Least mitigate the risks when it comes to currencies. We see offshore renminbi at least getting for the first time in three sessions. Hovering around 693 after touching briefly 695. This morning we got strong fixtures so perhaps it is enough to withstand those declines for now. There seeing brent crude, big story today the opec meeting in saudi arabia. We saw almost a consensus that opec members are willing to continue the supply curves and keep supply tight for the rest of the year. We see the likes of brent crude up more than 1 , around 73 at the moment. Aussie rates also key to watch. Fiveyear up about five bits when it comes to your aussie yields. As the market continues to price out a little bit the rba might not have to cut rates as soon as next month. A speech tomorrow could be quite critical on any kind of guidance. We talked about the election fallout, or i guess you could say the tailwinds we are seeing when it comes to the aussie. We talked about the exit polls out of india which could bode well for the session in mumbai. We are already seeing moves in nifty futures up more than 2 . Sliding ruby one month sliding. Rupee sliding. Election results coming out thursday. One more note on the renminbi. We have halted declines but we talked about the winding gap between the onshore and offshore rates. This is a replica the bloomberg has produced. Up until recently we have seen this upward trend when it comes to renminbi. Really avoiding what we have been seeing in the onshore and offshore rate until recently. Things are actually falling in line with what we are seeing in the market. A lot of questions on just how much pressure there is on trying to stem the kleins and the renminbi. David and as we see the shanghai composite has fallen behind its recent levels. Back to australia as we mentioned, the centerright government is getting straight back to business after its surprise election victory on the weekend, pledging to pass signature tax cuts. Whats crossover to sydney in australia. Michael heath is there for us to talk about how this affects the rba. Scheduled to speak tomorrow. Results change at all what we are expecting him to say . I think he might be doing some redrafting on his speech because no one was expecting the weekends events. The decision certainly provides a boost of confidence. It could put a floor under falling house prices because it does not seem removed from the crack down onl to Property Investors and capital gains. You are seeing for a june cut coming off a bit. There are deeper issues in the main one is consumers are not spending and that is slowing growth. , we have theime labor market which had been performing so well for so long. It rba has made it clear needs to see unemployment fall further to meet its inflation goal and not move rates. Unemployment actually went up after last month. That becomes an issue. There is a good chance we might see and easing bias in the space speech tomorrow. We will have to wait and see. He was also a surprise. While this changes the immediate feel of the place it does not change the underlying issues. Rishaad can we draw a line between rate cuts coming from the reserve bank and Scott Morrisons win . Michael yes. That was just what i was getting out. ,hey had come up a little bit just because of the clear shot confidence. F things like rebates for pensioners who hold shares. These not being taxed. This is all good news for people in markets and businesses, these sorts of things. It is this issue when it comes down to drilling deeper into the economy that consumers are not spending. It has eroded a lot of their wealth. They are retrenching on spending. Consumption is 60 of gdp in australia so this is a significant sector. People might be thinking Scott Morrison is pledging to cut taxes. At the same time he has to pass legislation through the senate, i hostile senate. It probably will not come until later this year. There is an intervening periods. Yvonne lets talk about more of the fiscal side as well. Scott morrison has promised tax cuts. Will that be enough to boost the economy now . Michael yeah. I mean, the flow through from the tax cuts is likely to come later this year. Economyalready gotten not much above stall speed at the moment, ford was at the end of last year. The question is if the economy can hold over instill until that money flows through. Tax cuts will improve peoples wellbeing. The question is if we can hang on that long. As you mentioned earlier, there is quite a lot of pressure on the central bank to step in and do something. Perhaps not the same degree had labour won. But it will take some time to get cash into peoples pocket. It is really up in the air because the rba definitely does not want to cut. It would love to avoid it but the pressure is there, definitely. Yvonne michael, thank you. Joining us out of sydney. Lets now switch to india. Exit polls suggest the ruling party is poised for victory in india which would give them another five years running in economy riddled with problems like jobs, prices, and a struggling rural sector. There. our reporter is how reliable are these exit poll numbers . A very good question. Likely to take it very positively. There will be a collective sigh of relief, one, when elections are outoftheway, and two, when the government is likely to come back into power. That means good news. The rupee might strengthen. That a fewtake investors in the stock market were going long and they were expecting some kind of result like this. So, a lot of this is already discounted in stock markets but nonetheless it is positive sentiment overall. Going back to your question of how reliable it is, people go back to 2004 where exit polls were way off the mark. Although over a period of 15 years, that has improved. There are a lot of skeptics. Investors will take it would more than a pinch of salt. Yvonne what we were talking about with australia, this new government in india will face plenty of challenges. How will they go about facing him . Them now . Anirban there are a lot of issues. One is the budget deficit. 3. 4 ,dget deficit was at but this is the government which has a populist agenda. A lot of people are looking at 4 , a huge digression. There is the problem of jobs. There is a report which says the jobless rate is at a 25 year high. That is not great news. Tthe rural sector is in distress. Monsoons. Re a problem shadow bank has had a huge impact on consumption. Both of you have seen auto sales fall. Comingestments have been off because consumption is not going off. Seniorthank you, our economic and policy reporter. Unexpected results in australia, expected results in india. Markets living both results. Lets go over to su keenan for an update of first word news. Has warned the u. S. That negotiating on equal terms is the only way to solve trade issues. The foreign minister spoke to u. S. Secretary of state mike pompeo over the weekend, saying washington including restricting Chinese Companies from normal business operations. China says it is prepared to negotiate, but will always defend its interests. To japan, which delivered a surprise First Quarter growth figures which smashed expectations. The economy expanded in march despite the global slowdown and despite simmering trade war. Compared with economists who foresaw a contraction of. 2 . That may cool speculation that Prime Minister shinzo abe will delay his tax hike until october. Sticking with japan, the government is losing popularity over its plan failed tax hike. Almost to fant two thirds of people surveyed said they oppose as the support rate for Prime Minister shinzo abe dips. The government says it will increase the tax to 10 in october. Abe has already backed down twice on the move amid fears that the weakening economy of course that was before the latest data. U. K. Opposition leader Jeremy Corbyn is moving closer to backing a second brexit referendum, saying the public should be given a choice on any deal involving the eu. They broke up without agreements, with each side blaming each other. The Prime Minister still hopes to push a brexit bill through parliament only next month before stepping down. Before the general election was to respect the result of the referendum, and that was done to try and get a deal which guarantees trade and relations with europe in the future. If we can get that through parliament, then i think it would be reasonable to have a public vote to decide on that. Su 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. Im su keenan. This is bloomberg. Just getting news out of s p at the moment. A rating looks negative. It was stable before. Lets have a quick look on what is going on with the troubled carmaker. This is a position we do have. There we go. Yvonne we saw with the earnings last week how bad the picture was. 769, 1. 3 . Nwn not affecting prices for the day. Yvonne ahead we are going to take a look at the outcome when it comes to these exit polls out of india. We will head to new delhi. We will look at the growing challenges ahead. Next, this is bloomberg. Omberg. Rishaad we are back here with Bloomberg Markets. Coulds. China trade war be at the forefront again this week. It has been getting incrementally more positive when it comes to equities. Lets bring in mobile asset strategist from jp morgan in hong kong. Great to see you here in asia. Why a positive when it comes to equities . We kind of have to separate the world into before we kick started this off and everything that has happened since. At us as we look fundamentals, things were incrementally Getting Better up until that point. We have started to see earnings stabilize, valuations dont seem terrible. The u. S. Was looking better and we were looking at an upside for the data later in 2019. Now we see the trade tensions throw all that a little into question. We were sort of gearing up to get more positive until we had to put that on hold. Now we are pretty neutral on equities. Rishaad looking ahead it must create a lot of uncertainty. This is the deal, isnt it . It is how you interpret that uncertainty, where it affects certain sectors more than others. Patrik that is really the problem, to what degree will the uncertainty the rail what looks like a relatively ok macroeconomic environment. You have the fed going devilish going devilish, looser monetary conditions. Global growth actually looks ok. The real question is here how bad do the trade tensions get and will it derail the economy. If you just add up the numbers, how much of the tariffs really percent on ymy, x billion exports, that does not really move the needle on the economy. 10 basis points of gdp. The question is what does it do to business confidence, Consumer Confidence that derails the economy. For now the jury has to be out but clearly it has gotten worse. David while the jury is out on that one we are showing a chart on the dollar here. Is the recent strength of the dollar because of that uncertainty or is it because of Something Else . That the other side of the dollar equation is just not compelling enough, whether it is the euro, sterling, what have you. Patrik obviously trade tensions do help the dollar. Ironic given that the u. S. Is at the center, but it is still the most solid economy with the most solid markets that help the dollar. Even before the trade tension things looked better for the u. S. Dollar given that despite the slowdown, the u. S. Economy is still the strongest growing of any of the developed markets. It is a bit of both and as we know that is not good news for emerging markets, and one change we have done is we have downgraded emerging equities in particular. David i see you are still recommending credits. Would that still be the case if and when we do get a trade deal, as a trigger that makes credit less attractive, asset points if we get there . Patrik i think credit is attractive in itself. We look at credit as a nonrecession asset. Ok,n that valuations look we think credit should do well under any circumstances. The question is really how does it look relative to equities. In a relatively uncertain environment you would prefer credit because it gives you a lot more security. If we should get trade resolution and the tariffs come off, and i think that into the future we think it will happen, if it happens there is more upside for equities but you still do ok in credit. It as you balance these risks, credit is a better asset class. Rishaad china data turned awful in april. Awful missus. Misses. Expectations of 8. 5 . Auto sales for rolling falling way beyond expectations. Things were looking bad then. They can only get worse if these trade tensions are that prevalent. Patrik you have to look at the other side of the equation. That is one conversation we are starting to see much more declines as well as trade, if it escalates, what is the reaction from the u. S. And china. The thing about the chinese is where they clearly have the edge over the u. S. Is their ability to deploy stimulus and deploy it weekly. They have looked at many options they can stimulate if they need to, and they will. Rishaad they are going to be getting to the point where they are just going to be digging holes. Patrik that may be part of it. I do not think it will be that extreme. But infrastructure, to put it more politely, infrastructure is one area where they would clearly do a lot. On the monetary side we are seeing an oasis out of the pboc. They will stimulate if they have to. There is a bit of a negative feedback loop. Look at it on the other side. What are you going to get . The most youre going to get a 25, 50 basis points out of the fed which will not do much for the economy until six to 12 months later. It is not all bad news in that sense, although the latest data does not look great. Although there are a lot of distortions in that. David we have to leave it there. In case you missed that interview for bloomberg client tv is the function you run. Catch up on interviews and charts. We hope you find them useful. Check it out. This is bloomberg. Rishaad we are back. Reports of google suspending some business ties with huawei. We are told in no longer engage in areas of transferring ceptware and software, ex when covered by open source licenses. The next versions of huawei phones will lose access to google apps including gmail. Yvonne bonobos denying speculation that they are offering products to huawei. Supply is proceeding as normal and huawei will continue to receive goods and Services Based on local regulations. The company adds huawei is an important client for their sectors and anyone spreading false rumors may face legal action. President trump was strongly rebuked. Complaining of declining market share for u. S. Carmakers in japan and the European Union and giving them six months to negotiate new deals. Curbing imports would force u. S. Consumers to pay more and her u. S. Jobs hurt u. S. Jobs. David shanghai composite, 42 points down. Csi 300 1. 7 . Back atctually right the level at which we had the gap higher. A lot of support hopefully all the way down. 10 year yields down to the lowest since april. Yvonne we are checking the rest of asia. China still under quite a bit of pressure after a bad start on friday. Of thesetching some big moves like australia and india going to be seeing a different picture after we saw that big victory for Scott Morrison over the weekend as well. The key to watch will be the offshore renminbi because there are still a lot of reasons to short the renminbi despite what the pboc says. Rishaad the path of least resistance for the renminbi this is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. 10 29 a. M. In hong kong. Im sick you with the first word headlines. We start with the election in india. Exit polls suggest Prime Minister Narendra Modi is heading for victory, and his party may even win an outright majority. Surveys say his alliance could take in as many as 350 seats, well over the 272 seat majority level. However exit polls in india have a history of being wildly inaccurate. Wouldrongly suggested bjp win in 2004 and underestimated the size of the congressional victory in 2009. Two the australian election. The abc says Scott Morrison looks like he will be able to secure a majority government after his surprise win on saturday. Despite trailing in most polls during the campaign, the liberal coalition defeated labor and what morrison is calling a miracle. There was a ride in the unemployment race and he hopes the trade war will be over soon. That was his lowest level since january. I have always believed in miracles. [applause] and tonight, we have been delivered another one. [applause] how good is australia . To egypt now. At least 16 people have been wounded in a bomb attack on a tour bus outside cairo. It is the latest attack on egypts crusoe tourism egypts crucial Tourism Industry, which struggled in the wake of the 2011 uprising. No one has come forward to accept responsibility for the attack. In december, three tourists and a local guide were killed by another roadside blast in the same area. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Thank you so much. Before thenutes price discovery period from india. Im looking at futures right now, 300 points to the upside. Mumbai fording by in the Market Reaction to those exit polls. It looks like it is shaping up to be a mighty monday for equities. Definitely, especially for what came up with the exit poll results that showed that Prime Minister modi is set for another humongous victory. And without the help of any of the fence sitters, there could be a clear majority coming in for the bjp, and there could be an encore of what happened in 2014. Interestingly, in 2014, where was of their pressure between the north and the west, this time they are going quite wide. You can see the presence picking up in the east and the south of india. Markets ahead of these exit polls and ahead of any form of clarity was down almost 600 points, and now they can see a big pullback on the equity market. Part of the overhang is outoftheway. Caveat thatith the these exit polls they have been wrong in the past. Since thet for now, initial overhang of an unstable government is strongly outoftheway, you will see a big kneejerk reaction, at least from what the polls are indicating, a big move to the upside for the indian equity market. They came out with the numbers, they were absolutely horrible. What do we expect later today . Theres is a big impairment cost, which we reported as lost, never reported in the history of corporate india. Expectationsund, are still suffering with volume cuts, still suffering on the profit side. It is looking like we could see a dip around 80 and profits. The consolidated member is expected to be 73 , revenue dipping by 6. 5 . This time around, we are considering the overhang within the auto industry, weighing down on markets for all the other players in this is no different. Thank you. Joining us out of mumbai. You can also turn to your bloomberg for more on this from 11 00 a. M. Hong kong. You can get the latest comments and analysis from our expert editors. Check it out. This is bloomberg. Welcome back. You are watching Bloomberg Markets. We have some news lines coming through. The big story was last weekend, President Trump cutting off access, essentially, to the u. S. Market. Top u. S. Nderstand that Tech Companies havent caught up with viable supplies, including, based on sources, the likes of qualcomm and intel. Employeestold their and chipmakers that they will not be supplying huawei until further notice. We were talking also about google. Space,k at a smartphone everything apart from apple runs on Google Android software. More on this story later on in the show. They were saying they had enough stock to last about a year. We will monitor whats going on. Lets have a look at the business flash headlines. Expected to announce a series of commitments from the u. S. Government pushing their 26 billion merger ahead. Promiseold they will one of their prepaid brands and shore services, and also renew their pledge not to raise prices while a new 5g network is being created. Struggling iphone supplier needs an extra investor to secure a rescue package. They need additional funding in order to lock in a more than 700 million package on chinese and taiwanese firms. The report says negotiations wont be able to advance until the extra source of capital is found. Saudi arabia has 16 financial described as responsible finance. Insured to thedd entities meet these actual needs. Ncludes all right. Lets get your check of where we are in the markets. One theme isots, elections. There is the shocker in australia, which as you can see is playing off quite substantially, 1. 5 on the asx 200. Rba,e talking about the coming out below. We will see, because in terms of they haveuts, thats, been pulled back a little bit, that might have to do with the sentiment we are seeing across the region more so than a natural change in the fundamentals of the economy. The other one we are talking about is india. New can see nondeliverable forwards, 1. 5 stronger on the indian currency. We are also looking at china. When you look at the shanghai composite, we are back to levels of last february. That day was when the market essentially screamed higher. 3100 toa gap toward where we are right now. We could look at those two things as your support for the system, really consistent with what we are seeing here, pretty much what analysts have been saying is we are looking around 3300 on the index. Commodities mixed, sovereign also seeing yields pushing up. But the big story is india. Nifty futures are up. Will talkuest, we more about the politics in the challenges of the economy. Our next guest feels a coalition is government is likely to lead to a more decentralized decisionmaking process, of slow down and the pace of modern business reforms. India and analyst for south asia joins us live out of deli. Nice to see you. Good morning, nice to see you as well. You talk about a decentralized, less power. A decentralized decisionmaking process. Is that a bad thing . I think a decentralized process is not necessarily a bad thing, it means we are likely to whichore consensus usually has a lot of parties talking and participating in policy positions. To some extent it is likely to check any policy position. Its also the story of coalition governments. Had governments registered for the strongest economic performance. What should be on the to do list . What should modis priorities actually be here . Of theink irrespective makeup of the incoming administration, the next 12 to 18 months are likely to be addressing leader issues and related issues. The second aspect would be around consumer and economic sentiment, the economic shocks that have happened in 2016. The demonetization mode of the modi government, and then indias biggest act of independence was passed as well. Is addressing great issues and providing small and Medium Enterprises as well. Is there going to be a difference . Do we compare his first term with what is likely to be his second . Do you think there will be a big change . I think one of the key issues we are likely to see, one is the immediate focus, but i think more broadly what we are likely to see in the next decade is that there is a lot of owners thatwill be passed on, states are emerging as principal economic actors in their own life. Aboutre already talking billion and trillion dollar economies. I think the stories of the Economic Growth to some extent it puts all the focus on the federal elections and federal policies. Rishaad ask this question earlier on the structural challenges that modi faced when he first took power in 2014, compare that to the list they have right now. When i am trying to ask is how they actually moved the needle on any of these Structural Reforms that india desperately needs . I think to some extent there have been changes, under the previous government. Tax i and services think Going Forward, what the key policy agenda would be around addressing what they want, the key issue would be around looking at creating more jobs, creating more opportunities for a young population that wants to move up the social and economic letter. That will be the key policy agenda, which means the government will have more spending, although we did see to some extent increased spending on infrastructure, more of that effort in the coming years. Sectors like aviation, automotive, and more importantly, it is also likely to take a more active role in showing that manufacturing takes office well. Lets talk a little bit about geopolitics as well. There is rather bellicose language which was quite often directed at a lot of testosterone fueled nationalism, if you will. Do you think that was all bluster, or do we expect a more forceful india looking ahead as well . The think more broadly, idea is they will continue to maintain a lot more policy against pakistan. Already seen the significant politicization of the National Security over the last few months. That is likely to stay. It is definitely not all bluster. It means that they are likely to keep key positions and push forward others. We will leave it there, but thank you. Joining us on these exit polls. We have been talking about the india story, the oil story got pretty interesting as well. Saudi arabia and other key producers and opec signal intentions to keep well surprise constrained for the rest of the year, while pledging to prevent any genuine shortages. Are not arabia, we going to deviate from our targets for july in anticipation of either a decrease or increase for our target. We are going to commit, take an extra month on our loan, and i hope my other colleagues will do the same. We will not jump the gun. There are various options, including the production of limitations. If market demands that and if theres a deficit which we need to cover. Some voices theyre having a look at that opec meeting. Our asian Energy Reporter is it possible we could see a growing split between russia and other member groups . What went wrong here . That is the message we are seeing coming out of this. Saudi arabia is being very cautious about wanting to raise production, while russia is saying theres easing necessary. One of the big things to washes that saudi arabia is producing 500,000 Barrels Per Day under its cap right now, so it could boost production, increase revenue without changing the deal at all. Russia cant do that. So given the state of the oil market right now, how important is it for opec and opec plus to maintain these curves . Thats a really good question. We are worried about demand in the market right now. The chinau. S. Trade tensions are weighing on global growth, and we are seeing early signs that demand may be faltering. But at the same time the physical crude market is really strong. Prices for contracts are much higher now than further out, which means the supply disruptions from nigeria to norway to libya to venezuela are starting to weigh on buyers and make them worry about it. That is what saudi arabia is playing against, its up to them to decide what they think will outweigh the other. Stepping up a tough stance on iran. President trump has warned them not to make threats, tweeting that if it wants to pick up a fight, it will spell the official end of iran. Tensions are mounting. The u. S. Navy conducting battle Group Exercises in the arabian sea. For, war not looking but isnt afraid of confrontation. King salman has called a meeting of arab leaders next week. Lets crossover to jodi schneider, who joins us here in hong kong. How serious is this third of military action . Well, countries are worried. U. S. Allies are worried about these growing war of words between tehran and washington, but they are not really that worried about military action on the part of the u. S. , given that President Trump has repeatedly said he does not want to start fresh wars. The concern about the lack of communications on specific goals that the u. S. Wants to have they are still dismayed that the u. S. Left that 2015 Nuclear Allies haveu. S. Doubled down on their support for that accord with the visit by mr. Pompeo to brussels. Yet they dont seem terribly worried about real military action. President trump has repeatedly said not only does he want fresh military action around the world but he also doesnt want the u. S. To support others in spending. Jodi, speaking of military action, whats the latest here on saudi arabia, from their side, in terms of possible military action against iran . Isthere stance at this point that they will not start a war, but that they would, if iran withstart one, would act the strength and determination at that point. Their posture is we will not start one but we will defend ourselves. They are also saying that they have not seen an uptick in their exports, saudi arabia, of oil which is not changed appreciably, and they are noting that they dont think anyone is really paying that much attention to how much iran is exporting, even under the they dont think they are seeing an appreciable decline in recent weeks, with the sanctions being enhanced. Part, another interesting and another interesting note in the tensions between saudi arabia and iran. Jodi schneider, our Senior International editor. Coming up, chart to chart to compete for the battle of the charts, next. This is bloomberg. L the charts. Taking a look at our australian report. You can access the charts on the bloomberg with the numbers featured at the bottom of your screens. Good morning, good luck. Lets kick things off. Hey, guys. Oneave a bit of the tough between analysts and australian stock investors at the moment. As you can see, australian charts have busted through the 12 month price target by the most in more than two years following a sugar hit from the National Election that occurred over the weekend. Each time it has broken the analyst target of the stocks that proceeded to drop even with upward revision. The catalyst for the drop this time, cap in the middle of the u. S. China trade spat, not ending anytime soon. The australian economy is softening, the Housing Market is dwindling, that will be weighing on consumer spending. All of this is going to flow into midterm profits and we should see the drop in aussie stocks. Great. It remains to be seen what happens. Dan . Shows what oil traders are looking at. Saudi arabia and other countries met in jeddah. Saudi arabia is saying we need to keep Oil Production cuts longer and they are tearing their hair out because physical contracts are the strongest theyve been since 2014. Right now you are paying 2. 50 per barrel more for oil then you would three months down the line, and that has good indications for prices Going Forward. Physical demand always tends to pull futures demand along with it. Hmm. Im afraid im going for m. Im going for d. I dont want him to be pulling his hair out if he loses. Its a tie. Thanks, guys. This is bloomberg. Almost 11 00 in singapore and hong kong, 8 30 a. M. In dubai. The last hour of the morning session in hong kong. Im Rishaad Salamat and this is a look at our top stories. Top tech firms comply with President Trumps crackdown on huawei, and will no longer supply Critical Software and components. Elsewhere, elections bring the headlines. The aussie dollar strengthening as Scott Morrison pulls off a miracle win. In Narendra Modi on course for victory in india, exit poll suggesting the bjp will return to power, but exit polls have been wrong before. This is bloomberg. Lets have a look at whats happening. This year your this is your general market moves. , thailand and malaysia this is a position with the csi 300 down 23 points, looking at what else is going on, its about to these stocks, really mixed. Down,quity futures are looking for the chapter of this chinaamerica trade dispute. That surprise election victory for the conservative prime we saw itearlier moving to the downside, it erased some of the gains we did have and we also do currently have south korea shares on their way up but quiet this far. The rupee toepare but the dollar is losing 75 at the moment and the rupee is worth 69. 43. The 10 year yield is moved by prospect with an up era. Looking at some strong gains, some 43 minutes away. Lets find out whats happening with the first word news with rosalind chin. Injapan delivered a surprise fourthquarter growth figures that smashed expectations. Two. 1 an annualized compared with economist that may cause speculation that shinzo abe will delay a sales tax hike set for october. China has warned the u. S. That negotiating on equal terms is the only way to seoul trade issues. The foreign minister spoke to mike pompeo over the weekend, saying washington has harmed beijing with words and actions, including restricting Chinese Company from normal business operations. Exit polls in india suggest that Prime Minister Narendra Modi is heading for victory, and the bjp could even win an outright majority. Surveys say it could take as many as 350 seats, well over the 272 seat majority level. However exit polls in india have a reputation for being wildly inaccurate. They suggested the b. J. Penn would win in 2014 and underestimated the win in 2009. The abc says Scott Morrison is able to secure a majority government after his unexpected win on saturday. Despite trailing in most polls through the campaign, the liberal National Coalition defeated labor in what he calls a miracle. The aussie sank to 6868 amid arise in the Unemployment Rate amid hopes the trade war will be over soon. I have always believed in miracles. [applause] and tonight, weve been delivered another one. [applause] australia . Globa global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im rosalind chin. This is bloomberg. Thank you so much. Lets talk about that miracle. For more on the market impacts of the elections in australia and india, we are joined by our mliv strategist, mark cranfield. For the aussie, is it the same Going Forward . The problems facing morrison are the same as the other Prime Ministers. Quick whenbe pretty people look past the australian election. We see that this could stop the revolving door. Maybe, but we have heard that before in australia. There are much more significant things going on in australia, just because the government is coming back isnt to say they can do a great deal about the shortterm impact on the economy. Its a lot to do with the Global Economy and china and factors in the property market, still trying to find a bottom in australia. Theres a lot of other things going on which will not be solved immediately. The big thing is what happens with china. There is pressure for the rba to cut rates when and how much . We should get clarity soon afterwards the rba government will make a speech. We will hopefully get more direction on where they see things going. So far they have not been quite as dovish as people expected them to be. At the beginning of may, some people thought they would cut rates straightaway, but that didnt happen, and they didnt get an outlook for when they would cut rates even though the market was pricing that way. It could will be that they want to see more developments in the china trade situation. They want to hold their power just in case it turns into a global slowdown in the second half. Australia may need to do something not just for the domestic situation but the international situation. Although the bjp was expected to get through on this, it does look as though this victory could be bigger than anticipated, applauded by the investment community. Absolutely. I think the Foreign Community in particular, the government has generally been business friendly, which means they want to retain assets in the country. So far this month foreigners have comemet and they down about 6 at one stage. It shows Foreign Investors were beginning to get cautious and they werent sure how this election was going to go. A reasonable amount of money has been withdrawn in the last couple weeks. It wouldnt be surprising if we see a rush back to the india market, replacing some of the money which has been withdrawn in the last couple weeks. We can already see the indian rupee strengthening, and the indications are that the futures market is also a pretty strong move in singapore. It looks as though Foreign Investment is getting ready to put money back, and there could be quite a lot to go, considering what weve seen in the past few weeks. , mark thank you very much. Mark cranfield. You can turn to your bloomberg terminal to get more on those indian elections as the markets get going. You can get commentary and analysis from our expert editors. Over 4 guest manages billion usd in fixed income strategy, and he joins us now from sydney. Paul, what a surprise. What did you do when you pick yourself up off the floor after the Scott Morrison when . Whatstarted to think about it means for the fixed income market, the Government Bond market, and the currency. We have certainly been looking at politics as being a key influencer of our Interest Rate and currency policy Going Forward, much more so than central banks. Are very difficult to predict, so we have to work out how to invest in this everchanging political environment. What about the economic policies Scott Morrison has . Tax cuts is something he has promised how does that move the dial not just for the economy but more crucially for the reserve bank . It introduces a period of reflection for the central bank. We need to see what those policies mean for the economy, what it means for the domestic economy, for Economic Growth Going Forward. I wouldnt be surprised to see the central bank take a step back, and sit on the fence a little longer. Clearly there is a propensity for a dovish profile in the central bank. It may choose and to pause a little bit. Policies ofk the the surprise election, the reelection of the coalition, is probably better for the Government Bond market than the alternative and from an International Point of view investors could be looking to maintain their high exposure to australian Government Bonds. There is a shift away from centrist policies to the left or right and how that changes the Government Bond outlook. We are having a look at the question of the day. Is whereion of the day will this weeks political impact last longest . We are talking about the indian election in the australian one. Probably the indian one. Investorssentially like to use india as a diversifier away from the other emergingmarket exposures they have, and the fact that maybe we have some political stability again in india for some time because of the result of the election, maybe its more of the same, more of the status quote, with investors coming back if they are not already coming back to india. I think we could see a longerlasting effects australian markets, Government Bond markets, the currency markets, it is clearly more influenced by outsiders than the global trade war, global trade situation, Global Economic outlook. Maybe australia is more influenced by that that the domestic situation in india, which is going to be more stable. Paul, picking up on that, reaction in the market the aussie rose as much as 4 . Given thata blip, the problem has fazed by morrison. With stagnant wage growth and unemployment and the crisis in the Housing Market. There will have to be some significant changes to make a significant dent on all those underlying issues. From what we have read and what weve seen i dont think we will direction,h in that and clearly they have pushed to make some promises because of the support for labor. A significant change in the Economic Outlook from a domestic point of view. From overseasnce in the trade situation, and the underlying Housing Market, there will be key changes to that, a big influence Going Forward. The australian economy looks as though it will slow domestically over the next few months. Enough perhaps to keep the dovish bias from the rba. Outlooktheres also the from the global perspective which will also be more negative and more damming for the australian economy. I think both of those effects will undermine the Australian Dollar and keep support for the australian Government Bond market from overseas investment. Hang tight. More with him just ahead. We will discuss the delicate balancing act facing the worlds two biggest economies. Ofalso coming up, the ceo one of indias biggest Asset Managers is giving us his take on Narendra Modis election win and what it would mean for the Financial Markets. That and for. You are watching bloomberg. You are back with Bloomberg Markets. Investors have plenty to digest today, the bank of china has vetted has pledged to stabilize the yugo and we will hear more on policy when Jerome Powell delivers a keynote speech in florida. Market tohe complacent in pricing and how much the fed will actually cut . Yes, i think they are. In the near term, we can see the Federal Reserve cutting interest ends, and i think the front of the u. S. Treasury market has overpriced that opportunity. Having said that, we do see a lot of risk when it comes to the ongoing discussions about the trade war, the situation in the middle east and the gulf. There is bound to be some safe haven money that is distorting the Interest Rate outlook. That money which tends to go into treasuries when the outlook is uncertain. Think they can talk about Interest Rate cuts before and the negative frontend yield carve but at the moment the economy is doing all right. You talk about risk dovish Monetary Policy has driven the risk appetite. What do you make of inflation risks, given where oil prices are right now . Al . Will that play out Higher Commodity Prices in the oil price we have seen time and again all it is doing is taking away spending from other things, the cost of gasoline in your tank, the less you have to spend on other items. The underlying inflation pressures are likely to come from higher wages and generally the full employment. Those are the things the fed has it is notrned about, affecting the headline inflation rate. Its generally an overcapacity as a result of that as well. The Federal Reserve is reinventing their model, trying to work out what they do next. Coming through from the trade situation, feeding into higher costs, that should lead to higher ppi costs, input costs, cost of production, necessarily leading to higher headline inflation. Trade, itsoned amazing we managed to talk about this without the trade war. Must haveme markets a lot of money going into chinese bonds right now, the sentiment has opened up and the thing is how much consternation is there among investors not to get too invested in china because of the uncertainty and the rmb which could slide further . Point, and something we are all grappling with. Lookingal managers are its diversification. Static, low from Interest Rate policies and possibly from the u. S. In the future, trying to get away from flat yield curves. Difficult to make a good total return. Investors are looking for other things that could give them a way of moving away from that centralbank fixation and of course china is one of those. Clearly different but it is economies clearly operating at a different profile to the more western economies and that is where you get the diversification benefit. Market and that is what Global Fixed Income managers do, that is what they are used to doing. U. S. Market but hedge the dollar same thing with other developed markets and if you like the bond market you will not like the currency. That is where you tend to focus your time and effort. I dont see anything wrong with having that approach, it will be more difficult in china because of the liquidity but it is something we are used to doing. Thank you very much for joining us. Markets, on bloomberg wall ways future is looking cloudier by the day. Details coming your way, next. This is bloomberg. Lets do a quick check of the latest business flash headlines. Another blow for nissan. The embassy cuts its a Rating Outlook and there is a more than one in three chance of a proper recovery, in the carmaker will likely remain under more pressure than its rival due to slumping sales in europe and north america. S p also says the costs are set to rise as it continues to change and use technology. Struggling iphone suppliers, denying claims for an extra investor to help the cure. Additional funding in order to lock in a more than 700 Million Dollar package from a group of chinese and taiwanese funds. The rescue negotiations wont be able to advance until the extra source of capital is found. Huawei is facing another major setback, top u. S. Companies cutting off crucial supplies. Google is ending some of its business ties with the company, along with qualcomm and intel complying with the Trump Administration crackdown on chinas Biggest Technology company. Our asia tech executive editor has this developing story in tokyo. What is happening now with huawei and the suppliers . The phones used the Android System as an intrinsic part of that. What people familiar with the matter are telling us is that many of americas Top Technology companies are cutting off huawei. It is not entirely unexpected. The Trump Administration put in place this ban on American Companies supplying gear to huawei at the end of last week. Now we are hearing among those names, google, intel, qualcomm, broadcom these are critical components makers that have been supplying them, both for its smartphone business and its networking business. This is a pretty significant step for them, as we have written, they have stockpiled some supplies in certain cases to continue supplying their customers. They have built up inventories of chips and software and other things it needs to produce these products. But our sources have told us is that these supplies are at least three months long and there are mixed reports about going for a longer period, but it is important to remember that this kind of Technology Gets old after a very short period. The things they have stockpiled can only last so long. Peter, put it in context for us. How important are these for a while way . These are essential components. Google develops the android operating system, the most popular operating system in the world. Qualcomm makes chips for smartphones. Broadcom in xilinx make chips used in networking gear. These are the topoftheline components for these kinds of equipment. Hallway has been trying to develop alternative supplies and it is difficult to get the best technology. Peter elstrom, we leave it there. Plenty more to come. This is bloomberg. Singapore. Ts out of we are not in the middle of the trading day. Singapore is having a public holiday. When you take a look at the currency, it is in play, down about. 1 . Marketr, this is the that is pretty much exposed to trade, and any bad news out of the u. S. China trade war, they get impacted. Lets get the first word headlines with rosalind chin. Thanks. Saudi arabia and other top policy leaders are signaling whileent to keep also preventing shortages. However, it is not clear how much pressure shares that view. The Energy Minister talked about potentially relaxing the opec plus output curve. Saudi says the group must a united. My recommendation to my drive downwill be to projected stay on the inventories to a normal level while making sure that no refinery, no customer is left without their requirement. Tensions are rising in the middle east as the u. S. Navy conducts battle Group Exercises in the arabian sea to counter an alleged threat from iran. The senior military commander in tehran says iran is not looking for war, but is not afraid of confrontation. Saudi arabia echoed the call for calm, but syed wont hesitate to defend itself against iraq. King selmont has called a meeting of arab leaders next week. U. K. Opposition leader Jeremy Corbyn is backing a second brexit referendum, saying the public should be given a choice on any deal to leave the European Union. Talks between labor and the government broke up without agreement, each side blaming the other. The Prime Minister still hopes to push her brexit filter parliament before stepping down. What we thought the general election on was to respect the results of the referendum, and that was done to try to get a deal which guarantees train and relations in the eu, and i think its reasonable to have a public vote to decide on that. At least 16 people have been wounded in a bomb attack near the pyramids outside cairo. It is the latest attack on egypts crucial Tourism Industry in the aftermath of the 2011 uprising. No group has admitted carrying out the attack. Tourists andthree a local guide were killed in the same area. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im rosalind chin. This is bloomberg. Lets get straight to markets in india and have a look at the prospects. We just had this nifty contract, up 2. 3 , even some very strong gains for those equities in mumbai. Investors are digesting these exit polls, which do suggest that Narendra Modi is poised for victory. That gives the bjp and its allies more in the economy which is riddled with problems such as a looming jobs crisis and struggling rules. Lets get the executive producer. These exit polls were quite something. Should they be believed . [laughter] given the fact that it has had an obsolete majority, all predicting that Prime Minister modi will come back, and come back not just for india but the the caveat is exit polls dont have a great history. In 2004 they got it completely wrong. Victory de of the but we will wait for the action numbers to come but directionally it looks like it is coming back. And it has a big to do list. We just mentioned some of those things that had to be tackled. Tell me about it. A bunch of officials there is a very clear economic and everything indicates the economy is slowing down. Downconsumption is slowing which does not bode well for the economy at all, given the fact that Global Factors are not playing favorably toward india. The second is the jobs crisis, it has been the face of jobless growth, which had serious social ramifications. The third and equally important they have become extremely unviable as an occupation and you are seeing protests across the country over the last couple years that made governments a witness. There hasnt been a comprehensive solution by the Modi Administration so far. One of the others will have to handle the issue of jobs and farmers. There are expectations that even if modi does win, it will be a slim majority, and that means working towards a coalition. How viable do you think this will be, and will he have enough support to push through his reform agenda . Well, if the exit polls or anything to go by, i dont think its a question of coalition at all. As i mentioned, directionally, there are supporting theories that it will be comprehensive it might emerge as the Single Largest Party comprehensively crossing the 32 mark. Out,ing that does not play i think most exit polls say india will be home comfortably. There is no data point for us to believe right now, any other coalition for combination of parties could come anywhere to that mark. Having said that, even if that happens, there are two important questions who will become the Prime Minister, because you dont know who the Prime Minister candidate is and how stable will that be . Both may not bode well as far as the Financial Markets are concerned. They like continuity and the like stability, both which india seems to promise. Reading the tea leaves right now, results out on thursday. The executive producer for Bloomberg News in mumbai, thank you. Our next guest says indias appetite and bond markets looks like a trap for bond market investors. The largest indian asset manager worth over 100 billion. Good to have you with us. Will you be jumping in on that . Will you be telling investors it is time to get into india . We have been saying that since the beginning of the year. We believe that one of the easiest calls in india is an election simply because of the tremendous ending that happened, the way votes are one, both parties would go doortodoor and village to village, trading all of these things lead up to winning an election process and as the leadership of india has shown, they view the business of running the country and the business of legal action as distinct projects and both of them sometimes have majorities. Right now they have been focused on winning the election no matter what it takes they will deliver the results. Them butike to believe it has never known until the last finale is done. How much for upside . If it is true that modi wins . It is difficult to call but i would imagine if he does come back it will be 3 to 4 . Is it a consumption story . Very much so. If you view india intrinsically from what is going on, historic trend. It looks like it is slowing down. But the moment you compare to the rest of the world it presents a very compelling story. There is no growth to be had everywhere in the world. The euro zone is struggling. The u. S. Is looking at a rate cut this year or early next year. More than 10 trillion of global Government Debt in negative yielding territory. There is no growth to be had, therefore on a relative measure india still looks more attractive. It is a consumption story, to say that the auto sector will be included. That has been the weakest link. It has had the worst performance among all sectors in india. Autos eventually will come back. And it will come is essentially germinates from agriculture. Even agriculture is about 16 of gdp, and it has a direct impact on more than 60 of indias population. Theres a very high correlation between that and the spending power that is unleashed on the towns and big cities, and this Ripple Effect of consumption starts with the good that if we have a timely monsoon this year you can expect consumption to pick up by september or october. Its an economy which is dictated to by the strength of that, and it is also, as you say, because of the importance of the rules side of things. It then brings that into focus, because theres been a lot of disenchantment with policies conducted by the bjp administration, affecting the rural side of things. How does this government address that . It has been a tough call for Prime Minister modi to walk a very fine line managing both sides, the extreme leftwingers and rightwingers in his own party. The bulk of the reform, id say, has been pitched at the bottom 25 of the country population. If you look at bringing sanitation to villages, bringing toilets to rural schools, to allow girls to go to school and get a primary education, all these things have been aimed at improving rule india. In the immediate shortterm, raising the minimum support price for farmers was a step in the right direction, and as we can see, inflation has been undershooting the target for the better part of this year. And we should like to be somewhere closer to 4 . It is probably the biggest and as he has rightly highlighted, Water Management is going to be his biggest drive. We dont expect any big banks, reforms. All of that is done and dusted. With the trade war taking place between china and the united states, that causes global ripples, india being one economy which is rising, its Domestic Industries and the consumption stories being intact in the past. Does it not make it a haven compared to whats going on elsewhere . Completely,gree however in this super connected world no one can afford to be an innocent bystander anymore. The way the trade war impacts india lets say you are ahead fund manager and you suddenly see an emerging view of the markets because china is doing badly as a result of trade wars. How do you express the china negative view . The bulk of it comes by dumping global emerging markets, etfs, and funds, because china is a big proportion of that. India is a smaller proportion but then india becomes Collateral Damage any time adverse em view was expressed. We will continue to see a degree of volatility, but in the long term the intrinsic growth is going to make a difference. Stick around for us. We will have the repercussions of these exit polls. We have Indian Markets reacting in a couple minutes. We are over in mumbai for the start of a new trading week. This is bloomberg. Welcome back. Indias markets have just opened. Lets get right to mumbai, where our guest can take us through what to expect from todays session. The focus is on those exit polls, showing the bjp on course to win. How will that play out . How is that playing out . Seen the already extent,to a certain with the return of bjp and we are seeing that extension coming through. 2. 5 games from both of these indices, showing a lot of strength, and the same can be said about the banking index which is up nearly 3 . The markets are now starting to and we havee wind seen a sharp decline in the volatility index which is down as much as 27 . Thank you. India goes up to. 6 with those exit polls indicating Narendra Modi will be returning to power. Lets get more from our other guest, thank you for sticking around with us. We have a lot more to do. You said it comes with big about thees, but what aerospace side of things. It is one part of the economies where they are emblematic of there being these restricted practices that have been there for years. I mean, Airline Industries it is plagued with all kinds of problems globally, and it reminds me the best way to become a millionaire in the Airline Business is to start off as a billionaire. Given the fluctuations of oil prices and hedging most airlines do and the way routes are divided, the most comfortable ones have been given to jet and india, and despite that they have struggled. There have been some signs of stress. The opening of the Airline Industry for foreign participation was a great move, but we have to see further improvement in the sector. Where else . What else needs to be done to make india more open . I think its more of the same. It starts with credit. There is a serious need for expansionary credit in the country, and the Public Sector banks arent getting the challenge. The lifeblood of indias economy, the private capital enterprises, that is starving and we have seen even the shadow banking side,. That i think is the trigger. After the elections, the focus goes back to the economy, back to what the r. B. I. Will do. What are your earnings . Earnings have been the one bright light in this dark scenario, because earnings have 2018,ed between 2011 and the growth of earnings was below 2018, theyeady in breached 9 . Thankfully they have started improving. I think india has entered a new cycle where we will see earnings. R. B. I. Has to cut Interest Rates simply because of the inflation targeting. We know they cant be more than 2 off inflation, and we have ppi below 3 . The question is how soon and how many . At least two rate cuts. One, possibly, next month, but one definitely after september. And in terms of growth, modi needs to increase the growth that the country has right now to pull more people out of poverty. How soon can he do that and what would it take . I guess the animal spirits of the country, which i have always been in favor of they need to be unleashed, and we need to see increased reserve spending, which would strengthen modis hand if he had greater tax selection. We need to see more government spending, infrastructure, logistics. Question, assuming there is going to be a second easily i would say 8. 5. Wow. Ok. How could he get it to 10 . [laughter] the twould have tackled remaining blockbuster reforms the country needs, labor reform and land reform. Ok. Thank you very much. Up, heres the outlook, for oil comments from the opec plus meeting amid plans for russia not being entirely happy. Lets have a quick check of the business flash headlines. Top American Companies are freezing this suppliers to huawei, after a Trump Administration crackdown on the company. Chipmakers intel, qualcomm, xilinx, and broadcom will not service them until further notice. Google is said to cut out certain hardware and software, on accusations of spying for beijing. Taiyo yuden strongly rebuking the separation of imported cars threatening National Security, saying it sends a message that the investment in america is not welcome. The president is complaining of a declining market share for u. S. Carmakers, and has given the eu six months to negotiate the new deals. He says curving imports would force u. S. Consumers to pay more and hurt u. S. Jobs and the economy. Lets talk crude. Lets do a check on oil prices. We had brent crude up by 1. 5 , oil started the week strongly, as opec plus members signal they will keep the supply constrained. But it was less clear how far russia shared their view. We are notabia, going to deviate from our target for july in anticipation in either of increase or decrease. We will commit and take an extra month on their on our own and i hope my other colleagues will do the same and will not jump the gun. There are various options, including flexing production and limitations. If the market demands that and if there is a deficit we need to cover. Lets bring in our asian Energy Reporter. Is it possible we saw a growing slip within russia and other members of the group . What happened there . It is certainly possible. One thing that is important to keep in mind, if you look at the way saudi arabia and russia are looking at the oil market differently, saudi arabia has really throttled production. It is producing about 8. 9 million Barrels Per Day, 500,000 Barrels Per Day less than it agreed to. Hasia, on the other hand, been a lot slower implementing its cuts. Right now it has only reached levels it promised to get to. If the current agreement is extended through the end of the year, like saudi arabia is asking, saudi arabia would basically get to increase output, whereas russia would be stuck at the same level. With oil prices having risen 40 to the 70s, both countries would really like to get that extra revenue from increasing production. Where are we with the supply and demand equation for crude, and how does that dovetail into the amount of pressure that there is on these producers to maintain these cuts . Thats a great question. Wel market right now are looking at two different forces. Traders are really worried about demand because you are seeing the u. S. China trade tensions continue. You are wondering how much the Global Economy will keep going and how much oil we will need. But if you look at the oil market itself, physical demand is really strong right now. Futures for delivery are at the highest level compared to three months out and they have been since 2014, when oil was 100 per barrel. You can focus on either one of those areas and decide which one you believe the oil market is heading toward. That is what russia and saudi arabia have to decide. Joining us from singapore. A quick check of the Indian Markets, we are on an absolute tear in light of those exit polls, suggesting Narendra Modi will have a majority at the next houses of parliament in india. Thats it for Bloomberg Markets . Asia bloomberg daybreak middle east is next. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg l. P. , its affiliates or its employees. The following is a paid presentation for the power air fryer oven brought to you by tristar products. We introduced the power air yer and its become possible to enjoy the friday, crunchy foods you enjoy. Air frying is taking a quantum leap forward. Introducing the air fryer than can air fry more than