In hong kong demonstrators clashing with police. Doubts grow over Masayoshi Sons investment record. Topics question his strategy after a series of expensive setbacks. Desktop banks question his strategy. Staggered open, not seeing a huge amount of action. We are up. 1 . Looks like a positive day rolling a flat close of u. S. Equity markets friday. Good news from the u. S. China trade dispute, seems to have been priced in. New zealand has been flat all morning. Seeing modest gains for nikkei futures as well. By s p is pointing higher. 1 . We have also had out of economic the midyear and fiscal outlook. The surplus budget is falling, narrowing a little, same story for the following year and the growth forecast, the government trimming. 5 . A lot of data out of china. We will have new home prices, fixed assets, Industrial Production among others. Later on we are joined by the australian finance minister. He will be joining us on daybreak asia to discuss the budget and a look. For now lets check in on first word news. In india protests against the new citizenship law directed in new delhi with buses set on fire and parts of the subway system shutdown. Demonstrations spread from the eastern state. They also forced the postponement of a planned visit by shinzo abe. New law thatpose a grants citizenship for undocumented migrants based on religion and bars muslims from applying. The International Effort to rein in fossil fuel pollution has stumbled after talks weakened language agreed to in previous years. Delegates left madrid after two weeks of discussions, agreeing only on the urgent need for deeper cuts to greenhouse gases. They shelled work on Market Mechanisms shelled work on Market Mechanisms. Smogstralia the choking blanketing sydney is called a Public Health emergency by a group of doctors and researchers. Air pollution throughout the city and eastern New South Wales is 11 times greater than the established threshold for hazardous levels. As of sunday morning there were 106 bushfires in the state. 57 were burning out of control. A heat wave in Western Australia is expected to move east this week. And English Football Club arsenal is facing backlash from china after one of the top players attacked the treatment of weaker muslims. Uighur muslims. They tried to distance themselves from the remarks made by the star player. Earlier the nba was slammed after an after an executive showed the port for prodemocracy and showed support for prodemocracy in hong kong. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Kathleen the u. S. And china have agreed to the first phase of a broad trade agreement, bringing some calm. Tom mackenzie is in beijing. When you look at what the u. S. And china are saying, what can we tell for sure . The we are waiting for details. The lawyers are going through the text. Robert lighthizer has said they are looking to sign in early january. Uri to suggest in terms of the details they are few and far between. Is fromknow is focused the chinese side. The threatened tariffs for december 15 of another 160 billion, they have not come into play. They have been taken off the table. You had a commitment by the u. S. To cut in half from 15 , tariffs from 120 billion of chinese goods. Tariffs relief, even 25 tariffs made on a larger block of chinese goods. They could use it as an enforcement mechanism. The chinese are preparing to purchase an additional 200 billion worth of goods and services from the u. S. On top of the 187 billion it was buying that is according to Robert Lighthizer in terms of the chinese commitment. We have some commitment around intellectual property, transfer and currency but we are waiting for more details. Lighthizer saying the negotiations should happen in early january. Trump has suggested they will move quickly to phase two but we dont have any dates. That is where the tricky issues of state subsidies and industrial policy come into play if they get into those second rounds. Mean for what does it the chinese economy . At least the summer 15 tariffs are not going in. December 15 tariffs are not going in. Tom it is about business sentiment. China is hoping it makes it easier for them to meet the goal juggling 2020 of doubling gdp. It could go some way to helping the meat that goal. They will meet growth of 5. 9 to achieve that. Bloomberg economics saying in terms of monetary easing, the policy response, it is less urgent now the pboc to step on the pedal in terms of aggressive easing now you have this phase one trade deal out of the way and the prospect of further retaliation and breakdown from the trade front looking less likely. China is threatened to retaliate against germany if it bans huawei. One of the details . What are the details . Tom there are still questions with security and particularly in germany. The ruling relation is divided on this coalition is divided on this. Merkel and her minister say there should be no laws that ban huawei, but some of her people are concerned about the security implications of huawei which the Company Denies any links to espionage and concerns around cybersecurity. Some of the Coalition Partners are pushing through legislation which would ban huawei from germanys five g network even if it doesnt name the company. You get the ambassador to germany saying if it happens and goes into law, we will be forced to take consequences. They will be forced to retaliate. He said china is the largest market for german automakers. Something of a veiled threat as the germans get their heads around how to deal with huawei and of course many European Countries do as well. Paul thank you for joining us. The associate director alice brown. Thank you for joining us today. Lets talk about the trade deal. It is great to have phase one done. Very muted reaction on u. S. Equities markets. In australia we are up. 4 . . R people being cautious are the people being cautious . We had cautious gains. This was anticipated since october where we knew they were working on this. It covers a number of items. A lot of the more complex issues, significant issues andnd intellectual property subsidies to stateowned firms will be a part of phase two. There will be some uncertainty on the table. That is why we havent seen much rallying in the u. S. Market. Paul is there a seasonal aspect of this . There has been but the largest story is the pentup investment demand because we have had two major issues and uncertainties on the table for over a year, that being brexit, which we got certainty around with the conservative majority taking power in parliament and u. S. China trade war. So that we have avoided the most worstcase scenario which would ,ave been escalation of tariffs is a positive. There is more demand as business comes back to the markets around the globe. Question regarding actual investment, i am a company. Am i going to get into . It is one thing to buy shares, but i wonder if the absence of how bad the brexit could be or the trade deal could be is enough to bring people back to looking at 2020 where we say i am ready to get off of my chair and really send investment to the economy to help it grow more . You are right. If we think of the u. K. , we can say the heavy toll that has had, it is growing at the slowest pace in eight years. The businesses have delayed their investment decisions. Certainly the initial hurdle that is being passed is a positive, but there will be more in the year ahead. We know that the government has until next december to negotiate the future relationship with europe. Even that deadline is relatively short. It is quite optimistic to believe that will be the case. We might see an extension. It will take some time for businesses to feel more confident. Overall we expect to see a resurgence in Global Trading volumes over the next year. That is why there has been talk of a Global Recovery unfolding. Kathleen the federal Interest Rate reserve bonds was widely telegraphed. There was data and the emphasis on the consumer being strong. Nevertheless consensus on the docks that represent the fomc forecast, the vast majority say we are not going to cut or hike next year. How does that factor in to your outlook . The u. S. Economy throughout the trade war has proved to be very resilient and robust. That is because unlike china, they are not reliant on exports. Gdp is made up the gdp is made of domestic consumption. Consumers have remained strong. That is cause for the Federal Reserve to indicate rates will be on hold throughout 2020. The next indication they have given is an Interest Rate hike in 2021 all the seem more skeptical. They are pricing in one Interest Rate cut next year. Overall it provides a supportive environment for businesses and american households to continue feeling confident. They have got a record low rate of unemployment and steady growth. We are going to continue to say the economy is expanding in its 12 year next year. That is really why in terms of investment we are still comfortable investing in the u. S. Market, although we need to be selective because it is expensive. We want to be looking for companies that are innovating at disrupting executives. Paul i want to get your thoughts on a straily of. On australia. We are seeing a big runup on the asx. You are cautious. We are. With the government, they have trimmed their Budget Surplus estimate. Expectations on growth, wages growth. A big really seeing disconnect between a strong share Market Performance and very gloomy economic act drop. That is really what i have spoken about the u. S. Consumer, if we compare that to australia, here is a lack of confidence by businesses and consumers. That is because households are preparing to save rather than spend. We have seen that pick up. Sadly it doesnt appear to be the case there is any momentum. That is the reason we are cautious on the asx. Paul one wonders how much worse that would be with a conservative estimate. I want to talk about Infrastructure Spending. We have seen new zealand together a generous stimulus package. The rba has been calling for something similar. Is it time to break the election process . That is an interesting comment we have seen for quite some time. The reserve bank has been advocating for fiscal stimulus. They wont get it today. There have not been any big announcements when it comes to h care. A lot of it had been accounted for and it is formalizing it. We would like to see more stimulus because the rba is so constrained. They have they dont have with recorder left low Interest Rates. It remains to be seen. That is one of the reasons investors have penciled in another Interest Rate cut for february. Paul on their own at the moment. Thank you for joining us. We want to get you an alert from the bloomberg terminal. The enzi i. E. Are, a consensus survey of new zealand, published its results. Seeing 2019 to 2020 gdp growth at 2. 2 , a little weaker than they had forecast. Still to come, seeing oil market stabilizing. We will have highlights from our exclusive interview ahead. Kathleen and more clashes in hong kong. Carrie lam going to beijing. This is bloomberg. Loomberg. Paul this is daybreak asia. I am paul allen. Kathleen i am Kathleen Hays. Hong kong antigovernment protesters clashed with police after an otherwise peaceful weekend. Carrie lam met with top officials in beijing to give a debrief. Editor Jodi Schneider is joining us now. Nteresting juxtaposition carrie lam is explaining something in china. The protests continue. They do. Part of it is frustration by thatof those demonstrators there has not been more done. Carrie lam has not responded what they view as an effective way since a record turnout elections last month. Another very large demonstration. Demonstrators say as many as 800,000 people a weekend ago. It was relatively peaceful until sunday night and then there were clashes with police and then there was one in a tourist market. Things thrown into your gas. Looked like the unrest we had seen in the past six months since the protests began in june. Kathleen what do we know so far about carrie lam in beijing . She is there to meet with them to describe the situation. It is interesting timing given the major generation major demonstrations and elections where 71 of the population turned out and largely were supporting prodemocracy candidates. They were very local elections. These were not Legislative Council elections which will happen later next year. That is interesting. Interestedle here and some concerned about how the discussions could go. Carrie lam has continued to be supported by officials in beijing even as she has record low Approval Ratings in hong kong. Lam no sign of carrie making any concessions on the remaining four of five protesters demands. What will happen next or is nothing . The protesters here and those helping organize a protest and even in Civil Society feel that without a reaction or anything given to cut from the elections, the situation is likely to continue. We have had the economic effects rolling in. The economy, which slid into recession in the third quarter, has continued to show effects from the unrest. We got some numbers in from the airort authorities saying traffic was down, passenger traffic was down another 16 in november from a year earlier with 5 million passengers. Up ofe seen a drying passengers from, visitors from the mainland which has been the main source of visitor traffic to hong kong. Last february we saw a Record Number of mainlanders coming, support that has had dire economic effects particularly for the hotel, restaurant Retail Industries which have been feeling the effects. We will continue to see that in the new year. There is nothing to tell us anything is going to be different especially with carrie lam visiting with officials in beijing and not really talking to the people of hong kong. Those conditions happening on carrie lams watch, she is in beijing at the moment. Is there any evidence in beijing of appetite for a new chief executive . What is her future . That is the question that comes up in many conversations in hong kong. There has been no indication from beijing they will replace her. One would think with such low Approval Ratings and her being a target of the protests, all of these signs that are about carrie lam, it would make sense totry to come up with a plan replace her. Beijing has shown no signs. We have not heard that. She keeps saying she is not resigning even after a tape that said she wanted to. She will continue to serve out her term which she is several years into. She says it is important for her to stay on to resolve this peacefully even though she hasnt given, after getting finally, withdrawing the extradition bill, that was the start of the protests, after doing that, she hasnt given in orall to any of the demands some of the discussion among people in business and legal circles for things like an independent investigation of the police. She said she cant do that. What she needs is for the protesters to stop, the unrest to stop and then they can have a conversation. Doesnt look like it will happen anytime soon unless something is given from her and the government. You very much for joining us. We have plenty more to come. This is bloomberg. Quick checkw for a on business flash headlines. Leading chinese automaker plans to double its stake in daimler. 10 and could to bring a seat on the board. The move could make it the biggest shareholder. Paul a Chinese Private equity firm has received government approval to buy a 15 stake in the largest maker of airconditioning units. It is worth 7. 5 billion and makes chinas push to reduce state ownership in his most competitive industries. About chineserts groups taking over british steel. The deal is at risk of falling through but the guardian says it is still on. Capital controls being imposed on senior Chinese Government officials could still uproot the deal. The deal is done and new tariffs are on the table but details are sparse at best. More just ahead. This is bloomberg. [ dramatic music ] this holiday. Ahhhhh ahhhhh a distant friend returns. Elliott. You came back and while lots of things have changed. Wooooah woah its called the internet. Some things havent. Get ready for a reunion 3 million light years in the making. Woohoo yeah pictures of sydney harbour, smokefree. That is thanks to the wind direction. The smoke is circling the city and expected to return. Up. 75 currently percent. All sectors are higher. The sydni dollar pulled back a little bit. After the midyear outlook. Forecasts forecast surplus was turned back as was the growth rate. Down to 2. 25 . No fiscal stimulus from the government. We will get more on this with our interview with the australian finance minister later on what we will discuss the content of the budget and outlook. Lets get over to su keenan. Su we start in hong kong where protesters clashed with police at a subway station. This was a small scale demonstration. Standoffs continued into the night as protesters blocked roads and Police Fire Tear gas. The violence came as the chief executive carrie lam visited beijing to give xi jinping a full account of what has happened in hong kong the past year. Protests continue to hurt the economy. Passenger traffic at the airport fell 16 . The total number of flights in and out of hong kong dropped 8 . Cargo throughput dropped 6 . 4. 5 million tons. Property speculators in china are being even a warning to think given a warning to think carefully about the real estate market. Homes are for living in an some see it as a veiled warning. They could boost Financial Sup