy completely falling out of bed. If we think of where we are, the u. S. Economy is doing ok, u. S. Stocks doing incredibly well. People are banking and further growth over the years. China, there is been a lot of worry around growth, this year growth being better than expected. Tightening policy a little more, people concerned on the mainland. In china it is an individual investor market. There is a lot of sentiment that drives the market there. Where we go now is, from here, from a u. S. Equities point of view. People have been wanting to pull money off the table, u. S. Stocks have done well over this eight year bull run. We may see some of this outperformance lag as the year progresses. Whether this means outperformance for shanghai and relative terms, is a harder question. Betty thank you so much, adam haigh in sydney. Bhp billiton releasing disappointing numbers for the third quarter. Allen, alsoe apollo in sydney. Not a great quarter for the worlds biggest miner. Paul no, it was not. Miss, for the quarter. Analysts expected 57 million tons. Copper, the big one as we were discussing earlier today. Quarter,ons for the 295,000 tons was expected. There was the strike action in chile. Periodfell 44 from up earlier in the year. We have a second time bhp has lowered its copper drive. There were Power Outages here in australia a few months back. Petroleum was also a miss. Met itsgical coal output numbers. A cyclone in queensland. Not a good morning for bhp. We will see how that gets priced in at the top of the hour. Thank you, paul allen joining us live from sydney. Mornings to talk about later today. Hyundai may see a drop in earnings of more than 20 . Firstquarter results will be available later today. Lets bring in our auto analyst, tracking this. This is an automaker that has really been hit by not just u. S. Car sales that have slowed, but geopolitical tensions between the u. S. Kind u. S. , china, and korea. That drop may be more than that. You hit the nail on the head. 25 of revenue or sales is coming from china. Missile geopolitical role that is happening, half of hyundai sales in march just disappeared from a year ago. Compared to a year ago. Same thing with their affiliate. Everybody in china is boycotting korean goods. A lot of trips to korea have been canceled. To korea havees been canceled. What it means for hyundai, plants will have to be shut down. It will take a long time to work out. If you remember back in 2012, the japanese and chinese had tensions over some islands in the east china sea. That impacted japanese automakers for one full year. We may see the same thing for hyundai and gm. This missile role has dented the sales in china. You mentioned it taking possibly a year or so. Is there anyone in the market that can pick up the slack . Steve there is quite a bit. I think the americans and the japanese Auto Companies will pick up the slack. We are seeing some of that right now. Some of these companies are outperforming markets, while hyundai is seeing sales drop. Toyota, honda, and gm will probably pick up the slack. Betty talk a little bit about why china is thinking of relaxing its joint venture for foreign automakers . Steve i think they have to. What they are thinking of doing speaks very well for the chinese domestic brands. The reason i say that is, as these automakers look to export these vehicles, they do not want create jointo ventures in the countries where they export or want to send cars to. The joint ventures here in china, are more like a protectionist measure that is going to prohibit local chinese automakers to go abroad. They need to think about eliminating that. Betty is this good for the automakers . Steve depends how you look at it. If youn automakers look at it financially, it is potentially positive. If they own the profits they will have to consolidate those profits and revenues. Building cars in china is still very profitable compared to north america and europe. If they would consolidate profits from china, it would probably lift Profit Margins for those companies. Yvonne we talk about local players, billions of dollars in evaporated if we see these restrictions lifted. Steve exactly, for domestic automakers, they have to do this gradually. In chinatic automakers are still depending on foreign automakers to subsidize their own development. Yvonne steve, great to have you there. A 13 billion deal to consolidate famous luxury bland brands. Plus, the fallout from a fiery Shareholders Meeting for wells fargo. The message is clear. We will discuss the banks direction. This is bloomberg. Betty this is daybreak asia, i am betty liu in new york. Yvonne i am yvonne man in hong kong. A luxury empire has consolidated control over Christian Dior and a 13 billion deal to fold the fashion house into the wider group. They bought out minority dior shareholders. They already own a 74 of dior. China leads a revival in luxury. Betty one of the Worlds Biggest Oil producers is joining a chorus predicting the rise of electric vehicles. They say they may make up a third of all new car sales by the end of the decade. Technology finance conference in new york, the first and that are he powered vehicles will cause natural oilbased fuels to peak in the 2030s. Yvonne googles itself driving car project looking to get its firstriders. Residents of phoenix are now signing up for the service. A a 500 customized minivans. The vehicles have been tested on public roads, but only with employees and contractors inside. Wells fargos Board Members narrowly surviving a raucous Shareholder Meeting in the wake of the fake account scandal. Despite the banks tough time, our guest says the future is stable. Billiones more than 2 and is an wells fargos top 10 holdings. One of our gaslight columnists said it was not a narrow survival, but a narrow escape for the board of wells fargo. Despite the fact that they have it cannot beected, business as usual at wells fargo, after seeing the turnout and the contentious meeting between the shareholders and management. It certainly was a lively Shareholder Meeting. Grievances, including tears and people being thrown out of the room. Many times the Shareholders Meeting stop and they needed to restart and reset it. A year, everyone can come and talk to not just talked to the board of directors. There are a lot of grievances that were brought up that they addressed. They took them very seriously. One of the things we like to see is that they are handling this seriously, listening to these grievances in a very serious way, in a way they did not do at the very outset of all this unfolding. That, no, and because of you had such strong grievances being aired at that meeting. Tony, some of these directors eked by with votes barely above 50 . One observer said, anyone below 75 should effectively resign from the board. Tim sloan it says he does not hope so. He hopes they do not do that. They maintain at this point a mandate. And they have all the support behind tim sloan, he seems to be doing a very good job. Yvonne what can the chairman and board do at this point . If they are not getting rid of Board Members, what can they do to ensure shareholders they can put the fake account scandal behind him . Tony for one, when you look at the report they had last week, ames looked stable and still positive. We think things have stabilized for the company. We do not have to wait too long. On may 11 they will do an investor day presentation. They was a time to clear deck, here everyone on a wide array of things that were done wrong and take them seriously. But on may 11 we look forward to them setting the bar, in terms of what things will look like in the upcoming months. Get to a point of taking market share again, post the financial debacle. Until the recent scandals. Somee as betty mentioned, members got less than 60 of the yes a vote. The chairman thinks maybe this is a bigger issue. How accountable should Board Members be in situations like this . Tony i think it would help if they had the 10 plus percent above and behind the board and what they are doing. Aey maintain in their mind mandate to run the company and run it well. They have changed out several other people, wholesale lending, the commercial bank. They changed out some key positions. They are taking this seriously and away they did not at the outset. It is a great brand that has been around for more than a century. We think they can continue to be a great brand and be a lender of maybe first choice to a lot of the millennials doing homebuying in the next decade. They have the money to lend. On wells fargo i want to bring up this chart that shows their quarterly revenue growth, which we saw quite a drop there in the First Quarter this year. It is still expected to grow by 2 in 2017, which is a close down from the year before. By it will get up to 4 2018, 5 in 2019. There is slow and steady growth. But this is trailing other regional banks and defers divide diversified peers. Why stay in wells fargo . Tony it is a similar argument to bank of america and jpmorgan, they have the money to lend, they have the deposit base to lend. Wells fargo is going to continue to be the primary lender, the number one go to lender on mortgages going forward. They have the money, the breadth, the distribution. They maintain the brand that is a goto brand we think will be important to the consumer. The fact they have been stable during this difficult period of time gives good credence to that brand and the lynn jeopardy longevity. You, a shareholder from wells fargo. You can get a roundup of this story and many more to get your day going in todays edition of daybreak. Bloomberg subscribers can look on her terminals. It is also available on mobile. Customize your settings to get news on the industries and asset to care about. This is bloomberg. Yvonne earnings that of lg earningsFirst Quarter coming in. Beat there. Over 6 billion won. Firstline gross sales short of what analysts were expecting at over 7 billion won. It seems that lcd panel prices display. Ng lg the highest level since december 2015. The company focusing on its ultrahg hd tv screens. Screens, areng tv not necessarily, we watch on our ipads. Netflix on the verge of entering the chinese market. Ramy inocencio has the details on this. They have been eyeing china for quite some time. Ramy at least the last two years. There looking to get over the internet great wall. They have found this in an streaming site. A lot of people in the western world not know about this, but it is one of chinas biggest internet streaming sites and it is owned by baidu. It has 20 million subscribers to it. That is the latest as of mid2016 or so. The news of this has brought record share prices to netflix, 8 . Ping by 520 . 5. You can be sure netflix will be hoping chinese and denizens will love its unique entertainment. In terms of what they are offering, not sure just yet. Could be house of cards or orange is the new black. They said cooperation with netflix will it here strictly to chinese policies on film and tv import. They have capped the number of shows they can stream in total. Yvonne look at this deal mean . What does it mean for the number of eyeballs watching netflix programs . Ramy the Vice President of content acquisition says he does not think it will be major for netflixs official numbers, it is more about branding and getting china to understand what netflix is all about. Dive into the bloomberg terminal. This is the Financial Analysis function. The orange lines are the numbers of scrapers for domestic, u. S. In green are international. Thisllion subscribers, could overtake if this does happen. And a quick graph here. We see record share prices here. We talk about oranges the new black, china could be the new black in terms of its bottom line. Betty profits, for sure. Thank you so much. Plenty more still to come. Do you get netflix in hong kong . Yvonne of course we do. A big, big thing for us. We watch a lot of things. The market open as what we should be looking ahead to. Plenty of earnings to look out for. When it comes to the asian session, hyundai among them. Ll holdings, something to keep on your radar. Take a look at the futures real quick. Both taking charges we anticipate a global rally to continue. Asianpacific markets set to extend the global rally. The nasdaq closed above 6000 for the first time. President trump slaps tariffs on canadian lumber. He says he does not care about a trade war. Yvonne the miners forecast increasingly gloomy. Betty Goldman Sachs does not see 3 growth this year or next, but they think the risk of recession is small. This is the second hour of daybreak asia. Is just after 8 00 a. M. In hong kong. Just after 8 00 p. M. In new york. You could not get better markets. Hour, how much the theirors are looking at own market. You see the here the divergence between the u. S. And chinese market. The biggest divergence since 2000 eight. We know that beijing is trying to curb these capital outflows. Meanwhile, in the u. S. , all animal spirit,he it seems so far with what President Trump has done in the first 100 days, it seems to be working so far. Heare you have to President Trump say tax reform and markets see things to keep going. It is interesting, when you throughout the chart, we see chinese stocks with Global Equities as well. As long as you can cipher decipher between the economy and what is going on, we will not see any contagion effect. We see things that define what is happening today. Lets take a look at the market. Sophie as betty put it, the roar on wall street. The dow and s p edging closer to record highs. The nasdaq topping 4000 for the first time ever. We did see several asian benchmarks. That is continuing in the midweek session here. Trumps tax of plans hoping for sentiment. Sliding. En after u. S. Treasury drops for a bonds slip. Ussie copper and aluminum. Aluminum has risen about 50 year to date. Taking a look at the currency , broken out of the consolidation range here. It has plenty of catchup potential. Taking a look at the yen, we do have weakness prevailing here. Trading around a twoweek low. It did fall against the dollar on tuesday and dropping against g10 peers. Some highlights and the currencies base. Aussie, little changed. Euro trading near the onhest in nearly six months change that the ecb may the language. When it comes to riskier currencies like the medicine mexican peso and brazilian be outcome of the rise in u. S. Treasury yields could be a drag. Shares here. Check the u. S. Miners release a disappointing set of numbers. Miners have been hit by some Power Outages. Of weaknesse a lot has been priced in. Paul it appears so. A lot has occurred over the past few months. The market has had a chance to respond. Iron ore, 50 million tons per quarter. The market had been expecting 50 million tons. Copper, the big mess, of course. That was the impact of all of in disruption that the mine chile at the beginning of the year. Not surprisingly, copper guidance cap for the year, down about 18 . Time. S the second the first was after the Power Outages we had in australia earlier this year. Had in australia earlier this year. Betty . Much. Thank you so Paul Allmendinger on bhp. Now lets get first word news with rosalind chin. Alind plans to fit units into operating companies. The meeting will be held in seoul discussing widespread changes to the group. Chinas leaders said they book improve the economy while maintaining prudent policies. Growth accelerated in the First Quarter, accelerated by demands. The sentiment is recovery. Unemployment fell below 4 for the First Time Since 2002. Joined the u. K. , brazil, and other nations to question whether the u. S. Is doing enough to the climate commitment. The responses illustrate the potential humiliation or retaliation demonstration could face if they were to abandon the pact signed in 2015. The Goldman Sachs economists says they do not expect Donald Trumps 3 growth target to be met this year or next. Still, expectations of a u. S. Recession are low. Release taxuse will proposals on wednesday. We expect something that is not tax neutral, relative to the modest, and delivers a boost to growth. Rosalind global news, 24 hours a day, powered by more than 2600 journalists in more than 120 countries. This is bloomberg. Chinasstill ahead, how ourgest Investment Bank exclusive interview with chinese merchants. Betty this is bloomberg. Betty this is daybreak asia. I am betty liu in new york. Yvonne im yvonne man in hong kong. A quick look at the business flash headlines. Hitachi may have a boost in selling their stakes in hitachi electric. The company will be sold to kkr for more than 1. 8 billion. Reports say hitachi will make an announcement as early as today. Forunit produces equipment makers and manufacturers of wireless here. A 6 increase on demand for Business Class flights. The carrier also sent to release profits. Yvonne related recall losses expected to push honda back in the black for Fourth Quarter. Most of hondas japanese rivals are projected to post declines due to the stronger yen. , after the market close on friday. Betty speaking of the market, many of them have just come online. Now we are seeing the risk on rally in the u. S. Pointskei up 131 already. Looking pretty good so far. Thank you. China markets open a little later on this morning. A narrow gain on tuesday. That brought them off a threemonth low. Of course, triggered by fears of a regulatory crackdown. Lets get some perspective from grace. Great to have you. Im sure you have been looking at this for weeks. The composite falling, hovering around the 200 day moving average. Regulators cracking down on leverage. Where do you see this going . We have a contrary and overweight recommendation on chinese equities. The First Quarter surprised on the upside. We see an improving profit outlook. The fundamentals actually look like good. We see this as an opportunity. Yvonne its interesting. The last time we hit those intos, we saw china enter a bear market. When it comes to this kind of deleveraging, at what point does it start to derail the economic will be in china . Are seeing is court growth that has come out better than expected. The numbers coming out a really good. We think that some of the market worries earlier this year abated a bit after the meeting between trump and xi. We see some positive progress that has been made. Yvonne what are you looking at in terms of opportunities . It seems real estate is the bestperforming sector, i. T. Has outperformed as well. I think the i. T. Sector will continue to outperform. The housing market, there are concerns that it is overheating. Betty im curious. We are showing a chart about the widening gap between the rally we are seeing here in the u. S. And china, which, as you mentioned, could present this opportunity. Narrowing. Gap will the risk aversion quickly dissipate here . Of four dayse out of meetings in washington, d. C. Where the overall sentiment was more positive. Most of that is driven by china having a strong performance, a sense that relations are in a steadier place than they had been. There is value here. In markete is inflows equities. I think the momentum will continue. Betty it looks that way. Certainly everybody wants momentum. What is the biggest risk out there that we are perhaps not watching close enough . We are watching the housing market. Beyond china itself, we are looking at the geopolitical risk related to trade protectionism. We do think the 100 day plan to boost u. S. Chinese relations are positive. You can see some announcements coming out shortly. Betty what more can we see . It seems there was a more progressive meeting between xi and President Trump. What is the next up to instill some confidence . What needs to happen here . Is, on chinaere part, they are looking at which sectors in the u. S. May be more open to them. But to make it a very much bilateral reciprocal relationship. Yvonne we have seen marbles markets being squeezed. I want to talk about the china 10year bond yield. We have come down a little bit since then. If you track it with the china financials index, you see there are beneficiaries of the rising rate. Is this an opportunity now to get into some of the financial . I think there is growing markett in the interbank. The Chinese Government has taken steps and reached out to investors in ways to promote the bond market. Yvonne i think we only see about 1 of Foreign Investors diving in right now. You see that picking up . It is a longterm process but china does have the biggest longterm market. They are making trading procedures easier. I think we have seen that Chinese Companies have been able to access the market quiet easily. Yvonne stick around. We look talk about the bond market a little later. This is bloomberg. Yvonne this is daybreak asia. I am yvonne man in hong kong. Betty we are back with joyce chang, head of research for j. P. Morgan. We also joined by kathleen hays, who has been in tokyo all week ahead of the boj meeting only a day away. Let me start off with kathleen here. Now we are talking about the bond market. There was a great story out on the bloomberg about how this bond selloff we have seen in china might now be an opportunity for some investors. Why is it significant . Is verynk it significant, especially for investors if there is a big selloff. Theres obviously an opportunity for profit. There are questions hanging over market. That a trying to say financial crisis is where china is headed, but if they did not understand, it created problems in the Financial System and banks. I think for now, the issue is how china can thread the needle raining in credit, but not pulling in things so quickly that they see bond yields rising. Really a bit of an outlier. We see jgb. In europe, there are moves doubts that they make any moves anytime soon. Betty you make a great points. Joyce, do you see any sort of debt crisis . We know that debts are rising. There could be a contained situation despite the default. To see at all of debt Crisis Brewing in china . For the mediumterm, this is what markets are focused on. They do think that over the short term, this is manageable. It is an important step to make sure they have interest coming into the markets. I think the market was very foreigned to see Exchange Reserves go up for the first time in two years. As far as the overall global framework, i think there is more stability there. Markets will remain focused on what china is doing, but also that they dont have capital outflows. Betty i think your point of developing the market is important, important for china. O take a bigger role you have to have money coming in and out freely. Yesterday, or day before pboc governoruty bloomberg york at a conference. Prudentthey have to run Monetary Policy. What does he mean by backcheck go by that . I think the first objective is to ensure that instability in the market. I think they send those signals clearly. Reactions see that Monetary Policy is at a more neutral stance right now. Keeping with the markets you had been focused on, they seem to have managed the situation, stabilize it and we have also seen stabilizing of the macro numbers. Yvonne the problem is, when it comes to the products in the shadow banking industry, we still see trillions of dollars. They have no other option. There is the moral hazard. How do authorities try to break do they have to let some products fell . Fail . It is a more Political Year in china. The focus is on stability first. There are not the concerned about the Exchange Rate were you had more to weigh volatility. On some issues of credit leverage, the plan will be a more longterm plan. They have tried to get Foreign Investment in to the market so they have more twoway flows. Yvonne do see more pressure . I think on the global stage right now, there are reasons to think there are attractive opportunities given where yields are elsewhere. I think the message from the Key Central Bank is more accommodative. I dont see actually a big spike in yields from here. Betty i guess that anticipates my question. Tetheredar treasury is to 10. 3. This battle between the bulls and bears continue. 1. 5 on the 10 year. The bears say you will see it move well above. What does this mean for asia . How important is it to the Central Banks if we see a big move on u. S. Yields in either direction . We do see u. S. Yields moving up. The thing that has been surprising is we have seen more equity funds. O when you look at the j. P. Morgan global bond index, 21 of it yield. As a negative i do think you will see u. S. Yields rise. It is also something that the market can manage at this point. Yvonne great to have you there. We have some breaking news. As kate telecom. ,e are seeing the First Quarter a sizable beat from estimates. Irstquarter sales missed we see the stock pretty much heading lower here. We will check back later. Yvonne 8 30 in singapore, looking nicer in new york city then hong kong. We are half an hour away from the open in singapore. Im yvonne man in hong kong. Newy i and betty liu in york. You are watching daybreak asia. Lets get to Sophie Kamaruddin who has got no, she does not have it. Lets check in on the markets themselves. We see the asiapacific market right now. Yvonne, carrying go over on this rally. It looks like what we have been talking about, despite what we have in china, this risk on trade sweeping the globe. Two new the French Election would be stoking this bullish yvonne sentiment. Asiae a third day now in for gains. Right now. T 07 the kiwi dollar Holding Around 70 u. S. Cents. We see this resilience and the aussie dollar. In japan, up 7 10 of 1 . On a two day meeting out of the boj. Not saying too many surprises. May be seeing some surprises there. With sophieake your kamaruddin. Sophie i mainly focusing on the korean markets here. Up eighthe kosbi points. He have he end aim voters Hyundai Motors up. Lets take a look at eisuke there. Leading they seek to wrap up the flash memory chip business as they see the chip business waning. At some at what of the laggards here today in korea. Fallingas kate telecom about 1. 8 percent here, following the First Quarter results. Sales and operating profit missed estimates. The stock was cut to neutral earlier this week. By the way, it has fallen about 6. 5 since hitting the years peak in march. That is just a look at some of the results we have gone so far out of korea and japan. We have several on the line up as well. They several stocks on move. Thank you so much. Lets get to the first word news now with paul allen. Lg display open strongly topeoul after results estimates. At 913g profit came in million, ahead of the forecasted. Cells fell shortly. Bhp has cut copper guidance by is much as 18 after production fell. Escondido have returned to the jobs. Bhp also lowered forecast because of bad weather in australia. Of shipments in indonesia overshadowed the prospect of lower output this year. Upeport preparing to ramp production. Copper climbed to a year long high but has since fallen back. A plan sees a family of a billionaire the family already owns 30 of the your. Global news, 24 hours a day, powered by more than 2600 journalists in more than 120 countries. I am paul allen. This is bloomberg. China will maintain prudent support after the economy saw a pickup in the First Quarter. More on this. What is driving this optimism . It is backed up, not just by chinese official numbers. If you look at what china has caution. Ng, they have there are risks in the economy as well. Growth in the First Quarter rising. That was expected. Some feels some numbers released showing the Unemployment Rate at a 13 year low. 3. 3 million jobs included in the First Quarter. If you look at what has been available, at the Bloomberg Intelligence china attracted tracker, you can see, what is actualis tracking estimates. Also the target as well. The target is pretty accurate actually. Yvonne what to they look at exactly . Industrial output, retail sales, things like that. It is an accurate gauge. What Bloomberg Intelligence is saying comes above that. The numbers coming out of china after all. Flated growths at things like and output as well. This of course looking positive. Betty what about managing Financial Risks . That has been a priority this year. That has deathly been a party this year. They have been saying they want to continue the stable to the helmet of the property market. Restructuring will be arduous. Iny will maintain continuity macro policy. Managing risk in the worlds secondlargest economy. Of course one of the other issues, if you look at the index i mentioned, the growth is coming from areas that china is trying to move away from. Try to shift the emphasis away from that to services. Thank you so much. Rosalind chin there on the chinese outlook. Sector,outlook on the launching a new Private Banking center in singapore today. The Largest Private Bank in asia. He expansion plans very course, we have a ambitious goal. The first step is to become the best in the Largest Private Bank in asia. Currently we are managing 1. 6 trillion yuan for some 16,000 clients in china. The assets under our management will grow by 25 to 30 to reach 2 trillion yuan by the end of this year. After that we will seek to enter the worlds top 10 club for Private Banking business. How do you characterize the competition you are seeing now in the Private Banking space . How do you distinguish yourself from competitors . We always keep a sober mind. We know we are facing some strong competitors in the offshore market, including ubs, credit suisse, Goldman Sachs and morgan stanley. We are also quickly about our strength. The large number of chinese clients who are willing to put their overseas assets and the hands of the bank they are more familiar with. What assets in particular are you focused on when it comes to advising to clients about the opportunities overseas . Although there are plenty of Investment Opportunities on the mainland, we see a huge demand from the High Net Worth individuals to allocate their assets globally and diversify the portfolio say they can preserve or increase the value of their wealth regardless of the cycle. Our job is to find a balance andeen maximizing returns managing the risks. What are your plans to grow the Retail Business this year . In terms of the Retail Business, we will increase our investment in order to improve Business Efficiency and user experience. Besides, we need to be able to provide the medium to high end customers with customized Wealth Management products. Are you comfortable with the level you have at the moment or you feel you need to still reduce some of the exposure . In fact, China Merchants Bank has always been wary of risk in the loans sector. We are cautious of companies in cautious or bad situations. Once we see any issues, we pull out as quickly as possible. This is an important policy for us. Exited risky have enterprises to lower risks. Future do you see as the for Wealth Management for us and china . All of the recent regulations are aimed at ensuring a healthy and Stable Development to get them back contract. I think these regulations are very necessary. Yvonne that was our exclusive interview with the Vice President of China Merchants Bank. Casino paysxt, a off nicely. How the mccaul recovery is progressing. This is bloomberg. Yvonne this is daybreak asia. Im yvonne man in hong kong. Betty im betty liu it here in new york. Business flash headlines. Ofls fargo Board Members thining, some by razor margins. One investor was thrown out after demanding to know what the board knew and when they knew it. Shares fell slightly after hours, as you can see. Holdings inn posts an Australian Investments Company Turning profit into a 3. 6 billion loss. X 1300 more by next march. They paid a price that the president now it ms. Was too high. Now admits was too high. In terms of our Global Logistics strategy, im aware of criticism that we did not properly assess the risk of the us train of economy and we may have been too optimistic. In hindsight, i cannot say i disagree with all of them. A group of japanese lawmakers will lobby the government to put the National Interest first on the sale of toshibas chip business. Toshiba is selling assets to raise money after the bankruptcy of its Westinghouse Nuclear business. Mcdonalds investors loving the latest sales figures. Global growth soaring. Shares hit a record after the biggest intraday increase in 18 months, offering the iconic big mac, they have three sizes now as long along with aggressive drink discounts. Shares easily beating analyst estimates. I have not even tried one big mac. Betty that might be on your bucket list next. Yvonne lets talk earnings now. From Bloomberg Intelligence. Margaret, we have seen this results on track with what we have seen with macau. Is that, it seems. How much of this result was due to tallies . It started off slow in august. It is cater to the vip segment. The First Quarter that drove the market was that segment. s position in that way, it was able to grab more of that share, the highroller market, if you will. Demands to expand on the with more vip business. Yvonne is that sustainable . Easy tothink it is too early to call. There is room to grow. You see some of the chinese highroller gambling demand coming back. There are facilities such as the wynn palace catering to that segment. Also more junk to play to capture that section of the market. To say goes back to the levels we have seen in 2014, probably not. Until we reach a stabilize level, there will be a lot of volatility. Betty certainly the vip business is an important segment, but you have to attract wider clientele if you want longterm growth. What is the positioning their . There . They will always be cater towards the high end market. They spend more at the dining outlets, the retail rooms. They have been successful to really adjust their prices to offer the same for that segment of the business. It has not reached the full potential. We are looking at the Second Quarter and beyond and whether we see improve its in the infrastructure. It is hard to get people in and out of the property. I think it will reach the full potential by 2018 when we see the cluster of height and resorts fully develop. Goode the start of a earnings season for the rest of the casino operators. We have fans reporting tomorrow. In terms of the new resorts, as well as wynn potentially for sands. Both, very optimistic to start. Yvonne thank you with the breakdown of those earnings joining us from Bloomberg Intelligence. Betty . Betty just one last question for margaret here. I want to bring up this charge. We just got this chart in from macau, talking about this recovery. What is interesting is revenue, not quite what you have seen. It is the store you just mentioned. You are seeing revenues recover but they are not back at the level we saw at the left side of the chart back in 2010. Is there any projection it might get back to that, and when . At this point it will be difficult to say. To get to that level, very difficult. That was the time when it was the peak. A lot of government officials going to macau, gambling, a lot of that has been removed. We are seeing the healthy, wealthy chinese gamblers coming back. Really, to get to that level of revenue, it will take some time. At this point i dont think it will reach that peak, but it will stabilize. Because the topline is so driven by the vip segment, it will be volatile. That is why most of the market should not stay focused on profits and step away from looking at headlines in terms of revenue on trend. Betty certainly a lot more behind the numbers. Hank you margaret on the casino operators. Plenty more to come on bloomberg. You are watching daybreak asia. Yvonne this is daybreak asia. Im yvonne man. Betty im betty liu. Netflix may be on the verge of entering china. Remy has the details on this. Never has been chasing china for a while. Ramy for at least the last few years, trying to find a partner in china. They are seeing this partner potentially in the form of this o streaming site called love unique entertainment. It is one of the biggest internet streaming sites in china, similar to netflix. You see the shares in terms of tuesday trade. 5. 8 . The biggest jump since october. We are seeing record highs off of that. It is unclear as to what kind of shows will be shown in china and if and when it actually takes effect. Of course you think of house of cards and things like that. And netflix spokeswoman says they are looking at a bunch of deals, multiple shows in terms of what could come over to china. They said that they will have to along the lines of what beijing put out just. Ome months ago they kept foreign shows at 30 in terms of streaming. They want to get a hold on local media. Yvonne and the International Markets certainly has dragged on the Profit Growth as well. What could the deal mean to the number of eyeballs . The Vice President came out and said this is more of a branding opportunity rather than getting any revenue here. , the number of subscribers for u. S. Domestic. Green, the number of subscribers internationally. What i really want to show you is down here. The blues are the domestic streaming ads. You can see those have been falling since 2013. What has been going is from 2012 to 2016. This is International Streaming here. Opened markets in 130 countries. China was the biggest major market that had yet to fill in here. The share why we see price jumping to a Record Number here because of all of the optimism that could potential you have for the bottom line. Usnne that is almost it for here on daybreak asia. Now for a quick look at what is coming up in the next few hours on Bloomberg Markets. Washing machines . Rishaad i will come to that in a second. First, more serious stuff. I think you were telling me that it would be . Yvonne the first time they hit a ban in rba. Rishaad the washing machine index. We have this index which signals a cooling when it comes to the housing market. There,see a slowdown possibly calling back as well. An interesting one there. Betty you will be talking to the chairman of the American Chamber of commerce in china. I imagine also complaining about doing business in china. Getting harder and harder, right . Usbaad we will talk to management first. Saying that china facing the hardest year in decades. That is all to come on Bloomberg Markets. Yvonne i am haidi lun. This is Bloomberg Markets asia. Rishaad china promises prudent
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