Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20170619

We have the world covered on daybreak asia obligated to crack down on hate. We have the will covered on daybreak asia. Betty we will have the latest on that tesla story. Tesla trying to save taxes. This is daybreak asia coming to you from bloombergs asian headquarters here in hong kong, where it is just after 7 00 a. M. I am betty liu. Yvonne i am yvonne man. Eyes are glued on china for the next 24 hours. Not only do we have this msci decision, but we will hear from the pboc governor as well. We do not hear from him too often, but it will be interesting to get his take now that it seems like the pboc is parting ways with the fed. They held off on raising those borrowing costs after the fed raised rates last week. Betty a lot on the agenda as you mentioned. We will be going through a lot of big corporate stories, including that story on tesla. Everybody focused on the Chinese Market and tesla being a tech movie has been a big today. How much a big mover today. How much of the impact will be on the asian markets . Yvonne a pretty big boost so far in new zealand. The nzx 50. on the kiwi at 7224. Watch the body lenders today after that meeting these downgrade after that moodys downgraded on the housing market. You will hear more of that on the rba minute later on this morning. On the at 7597. The aussie is up. 7597. Arjun japan, we close above 20,000 for the nikkei on monday. We could continue on with this rally. Dollaryen well above 111 right now. 1163, so that is going to help sentiment as well. We are set to be a pretty good day thanks to that. Pretty solid session in wall street overnight. Betty let us take a look at what happened on wall street. As we have mentioned, tech shares, particularly the big one, a large market cap, led the gains today. Look at the nasdaq, up 1. 4 . Up a lot of those losses. The Dow Jones Industrial average rose about 144 points. The s p rising almost 1 . Let us look at in particular some of those big cap tech stocks might amazon, apple, and they rose up about 3 . Way, oneocks, by the losers ingest todays session on wall street. First word news with lena melendez. Nina. Nina we talk brexit negotiators say the top brexit negotiators say it has started positively. Gary davis said there was more that unites the two sides then divide them. The chief you negotiate Michel Barnier said they hoped to tackle a timetable for britain to leave the block. , a fair deal as possible. Deal. R better than no that is what i said today and why we will work all the time with the u. K. And never against the pay. Against the u. K. They confirmed that trade talks will not start before october. He will brexit deal will follow the timeline set out by brussels. They had wanted trade negotiations to run in parallel with divorce proceedings, but has accepted the timetable set out by barnier. He welcomes top industry executives to the white house. The president vowed to work diligently with congress on immigration to ensure the sector gets the people in needs and jareds ceo praised kushner for leading the administrations tech outreach. The u. S. Should have the most modern government in the world. Today, it does not. Effortreat to see the that jared is putting in a working on things that will pay back in 5, 10, 20 years. Spicer may be in line for a new job. He has been President Trump spokesman since the beginning, but has faced months of speculation that he will be fired. Sources now say officials may move him to a more strategic role and bring in a new press secretary. The Administration Needs a new commissions director after he quit last month. The american student released from prison in north korea has died. News,mily confirmed the saying the torture he suffered in north korea meant no other outcome was possible. The 22yearold was sentenced for 15 years with hard labor in march of last year after admitting trying to steal a propaganda better. U. S. Doctors said he had severe brain damage. The cause is not clear. The imf says japans improving economy undertakes both reforms. The abe government needs to boost wages as well as working to increase private investment. Japan is enjoying its longest economic expansion in a decade, but the imf sees growth weakening in 2018 with inflation below the central bank 2 target. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am nina melendez. This is bloomberg. Anchor thank you. Tesla is said to be close to an agreement to produce vehicles in china for the very first time. It would allow the electric carmaker to avoid an import tax and price its vehicles more competitively in the World Largest auto market. Let us get to the hall get to joining us from San Francisco. So how significant is this deal . To be clear, we are waiting for more details. Yunnan up with a partner would be. This would be huge. Tesla has one auto plan in fremont, california. If they want to become a global cars by 2018d sell they will need additional facilities. Be a pretty significant development. Betty it would be. Meanify what this could for teslas business . U. S. Automakers on allah to produce in china on the a have a local partner. Their cars are subject to a pretty significant import cap that makes their cars more expensive, so here, you have tesla tried to sell electric vehicles in china. Chinas government, which has itious goals around that they would be cheaper, so they would be more competitive with other automakers, but the time it takes to ship the cars and transfer them from the u. S. To china would be negligible, so it really would open up the Chinese Market for the company. Anchor right, and in terms of Pricing Power, you mentioned this could potentially alleviate boost some of the Pricing Power tesla could have when it comes to pricing their vehicles. The timing could be right given that they are about to start production. It is a model three sedan in july. Dana the model three is teslas reason for being. Founded to was brangelexit vehicles to the masses. They are launching the model three in july. They have not launched or done any marketing of the vehicle in china. When they do, that could be a real game changer in terms of bringing an american luxury automaker that is much more affordable into china, and we know that suvs are all the rage in china. Teslas model x seems to be doing fairly well. Elon musk has been to china several times. He was most recently there in april. Right now, i think everyone is very excited to find out a little bit more. There might be some kind of announcement imminent. Betty dana hull, thank you so much. A big story and move for tesla in china. Stilltory still being evolving. In the meantime, another evolving story in china is of course the decision time for chinas ashares and whether they will be included in the msci emerging markets index. This has been a longstanding saga for these chinese ashares. The fourth time around with that decision. Tom mackenzie has more on this. Iinas fourth attempt mean, certainly, it has been a long wait. What is going to be different this time around, tom . Both sides, really. We have Seen Movement from both the msci antenna to close this gap. Another to close this gap. They have reduced this by a large portion of the ashares. 169 from 448 last year. More than 3000 ashares. It is a 0. 5 weighting is what the ashares would get. From china side, they have done things like initiated the hong kong to shanghai stock connect, which is part of their attempt to convince the msci they are serious about this. They have reduced the amount of time stocks can be extended and the quota for black rock. They try again to win over the msci. There are sticking points that remain inl controls place. I is an issue, as is the need for authorization from both the shanghai and shenzhen stock exchanges when it comes to etf that includes these ashares. That could be a sticking point. Morgan stanley says if the decision does go through in less than 20 hours time, you could see a market uptick about half a percent to 1 . It will not be hugely significant at this stage because it would not be implemented until june 2018. If the decision goes against china, you could see a market follow of 1 . Morgan stanley says initially, you might see passive inflows of 1 billion to 1. 5 billion. This is the first step in a long process of including these into the msci, something Bloomberg Intelligence says would eventually or could eventually lead to about 400 billion worth of investment or foreign interests in chinas ashares. A move forcould be now in the short term. How does this all play into chinas desire for a Greater International Role for the yen . Into therly, it ties focus that they want on trying to liberalize their Capital Markets and internationalize the renminbi. They want this to happen. They want this seal of approval that it would give them. They are not prepared to give everything up, and that is what we have seen in this authorization around the shenzhen and Shanghai Stock Exchange when it comes to the etfs and a share inclusion. They have included uandenominated ashares. This would help to move it forward in the yuan nationalization. They want to increase access and use of the yuan, so it is part of that play. They have a working group liaising with the msci to move things forward. With so many things in china, they are reluctant to give up all control on this. Clearly, if they get this approval from the msci, it will arese them, but there certain lines they do not want to cross at this stage. Yvonne it comes down to whether the msci has it knowledge that acknowledged that. Thank you. Still ahead, facing the mobile challenge. Facebooks coo Sheryl Sandberg on the social media giants push. Betty staying with tech, u. S. Tech stocks have rallied. We will talk about this momentum just ahead and what that means for the economy. Independent Market Strategist jim polson joining us. This is bloomberg. Betty this is daybreak asia. I am betty liu in hong kong. Yvonne and i am yvonne man. It is Technology Week and we are diving deep into tech today. Let us look at how the sector has performed since the start of the year and relative to other industries. Ramy inocencio at the terminal right now. To show you exactly how Important Information technology or Technology Stocks have been to the performance of the s p ever since year to date. On there all the sectors s p, starting with Information Technology. Ramy it is at the top here average rate, it is like this. I want to show you that it has actually made up the bulk of the performance for the s p 500. To 39 tually translates of the growth of the portfolio return of the s p 500, year to date. You can see how Important Technology is. Moving down to the secondplace financials is never to bring. 0. 77 on the means it has to that port. 08 for your return. Let us switch to another btv 9101. Erminal, g energy is the orange line. That is any negatives because of what has been happening with oil stocks. The yellow line is the s p financials. We have this trump bump after the inauguration for these first two lines. The Technology Sector is pretty much flat, only up by 1. 5 here. Things changed at the start of the year. You see this break out of the white line and the yellow line was basically flat, up by 5 . Switch in terms of Investor Sentiment as well as investor action. Betty, you were talking about how Information Technology was up. You just see this pop right here. The white line up by 1. 4 . Last week, we were talking about this growth to value rotation. We are now seeing this pop. Generally speaking, you can see this white line is pretty much going gangbusters over the past several months since the inauguration. Take is on the up and up. Guys. Tech is on the up and up. Yvonne thank you for that matter look at how the tech shares have performed by segment. Betty i want to bring in someone who wants to talk a little bit more about this tech what the declines have meant. I want to bring jim, you have an interesting take where you say do not worry about these tech shares and when they fall. That is a possible positive sign for the economy . Jim it sounds kind of weird. I admit that, betty. What i found is that there is a very close relationship with the relative performance of financial stocks relative to Technology Stocks to the economic momentum index of the United States, to the positive surprise index of the u. S. And when financial stocks outperform tech, it is often a precursor a couple months down the road to reexhilaration of economic momentum in the economy, so a lot of people in the last few weeks have looked at the pullback in tech stocks as a harbinger, the beginning of the bear market with the leadership of this market ending. I think what has been happening more likely is that while tech has fullback, financial stocks have taken off and their combination suggests the market a starting to sniff out reinstallation in the economy after a period slowdown in the last few months. A good example is prior to the auction, last summer, up until prior to the election, last summer, tech stocks were doing very well when people were fearing the economy was slowing down in financial stocks were not doing well. Once trump got elected and optimism took off, financial stocks soared and tech stocks pulled back through the end of last year, telling you that the economy with accelerating. Earlier this year, people wonder why the financial stocks were doing so poorly when the data was still bit. What the takeoff in tech earlier this year told you and financial stocks struggling was that the economy was want to slow down again. This being a bull market and her, it is suggesting a shift in relation able market ender, this is continuing to keep the market higher. Anchor are we reading too much into that . You have to think about the atmosphere we are in, right . The fed is on an aggressive rate hike path. At least, that is what janet yellen seems to suggest with rate hikes and pulling back on the Balance Sheet. That is going to be positive for the financials. Jim right. I mean, i think one of the things that will be helpful for financials is if rates to go up, and that is one of the reasons stocks have been doing better since the fed meeting. My view on the fed is that the doneas so overwhelmingly easy policy for so long that i think they are going to have to tighten for some time before it is very noticeable in you Financial Markets or the economy. To give you an example, the fed has lifted rates now three times or maybe four times, and you still have a negative real federal funds rate below the rate of inflation even though they have tightened three or four times. The amount of the m2 money supply is about 70 of gdp. That is 10 Percentage Points higher than almost any other time in postwar history. So they could restrict liquidity and raise rates for some time before it is even noticeable by the market or the economy. I think that is what the market is telling us. It is continuing to climb even though the fed started to i would say start to normalize. Very abnormal policy. Anchor if we are going to see any meaningful rotation out of growth to value, how much of your thesis is based on us seeing trumps agenda go through . With have about capture forms and infrastructure, both of which tax reforms in infrastructure, both of which seem to be in jeopardy. Jim i have never really thought that the market rally has been based that much on trump expectation. I think that the rally was based on a synchronized balance across the globe, and economic momentum. Most of the momentum is still in force around the globe. They continue to do better even though we slowed down here. I think that is the true undertow of this. If you put that together with continued Growth Without inflation or rate consequence, that is a pretty nirvana situation for stocks, that i think is the real driving force. What i would say about trump is that to the extent there was any expectation, i think there is very little left on wall street. I do not think anyone expects there to be major legislation the rest of this year what with rating, popularity special prosecutors, and investigations. I dont think anyone expect anything to be done. What i would suggest is that trump could turn out to be a positive force if surprisingly they actually do get something accomplished. Yes . Betty i want to get back to the Technology Stocks and bring up this bart chart we have that showed bar chart that shows the positive signal. Wall street analysts have been , in fact,g, massively outpacing out grades in tech shares over the first and second quarter. You can see that represented by lightow outpaced by that yellow bar, how many downgrades we are seeing. They are downgrading, which is not a great sign. They are seeing earnings deterioration. That is not a great sign for the economy. Jim i think tech stocks may well continue to perform for a periods time. I do not think they will collapse. I would be nibbling at them may be another month out if they continue to underperform again. Here is what i noticed. The market is at a new high. The leading sector, which the previous person just pointed out , has accounted for much of the performance this year, and it has pulled back in the market has gone on to new highs. Even without that leading sector, we are refreshing other sectors to take leadership. What if we bring energy back before the year is out . I think it is a Healthy Development that is more a rebalancing of this market b ull, which gives it more sense that it could be sustainable, rather than waiting for the sector to lose its appeal. It is very encouraging that the leading sector has pulled back and yet the market has gone on to new highs. Yvonne for all the doomsayers, which one of those arguments still sticks . Jim i think they all do. I think those are good points. They are all true. Tech stocks have run ahead of themselves, and i think that is kind of my point. I think we are starting to refresh and revalue that sector, which i think is a Healthy Development, bringing the prices of those stocks back closer in line to the more Sustainable Growth rate of these companies. Here is what is interesting. While we are doing it, i think we may the restarting the sectors to take the baton if you will to keep the bull market running, and maybe later this year in the fall, later fall, there will be another great entry point for tech stocks, which so have a good longterm story, but they are going to be at a much better price point relative to the rest of the market. Yvonne i want to bring up a chart and talk about correlations because we see the s p and nasdaq i guess you can say the correlation has weakened of late. The nasdaq has had two consecutive weeks of drops. The s p showed one weekly decline. What do you make of these correlations at the moment and can they continue to weaken . Jim i believe so. That is kind of what is another reflection of shifting leadership going on here in the last month or so away from high primarily text, but not only tech. Some health care as will. Moving maybe towards cyclicals. Look how the industrial sector has done in the last month or so. It has had tremendous outperformance. Materials have lifted. You are releasing more cyclical leadership come into this market place at the same time the high unit growth is pulling back, so i think that correlation between the s p and the nasdaq is likely to continue to diminish until unit growth reaches a better price point. Anchor jim, we believe it there. Chief investment strategist, join anchor 7 30 a. M. , tuesday. No let up in sight. Betty unfortunate. Minutes away from asias first major market open. Hopefully, it is better in new york. It is monday in new york and markets yvonne no. [laughter] yvonne we are wrong. Betty it did look brighter. The s p hitting that record almost 1 . I am betty liu in hong kong. Yvonne i am yvonne man. Youre watching daybreak asia, coming to you from our asian headquarters in the city. First word news with nina melendez. Nina tesla is said to be close to an agreement to make cars in china, which would allow it to avoid import taxes and price its vehicles more competitively. To a production plan in the Development Zone and could be announced this week. Tesla would need a joint venture with at least one local partner at, and it is not immediately clear who that would be. The main suspect in the north London Mosque attack is being held on terrorism charges. He has been identified as the 47yearold father of four, darren osborne. Several others injured when a van drove into the vestry the attack happened after midnight at local muslims were breaking the ramadan fast. Skyscraping prices means an ever rising price gap. A fear a repeat of the system is far stronger now and the banks will be able to withstand any dramatic shock. Price. Annot suppress the i think it is fair to say that by applying those measures, we external demands, speculated demand, and investment demand. Nina chicago fed president Charles Evans says the u. S. Economy is doing quite well, and that is why he did not dissent from last weeks rate hike. He also said the idea of unwinding the Balance Sheet this year is one of the easier, more natural decisions to make. However, he had some criticisms of fed policy, saying the low inflation is a bad miss. Underrun 2 ,rally and often by substantial amounts. This is 84 years below target. This is a serious policy outcome this. Outcome miss. Nina i am nina melendez. This is bloomberg. Anchor nina, thank you so much. Todayxecutives gathered at the white house for a meeting of the American Technology council. Working groups, ceos attending, including the biggest names in silicon valley. Also of course, amazons jeff bezos. Jared kushner was running the summit and he says he hopes to unleash the creativity in the private sector. We began by analyzing and auditing our current infrastructure. It turns out federal agencies collectively operate 6100 data centers. The vast majority of which can be consolidated and migrated to the cloud, something a lot of you know a lot about. Anchor joining us now for the latest is bloombergs alex webb, who joins us from San Francisco is mine. You. Good to see it seems like this with a very friendly gathering among the tech ceos despite the false start after the election and a lot of the relationship was not to get up the start. What was on this agenda . Alex it was really to do with the way the text can help the function in government. When cherish christmas is unleashing test, it is accelerating the processes, improving the processes which run arms of the administration. Kushner is talking about unleashing tech, it is accelerating processes, improving the processes which run arms of the administration. It affects the way they run their companies. They are able to get the ear of those people. Yvonne i just want to play for you a part of that meeting. Tim cook speaking to the president here. Tim cook the u. S. Should have the most modern government in the world, and today, it does not. And it is great to see the effort that jarrett is putting d isn working on jare putting in on working on things. Betty what are some of the biggest tensions between the tech ceos and the Trump Administration . Alex it clearly differs company by company. The ones for apple, clearly, offshore cash and repatriation of that cash. It seems they are on a similar page to the trump administered when it comes to Trump Administration. When it comes to cisco, it one b h1b visas, the Trump Administration has cracked down. They are coming up with policies that may reduce the ability for some to get those visas. The is a threats to some businesses. There is net neutrality, where Companies Like netflix will want fieldure a level playing for everyone. At t may have a slightly different opinion on that. There are a lot of interesting dynamics on that. Yvonne it is interesting to see kushner next to the president. He says he does not find these committees very productive. Talk to me about the rsvp list. There were those who were there and those who were not there. Alex there was a lot of the great and good. ,e saw microsoft and apple, ibm mastercard, and a german company. We did not see tesla. Elon musk said he would step back from the advisory committees after the president withdrew the u. S. From the paris climate accord. We did not see facebook. Facebook said they had calendar clashes, which meant they were unable to make it. There was a huge advertising conference in france at the moment. That might speak to that, although facebook did not say that was the cause of the clash. That was the reason they gave for not being there. Betty just before we go, describe exactly the purpose of this. We see a lot of these working groups are the president. We have seen a lot of these councils. You know, how is this going to be any different from the others that ceos are sitting on . Alex if you look at the Biggest Companies in the u. S. , the majority of them are Tech Companies. They are very important to the u. S. Economy. The Trump Administration has been very outspoken about a lot of the Traditional Industries that coal mining, for example. It is a way of demonstrating to the public that they still are backing these big companies, although, you know, these discussions are very much focused on using tech to improve government. The way these meetings continue in the months and years to come will be interesting to see. The extent to which trump can ensure these Companies Continue to grow at the stratospheric rates we have seen over the past five to 10 years. Yvonne it is something the previous administrations have done tried to do, but have been with a very tough task at hand. We also heard some fed speak in the last 24 hours. William dudley has bullish comments on the u. S. Economy. It spurred gains in the dollar and send sent treasury yields higher. Let us bring in reporter garfield reynolds. Good to see you. How is this likely to play through in asia today . Garfield asia is looking rather sunny this morning. I think both because u. S. Equity markets rebounded, led by tech. Maybe they wanted to put on a good face for donald trump. But more importantly, the dudley comments sent the u. S. Dollar higher. A big concern for a lot of asian economies because we do a lot of exporting is what is going on with the currencies and when the yen weakens, when the aussie weakens, when the korean won takes a break from its recent gains, that is all seen as being positive for the exporters down here. Those currency gains for the u. S. Dollar, that is good news for asia, especially with the that talk of u. S. The backdrop of u. S. Stocks rising as well. Everyone is watching will msci finally bite the bullet and add china to its indexes . If it does, and it seems like the feeling that it probably will or outline and timetable for it, then that will add more to the Risk Appetite that is already building in asian markets. All of the major futures are up. The nikkei up 0. 5 . A future for it. Betty if you like we needed countdown clock to that decision. Speaking about Risk Appetite, there does not seem to be a lot of Risk Appetite for australia banks. Moodys adding onto that missouri with that downgrade, isery with that downgrade, garfield. Receipts rose last night. They did not rise as much as some of the other australian equities that trade on a similar basis. Bank shares have been lagging behind general australian markets for some time. However, have a chart in the bloomberg looking at what even debt investors, who are the most directly concerned, might think. We have seen Australian Bank seniors this is the average for the big four banks in australia, also called the four pillar banks. They are not about to merge with each other and have an implicit government guarantee behind them. They are the essence of too big to fail, as it were. Because of that and their big role in the australian economy, and the fact they keep on making lots and month of profit, theyre are still seen as being safer than the broader index. That gap did narrow earlier this month. The more around the time s p first made its downgrade. Still, you might even start to think that they are looking a little bit cheap, because with what is going on with the shares and their strong role in the Australian Business space, the banks might be starting to see how far they can go. Yvonne we will watch for the big four here today. Garfield reynolds joining us from sydney. Coming up, facebooks pitch to marketer ongoing global. This is next. This is bloomberg. Anchor a sunny day in tokyo. We are seeing the case futures seeing nikkei futures point positively. 5 . Es up this is daybreak asia, live from hong kong. Betty i am betty liu. A quick check of headlines. The toshiba chip drama has turned another page with reports potential saying a bidder has dropped out. With a declined to join decision on toshibas preferred buyer expected this week. Incj have reportedly offered 19 billion for the unit. Yvonne time warner is said to be ready to invest 100 million in producing shows an advertising on snapchat over the next two years in a bid to reach audiences. They will make a range of shows including dramas, comedies, and documentaries. Will alsor Properties Invest in advertising on snapchat. Betty a group said to be considering an ipo for jaguar land rover, bought for 2. 5 billion. Sources say the company has held internal discussions and is weighing the merits of london and new york. Plans for a has any listing, though it declined to elaborate further. Singapore listed commodity Trader Noble Group jumped the most since 1999 after it clinched a deal with lenders to extend a 2 billion credit facility. Noble has been struggling with losses, a collapse in its securities, Credit Ratings, and growing doubts it can turn things around. Undisclosed was its highest in four weeks. Even so, stocks have lost more than 70 this year. Betty Global Advertising a dead executivesvertising are discussing in france. Sheryl sandberg is one of the most eagerly awaited guests. She said the company sees mobile as our biggest message is that the small screen is big. People have moved tmobile and businesses are catching up. Mobile, and businesses are catching up. These numbers are duplicate it all over the world. Onple are spending 5. 3 hours mobile, digital. It is an exciting time to be a marketer because people are carrying around in their pockets this device that lets you reach them all of the time. And brand, products, services, they have always been part of our daily life from the toothbrush we used to the cars we drive. ,ow, marketers can reach us hopefully, with messages we want to hear as part of our daily experience. That is pretty amazing. And the explosion of creativity is very much about the creative community. How do we create messages that really resonate with people and that want them to be part of their daily lives . This is almost playing into a discussion Mark Zuckerberg started this year of community online. Offline and how are brand going to be able to play into that . Communities are so important and we are focused on facebook on how we build communities that provide support for people offline and online. Brands are a huge part of that. Airbnb is doing a great job. They have this great offline experience where people can rent houses from hosts. They have created a lot of facebook groups. Even when you not on that trip or vacation, you can be connected to the people who are part of it. What about all the various products . Airbnb isbout how making a good run of it at the moment using facebook groups. What about messenger . What about whatsapp . How are these products being adopted in the growth you are seeing . People are using all of these different platforms in facebook and instagram. We have the two largest mobile ad platforms in the world. We are seeing people really use that to build their businesses. There is a young woman in brazil who started a company, and their idea was to sell fashion accessories. Using facebook and instagram, she did all of her advertising herself on her phone, and she was able to target those and people interested in fashion accessories, and a 79 of the business she had came from instagram. That is the small and local example. We see the largest ad agencies and clients in the world figuring out how to reach people that works. Reatives we are starting to learn a little bit more about how businesses can interact on messenger as well. What about video . This is what facebook has driven forward. You experimented with new ways that advert can come within videos. How is that being adopted . How much are you starting to see that added to your bottom line . It is a great way to tell a compelling story. , we have tommunity create the video for the platform, so the first tv ads were people reading their radio ads behind mikes. Kind mic. Was of old, it evolved, it was not someone sitting behind a mic. A lot of video ads were 32nd tv spots just moved over to the social platform. Those can work well. Or . S it an either i am looking at data that says what is spent on tv. How much of that will go purely to the Digital Space now . I do not think it is either or. They should reach people in a Digital Space and everywhere they go, but how they reach people on this different platforms needs to evolve, and facebook and instagram, we think uniquer a really value proposition. You can have the creativity of a video, the creativity of sound and light and pictures, but you can also do very specific targeting. You can target your current and news differently customers. People in the markets for a car, people who look like they are in the market for a car. You can make sure the right message gets to the right person. Yvonne yvonne and that was facebooks coo Sheryl Sandberg speaking exclusively to caroline hyde. You can get a rampup of the storage you need to know to get your day going in todays edition of daybreak. On your terminal and smartphone in the bloomberg anywhere app. You can customize your settings and only get the news and industries on industries and assets you care about. Dayb. This is bloomberg. This is daybreak asia, live from hong kong. I am betty liu. Yvonne and i am yvonne man. Boeing received more than three dozen pledges to by its 737. Orexpects 240 orders expressions of interest for the plane from at least 10 different airlines, worth roughly 30 billion. Boeing is confidence it will which has racked up a considerable order lead. We actually think the timing is just right. , it islook at the market at the heart of the market. We have 4000 737s in backlog. Betty airbus says the boeing competes with its own. The airbus has built a wide sales lead in the three years since its construction, and it could fly further and more cheaply for passengers. Airbus announced orders worth more than 12 billion. The ceo says he does not see the boeing as a threat. I do not think so. We have 80 marketshare right now. The 737i think is competing with the 737 with a different 737s. Anchor Qatar Airways may seek Legal Recourse. The carrier says it is assessing the longer flight times it faces because it is barred from saudi , your unique, egyptian uae, and from saudi, egyptian airspace. We have a lot of new destinations we are launching an we will expedite those launchers and Qatar Airways will continue its growth. We do not get intimidated. We will find new markets. And a report into last years fatal crash of a self driving tesla model. They fail to say what caused it. The car had hit a truck in florida, killing me driver killing the driver. It was in a zone limited to 65 Miles Per Hour. Regulators found no defect in the autopilot system and said the owner had ignored warnings to maintain control even in Driver Assist mode. Sounds like there is more to that story. 20 more still to come with a asias first major market open. Yvonne sophie kamaruddin. Sophie so much for that tech we have been talking about. I. T. Shares led the rebound on wall street. Let me take a look at how is a is set at the open when it comes to the kospi, the nikkei, and the asx 200 over in sydney. We are looking to follow suit. The dollaryen is pushing higher on a relatively bullish take on these economies. Watch out on how that can play out integer. Switching the boards here, we have home price data for the first due. Moodys downgraded the big four banks. We did see them shrug off a debt rating cut. We will be watching aussies this morning. Otherwise, we are going to be taking a look at other shares in the region, primarily asian chipmakers in south korea, following the rise we saw in u. S. Peers like micro and amd, which added more than 4 overnight. Korean Semiconductor Players could find opportunity when it comes to the toshiba views. For toshibase woes could mean opportunities for play other players. From now, plenty to come ahead. This is bloomberg. Yvonne asiapacific markets look to extend the global rally after tech stocks push prices to new highs. Munis cuts australias thatanks warren morning soaring house prices leave them likely for shock. Betty sweeping changes in the governments use of technology. Yvonne this is the second hour of daybreak asia. Im in hong kong. It is just past 8 00 a. M. Betty i am [laughter] i am in hong kong. It is it 00 p. M. In new york. We are looking at a lot of events today in asia. What we are counting down to is whether or not china will be included in the msci. Argue both sides of whether this will be an in or out. It is warming up and maybe they are perhaps ready to give the green line to this. A lot can happen in the next few hours. But check in with sophie. Happen in the can next 24 hours when it comes to the Chinese Market being that the msci is highly anticipated. Technology shares pushing u. S. Markets higher. Chief dudleysed hawkish news on the economy, it said sent treasuries lower. The nikkei 225 up. 8 . At the dollar strength. The yuan falling for a second straight day. The kiwi is stripping lower along with the aussie dollar. We are waiting on the rba meeting minutes. We have a policy meeting later this week. Aluminum continuing to climb over 1 . Chinas region is checking on illegal smelters. Iron ore is rising in singapore. After swell and demand is seen taking. Oil is trading near the lowest with since early june crude below 45. We do have gold prices will take. Futures are trading at a onemonth low. We are seeing risk on a rally. Hedge funds have been pulling 4 since hitting a sevenmonth high on june 6 after the fed hiked rates. The dollaryen is trading at its highest since june 2. Underpinned by the increase in treasury yields. They are expecting office for dollaryen. Technical resistance could be seeing in the 100 Day Moving Average. Looking ahead, traders will be waiting on governor kurodas comments on wednesday wednesday along with the line of speakers that they have. Betty a lot going on here. Lets get to the first word news with Ramy Inocencio in your. Say top brexit negotiators talks between the u. K. And eu have started positively. In brussels, the brexit secretary said there is more than unites the two side then divides them. They hoped to tackle the uncertainties posed by brexit and identify a timetable for one to leave. Eu and the u. K. , a fair deal is possible. It is far better than no deal. That is what i said to david today. Withis why we will work the u. K. And never against. To david, the eu confirmed trade talks will not start before october at the earliest. The brexit deal will follow the timeline set up by brussels. The u. K. Had when a trade negotiations to run in parallel with divorce proceedings. Toshiba chip problem has turned another page. Tokyo says and potential investor has dropped out. Kkr has declined to join. A company has offered 19 billion for the unit. A u. S. Chipmaker is said to have been down slightly more than that. Tesla is said to be close to an agreement to make cars in china ch would allow it to point avoid import taxes and price vehicles more competitively. It would lead to a production plant in a Development Zone. It could be announced this week. They would need a joint venture with a local partner. It is not clear who that will be. President trump promised a sweeping transformation of u. S. Government use of technology. Top industryomed executives to the white house. Even leaders that have openly clashed with mr. Trump. They will ensure that the sector finds the people it needs. All the technology that we have today started in the government and research institutions. As well as the enlightens immigration policy. I am a beneficiary of that. I hope that we continue to be able to make sure that the american competitiveness is what helps us that policy forward. Ramy the imf says japans proving economy gives the chance for bold structural reforms. They can boost wages and increase private investment. Japan is enjoying his longest economic expansion in a decade. It is weakening in 2018 with inflation well below the 2 target of the central bank. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Betty. Betty thank you so much. There was a big story that happened overnight. Moodys downgrading the Credit Ratings of australias big four banks from aa to aa three. It moved because of risk associated with the housing sector. The risks have been rising. We have been saying that for some time. Wage growth at the same time and how they have been taking on debt has led to record highs in household leverage. How thedont know mortgages will perform during a real downturn. Yvonne lets get the latest from our reporter joining us live from sydney. Good to see you. Risk of the housing sector, we have heard this telegraph before by the rba. Was there anything new about this downgrade . New is thatat is the rating agencies are expressing their concern. They deal the risks are something they need to talk about. The new thing is, it is not that the rating agencies are concerned about it per se, but the rising house prices accompanied by flat rage growth. Whether households have free cash around to deal with any bumps in the road. Mean, is thisis sort of one more sign that there crash or and and to this goldilocks economy that we see in australia. That we will see a correction in housing. That we have to pay the hyper of debt. Reporter lots of people have lost lots of money over the years by predicting that the house growth boom would and. What is different this time is there is a feeling things cannot go on the way that they are. To predictve person a crasher major correction. You are seeing people talking about what would happen if it dropped. Where pricesr year have gone up by over 20 . 10 correction would only take us back to where we were six month ago. It is a big number. But in the context of what we have been seeing, it would not be a complete disaster. Yvonne lets look at the initial reaction right now. We are slightly down. 1 . Completeeing the most losses down. 3 . Is the market expected to shrug this off . We are expecting an announcement from the regulatory authority. What should we expect . Reporter a lot of moving parts with the banks right now. The outlook is tougher than it has been. They said in an amazing profit generating machines over the past 56 years. Now it is getting tougher. They might have to raise more capital. The economy is not firing on all cylinders. Operatere difficult to in this environment for banks. You see it in their share prices. Their monopoly the performers they were in previous years. Usnne thank you for joining live from sydney. Still ahead, boeing versus airbus in paris. Orders worth it worth billions of dollars. Betty up next, with a fourth time be the charm for china. We will head there for the decision. This is bloomberg. Betty this is daybreak asia. Yvonne msci will announce early on wednesday whether chinas letter asia shares will be included in the emerging market index. Our next guest says the roadmap for inclusion should be acceptable to global investors. This is the chief economist for asia x japan. We have heard from china, whether it is regulations or access, they have been addressed on margin. Msci is showing signals they are ready to say yes on this. How do you feel this will play out for china . This time it might be they are because trying to solve the problem of inflow and outflow. Before it was foragers 48 stocks. Now they narrowed it to 159 stocks. Also the waiting has been done. Msci chinaas on the index, and the rating is 1. 7 . That is why it is much more predictable and more transparent. That is why i thought maybe this time it will be different. Betty you and several other houses as well think there is more than a 50 chance this will happen. Richard, i want to show up a chart that shows this mindset. It shows letter a shares and how the momentum that pick up after february when this started to get more into mind of Foreign Investors. Flowing in anticipation of that. Before, howd this big of an impact will this have on index or flows . Richard we saw a bullish move from traders. Given how much they have scaled down this proposal, it is going to be a big bang moment for china or more of a fizzle. The rating is so marginal, if you think chinese shares offshore are already at 28 , the influence on these indexes will be very small. Do you think this is significant enough of a moment now . Chinese a shares have finally been included in the msci index. If we see the inflow, it is small. Only 7 million. We have to move. If we move, the chinese regulations will change. Whenever they change, we have good regulations. A limit on capital repatriation. Also betty what is not happening . It was mainly because of the money, the inflow and outflow. Now we have the connect, that is why the money can bring the flow. That is the key. About newthing is product before it is preapproved. That is why the decisions will come with these obstacles. Look at what just happened in terms of the economic and political perspective. The 2015 summer routes, the mishandling of china, how they reacted to that, as well as the latest developments. Can Foreign Investors overlook them of these concerns . ive been on the show for the past two years talking about this. People have been very bullish going into this decision. This time around it will be different. Goldman sachs last year said it was a 70 chance. Each time there has been his appointment. Each time there has been a series of upward events that have made it challenging for investors to accept this decision to be done. Ofre has been a sense greater call this in the markets in china. If you look compared to the rest of the world, it has done very poorly. It is inversely correlated if you look at how badly it has done with other markets that rally. Theyyou talk about anbang, still have been imposing capital controls with concerns over the yuan. There is still a sense in have they done enough. I know the latest proposal is designed to try to limit the impact of that. It is not a short deal just yet. Betty so what happens . What if they dont get in . We continue to do the reforms. It is good. China is open betty this time . It is true, we should keep going. If msci does not accept china, then they will say open up and reform will continue. That is very decisive. Yvonne they also mention that the pace is not going to change regardless of the outcome. That this is not going to affect their economic agenda or the reform agenda. China has a lot of big reforms. Is always thinking about reform. On top of that, we have three more reforms. Number one, reform of the growth model. Is, consumption that grows. It is too narrow. Consumption and investment. There are two dimensions. There is still debate on that. I dont think that is right. All the import is on structural reform of the whole economy. Make it into tax finance. That is why we have a gift tax, property tax. Number three, china has been talking about supplyside reform. We always thought the amount side reform is much more important. They have to have the amount, it generates the price. Inse reforms are much more the direction of the next stage of china over the next 30 years. Richard do you see if shares were included that this would act as a catalyst for the reform or do you think it would make little difference . They would especially be a catalyst for the reform and it would increase the pace of the reform in the stock market. It is already going on. Im very confident it would go much further. Betty lets look at my bloomberg again. I want to pull up another chart. Btv74. We talked about this shanghai death crawl, the 50 Day Moving Average falling below the 200 Day Moving Average. That is a sign there will be less momentum in this shanghai stocks, the shanghai composite index. Richard, are you reading anything into that at all . Richard it shows how poorly this market has been performing, particularly in the last couple of months where concerns over the leveraging have come to the forefront. We have seen an exit this other investors. It has been marked when you compare 20 other global stock markets. Whether the hong kong, or the ones in the u. S. Dealonder, why such a big when the index is up 25 this year and shares are up 1 this year. Shows there hasnt been any aggressive positioning germanic policy impact. That is very different from 2015 where people. What was front running ahead of this decision helped a huge rally that people aked andapsed pe collapsed after msci in june. Yvonne in terms of global portfolios, how much of them can be a big game changer . Even though the initial factor is 5 , it is really small. Markets cannotse be excluded because chinese economy. That is why whenever we are talking about a global economy, it is strong. Should not be in the league, it should be china. When china stabilizes, we had the global economy. That is what happened in the past two years. It should be this year. Why chinese Economic Situation gives is a global cycle. Is the Chinese Market trying to stabilize. Markets our global because you can invest in commodities and others. Betty thank you so much for joining us. She economists asia x japan. And richard who covers the Chinese Markets for us here at bloomberg. Much more on the msci decision on wednesday because the chairman and ceo of msci will be joining us right here at 7 00 a. M. Hong kong and singapore time. That is directly after the decision. If youre watching in sydney, that is not 00 a. M. 7 00 p. M. In new york. Yvonne i remember your interview with him a couple weeks ago. Several issue still needed to be resolved. We can speak to them more freely about what led up to this decision. Betty he can give is a playbyplay to that decision. This is bloomberg. Yvonne a quick check of the headlines. Time warner is said to be ready to invest 100 million in producing shows in advertising on snapchat over the next two years in a bid to reach young audiences. The bid will see time warner make a range of shows including comedy, dramas, and documentaries. Turner, and warner bros. Will also invest in advertising on snapchat. Group jumping the most in 1999 after he clinched a deal with lenders. Withhave been struggling losses. Around. Turn things monday was nobles highest in years. Yvonne a self driving tesla has new details released about the crash last year. It hit a truck in florida killing the driver who is at the speed for 74 Miles Per Hour in a zone limited to signify. Regulators found no defect in the autopilot system and said the owner had ignored warnings to maintain control even in Driver Assist mode. Betty much more ahead. Strong foundations. We will hear from the Hong Kong Financial secretary on what the potentialithstand a property crash. Our exclusive interview. This is bloomberg. Yvonne singapore looking beautiful this morning. 87 humidity though. It will be a hot day. But we have been seeing rain throughout the week in hong kong so it beats that. Am yvonne man. Betty i would prefer that. I am betty liu. You are watching daybreak asia. Main suspect in the north London Mosque attack is being held on terror charges. He is a 47yearold father of four. He is thought to have acted alone. One person was killed and several others were injured when a van drove into pedestrians. That happened shortly after midnight as local muslims were breaking the ramadan fast. President trump condemned north koreas brutality after the american student release from prison died. Said no other outcome was possible. The student was jailed for 15 years for our labor after admitting to trying to his deal a up again to banner. Propagandao steal a banner. Sean spicer might be in line for a new job. He has been President Trumps spokesman since the beginning. May moveay officials into a senior strategic role and bring in a new press secretary. Administration also needs a new Communications Director after the last one quit. Facebook says it another tech duty tosaid have a Work Together to prevent the spread of online hate. Says operating officer that means eliminating all such content. Under pressure from advertisers, facebook has been working to clean up its network and give customers more tools to know where their messages are placed. Successes to make sure there is no inappropriate content of any kind hate, violence, terrorism on our platform. We take our responsibility more broadly than that. We want to contribute. Her the past several years, Tech Companies have started working sharing information freely when somebody identify somebody they think will put inappropriate content on a platform. Ramy to the u. S. Economy and the chicago fed president. They said it is doing quite well. He did not dissent from last weeks rate hike. The idea of on monday the Balance Sheet this series one of the easier and more natural decisions to make. The next hike could be delayed until december to allow more reflection of data where it the years of low inflation are a bad miss. Is generally under or around 2 . This is eight full let years below target. This is a serious policy outcome miss. Ramy global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne lets see how the asian markets are shaping up with sophie. Ralliesglobal stock coming along nicely. Look at the nikkei 225 up over 1 rising for a third day. Japanese shares are trading at the highest since august 2015. This is the dollaryen session high. Like the new york session, shares are waiting on what is going on in tokyo as well as see all. Health care is taking a drag on the cost when it comes to the equity benchmark. We do have Samsung Electronics extending the rally in the korea chip makers. We have the asx 200 snapping into the red here. Lets take a look at what is going on across the day as 51 index, it is down. 01 . Producers are following 1 here. Property stocks are also falling in sydney. Data is due out later this morning. In terms of points, look at this board, the big four banks are losing the most in sydney. Moodys downgraded the lenders with sick concerns of rising risk and downgrades in the house grade house market. Betty thank you so much. Property prices there isto skyrocket, a morning of the repeat of the post Asian Financial crisis. Exclusive interview with themberg, it is said that system is far stronger now and it could withstand any dramatic shock. No one can tell how deep it will be, what is the appropriate level of adjustment . It is not up to the government to dictate. Forink it is important people to recognize, it is risky. But on the other hand, i also take comfort in terms of the Financial System of hong kong. I think we are very strong. It even ifstand there is an adjustment in the property market. The situation is very different than it was in 1997. Reporter hong kong has implemented measures to help put a lid on prices like mortgages, why have they not work . Fundamentally over the past exceptionallye low interest rate, the equity in the market, the supply demand imbalance situation all and out. Suppress thenot price. I think it is fair to say by applying those measures, we do suppress external the man, speculative demand. Chinese developers are outbidding Hong Kong Developers for plots of land and record raises. That will surely mean higher property prices in the end . Over the past 15 years i have seen so many Different Developers fail in the hong kong property market. Of course the have their own Risk Assessment and cultivations, but at the end of the day what is important for the government is that we have to have a good assessment of the demand situation. So long as the government can sustain the land supply and housing supply, it will be balanced. Exclusiveat was our interview with the Hong Kong Financial secretary paul chan. Toshiba has a long list of worries. There was an attack on the board for board government poor government. Editoret to our managing joining us live from tokyo. A 25 page report. What was the initial reaction in your eyes to this . Paul it is a very critical report. The board has not done a good job of overseeing management. Toshiba has gone through many rocky periods over the last few years. It hadpany said overstated profits for seven years. Less than two years later, it has an enormous problem with his westinghouse business which have had to take a break down. Have to sell off a bunch of businesses, even a crown jewel of the company. So this report details all of the missteps over the past two years. It is very critical. As a result of this, we advise shareholders vote against all directors on the board at this point. They advise clearinghouse completely. Radicalhat is a suggestion. They detail all directors for various roles of a play, including sitting on the Audit Committee at the time when the accounting problems emerged. For the ceo of the company, they point out that he was one of the managers in the medical Systems Division as it had accounting problems. Yes he is new in the ceo role, but they say his history is troubling and raises questions about his ability to oversee the company as it tries to deal with the latest round of accounting problems. Yvonne the timing could not come at a worse time because this is the time when we are expected to hear from the sale of the chip business. To try to is fighting stop shares from being lifted from the tokyo stock exchange. What is the expected outcome . The problem is for investors. They are being punished for who is paying for these missteps and problems. The big rest for them is that toshiba shares can be delisted altogether from the tokyo stock exchange. That would be a dramatic step. The reason they are selling the memory businesses to plug the hole in their Balance Sheets to avoid the delisting going forward. Theres another advisory form which is advising reelecting this board so they continue with this transitioning get through the rough patch and try to adjust things going forward. There are different points of view about who should be overseeing the company during this difficult time. Betty thank you so much. We will continue to watch all of the developments coming out of toshiba. Up next, boeing receiving or than three dozen pledges to buy the 737 on the opening day of the airshow. We will hear from the ceo about some of the upcoming orders. This is bloomberg. Yvonne this is daybreak asia. Boeing received more than three dozen pledges to by its upcoming 737 max 10. The ceo says he is confident the plane will stem customer defections to the airbus. We are continuing to see Strong Energy in the marketplace. We have a 7. 5 trillion market over the next two years. Commercial airplanes remain steady. 5700 commercial planes in backlog, that is seven years of backlog. That gives strength to the marketplace and our operations. Reporter you said it will continue . Continuel see it because we have the 737 max nonflying. We expect to have some news about the max 10 later today. We are seeing incremental widebody opportunities. Reporter lets talk about the maxes for a moment. For the bell to be wrong on the arrival of the number 10, the newest. The question surrounding the 10 to a lotked all of your customers and they want to do 10 for a while. Why did it take so long to respond to one play that has been flying out of the door . Couldnt you have had this earlier . We think the timing is just right. We did 4000 737s in backlog. Because of that, we are ramping up from the two a month reduction rate now to 57 a month in 2019. The timing is just right. This current Production Profile wrapup, we are oversold. Max 10 available to get into the marketplace around 2020. We think that will add longterm values for our customers. Reporter i imagine the engineering challenge around that is not difficult. Will it end up cannibalizing some of the nines . We will have some conversions, some incremental orders as well. We have a family approach to how we design airplanes. Customers can operate between the 7, 8, 9 and 10. That adds value to their operations. Reporter ive heard it called 797 or seven m 7. Replacement767 aircraft. A lot of people are talking about. When we have more information on that . We will talk this week on market interest. Were talking to our customers. We talked to dozens of customers to engage their interest in this marketplace. We see the need for an airplane that is larger than the 757. Of mile a 5000 kind airplane. Potentially when ill solution. Were looking at different options for how we satisfied. Really important that we focus on knowing what our customers are looking for, evaluating the market, making the Business Case work. We see a potential market there for 4000 aircrafts. We have time to make the right decision. If we do this airplane, it will 20242025 entry into service. We had time to do it right. If we get this development program, it will be on the backside of 777x. Reporter lets talk politics. Qatar first of all. Weeks into this, Qatar Airways is having to make significant changes. There is potential for cancellations, deferrals, we will talk to one of their members later on. We are keeping a close eye on the situation. The relationship between the United States and qatar is very important. We have a number of customers in the middle east. Airwaysomers at qatar are extremely important to us. We have significant backlog there. We are seeing some stability there. In the long run, that relationship will be worked out. A good sign post was last week with the u. S. Government signing the deal for f15s with qatar. The gives you a sense that foundational relationship is strong. We have issues to work through, but we are hopeful that the country to country relationship will remain solid. We know we have an Important Role to play in that. We will continue to serve our customers. That was the boeing ceo speaking with one of our reporters at the paris auto show. Told numbers also it will seek Legal Recourse for the saudi let isolation of the country. Is barred from saudi, uae, egyptian, and bahraini airspace. It is said that it is still business as usual. He may appeal to International Tribunals at some point. We have a lot of new destinations that we are launching. We would expedite those launches. Qatar airways must continue its growth. We will find new markets. Yvonne airbus says the new boeing competes with its new plane. The airbus has a sales lead. Fit 10pany says it can more seats. Airbus announced orders worth more than 12 billion in paris. The ceo says he does not see the boeing as a threat. So. Dont think we have an 80 marketshare right now. Competing with the 7379. We have more coming up ahead on bloomberg. Blackstones vice chairman is joining us. That will be on bloomberg surveillance. That, catch our interview with Steve Mnuchin the u. S. Treasury secretary. That is at 5 00 p. M. In hong kong. Betty after that a chat with the South African finance minister. Stay tuned. That is quite a sunny smile. This is bloomberg. Yvonne this is daybreak asia. Moodys has downgraded the Credit Ratings of australias big banks from aa to two aa three. That is because of the risks that are lurking in the housing sector. We spoke to moodys Vice President earlier and that economists earlier. The risks have been rising. We have been saying that for some time. The low wage growth and households taking on more debt has led to record highs in household lending. We dont know how these mortgages will perform during a real downturn. Economys desk economist, youre probably seen this phenomenon of low wage growth over many other economies. Lower wage growth is something we are seeing globally. The advantage for australia is that we do seem to be getting some signs in the labor market. There is some decline in wage growth. It might pick up a little bit over the next period of time. As an economist, estrella has always been in australia has always pushed back on the idea that we are not doing ok. There is a risk that we have arrived at a point where the consumer has a free cash flow. I think it does make us much more vulnerable to Slower Growth and more volatile cycles. Get an increase in energy, the consumer does not have any free cash flow. Reporter how much are you putting on the Banking Sector from here . The Banking Sector with australian households 2. 5 years ahead of their mortgage payments, i dont see any problems. But i do see commercial banks are repricing houses in mortgages. We have seen on increase in debt to income. Iso see the household sector likely to be pinched over the next couple of years. That leads us to have a slower consumer perspective. Ask you aboutd getting back on the aussie banks. I want to pull up a chart on my bloomberg. And it shows 224, you where australia banks have been trading be savvy other banks in the world. Noticeable, towards the end of the first quarter. People have been bailing out at these Australian Banks. It raises a point which is, the m to see trouble months ahead. What took moodys so long . We call these out back in august of last year. We put it on a negative outlook last year because of these concerns. I would not say that investors have seen it just in the last quarter. It probably goes back 1. 5 years. We think the debt level in households has meant that the level relative potential certainty around their behavior and how hassles react if there was a downturn is now just uncertain. So we have taken action on the banks. Yvonne that was moodys Vice President and the chief economist speaking to us on daybreak astray. That is all for us on daybreak asia. Here is what is coming up. About you will be talking the msci decision. He is not looking too optimistic about this. Rishad he has a lot to say about everything, from brexit to. He Traffic Signals he seems to have knowledge about everything. Is going on with the u. S. Economic expansion. He is concerned about that. Also what is going on with msci. We are talking all things brexit as well. It was yesterday that we had the first meeting between the u. K. An union and the betty it started off friendly or cordial. I still fixated on your other guest. There could be some troubles in the u. S. . Rishad there could be trouble in the u. S. Looking also what is going on with a Hong Kong Listed company. Share prices lagged a bit, but suddenly had a massive ramp up. Also information about a company on the mongolian chinese border. Also about his ambitions. What we have been seeing is that he has been getting involved with various companies in the u. K. And has been vying steel assets. They are also going to buy area him, a steel producer in australia which has been suspended since april of last year. Have a lot happening. Thank you. We are looking forward to market coverage with Bloomberg Markets next. This is bloomberg. Its 9 a. M. In hong kong. 9 p. M. In new york. Im haidi lun. Rishaad i Rishaad Salamat coming to you from bloombergs asia headquarters in hong kong. This is Bloomberg Markets asia. Haidi asia pacific market aim to extend the global rally after tech stocks push wall street to new highs. Rishaad brexit negotiations finally underway. That u. K. Is