saw climbed last week. seventh straight day of gains overall. we have reached the highest levels since august, where we are seeing the greenback this morning. no surprise we have seen the chinese roman be, onshore -- chinese roman be come back -- remenbi come back. we got a fix, the weakest we saw since july. seems like they are tracking the offshore underperformance we saw last week as well. rupee down one third of 1%. seems like china markets are muted. take a look at this board when it comes to what we are seeing in shanghai as well as in hong kong and shenzhen. up about 1/10 of 1%. asia pretty much flat. we're seeing a pop of 1% this morning after the lunar new year holiday. age shares is still around 10,9 34 mark. watching whether it can break above 11,000, which has been a key level overall. take a look at some things we are watching. commodities very much in focus. iron ore playing catch-up to what we saw in singapore last week given the supply constraints with the disaster. futures up a percent. -- 8%. really flying in australia. givennly a lot of action, this dovish tilt from the federal reserve. new zealand 10 year yield, we are hitting record lows for yields at 2.12 for new zealand. very interesting, joining on this global bond rally. the big question is if it still has legs? david: we will see where it goes. frank is here, head of asian equity strategy. nice to see you. much better conditions, investment conditions right now compared to last year. what is top of mind for you it comes to chinese markets? frank: when it comes to chinese markets, what i am looking is if you things. that we known something is remaining. what is increasingly interesting is on the earnings side, we know we will have a downgrade in the earnings. what is important for the investor is the existence of these downgrades. how much he will have. will it be something comparable to 2014, 2015? 2009?t be like 2008, we do not think so. --think target stimulus this is why it is a relatively encouraging start to the year, why it might continue. seeing, ise what we that bringing a flock in -- flaw in, and is that being created by small to medium-size enterprises? cut and youave a also have some tax policy, which has been aimed and increasingly to the corporate sector. this is something which is supporting one part of the market. i would say nonspecifically a smaller part of the market, but actually the private sector. one of the main things that we had last year -- [indiscernible] this is something that is very likely start to reversed. david: that is important to the two important metrics in china. aggregate financing is one. two forlooking at these confirmation on a trend. what trend are we looking at? frank: if you look first at the ppi, we are seeing some declines of ppi. it's possible we will have 0% growth this time. this is one indicator i like to look at. it also gives indication on the industry of profits. declineare seeing some but not seeing any collapse. when i look at the equity market, which is where i spend my time, it is difficult to be too bearing. rishaad: where do we go from here? if we see credit continue to worsen, this is a real problem. that of course hits earnings in a nasty way. have: we know that we slowdown in the economy. the elementwatching which would make us become even more bullish on a structural basis would be when we see credit growth stabilizing, and when we see the money supply rising again. one of the data factors we're going to watch this week is monetary supply, which is important to assess growth. aroundtill going to be 1.6% for january. this is when we see more acceleration that we can become sitll -- still more constructive. david: the trade deadline is less than 20 days away. that is arguably more of a factor when it comes to sentiment. should we start working around the consumption -- assumption the deadline would pushed back? are you optimistic? frank: as everyone, we are watching. it is tough to get a true view on this. is wew -- what we think will have some kind of status quo. that means after no increase of tariffs, and no decrease in tariffs. the clock is ticking. but conditions are ongoing. we can expect some kind of progress. perhaps the can moves down somewhat. kicking the can down the road. frank: that is also a possibility. that is going to be a possibility that nothing will happen after the first of march. david: we had a graphic earlier which showed valuations. different metrics. we will get them up in a moment. frank: what we see -- [indiscernible] this is what we are seeing today. deliver where we were around the beginning of 2015. that's an interesting level. expecting a real collapse in the earnings, which actually has not happened in china, unlike other asian markets. taiwan, you have some very significant jump in earnings. it has not happened yet. i think it is going to happen, but not in the extent of anything we would like from 2015 or 2008. where if we want to find some constructive ways after billing on the china equities, we can find it. rishaad: please stay with us. with us. stays naturally it is going to be geopolitics. a certain leader in london, embattled, fighting not just brussels but her own party. let's get the latest on britain's torturous attempts to leave the european union. >> we start with theresa may, who will ask parliament this week to give her more time to renegotiate brexit, promising lawmakers a for the chance to take control. to notl last the commons remove -- if she does not come up with a deal parliament will have another vote. observers are increasingly concerned. >> whether it ends well, whether there is a smooth exit, as predicated by some, or if they sent a result of a brutal exit on march 29 without the extension of notice, it will not be as good as it is now. a near one in three chance of recession in the u.k. over the next year. 10 economists finds the probability of two consecutive quarters of negative growth stanza 30%, up from 25% a month ago and 20% throughout the whole of last year. the survey was conducted before the bank of england's forecast of the slowest economic growth in a decade. in the u.s., talks to avoid a new government shutdown stumbled over the weekend with republicans and democrats said to have stopped talking. without new funding, nine federal departments and related agencies with chuck down all over again -- would shut down all over again just weeks after a record shutdown in washington. retail and catering sales in china over the lunar new year holiday rose more than 8% from a year ago to $150 billion. cctv says residue -- revenue from tourism was also up 8% to more than $76 billion. the trade dispute with the u.s. has put china's economy under strain, but consumer confidence remains robust. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. david: still ahead here on the program we are talking china's economy, trade war, possible shutdown in washington. frank stays with us to have a look at the weekend. this is bloomberg. ♪ erg. ♪ david: welcome back. the resumption of trade talks in beijing is very much in focus. investors will also be looking at key data and other geopolitical events. latest numbers are due anytime between today and friday. rishaad: thursday british lawmakers will debate and possibly vote on a series of amendments to the brexit deal. let's get back to china again on friday. u.s. facing another shutdown. if donald trump does not get his wall. david: that stopgap measure of course expires next friday. think willat do you be the most important wall of worry? , tradeot only brexit talks shutdown, spat between paris and rome, it is all going on. let's not forget the crisis developing in venezuela. frank: yes. that is definitely when we see policy and politics becoming more important for markets. if you are looking at a risk understand whyo it has been better. because the perception havewe have on positics shifted from the worst to the bad. whether it's the fed policy, trade talks, brexit, or any other european concern that we can have now. and this is something that could last for maybe this first half of the year. reducenot yet ready to the risk in the portfolio. of course we have a lot of uncertainty, and brexit is certainly one of them. but compared to where we were a few weeks ago, maybe there was some progress. david: how long do you think the magic last? the tailwind because of a shift in policy stance. has that run its course? frank: no. possibility still a to go further. that is why we think when we year of two9 as the house. moreecond one will be challenging. we will refocus on the fundamentals on the gross slowdown. rishaad: these geopolitical headwinds have been prevalent for a while. when do we get over them? how many has been priced in? frank: which one are you talking about? david: -- rishaad: a la carte. frank: we had the shutdown and the possibility it will come again later this week. we have seen so far the economic impact has been qutie minimal -- quite minimal. so we can remain reasonably confident it might not be the top one. of course there remains the possibility of a no deal brexit. when we see the latest number .k., that would u be very unhelpful for risky asets -- assets. this is one element to pay a lot of attention. trade talks, we are just watching that happen. david: frank, thank you. head of asia equity strategy. you can catch up in case you missed that interview. tv is the function. it takes you to this. scroll forward, back, and become part of the conversation by sending us questions, comments, what have you. check it out for bloomberg prime. this is bloomberg. ♪ yvonne: now for a look at stories trending. the story of blackwater mercenary eric prince's map. howloomberg.com, a piece on china could revive confidence among foreign investors. and what being part of the 1% means around the world. check out those stories trending on bloomberg online or on the terminal. rishaad: we have political tensions rising in thailand in month before the first general elections since a coup five years ago. the party linked to the former promised her has abandoned plans for the king's sister to run for office after the monarch publicly opposed the idea. david: the election commission calls forr today amid the party to be shutdown. let's bring in our bloomberg editor joining us live from bangkok. we were speaking last friday, what a difference a weekend makes. margo: doesn't it? just a few hours after the announcement that the process would be the candidate for the party can the announcement from the palace that the king was very opposed to this idea, and he quashed it. the electionto commission to withdraw the candidacy. once submitted, the individual and the party cannot do it. the election commission is meeting today at 10:00 local time. we do not know if it will comment on this today, or whether it will come at the end of the week. but it's probably inconceivable that there would be anything other than a withdrawal of the candidate. rishaad: what is the potential if this political party gets disbanded? margo: we do not know that that will happen. it is one of many scenarios being speculated. there is a group that is calling for the party to be disbanded for having drawn the monarchy into the electoral process. again, that would be a decision of the election commission. it would rule whether this party had to be defended -- disbanded or not. in the event that happened, it could spark more unrest. we have had decades if not longer of public unrest related andarties linked with it supporters of the monarchy. scenario, itto the is very unclear what will happen , whether things will continue on towards an election for what happened. it would be purely speculative at this point. we have to wait and see. rishaad: margo, thank you so much. let's have a look at some business flash headlines. reports toshiba will cut its profits forecast. that, as it reports earnings tuesday. no trading in japan today. there is a public holiday. lowered fromll be $550 million to between $270 million. reports are blaming higher costs for dragging down earnings. toshiba is expected to maintain its aim of $3.5 billion by 2024. david: let's have a look at trading in australia. 2.5% up. net in committee estimates. up to 245 million aussie dollars. slightly over 7 million aussie. the company continues to see positive sales growth. during the christmas quarter and january, volatility increased, along with customers holding off purchases until key promotional periods ended. rishaad: ea said his latest release attracted 10 million users in 72 hours. apex legends is the company's latest free to play battle game. fortnite has had rival publishers catching to scratch up. david: lots more to come. we are talking currencies, commodities. wayne gordon will be joining us in a couple minutes. if you have any questions to him when it comes to iron ore, send them in. that is next. this is bloomberg. ♪ >> it is 10:29 a.m. in hong kong, 9:29 in new york. i'm su keenan with the first news headlines. we start with president xi jinping at economic aid, who will be a part of this week straight talk in beijing. the vice premier will join treasury secretary stephen robert lighthizer as the u.s. and china tried to seek a deal to avoid the expanded tariffs that are set to begin march 1. president trump us as the two sides are making progress. is also confirmed he is ready to impose heavier duties and necessary. now to the u.k., where trimester theresa may will ask parliament this week to give her more time to renegotiate brexit. she is promising lawmakers a further chance to take control. she will ask the comments to reaffirm its desire to remove the irish backstop from their agreement. if you does not come up with a new deal by february 27, parliament will have another vote. that has observers, including the imf increasingly concerned. >> [indiscernible] some, or as aby result of the brutal exit on march 29 without extension of notice, it is not going to be as good as it is now. su: italy's populist leaders are testing their electoral support eight months into government. and luigivini dimayo campaigned as people were testing their legitimacy. finally, it is happy 50th birthday to the jumbo jet. -- iconic playing that plain, now common, made its debut in february 1969, having been brought to life's from drawings in just two years. at the time, the plane was double in size of boeing's next aircraft with a cost -- a size of three stories of the ground. the divide the wishes of pan am and almost bankrupt and boeing. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is bloomberg. yvonne: thank you. let's do a check of your commodities this morning. oil still seems to be on the downward trend. we are down about 1.3% here in the asian session. we are retreating for four weeks. the oil bears are coming back in a big way. now that we have seen these retreats, short-sellers also boosting their bets against the price of crude. we will see out things play out given these global growth concerns. the dollar also making a resurgence as well. futures, we are higher here today. there have been some indicators from commodities in particular saying that chinese soybean imports may still fall, given the trade war situation and the spread of african swine fever. the big story today has been on iron ore. and 8% pop on your futures today, live it up today. .hey have been quite remarkable we have broken above the range that we have paid -- have seen, seeing around 92. 19 here. inhave broken above the high 2017. it brings us back to the highs we saw in the summer of 2014. this has been due to the supply constraints and the concerns after the value disaster. the question is, how much longer will this last? let's bring in our next guest, wayne gordon, commodity & asia pacific currency strategist at ubs ag wealth management. wayne, think you for joining us. with a chart like that, should we be concerned that the vale disaster could lead to a global supply shortage echo shortage -- shortage? wayne: we started the year with expectations of about a 20 million ton surplus. now we are looking at a 30 million ton deficit. that is not so much the problem, at least in the short-term, because we could see some stocks of iron ore, of the lower gate mccarrick -- material, start to work it sway back into the market, which can help. the more worrying views, and perhaps what is caused the pop today is that over the weekend, there is some news that the brazilian government would do a 'solesale review of vale operations, that is about 200 million tons or half of their production. if that is the case, we are looking at iron or prices hovering around the 80-100 dollar a time -- a ton for four-on-two's six -- 46-9 months. if not up to the year. david: at these prices, a window opens up for less efficient mines. a lot of these did not make sense to open up. now they become a factor. is that something i should consider? where should i be looking at that sort of expensive capacity to come online if any echo -- if any? wayne: it's important to recognize back when oil prices 2013, china was receiving iron or imports from six-70 countries. prices fell, the lower level ones tended to survive. it dropped to where the major importers in australia and brazil takeover. the out -- the opportunities are before 8-10,000,000 times a month of iron ore to come out of these smaller producers. realistically, it takes about 3-6 months to get these mines back into action. there is some stock, some lower grade iron ore around countries like australia, canada, etc.? increases inal production of the higher cost lines, which really need 70-80 dollars on a 12-18 month basis to encourage them back into production. it will take a little bit longer. wayne, how short-term or medium-term is this move higher for iron ore? fundamentally, the supply and demand equation remains the same. i think, when we look from the consumption side, steel production in china is supposed rise, we expected to around 1-2% in the coming year. margins in china are under extreme pressure. when we think about the stimulus that china is pumping in, housing starts have been exceeding sales. there's a broader demand for steel. it is pretty robust looking forward to 2019. still margins are under pressure. flat steelct production to occur. that would tighten the steel market up. you would see steel prices rise. a bitld give companies more room. when we think about forecast, we 75-80 our prices to about dollars per time. -- ton. that is a $50 rise from a previous forecast. we see it telling off any backend of the year, below the $70 mark. -- of that is protected on pretexted on vale coming back in the market with about 50 million tons. if there is a wholesale review these outagesms, could expand or last longer. view: let's brought in the across a greater commodity universe. i want to bring china in. the report producer prices on friday. there is a risk that at some point, either friday or after or sooner, prices fall into a deflation in china. what isa big deal and the most important indicator for you when it comes to china? ppi isthe key driver of largely steel prices, which have it made material leaps since this rally in iron ore. companysteel production -- companies are under extreme margin pressure. yes, the ppi will walk into negative territory. it is not a positive step. china has moved to easing credit materially. even since the start of the year, there has been it -- additional action on the credit side. i think steel prices will rise again given the cost push from below and the credit easing measures, which will potentially expand to the housing market in the second quarter, which would see steel prices move higher, which would see producers prices stabilize back into positive territory by the second half of the year. wayne, thank you so much. wayne gordon joining us. a slowdown and simmering trade tensions are affecting asia's private equity. jia capital's johnathan joins us next. this is bloomberg. ♪ david: welcome back. let's change gears from the public market to the private markets. private equity, have a look at our bloomberg chart. it has been very good. what you are looking at here is field volume. you have the deals across the asia-pacific in yellow. blue deals in china. roughly about a third of deals across the region are related have to do with the chinese market. rishaad: let's find out what is happening with zhu "johnathan" jia, managing director of bain's asia markets division. thank you for coming on the program. tell us about this. we have been operating in asia since 2006. over the last 10 plus years, we find asia to be a very interesting and very growthful market. -- inccounts for aggregate, it is bigger than the u.s. and europe in terms of total gdp. the private equity market in asia is meaningfully smaller than either the u.s. or europe. there is a lot of room to grow in asia. david: you've almost fully used up your third fund. i understand you raised 4.6 billion? johnathan: 4.65. david: where are you looking to deploy that? johnathan: we have been deploying capital across the region. i most important markets have been japan, china and india. we have also been active in australia and korea. for our fourth fund, we are looking to add south east asia to the markets that we cover as well. rishaad: what particular industry groups? -- it is probably a top-down versus bottom-up approach. what are interested in? johnathan: we are focused on five different industry verticals. care,er retail, health financial andmt, business services. we find opportunities across all of these different verticals. years, weast 12-13 have in approximately 40 companies in asia, also covering all five of these verticals. david: i was at a private equity conference about two months ago. the sense i got there from a lot of the players is that you have to get in earlier now to secure better valuations. is that what you are seeing? the pnd industry is moving earlier into the lifecycle of the startup? johnathan: it probably depends on who you speak to. , who are people who invest focused on investing in the tech sector, that is actually very tech specific. you can see, over the last number of years, you see a number of tech unicorns that have become very big. if you don't get in early, then you invest in businesses that have become highly valued. outside of that, that is not necessarily the case. what we tend to do is find businesses within established track record that we can then due diligence, businesses that have specific growth then,unities that we can after investment, help management achieve. these are the things that we do. it is not necessarily, you have to get into a very early stage of a business to have an attractive opportunity. rishaad: absolutely. when you are invested, how do you exit opportunities? what is your favorite route? typically, we have two ways to exit. we can sell entire businesses, either to strategic buyers or two financial buyers. trade-cell. or we can go through a public market. the public market tends to be volatile in asia. the window opens and closes. you have to be opportunistic when you access the public market. pretty good success with public market exits. businesses, we can't exit both ways. david: the next 12 months, when it comes to the preferred option? is it public markets or trade-sell? which would provide a more attractive option? rishaad: given valuations and what you can get for these companies, i suppose that is what we are driving at. johnathan: the last 12 months have been very difficult for the public market. throughout the region. in china in particular, the public market has been very difficult. in 2019, we are hopeful that the market will recover. case, the public market becomes a more attractive avenue for exits. we have been exiting businesses through trade cells as well. the trade cell market is probably a more stable market than the public market. the public market is a great way to exit we are not looking at that. i need to ask you how this bet between the u.s. and china is affecting what you do, especially when you look at the u.s. looking to stifle chinese growth in tech. madeat we made -- has that you rethink some of your investment opportunities? was the conversation in the industry? -- what is the conversation in industry? johnathan: tech is an important sector for chinese investing. if you look at capital deployment over the past couple of years, tech is accounted for a significant percentage of capital raised. investing, hash been domestically chinese focus. you have e-commerce players, you have businesses that mostly serve the chinese consumer market. those businesses tend to not be affected by any u.s. government restrictions. over the last several years, we have not been very active investing in these kinds of businesses, primarily because i think of the issue that you raised earlier, that these businesses can become very expensive very quickly. on a going forward basis, we would be interested in these businesses. focus,r domestic market the u.s. government restrictions don't affect them as much. some of the more hardware focused businesses that tend to sell their agreement across the globe, that has the potential to be more affected. businesses,est in regulatory issues are always going to be important. you need to keep that in mind. rishaad: thank you so much. johnathan zhu, managing director of bain's asia markets division. let's get more information on private equity. thes get a check of function pe go. you can see the breakdowns a private equity funds around the globe. have a look at it. pe go. yvonne? yvonne: we've been watching tech stocks as well. let's look at chinese airlines. we are seeing china airlines down 4.3%. this pilot strike dragging on for a fourth day. now the stocks are slumping the most in a year. the carrier is saying that the strike caused $2.5 million in lost revenue. that stock is being weighed by that strike. fortescue metals are the price we are tracking. 3% up today. tech stocks overall, the sector doing the best out of all in asia. 3.5% upward larkin. the apple supplier we talked about. city maintaining their by rating for them. they are doing better than forecast. they are citing increased demand when it comes to samsung and huawei handsets. and sunny optical, up seven point 11%. -- 7.11%. let's go to our reporter in mumbai. -- what areching? you watching? >> i'm keeping and i on foreign portfolio investors in the investments they have made in the first week of february. that is the six sections in february that amounts to a number of billion dollars, inflows coming into foreign institutions in the last week of january as well. there's a clear sign from foreign investments coming through. it seems that at this point of time, they are positive on india. indian equities take a knock as much as 1% on friday. on an overall basis, we are gains up .5% coming through. i'm keeping an eye on these numbers as well as a lot of economic data coming through in the course of the week that could shape things out for equity markets. rishaad: thank you. but the more ahead. including -- plenty more ahead. including the battle the charts. that is ahead. this is bloomberg. ♪ david: it is that time of the day for our battle of the charts. today, we have a greater china finance chinon leader -- team leader against the season veteran in our chief economics correspondent. we will start off with the newbie. he is a virgin. it is sam and you rubber same, this is your offering. you are only a virgin months. >> today, the chart that i am here to talk about is a very interesting chart. rishaad: i'll be the judge of that. >> it's an interesting chart on the u.s. bond market. right now, the picture looks rosy. u.s. stocks are up 8% this year. growth has been good so far on earnings. fore is an earnings outlook growth of about 5.4% for the whole year. when you look at this chart, if you look at the red bars, that is what we should be worried about. in the past couple of weeks, analysts have cut their earnings growth forecasts below zero for the first quarter. if you imagine a chart on the far right, you will see a red bar going down. what is worrying about that is you have -- you are hardly ever in a quarter of negative growth. -- twoomes 2, 3 becomes becomes 3, 6 out of seven times since 1967. once you get three, you get a bear market. there has been -- that is happened three times the century. that white line shows how the s&p did overlaying it. this is causing some consternation going forward, adding to that is the earnings growth. it was 5.4%. at the start of the year it was 8.3%. >> sorry to interrupt the monologue. if you look at our charts, it is important to look at japanese gdp. numbers due on friday. the devil is in the detail. exports are important for the economy. they make up 17% of gdp. if you look at this figure, you can see that the trade story is still lacking. it is dragging on the economy. it is showing you how much the chinese slowdown is affecting them. let's point to the white line which shows the exports on their. under pressure. it could take 0.4 percentage points off of gdp growth. thepoint is that consumption story is holding up in japan. we are expecting a rebound in the fourth quarter. aports continue to be significant track on the overall performance. it would've and supplement just a few things. congratulations, you have come second. >> robbery. david: gtv go. be your own judge. lots more coming up. this is bloomberg. ♪ yvonne: it's almost 11:00 in the lion city and in hong kong. 8:30 a.m. in mumbai. the top stories this hour. caution in the air as chinese records return from the weeklong break. hong kong is black but shanghai and shenzhen are both on the rise. trade set to dominate the mood in beijing. and, tension is rising in thailand. the king said his entry into politics was gravely inappropriate. this is bloomberg markets asia. >> we are entered the last hour of the morning session in hong kong. it is about the return of china today. at sea with the csi 300 is right now. up by .9%. wasshanghai of the csi cop swinging gains and losses earlier in the part of the day. aboutns among investors not meeting with xi jinping ahead of the month deadline for tariffs. thexture across the rest of region. asia is down and indonesia is down. gains for hong kong and new zealand. we are keeping an eye on the yuan, right at 70 -- 6.7795. we see the yuan weakening by the most since june. betweenas the range is 6.8, there is no panic insight. our team is saying that right now. we are also keeping an eye on the thai baht. the bot is strong at current levels. it is rising today after we saw the numbers on friday. the main concerns are within the country. we're the king coming up to say he is concerned about his sister's bed to be the next prime minister. the party, has come out to say it is acknowledging the concerns that were announced by the king. that could be a return of sentiment in the tide markets. avon, itt india, dave, has to do with the ibi move on friday. david: this global move toward easing. a lot of earnings to talk about in india. but we just point out, as haslinda was speaking at, china has really started to pick up. we are not of 2.7% as we speak. india is a big story. yvonne: but see have futures are set up in mumbai. about the talking surprise what might cut the we got last week. futures are lower by about .1%. a stronger rupee for now. bond yields are picking up by two basis points at 734. we're talking about the pace of these bond sales, boosted by this rate cut we have seen. of companies are in the rupee bond market as the pace of issuances rise. not taking part is jaguar-land rover. we will talk what that later. david: roz is here with the first word news. ros: talks to of boys -- to avoid a new u.s. shutdown stumbled over the weekend, with democrats and republican said to have stopped talking. nine federal departments and agencies would shut down again, just weeks after the record 35 day halt in washington. setgo shooters had hoped to up votes in the house and senate before friday's deadline. political tensions are high in thailand just months before the first general election. the party link to the former prime minister has abandoned plans for the kings sister to run for offense -- office. madelection commission calls for the party to be shut down. ukip prime minister theresa may will ask parliament this week to give her more time to renegotiate brexit. she is promising lawmakers a further charge to take control. she will ask for comments to reaffirm the desire to move the irish backstop from the agreement. if she does not come up with a new deal by february 27, pilot will have another vote. governments, including the imf, are concerned. >> it will end when there is a smooth exit by the custom units predicated by some, or as a result of the brutal exit on march 29 without extension of notice. it will be as good as it is now. saysa bloomberg survey there is now a one in three chance of recession and the u.k. in the next 12 months. the poll of 10 economists find the probability of two consecutive quarters of negative growth stand at 30%. that is up from 25% a month ago. 20% throughout the whole of last year. the survey was conducted before the bank of england's forecast of the slowest economic growth in a decade. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. rosalyn chin. this is bloomberg. yvonne: u.s. china trade talks resume in beijing this week as the clock ticks toward president trump's tariff deadline. tom mackenzie joins us from beijing. we can only hope these talks will amount to something. tom: absolutely. in terms of how they play out the debt these are already in town. the likes of jeffrey gerrish men from the ustr and david malpass from the treasury as well, they will be talking. they are laying the groundwork for these continuing conversations between light kaiser and mnuchin. they're expected to pick things up on the 14th and 15th with the chinese premier. there is a focus on what they can extract on the pledges by china to buy more agricultural and energy goods from the u.s.. particularly around structural changes and any enforcement mechanisms. depending on what we get out this week, we will get a clear sense of whether or not the threat to a raise of tariffs on chinese goods will be strapped -- the scrap or if we get an extension to allow these talks to continue. reporting today that some and the administration are looking potentially at a meeting in mid-march at mar-a-lago between president trump and president xi, although that is not been concerned, they are reporting that those conversations have started. david: looking at how markets are trading right now, they reopened, but looking at the section high -- session high. there is some hope, if you want to extrapolate that what you just mentioned. sectioning into today -- session, there was concern, given what we have seen in chinese shares listed on friday, you get a weakness in chinese equities. that has not come to pass. up over 1% at the moment. the weaker yuan, the weakest since june or july, and the u.s. is down 1.6 cents or so. that is down to dollar strength. of $380a clawback billion worth of valuations at the new year from the drops we saw in 2018. whether that will continue will be largely dependent. and there are other side posts this week that may give fear to investors, including some data. we've a forex reserves, less important than the money supply have the export and trade data out on the 14th. exports inspected to contract again. we look at the trade balance. that will be important potentially. we have inflation numbers, which give an indication of what extent factories are having their prices or profits eroded by some of these weakening prices and whether or not we are getting into deflationary territory. there is a lot for investor to chew over as well as these increasingly important trade talks in beijing later this week area -- week. yvonne: thank you. tom mackenzie joining us from beijing. i want to be some lines from macau. we've been talking about concerns about a china slowdown and how it will affect spending during the lunar year. they weren't spoiled by this party. take a look at what we are seeing for the tories and statistics. they are saying that chinese visitors growth numbers were up 26% from a year ago. that was from the time we suffered worried fourth and february 9. total visitors were up to the 7%. if you -- 27%. casino stocks doing well. it really shows how resilient the chinese consumer is. ivid: the visitors per day, imagine why someone like me, who is not into crowds, wasn't in macau. to give you a good example, i'm doing the average of day. 200,000 that is -- visitors. per day. that is one million total. of that one million, 70 5% gambled in the chinese mainland. -- came from the chinese mainland. of that one million came from the chinese mainland. yvonne: they're going to the blackjack tables and spending. they're all appear. china is up 2%. retail, like we sought catering sales in china also job during the lunar new year as well. 8.5% from last year. when it are $50 billion during that holiday. let's bring in stefan hofer, chief invest strategist at lgt bank. always good to have you. last week we were dealing with the pullback in equities. global growth concerns. trade tensions. it's exec we are looking at little bit less optimistic. chinese markets comeback after this holiday looking pretty upbeat. what gives? down to theoils expectation of a trade deal between the united states and china. that process will never be a smooth one. we will have ups and downs. at the end of the day, for the united states and china, the truck -- the costs of the dispute are mounting. from all sides, we have pressure for both parties to make a deal. we are sitting by the middle of this. the market is more optimistic than that given what has happened. that as a baseline view. david: how does this relate to the economy? a lot of people have come on the show and have said it has got to the point where it is a sentiment driver for markets. do you disagree? stefan: it is more than sentiment. tariffs operate in the same with the taxes due. u.s. consumers, households and businesses are all caps a's and higher cost. that is bad for growth. if it slows down, it slows down. we are still above trend growth. we have a cushion. if it slows down further, the rest of the world will feel that. the u.s. consumer is 70% of gdp. 30% of the global economy is u.s. consumption. -- 13% of the global economy is u.s. consumption. yvonne: in china, there is the idea that it can't get must worse than this. that is the sentiment we get from a lot of gas. do think that -- guests. you think the bullish momentum we have seen in january can continue? stefan: i think so. to japan andight chinese equities. we are still happy with the call. you see the chinese consumer is doing well. a lot of these easing measures have been targeted to protect the consumer, from the risk of higher unemployment and so on given these trade tensions. going in they is right direction. it is doing what it should be doing. by the middle of the year we will see some upside in terms of chinese activity. david: should i ignore that to the next three months where the data is not likely to bottom yet and we are likely to get more earnings downgrade? stefan: that is the right thing to do. to look through that. if you want some positive reinforcement, look at the u.s. earnings season right now. we are about 14% year on year. that is pretty good. that is three times and what we have in europe and japan. earnings and so on, they will help us coast through this. the next two or three months, this data would be good. david: is that good for china? u.s., we don't find anywhere else in the world. as chinese investors, do they say, i hate that fact? stefan: i understand. trying to get the re-appreciation of the renminbi, which is solely happening. at --the u.s.-trained china trade dialogue needs to happen. if that doesn't happen, we are in for some serious problems. yvonne: what about the liquidity issues that weight of the market in 2018? has that improved? stefan: it has improved. you have an ongoing deleveraging process and china. it is helped by rrr cuts and so on and so forth. on one hand, cutting and on the other hand tightening. yvonne: we have a question of the day that we just brought up, it pertains to what you said about trade. i'm guessing that is where everyone's direction is going. what is the uncertainty for markets for the rest of q1? will it be brexit, trade, china slowing down? stefan: it is all of those things. in the short-term, we have to make sure that we don't have another u.s. government shutdown. that is not off the menu entirely. on the margin, things look better than last time around. yvonne: thank you so much. we will talk to you more. hofer will be talking more about how the u.s. is cautious stand on rate hikes will be affecting the rest of the world. david: we are talking about clinical tensions, one of markets that is already opened up his thailand, a lot of concerns about the king and his plans for his sister to run for the premiership. when we come back, we will have the latest details. this is bloomberg. ♪ haslinda: it looks like trepidation across emerging markets as china returns to trade again. a bt bank asian director, stephan hoffer stays with us. we are constructive on emerging markets. in particular, asia and japan equities. as we mentioned earlier, it boils down to expectations of a trade deal between the u.s. and china, which will have a ricochet affect on all of the emerging markets. you're right, what we also need to see is a return of the dollar weakness. that will help lift emerging-market currencies across the board. if that doesn't happen, it could end up being a difficult year for emerging markets. we are looking for dollar weakness as we proceed further in 2019. haslinda: if you had to hedge against e.m. risk, how would you do that? stefan: good question. my preferred trade in that environment, or going along with the yen, it is a safe haven play. has a natural deflationary impulse, which has been a big problem for the bank of japan, but what that leads to is a strengthening of the concert desk and -- currency. if you are concerned, and you do want to take on too much risk, being long on japanese currency is a good trade to follow. inlinda: what are you liking southeast asia? are you liking what you see in thailand? stefan: from an economic perspective, yes. the bulk of our calls in asia are focused more on north asia dan southeast asia. not too much of a fan of thai equities per se. i do like the stability of the baht. policy overall is moving in the right direction. haslinda: we are seeing a changing town about buying, so you the u.s. causing rates, accommodation in india and china, is that running the risk of asian central banks to stand, with greater clarity from the fed? stefan: a lot of central banks in e.m. markets have to be careful in terms of the coming -- taking on an easing tone with exception to china. it was not too long ago that there was a severe shock to emerging-market currencies, and central banks have to raise currency -- rates to defend against the currency weakness. if you step out of the region and think about europe and the bank of japan to some degree, here, the main central banks will be trying to follow the cautiousness that we have from the fed, to see what the data tells us in the next few months. david: the movement in the dollar, has been extreme. look at the yields. you would think the world is ending. if you look at the spreads, look at that. that might be telling us that the market has overshot this. we are overestimating the amount of commendation the central banks can deliver this year. you think the fed will hike, still? stefan: yes. only two times. there is downside risk to that forecast. we talked earlier about the u.s. growing above trend. that is still true, but on the edges you're beginning to see some things fraying. for example, the killing quinn sees for auto loans are going up. delinquicieses -- on auto loans and mortgages are going up. i think the fed will be looking at those things closely and judging its next steps. yvonne: what is the sentiment for the dollar to weaken in the second half of 2019? is it just the fact that you see growth in other places like india, are we talking about potentially a rate cut in the future? is it just that the u.s. dollar is a better house on a bad block? stefan: that was certainly the case last year, and therefore we have a divergence between the dollar and everyone else. of thes year, at the end day, the united states is running very significant point deficits on the fiscal side and on the current accounts. if you are any other country, you would have currency weakness. exceptionalism, which is important for financial markets. you know it is fair to scope tountries with a cut interest rates, what is your view on that? stefan: we have to be a little bit cautious. central banks won't be rushing into that any further than china, which has ample room for argument three cutting further. at the end of the day, even with the u.s. beating the uptrend, we are in a cycle. to rate hikes in the u.s. is a good baseline ascension for this year. there is some downside risk, though. haslinda: all right. stefan hofer, chief invest strategist at lgt bank. we thank you for your insights. if you are a bloomberg subscriber, you can get up on oliver interviews with our contractual function. -- interactive function. you can send into an -- instant messages to our team during our live shows. check it out at tv . this is bloomberg. ♪ haslinda: was doing quick check of the latest business flash headlines. see a drop inan four cups -- forecasted returns on friday. they see the target will be lowered from the $550 million payment in november 2 180-280 70 million. toshiba is excited to maintain with three point $5 billion of profit by 2024. overhaul ofs entertainment assets had a change of script. they will get a slightly smaller afterin the movie company an investor pulled out of the deal, which is now valued at $1.6 billion. it will retire the approval of the regulatory commission. boeing and aviation regulators safetyected to postpone measures from the 737 max since april. it has been prompted by a fatal crash of a lion air flight. state differences over safety experts over the differences the change may be. the crash happened when a sensor triggered a stop. checking in on markets. rishaad: it's quite a turnaround story. out of the gate, pretty much flat, we saw the shenzhen market rising up and that is what we have. 1.1%. the csi has been driven higher but what is going on in the shen jen. shanghai composite up .8%. they are playing catch-up. five days of that lunar holiday to blame for that. and see what is happening, hang seng up 2%. -- .2%. there is bit more optimism on trade. let's kick it out to some of the stocks on the move. this is the current situation. china airlines, we mentioned the lunar moon -- lunar new year. this is one of the worst performances on the index. the airline saying they have lost $200 million doing -- during the lunar. with a strike being taken in by pilots. they had 60 flights canceled between the second and the 10th of february. not good if you are traveling during the chinese new year. a lot of rand paul there is well. adelaide bank down 5.3%. is spinning off. there you have it. this is bloomberg. ♪ this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. ♪ >> 11:29 a.m. in hong kong. i'm rosalind chin with the first word headlines. topident xi jingping's economic aid will be part of the trade talks in beijing. the vice premier will join steve mnuchin and the trade representative as the u.s. and china seek a deal to avert expanded tariffs. president has said the two sides are making progress, but has confirmed he is ready to impose heavier duties if necessary. retails over the lunar new year holiday rose 8% from a year ago to $150 billion. revenue from tourism was also higher, up 8%. of the trade dispute with the chinese economy under strain, but the figures show consumer confidence remains robust. saudi arabia is denying any involvement in the dispute between jeff bezos and the "national enquirer." accused them of extortion, releasing potentially embarrassing photos of him. he noted the links between the publisher and saudi arabia. >> we have nothing to do with this. may be some of our citizens read the "national enquirer," others watch the soap opera unfold on television, but that's it. birthday to 50th the jumbo jet. the iconic plane made its debut in february, 1969, having been brought to light from initial drawings in just two and a half years. the plane with double the size of the next biggest aircraft at the time. wishes of defy the customers and almost bankrupted them. global news, 24 hours a day and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. chin.salind this is bloomberg. ♪ >> let's get a look at what's going on in the foreign exchange, some numbers crossing. 6.74, roughly where we had the fix today. it was the weakest fix we have seen since july. pretty much flat at the moment. we are waiting for the next installment of the pound with what happens with brexit, so this is something to be watching out for as well. we have a vote this week, and the amendments made by theresa may to her plan b. all eyes on what happens with the irish backstop. the euro has still been very much in the trading down, brexit weighing on the euro, but on top of that, there are also tensions between paris and rome playing out. dayre off the lows of the as we get political intrigue with the king's sister being from thely barred --osition party, which was let's get out to one of the big stories, iron ore, and that terrible disaster with the dam. this is the italian iron ore futures up nearly 8%. what we do have is this engendering game across the that is the contract size, for 100 metric tons. aboutquates to around $96 for the metric ton, which is higher than what we have at the moment. fortescue all, gaining off the back. we have a war with equity markets as well. what is in singapore. haslinda? >> singapore is down, china is up, a great start to the year. in china we saw the benchmark up and2%, the yuan between 6.7 6.8. let's get the perspective. not too bad for china. people were expecting it to be lower. >> it is lower, but i think it could be lower than that. >> but as long as it's within 6.7 or 6.8, there's no panic. >> there's no panic right now, but the monetary level should be closer to 6.8. with a tree truce another negotiations started it was 6.9. we want to be sure that between president trump and president xi, and if there is no meeting, more terrorists will return. 25% on 200up to above., it could lift >> are you underestimating the ability of the pboc and the government to respond? >> we are also looking at the basket. right now across the basket, the dollar is holding up pretty well. i think everyone is underestimating the u.s. in terms of its growth, inflation, and rate outlook. the last couple months have been , and you finally see below 0%. the 10-year euro is below 0.1%, and the downgrade in the growth, the european commission has not any hard negative impact from brexit. so a lot of things, enough to worry about this new year. i think generally the market is struggling. if you look at it, most currencies are within range. it's really whether you want to stay in a half-full or half-empty camp, but i think there is room for both. you should be very nimble, and you could be right on the trend. is how it moves up or down. >> right. should into be nimble anyway? just year point, on the strong dollar, the dollar index is at 100. a lot of people in em's sitting on these investments are not going to like you. like to thank the dollar goes up to that level? everything from the euro to sterling will essentially be weaker from here. i took the view -- i look at data a lot. this year, there are going to be a lot of downgrades. those have been coming in from australia, from europe, even in korea. important is that behind all the trade optimism, behind brexit optimism, the numbers are really weakening. well,ear trade was doing and some countries really started reporting negative numbers, including thailand. thailand, i would say, don't pay too much attention to the elections, but the numbers. the trades in the surpluses narrowed sharply last year. same thing for korea. something that most participants are not paying enough attention to. --y are right now >> what does that mean for the carry trade? that really has been roaring back ever since that dovish tilt. do you think that can last, especially since the concerns seem to be poking up again? >> the tariff trade is the dollar against the yuan, 10 years below 0.1, 10 year holding above 2.6, that's a pretty big gap. in australia, you have expectations coming in, it certainly removes the rate hike, and it has offset the dovish u.s. dollar sentiment. in the short-term, i would say that as long as you can get your growth concerns, the dollar is the place to carry. >> and we are splashing some of your calls. i want to ask you about korea. they have a central bank do you think they are going to cut rates, or the you think there's a possibility we might cut rates? >> i think the central banks, including rba, are still holding onto the view that the next move is an increase. but at thisching, juncture i would say that if you are a policymaker in most countries, most of the time you won't be looking at interest rates. of course india was an exception, but i think most countries, you find that the explanation is pushing more towards fiscal spending, to increase rates. if that's the case, then i would affect theseould currency outlooks. especially if it crosses, is not considered positive. philip, you think the fed and china are walking away from tightening and other central banks will follow. for now, there are still some currencies or countries with a consensus that we could see rate hikes this year. rates, it comes to will probably be neutral at this point, because the biggest it could be brexit. the uncertainty is unprecedented, and we are beginning to see life coming out, warning that we don't know enough about the impact. pullback, ina brexit was cited as one of the reasons it could cause some disruption in financial markets. london is the top financial center in the world, in the europeans are concerned about the negative effects. >> ok. stay with us. we will talk more about thailand. we will discuss the mounting political pressure in that country, and have echoed affect the outlook. this is bloomberg. ♪ oomberg. ♪ ♪ political tensions are rising in thailand just a month before the first general elections since the coup five years ago. the former prime minister has abandoned plans to make his sister run for office, as the monarch publicly opposed the idea. >> later today, we have the election commission meeting amid all the changes. let's bring in our bloomberg editor, joining us out of bangkok. tell us about all these developments over the weekend. >> hi, yes. it has been a remarkable turn of events, from a princess being nominated as a prime ministerial candidate, for the party affiliated, to the king coming out with a statement 12 hours later saying that this was an appropriate and would not be allowed. today we have the election committee meeting. they are right now meeting. we don't know what outcome there will be, but certainly they will be considering the kings comments, and it is highly likely that her candidacy will be withdrawn, as has been agreed by the party itself. it willculated is that be considering the dis-abandonment of the party completely. that has been called for by a number of parties, not political parties, but different groups. we will see what they have to say about that. that could really just hike up the unrest in thailand at the moment. there's a great deal of tension with these developments. nobody really knows where things are going. >> i mean, talk about a dramatic turn of events. does this all basically boost their position? >> well, again, we don't really know. there's a lot of speculation about what's going on behind the scenes, and it will all unfold in the fullness of time. perhaps it will strengthen his position. --haps the other events there are other events at play. it has certainly drawn attention to the election, about many who will go to vote, any for the first time, others returning to vote after many years. it is really turning their attention to this election. place, thereakes will be a big turnout. >> all right. our bloomberg editor, thank you so much for that. you can always expect drama in thailand. we have seen 12 successful coups, 11 unsuccessful, let's get more from our senior fx economist. it was the biggest decline on --day, and now it is gaining has said it is maintaining some stability in the market. how closely are you watching the political developments in thailand? >> i think we are watching the economic policies more closely. -- the previous king wanted the most stable economy, and that is why you had a very strong trade that supported the currency. that led to out performance in the previous years. i think we need to pay more it ision to the fact that receptive to chinese investments. we are seeing the current account balance lists. i think fundamentally, eventually, that would start to hold the floor. highererformance, 4% versus the ust, the best performer in asia. is it time for a correction given the uncertainty due to the elections? wouldn't link the outlook to the elections, although it is a finance center, but i think the real focus -- i like to look at where the strength comes itm, and right now i see diminished because of the growth direction. i think it is more important in terms of the longer-term. for example, if you take the view that the coup that happened five years ago -- today you would be very surprised. >> yeah. so ignore the politics in thailand. but when it comes to political risk, we are seeing elections pop up everywhere in asia. indonesia, india. where should i be adding that global risk premium? >> i think generally, most investors look at growth stories. in the last couple months, they still like asia, because that is still the fastest growing regions. they are looking for bright spots of trade tensions, focusing on beneficiaries that could spill over into the asian services. i think again -- there need -- markets are trading between half-empty and half-full. i think the timing is quite important. at this juncture, i would go back. especially on the fed, now they are coming in and i inc. it is time to take the gains off the table. >> ok. our senior fx economist at dbs bank. india markets have just opened. let's see how the sentiment is. we were still talking about that rate cut we saw on friday, but we are seeing red arrows today for the nifty, down about .4%. the sensex also heading lower. a little more strength coming through the rupee. to goget right to mumbai, through what's expected from today's session. >> right. over the past few sessions, what has stood out is investors buying into equities, and we have seen dollars worth of equity picked up by portfolio investors. what has also stood out is that the nifty has reverted back to the same range that it has moved within over the past three months after two days of cuts. .5%, more or less the same in the sensex. the nifty banking index is also falling. we are looking at a relatively flat to move for the rupee, despite the fact that we have seen growth coming from portfolio investors, and once again i'm going to track these moments with respect to the rupee. >> let's talk about steel. shares are moving against the about thel us earnings and where we are likely to go. well, this is the quarter in which it is needed by acquisitions, the course of which we've seen over 20% growth in revenue. 70% growth in the bottom line as well. this is largely on account of input cost, which has been favorable in the fourth quarter, because of which you are seeing that strengthen tariffs. but that hasn't had any impact on the metal index, which is otherwise really under pressure, down by as much as .5%. so once again it is going to be all about iron ore prices as we move into the next few quarters and what impact that has on the steel sector. >> it should be good depending on if you are buying or selling. thank you for that. lots more coming up. we will also preview the key dates and events to watch this week. this is bloomberg. ♪ ♪ >> let's do a quick check of the latest business flash headlines. beatingasts estimates, up to $245 million a unity and firms say -- they say they continue to see positive sales growth, however in the christmas quarter ended january, volatility increased, along with customers holding on purchases until key promotional periods. deal withom -- once a easyjet. that would involve a less costly agreement. they say discussions are complex. deals inines cemented november and a decision may be announced later this week. delta,ernment may favor because it would not require losses. standard chartered is considering options for the islamic banking unit in malaysia, including a potential sale. the london-based member has been gauging interest of potential buyers for the business, known a standard chartered stanek. becauseighing the move fierce competition has limited its growth prospects. >> let's have a look at what's going on with the market. this is the situation with india. down,est is on the way nifty down by .5%. tear, airon ore on a lot of this down to businesses. billion, the worst loss we've ever seen in indian corporate history. the stock is down, even though it will not go to the bond markets to raise capital. jet airways, always in the news for the wrong reasons, this time down to 10 aircrafts being grounded because of operational reasons. there are all sorts of stories swirling around this particular carrier, and its very survival is in question. this finance commerce company out with a better than expected figure, 262 million rupee profit. it is also selling off its securities division. there you have it. >> let's talk about the key events coming up this week. a pretty busy one, in particular malaysia on tuesday. 1mdb,will be a trial in facing a laundry list of allegations. on thursday, the u.k. parliament gets another chance to vote on alternatives to theresa may's brexit deal. a lot on that front. >> between now and then, a lot coming out of asia. export trade numbers out of china, inflation numbers. aso to wrap up the week, deadline to resolve the border security funding. but after those stocks on the weekend, another shutdown is actually on the cards if we don't get anything out of that. itthey have three weeks, seems like it doesn't make much progress. youould be interesting, could get a valentine's day date for theresa may, to see if she could strike a deal. we have not been seeing much love from both sides. that's a look at bloomberg markets. "bloomberg daybreak: middle east" is coming up next. this is bloomberg. ♪ i'm a veteran and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. ♪ >> this is "bloomberg daybreak: middle east." our top stories this morning. >> asian stocks dip as chinese markets reopened after the lunar new year. ended amid jitters about this week's trade talks. theresa may accept the offer of more talks with jeremy corbyn as she tries to buy herself more time to renegotiate a brexit deal, u.k. gdp later. >> saudi arabia denies involvement in the row between jeff bezos and the "national enquirer" after the billionaire suggested a saudi angle in a blackmail claim. >>

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