Monetary policy but says more can be done. A year after listing in hong kong, a Logistics Company discusses real estate, fund management, and the impact of covid19. We speak with the chairman later this hour. Haidi breaking news crossing the bloomberg when it comes to the pmi indicators out of australia. For augustumber still in contractionary territory at 49, better than the previous reading of 48. 1. The pmi composite number, a little bit of an uptick but still in contraction territory. It will be a while before we see a meaningful recovery given we are hearing in domestic media that the state for restriction law down in victoria, melbourne, and surrounding areas could be extended by another two weeks as we continue to get these numbers out of victoria. We have seen a jump about 100 new virus cases for the first time in three days. Another exuberant session for the u. S. Tech underperformed. The s p jumping the most in almost two months to another alltime high but interestingly, the russell 1000 value index outpacing its growth counterparts. Interesting that utilities and the three, two out of worstperforming sectors actually outperformed. We are setting up for a mixed to positive session. A mild level of positivity when it comes to the future session as we get greater certainty that the chief cabinet secretary will be the man to replace shinzo abe in that leadership role. Dollar yen holding at 106. 20. We had a rebound in the dollar, rising the most in a fortnight overnight and new york crude is. 65. Ring at 41 sophie at a time when we are seeing governments ramp up their bond issuance, thailand not doing so. Debt Management Office likely to sell fewer bonds this fiscal year, looking to borrow potentially 450 sale ofbhat through the securities and term loads. The debt Management Office says they want to make sure that borrowing will not disrupt the bond market. Haidi. On finding value in a high valuation market, lets turn to the chief global economist and global head of microstrategy. Always great to have you. Its interesting that we saw a slight hint of rotation in the overnight session but by and large, it has been a common refrain that valuations are a nosebleed but you have to stay invested. Where else in the market are you looking for yields at the moment . Key question, where do we find yields . Government bonds are giving us nothing and in some currencies, actually negative returns, so we are absolutely going to see continued rotation of portfolios towards other Asset Classes. For a lot of investors, that will continue to be equities and risk but in my view, it will be a move towards under owns Asset Classes which includes asia, emerging market debt. I would not be surprised if we begin to see the alternative assets like infrastructure funds actually become the opposite of alternative but a lot more common. This is going to be the biggest investment challenge for Pension Funds and large Asset Allocation investors. What do you do when government bonds are giving you zero or less than . Haidi if you are a longerterm investor, is it not just a biased market when you take a look at some of the beatendown sectors and names that will eventually emerge out of this crisis as we get to some kind of normal and perhaps even do better because they have been forced to cut costs and get leaner during this time . Isthat is the key theme which companies two years from now, on the others of covid, still look strong. This is a market that has spent a lot of time thinking about what we look like on the other cited covid. On the other set of covid, when these economies recover, when the virus hopefully disappears, we are still going to have extraordinarily low Interest Rates. On the others of covid, so many of these companies have higher pricing power, less competition, and extraordinarily low Interest Rates. When you talk to portfolio managers, they will tell you i can very comfortably have an extremely very attractive discount rate even at these high levels of the game has changed not just because Interest Rates fell to zero but because the messages are going to be zero for an extended period of time. Where do we go towards under owned Asset Classes that can perform well in that economy . They include nonus alternatives. To get morent specific on the em Debt Opportunities you are seeing. We have divergent recovery across the em space investors seeing the riskreward given these low rate conditions. Where specifically are you positioning . As an economist, a strategist, when i speak to the portfolio managers, the big theme for us has been Pay Attention to the manufacturingbased economies. This recovery is very unique. When we see larger sessions or depressions its the supply and demand side and you end up in this inflationary demand cycle but now, what we are seeing is the supply side looks like it has been cut more aggressively so we are expecting more inflationary pressures to come back and we are expecting manufacturing and production to come back online more quickly. We see this in the pmi data that is showing a strong recovery even if Consumer Confidence remains low. Look towards those economies most capable of recovering quickly. They are manufacturing based. There are more of them in asia. That makes sense to me from a macro perspective. Sophie overnight, we saw a reversal in popular trades. Trades coming back into the fray. Persist . Steepening i am a believer. I believe we have a paradigm shift when it comes to u. S. Inflation in particular and not because of Monetary Policy but because we are seeing extraordinary levels of fiscal stimulus, stimulus we have seen almost never before and in some cases, never before in many of these large economies. Be fundamentally inflationary. We are seeing globalization trends push up prices and inflation has come back online much bigger quicker in this recession than in past ones. We have seen breakevens with quite a bit. You will always have a backup in that trade. Things dont go up in a straight line. Economists dont have a good track record at predicting inflation and my sense is we are entering a new environment where a lot of the determinants of inflation will shift leadership. That is something we need to watch closely. Real rates can go further down. Breakevens can move higher in my view. Frances, with market stability seen after the u. S. Election, how is that feeding into your strategy . I cannot predict an election outcome. We tried in past events internationally. Our view is to focus on the trades that make sense no matter what, no matter who wins the election and thats large infrastructure spend, ongoing deglobalization, ongoing regulation of the tech sectors. Theres a lot of trades that make sense no matter what. We dont try to make big calls on election outcomes. Focus on what is true regardless. Theres a lot of great themes including inflationary pressures that come out. Even if you dont ignore the outcome from this election. Sophie thank you. Annces donald from Investment Management company. First word headlines. Sources in washington say the Trump Administration is debating the scope and date of threatened action against chinese social media app tiktok and wechat and will make an announcement later this month. The Commerce Department is drafting clarifications on specific transactions that will be banned between the two companies and u. S. Businesses. The decision may come around september 20. Global Coronavirus Infections are approaching 26 million with President Trumps top disease expert warning the coming long weekend may lead to a surge in cases in the u. S. At the same time, the centers for Disease Control have told state officials to prepare for a vaccine to be ready by the start of november. Cases are rising in france at the fastest pace yet while inspections in spain are at a four month high. Singapores Prime Ministers has his country cannot sustain emergency virus support forever. He was giving his first parliamentary address since julys general election. He says singapore must make the best use of its Financial Resources in a targeted manner to stem the economic fallout from the coronavirus pandemic. Singapore spent 100 billion popping up its economy. Germany says tests carried out in a berlin hospital show unequivocally that russian Opposition Leader was poisoned by a military grade nerve agent. Merkel said he is the victim of a crime intended to silence him and that early in will be taking berlin will be taking answers from moscow. They are demanding a response from the kremlin. Haidi still ahead on daybreak chairman. Speak with a we will ask him how the pandemic is affecting business and how or if they are changing strategy. Race tost from japans replace shinzo abe. As ahide suga is emerging leading candidate. That could mean the stimulus will keep on rolling on. This is bloomberg. Sophie japans next likely Prime Minister is vowing to continue with shinzo abes signature alter easing policy, a abenomics. Kickstart the economy . We are joined by stephen engle. Abes righthand man looking like a shooin for Prime Minister. Much a foregone conclusion that Yoshihide Suga will be the next Prime Minister of japan barring some unforeseen calamity because of the way they set up this internal vote. It gives a lot of weight to the fivepowerful factions and of the seven factions have come out publicly stating they are supporting suga. He has 10 lawmaker votes more than needed to become the next Prime Minister so if you are abetting person, the odds are high he will become the Prime Minister with the internal vote coming up in less than two weeks, to be confirmed a couple days later, likely by parliament. He has a lot on his plate. Aboutke at length continuing the policies of shinzo abe he was a righthand man of shinzo abe, mr. Fixit, the back room enforcer for abes policy. Policiesthose backwards and forwards. He will continue with abenomics and the alter easing policies with some changes as needed. He has been a bit more populist in that those tweaks to policy could come to protect jobs and the economy of course as the number one priority, he says, will be combating the coronavirus. Economic andn the financial front and fiscal front will be and monetary front when will he pull the trigger to switch from, you know, the lifesaver mode for business and households into again trying to stimulate growth . The economy has been decimated by the lockdowns and the coronavirus outbreaks, so again, it will be a delicate tight rope for the new Prime Minister. Of analysts are pointing out the risk lies in a potential destabilization when it comes to foreign relationships. What do we know about how suga might approach relations with china . He says it takes time to build relationships with washington. With the United States is the cornerstone of japanese diplomacy. Back to fastow puts him at a bit of odds with china right now. He is going to probably remain with a steady, proactive relationship with china. However, xi jinping was supposed to visit in april. All travel has been put on the shelf for now. It will be interesting to see whether china affords them that with a trip sometime in the next year, before the ldp has a vote next autumn and the general election by the end of next year or whether they wait that out. Hes not been as hawkish as others in the abe, current abe administration. He has not visited the shrine which indicates he is less likely to push for chains to changes to the pacifist constitution. Japan has had issues with china, with south korea, with border disputes with russia. Theres a lot on the geopolitical front including the possibility of a change in the white house to navigate for mr. Suga if he becomes Prime Minister. Our chiefphen engle, north asia correspondent with the latest on japan had we will get more perspective just ahead with a university professor. Callss shinzo abe is for accountability. Unique opportunities in the covid induced recess. From our exclusive interview, next. This is bloomberg. Bloomberg. Haidi as the economy slowly emerges from the pandemic, Apollo Global management says there will be a reset in consumer behavior. The copresident spoke exclusively to bloomberg about the opportunities and the challenges of investing in a low rate environment. We are in a low rate world. Last weeks actions will continue that for a while. We have parts of our business that are trying to get double digit plus. A mid single digit yield on longduration assets, that works very well for us. From our perspective, its getting more challenging. You have to navigate a pretty tricky environment right now, but again, you are trying to make 7 . You can find places to do that that are appropriate. Manus we caught up with pimco. They are prepared to have secured bonds. Some would say that is a big risk play. It is not the kind of risk you are prepared to take at the moment . Travel, energy, hotels. Could you have that level of risk . When you run a 400 billion plus portfolio, you have your fingers in a lot of pots. It has been well noted that we have been participating in some of the really unique opportunities, whether in the Airline Space or in the travel space. In and around the Airline Space. We have been active in a couple of the restructurings around latin america. While we are a somatic investor, its a bit too early to call the end or the bottom of this pandemic. I think you need to really think about structure and where you are in a capital structure so we are not afraid of investing in Challenging Industries but it really gets down to structure, security, and making sure the skills we have honed over 30 plus years, that we are bringing it to the table. We have been able to do that. Manus i look at spreads. Pretty much back to where we were precovid. Continueink that they to compress given what you heard from jackson hole last week . Going toink the fed is continue to be a very active player on highquality assets and theres going to be dispersions in the market between lowquality assets and highquality assets. What is unique about this transaction is duration. Its hard to get longduration and we were able to do that in this transaction. In terms is positive of spreads, notwithstanding any kind of dislocation from a global event. Us, we reinvested a lot in march and april when they widened out. We continue to have a focus in our business. Manus what is the biggest risk, that a vaccine comes to early and the big opportunities pass you by . Jim you have to be patient. This pandemic came out of the blue, and the impact on consumer behavior, consumer activity, especially in the u. S. , where the consumers 70 plus percent of the market. Unknowns in the next 12 to 24 months. I think we are fortunate that we have a broad platform between private equity, credit, and assets. We have our fingers in a lot of opportunities. At these kind of levels, one needs to be measured and thoughtful about how they are putting money to work. We think about asia broadly speaking and japan in particular. There are opportunities consistent with how we invest in that country per se. We say the same thing about opportunities in india and australia. Our spotsing to pick in that region that fit how we invest in our value and structuring. Em resistterms of diem what the fed did last week was an ignition torch to buy em and we cannot treat the whole church the same. Jim but concerns about em in march and april have certainly subsided and theres been a nice compression between em. How much one has to tighten is an open question. If you look at our portfolios, we are probably a majority of dm around the globe and we have overlay which we are excited by. Are right spreads now, a more balanced approach is probably the way and that is key how we invest from a value breet. Manus what is the biggest opportunity at the moment . Jim early days on commercial real estate, early days on aviation, broadly speaking. Two big ecosystems that you really need to be involved from front to back, and aviation is from manufacturing to airlines and everything in between. Certainly in commercial real estate. A slower moving train but it will have an impact. A lot of capital has been raised, a lot of money has been put in the ground, and it is the consumer as the consumer, we adjust to this new world. There will no doubt be opportunities in commercial real estate that are probably, again, a bit slower moving just because of the nature of the assets. Jim zelter speaking exclusively to manus cranny. Lets get a quick check of the latest business flash headlines. United airlines will cut more than 16,000 jobs next month as it shrinks operations amid the coronavirus pandemic. The furloughs announced wednesday will begin taking effect at the start of october when a six month restriction on job cuts impose as part of the federal aid package expires. Around 7. 5 thousand that have leftunited staff have united. Virgin atlantics 1. 6 billion rescue deal is set for completion this week after a london judge gave the goahead for the airlines restructuring plan. The airline said it would run out of cash by the end of september. Virgin atlantic is owned by virgin group and 49 owned by delta and has more than 3000 jobs. A snapshot of airbus plane usage shows a fragile recovery propped up by china and continued challenges for widebody aircraft. Almost two thirds have flown at least one in the past five days. 3600 have not flown at all, a stark reminder of the oversupply airbus and boeing are struggling with. Not, the fed says the u. S. Economy is showing signs of progress but it is still a long road ahead towards recovery. We will see what the survey and jobs report are saying. Lets get a check on do not miss a big interview later this morning. We will hear from the u. K. Trade commissioner for the asiapacific. Natalie black is helping drive deeper ties. Heres a snapshot of how markets are shaping up so far. Andeminis are on the rise the aussie under pressure but staying above 73, spurring speculation as to when the rba may move to curb strength of the economy. The government planning to bring forward income tax cuts hit offshore yuan will being a three day tax cuts. Offshore yuan holding a three year gain. The trend looking similar to 2017. More ahead. This is bloomberg. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. So youre a small bor a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Haidi this is daybreak asia. Lets get a quick check of the first word headlines. With new restrictions on travel in the u. S. Movepompeo said the matches chinas curbs on americans and it imposes costs for what the administration because unfair treatment. Beijing says the u. S. Action is unjustified and is calling on washington to correct china is limning india for recent clashes on the disputed border in the himalayas. New delhi said its forces had provocative actions at the weekend. Beijing says that proves Indian Forces were the first to illegally cross the border and that china has shown great restraint so far. The two sides have been at odds over the border for decades. Japan is facing strong winds and torrential rain as a typhoon hits past the west coast towards the korean peninsula. The storm has sustained winds of 160 kilometers per hour, warned to expect possible landslides. They halted Train Services and cut power across okinawa. Hundreds of flights have been canceled in south korea while the north is facing a second typhoon in as many weeks. Has testedmer leader positive for the coronavirus and is working in isolation at its home in milan. The leader of the party recently returned from holiday and is campaigning ahead of regional and local elections later this month. Giuseppe conte a government Giuseppe Contes government sophie to the latest report on private payrolls, the message for the u. S. Economy is the same. The rebound from its law down induced contractions still has a painfully long way to go. Kathleen hays is here with more. Bookeen, is the beige depicting an economy whose glass is halffull or halfempty . Kathleen if you look at it, its not that bad because they say the economy is still improving but it is not that great because its below prepandemic levels. Let me remind you what the beige book is. The Federal Reserve gives a report, based on reports inside each of the 12 districts, from new york to san francisco. Said,his one shows, as i it is not really an economy that is beginning to fire on all cylinders, especially not when it comes to the labor market. Lets look at what they said. Continued uncertainty and volatility related to the pandemic and its negative effect on consumer and Business Activity was a theme that was echoed across the country. A course, that is what they were saying. When activity increased, it was modest. Again, still below plea pandemic levels. Another thing Bloomberg Economics picked up looking at this is the labor market, the jobs increase, they are shifting into a lower gear. Lets take a look at another sentence from the beige book. Some districts also reported sewing job growth and increased hiring volatility, particularly in services industries, about 80 of the jobs in the United States, with rising instances of furloughed workers being laid off permanently, not just go home, get your unemployment check, come back, but permanently. Demand is still so soft. I think an interesting tidbit is the beige book said in a lot of places what they are seeing is there are families who are reluctant to put their kids and child, reluctant. Can you imagine all the people who are trying to teach their kids via zoom and still work . Its another thing thats hurting the economy. Haidi we have the jobs report as well. The labor market in the u. S. Is still pretty wobbly. Kathleen not as strong as you would like you to see. We saw a really good month. The jobs report looks at private payrolls. They have access through their services that they give to companies, payroll information for more than 20 million workers. It does not always tracked the government jobs report but it does show direction. Is a gain ofere 428,000 in august, less than expected. Although up from july, when it was 212,000, so thats a gain. June was up was up nearly 4. 5 million, and that is still only so far to erasing that big red downward cylinder you see when jobs fell more than 19 million in the United States. Arequestion here is how bad the headwinds that we are seeing . The paycheck protection program, which was encouraging a lot of Small Businesses to keep their workers on their staff rather than laying them off. That expired a month ago. Firms are still cutting jobs. Thats another thing the beige book showed. It is a bit of a problem here. Is that fragility being acknowledged by Loretta Mester . Kathleen it certainly is. She was the keynote at the virtual version of the association for business economics annual meeting which kicked off today when she was giving her prepared remarks to this is what she said right at the beginning. Lets listen. The recovery activity appears to be a fragile one. The most recent highfrequency data and discussions with regional context indicate that the pickup in activities seen in may and june has slowed over the past couple of months, and this slowdown is incurred as virus cases continued to rise in some parts of the country in late june, causing some localities to quit their reopening to reimpose restrictions on activities. Kathleen when Loretta Mester spoke to Bloomberg Television after her prepared remarks, she did say she thinks the consumer is in decent shape and the consumer is helping to offset the weakness we are seeing in investments and certainly, countries are reluctant to invest whatever they had. She cited a cleveland fed survey. Half of the firms they talked to say it will take at least a year to return to prepandemic levels. Perhaps another reason why she, like others, says more fiscal support is needed. There has to be a bridge built from the workers laid off or the companies i feel like they are on the verge of closing to the recovery. Keep them going. Maybe they will survive. On september 16, when we hear from the fed chair, jay powell, we will see what he has to say. If there is no package passed yet, it is still not on the table. That crime may be louder than ever. Hays, our Global Economics and policy editor. Coming up next on daybreak asia , and outlook when it comes to the Industrial Real Estate sector. We will be speaking to one of asias leading developers and investors about how the pandemic has changed that landscape. The chairman is with us, next. This is bloomberg. Sophie asian stock futures are mostly higher empty weaw th rally on wall street being led by bestloved sectors as tech underperformed and the reflation trade still being bet on. Pulling up the chart on the terminal, momentum gauge is slashing a bullish signal with the 14 day rsi starting to become anchored and well away from that 30 oversold line. This is similar to what we saw during the bull market in 2017, but switching up the charts, they are curbing their enthusiasm just a tad for the euro with Asset Managers pulling back slightly after the common currency top 120, a redline of sorts and a further unwinding of speculative positions may be on the cards if pmi or cpi are weak. Focused in the asiapacific region. It has over 20 6 billion of assets under management and just six property for china, south korea, and south korea. Most of asia earlier this year, the demand for Online Shopping saw a huge spike and had supported the logistics industry. He joins us now from singapore. Late . As been happening of the pandemic is very much looming large still. How has that shifted your strategy for esr . Thanks for having me. I think the pandemic, once we got to get a better look into what was happening, it really has benefited our business in a lot of ways. The few secular trends that were really playing out before the crisis started have only accelerated to the positive. Ecommerce obviously being the largest. Ecommerce companies are thriving in this environment. Its less about those who were buying online before the crisis, but really, some of the older generation who were not buying at all before the crisis and were forced into it during lockdowns, so certainly, ecommerce is playing a bigger role. Typically, Ecommerce Companies require three times the amount of space as a traditional bricks and mortar retailers so as more of that shifts online, its obviously a huge benefit in terms of logistics demand. The second big area is around what we call just in case inventory model which is quite different from the just in time inventory model we have seen in the past. Some of our big manufacturing clients historically have held five days of inventory. They have tripled that in that environment to 15 days and we think some of these changes will be permanent going forward. Alling that down, what it means is they will need more warehousing space. Sophie more warehousing space to be had given the demand from your tenants. Where else are you looking to expand to provide for the increase in the outlook for ecommerce . Certainly with ecommerce, as you look at our markets, the highest penetration rates for ecommerce in asia are china and south korea. We have a very large presence in both of those markets and look to go deeper but markets that are really now starting to pick up in terms of ecommerce, like japan, for example, we have a Big Development pipeline and we expect to continue to grow that part of the business. Growing, as you look to in emerging markets like india and southeast asia, these are big populations, obviously, and bricks and mortar are nascent to begin with. Ecommerce is very wellpositioned to grow quickly in those markets. As we continue to live in a world that produces all kinds of geopolitical dislocations and tensions, im wondering how much of this plays into your strategy and what level of disruption or you see arising from these issues. Its a great question and our business has domestic consumption driven so the u. S. China dynamic in terms of trade flows really has not impacted our business. Certainly, if it starts to wane on Consumer Confidence over the next several years, that can have an impact, but otherwise, again, our business is near for domestic consumption. Over 62 are Ecommerce Companies or Third Party Logistics providers who are really focused on deporting ecommerce. The other big area thats growing in this environment, geared towards message consumption, is cold storage. Fresh grocery delivery has picked up considerably during the pandemic. We think that is a change that is likely to remain coming out of the crisis. That domestic demand story is much stronger in certain parts of the aipac region. Where are you spotting the most opportunities and the growth trajectory being strongest out of the pandemic . We are seeing really good opportunities across what we call our victory, which is china, south korea, and japan. Again, as i mentioned, ecommerce is growing very quickly and theres a shortage of warehousing space. Theres still more warehousing space in the state of california in terms of modern warehousing space than in all of china today. It gives you a pretty good indication. We are in the early innings of this story and we suspect substantial growth over the next several years. Looking at the Way Logistics properties are becoming hotter when it comes to demand, what kind of exposure are Institutional Investors continue to gain here . Are you seeing an increase . We are seeing a huge increase. The first half of the year was a record firsthalf for esr in terms of fundraising. We raised 2. 4 billion across five different capital mandates and what you are seeing from institutional Global Real Estate investors is that historically, they have had only about 10 of their portfolios in logistics and industrial and 25 in retail, and many of them now see Logistics Industrial as the new retail and they are looking to really flip that exposure so hopefully 25 in logistics and industrial and only probably 10 or less in retail. For that to be able to kind of swap in its position, thats 200 billion of capital flows that will need to go into the logistics and industrial space, so i think what we are going to see is increasingly more and more Capital Raise for logistics and industrial to support the growing demand of ecommerce and warehousing demand. Your assets have been growing rapidly compared to your peers. What is the right size in that respect for you and what are the strategies that you plan to go from here . Is a great point. We have doubled our assets under management over the past two years from roughly 13 billion to over 26 billion and we have seen that continuing to grow at an accelerated pace, backed by the demand from our clients, a record leasing first half of the year. We one million square meters and if you look back over the last 18 months, thats 3 million square meters, so pretty Staggering Amount of space. Growth oncontinued the fundraising side. Is going to remain i think a key focus obviously as the lifeblood of the business, as a developer, a fund manager, and we hope to hit that target we gave by the end of 2021, hopefully quite a bit earlier from that. Jeffrey perlman, appreciate your time with us today. A smaller than expected drop in annual earnings. Of bar andthe impact restaurant closures. He spoke with bloomberg exclusively about the consumer outlook, including retail where the Company Represents about a quarter of the market. Undergoneretail has many ups and downs over the last 20 years and will continue to have ups and downs. Has beenlying trend growth. Passenger traffic was 2. 5 billion. Projections for the next 10 years are quite bullish. I see that channel being quite subdued. Is china do you think a good guide to the recovery . When you see a bounce in the trade restocking . Isthe only thing i will say in this specific crisis, recoveries and the shape of recoveries and timing of recoveries will probably vary from one market to another and some markets will experience slow recoveries. Others might experience faster recoveries. And within these markets, segments might experience a different type of recovery, and this is why it is absolutely important for a company to have two objectives in mind. Number one, be extremely, truly agile to see these opportunities , to allocate very swiftly resources where we see andveries behind markets stay the course for our strategic plan, which is more longterm. On our digital transformation, which we are accelerating. Annmarie where do you see recovery now . Which region . See adre we said we do pretty strong resilience of the trade in north america, whether it is u. S. And canada. We see trade across europe. Western, central, and eastern europe. We will see sequential improvements in markets such as china and india, and eventually, slow recovery of trades. Annmarie what about restaurants . Given they were hit so badly due to the pandemic and the domino effect for economics and the lockdown, do you see restaurants are shifting to buy cheaper brands of alcohol . Alexandre we are not seeing this right now. Seeing thell underlying trend accelerating during the course of the crisis. Criminalization is a longterm underlying trend. It might go back to the previous 2009. In that was a glitch in terms of criminalization. It is fair to say that business across the world is one of these businesses that was most hit by this pandemic. I am glad you mentioned the u. S. It seems to kilo was the drink of choice for americans under lockdown. I actually spent the height of my time during the pandemic in new york and i personally noticed this as well. Do you have any marketing plans for your tequila brand in the United States . We do. Re we have experienced growth for both our tequila brands. They have to perform growinginarily well, and very strong double digits. I referred to our digital transformation. In terms ofactive digital marketing, specifically on what we call which they were part of. Ceo Alexandre Ricard speaking exclusively to annmarie hordern. Dont forget, if you are away from the screen, you can find indepth analysis on the day big newsmakers on bloomberg radio. Listen via the app, radio plus, or bloombergradio. Com. Plenty ahead. Stay with us. This is bloomberg. Sophie here is a check of the latest business flash headlines. Tencents popular game is among 118 chinese apps newly banned by india. The two way tensions continue to escalate. Been and alipay have also scrapped with new delhi hiking concerns over National Security. Came on thening ban border. Dow jones is reporting robin hood is facing an sec probe for civil fraud over its early failure to fully disclosed trading practices of the investigation is set to focus on its practice of selling client orders to high fever trading firms. It is said to be at an advanced stage and robinhood could have to pay a fine of more than 10 million if it decides to settle the dispute. Softbank has a funding round into a Software Startup that predicts problems for patients with heart conditions. Its backing came from its mission fund. The successor to its initial platform. ,t was founded in singapore before relocating to a new base in boston. The pandemic fast forwarded the market. The need for virtual monitoring of patients remotely at home. They opened up multiple opportunities to enter new markets where softbank has butss to japan and china also accelerates our organic growth. Check ofts get you a the asian markets, setting up the start of trading across in japan as well as australia. This is what we have seen when it comes to trading in new zealand, seeing upside of. 9 , following some of that exuberance we saw in the overnight session. Another recordsetting session for the s p, jumping the most in two months. Its interesting that we saw this cautious rotation out of tech and more into value stocks. When it comes to trading in sydney, we are setting up for a pretty positive session. The futures session extending gains despite the australiachina headwinds. We also have a report saying that the melbourne state for restriction lockdown could be extended by another fortnight. We are hearing from the government, saying the economy recovery could take five years as australia fell into a technical recession. We will have much more analysis when it comes to the market moves in the next hour, assessing the outlook with our guests. A little bit after that, we get perspective on japans landscape with a university professor. Sanctions abe is invading calls for accountability as we get a bit more certainty in that leadership race in japan. Lots more to come. This is bloomberg. Sophie welcome to daybreak asia. Heidi asia major markets have just open for trade. Asia set to follow wall streets rise. Futures pointing higher in tokyo and sydney. They are dipping in hong kong. New tensions between the u. S. And china. The white house is debating the depth of the ban on tech talk tiktok and we chat. A pledge to maintain easing on the trade policy if he wins. Lets take a look at how markets are opening in japan. The naked 225 rising more than 1 at the start of cash trade. Risk assets writing higher. Ongoing stimulus. The yen holding a threeday drop after the drawl or dollar rebounded overnight. Bs climbing. Near 16 month highs on that supply. The socalled widow maker trade back into the fray. In south korea, we get lines on president moons new deal ended spending measures. The korean one on the back foot ahead of that, the cost be gaining ground by 9 10 of 1 . We are keeping and i on airlines after south korea and singapore agreed to allow business and other official travel between the two countries under a fast rate track program. Retail bits of more than 1500 times whats on offer. Lets take a look at what we are facing the day here in australia. A positive start to the session. 1 10 of 1 higher as we get the cash trade start here in sydney. We are hearing reports of the lockdown of stage four restrictions being extended with no indications as to what the plan is for the reopening of businesses and the broader economy. We heard from the government and treasurer saying that the recovery for the economy could take up to five years. This after gdp fell the most on record. We saw the start of that technical recession as well. Ozzy dollar on the back foot at the moment. Si yen intching aus particular with relation to these australia and china tensions. The 10 year yield holding steady. 895 at the moment. New zealand, after a speech, the take away from that saying that these more export very policies like negative rate are on the table still. Sophie joining us now for more on this market move is martin lycos. Thank you for joining us. I want to focus on the em space. We did see that stock rally for emerging markets stall overnight, given the rebound for the dollar. What are you penciling in in terms of depreciation . Martin good morning. Months, few weeks and the u. S. Dollar has weakened somewhat. Extent, thee outlook with the commentary out of Jerome Powell last week, they will basically it doesnt look like this low Interest Rate is with us for some time. That will support equities globally and also emerging markets as well. We dont have any specific targets for the u. S. Dollar. To some extent, the ozzy looks like it is overvalued at the moment. We can understand why it is where it is. Commodity prices have been so strong. Iron or has rallied to 120 a ton over the last couple months. Copper and oil rebounded since march. The australian economy, despite that poor rate for the Second Quarter, 7 gdp. Australia is doing relatively better than a number of developed world economies. We understand why the ozzy dollar is as firm as it has been. We expected to continue despite the fact that we would have preferred to see it weaker. Sophie em value stocks are trading at a steep discount as they have for some time. Our value stocks looking to cheap to ignore . Martin it would appear thats the case currently. Thats in line with such a strong momentum and rally in growth stocks, particularly from the tech space. Limited rotation away from the growth space and into value. Utilities andeen financials outperform the tech space. Overnight, the likes of cocacola and ibm up now. Apple androm salesforce. A little bit of profit taking in the growth stocks. Weve seen such a strong performance. The market is moving into another stage in this momentum. I would like to see a correction. I think it would be healthy. There is strong momentum in markets which we cant ignore. Haidi i want to get your views on the Political Uncertainty and what that means for the markets going into november. Taking a look at futures. Its pretty extraordinary. Pricing is worse than risk. October futures traditionally are the measure of election. Yellow taking of november futures. The volatility risk of a contested or extended election process. Markets arent pricing and in the likelihood that we could see a delay or an uncertain outcome. Worse thanar outcome hr or Biden Administration . Markets dont like uncertainty. Your selection risk is there. Its interesting. The it doesnt seem to be getting priced into markets yet. We have other overriding risks. Secondary flareups of covid. The Economic Data will be worse after the Second Quarter than anticipated. The September Quarter data might be softer as well. Suggesting theres more of a delay in the rebound that we are currently experiencing. Theres a number of risks that markets have to digest. I think that the result is unknown for the u. S. Election. We cant rely on polls alone. The polls did not pick the results on brexit. Nor the u. S. 2016 election. We have to be looking at other areas to try to gauge the sentiment of voters at this stage. If you have a look at the way the money flows are going to the betting on the election, joe biden is ahead of President Trump. Clearly, after the conventions, Donald Trumps fortunes have certainly improved somewhat. In that single gauge. That is something we are watching pretty closely. Theres absolute uncertainty around the election, both in terms of how it will be conducted and the actual result. That is affecting markets at the stage. Haidi how much certainty do you need in the postpandemic roadmap and a vaccine before you will start bargainhunting . Martin we are starting to do some bargainhunting now. Thats more around the sectors that have leverage through a covid recovery. A vaccine discovery and distribution is going to be the key. It does fall into those value sectors. Such areas such as infrastructure, health care, transport. Also areas such as Cyber Security will be an ongoing interesting play, given this new normal and increased Online Activity by businesses and consumers. There is some post covid leverage to be analyzing at this stage. Sophie thank you so much. Macquarie welth management, division director. Haidi a check of the first word headlines. Japans veteran cabinet secretary will maintain policy if he succeeds shinzo abe as Prime Minister. A surge from support has guaranteed he will win the Party Election on september 14. He would likely keep the relationship with the bank of japan, adding that more can be done with Monetary Policy to support the economy. China is blaming india for crashes on the disputed border in the himalayas. Provocatives said actions by Chinese Forces over the weekend. China says it has shown great restraint so far. The two sides have been over at odds for decades. Restrictionsh new on travel in the u. S. Mike pompeo says the move matches chinas curbs on america and imposes costs. Washington says chinese diplomats must now request approval to visit universities or meet with officials. Administrationmp is still debating the scope and Effective Date of an upcoming ban on tiktok. Later, is more and more certain that will become japans next leader. We will talk about the applications with Koichi Nakano this is bloomberg. Sophie the Trump Administration is moving closer to setting details of bands for chinese social media apps we chart chat and tiktok. Peggy collins joins us on the line from washington. What do we know . Peggy what we know and are basically they, Trump Administration is debating two main things. The scope of the ban that they announced early in august and the timing of it. Whats important for u. S. Companies that do business with chinese firms like tiktok and we chat is whether or not the band that trump announced will apply to their business in the u. S. Or if it will also apply to operations that they have outside the u. S. , in china for example. Thats one of the things they are waiting for. The other is on the timing of when such a ban would go into effect. What we are looking for and expecting is around the number 20th, the administration will settle on those issues. The scope and timing of when such a ban would go into effect and whether companies would have time to transition their businesses if they had to. Into how does that play the september deadline for the sale of tiktok . Peggy as you were saying, theres two tracks going on here. The we chat ban and the tick tack situation. Tiktok situation. Theres an acquisition or sale involved. We are continuing to report that out in terms of the different bids that are at play and where that will actually go. We had reporting that said china was actually stepping in more on that front and that it would. Ake it harder from their end weve also had Companies Like microsoft, oracle, and others in play for a possible accusation acquisition. Fori theres the option the president not to go ahead with the ban if those National Security risks are addressed. Peggy collins there with the latest. Lots more to come. This is bloomberg. Haidi you are looking at a live shot of melbourne. Days, the case numbers for the coronavirus picked up above 100. 50 new deaths reported in 24 hours. 113 new virus cases. Hearinge separately that we could see an extension of stage four restriction lockdowns. Domestic media reporting an extension of two weeks with limited tweaks. There is no timeline for when businesses could reopen. There are few changes being considered after that september 14 day. Essentially, we are looking at getting the economy all but shut down for longer yet. We will stay on the virus in china. Who program is designed to ensure that all countries have equal access for the Coronavirus Vaccine. This is the same program that President Trump says america wants no part of. Jodi schneider. What are the details of this Global Vaccine Program . Why does the u. S. Want out . Jodi china is hinting that it could participate in the program. Its called the vaccine global. Ccess facility its designed to ensure all countries have equal opportunity to get access to vaccines, effective vaccines. Yesterday, we heard from Chinas Foreign Ministry spokeswoman at a briefing in beijing, saying that chinas purpose is highly consistent with the aim of the program. That indicates that china has been thinking seriously about participating. We heard from president xi in may pledging that a china developed Coronavirus Vaccine would be shared with the world. This is a big concern. You need a multilateral approach to Vaccine Development. Especially deployment. If some fact countries get it and others wont, you cant fight out the virus. President trump has taken aim at the who and criticized it. They said the u. S. Will be pulling out. The cdc is telling states they should get ready for a november 1 vaccine distribution. What does that mean for the strategy that trump is attempting to outline when it comes to Vaccine Development . Jodi President Trump interestingly had a letter sent out from the cdc basically saying that there would be a vaccine, they should prepare for a vaccine developed by early november, late october. The president ial election happens to be on november 3. That is certainly an interesting timeline, right . Theres no indication that a vaccine will actually be ready by that date. Weve heard from anthony fauci, the advisor on this to the white house. He says he doesnt think a vaccine will be available, will be ready for the u. S. Until early next year, 2021. Clearly, this letter is going out from the cdc. It basically says, be ready for this. , part of his Reelection Campaign strategy is to try to say, we will wipe out the virus. Something is going to happen. Dont worry. It,cdc behind this makes gives it some seriousness, some gravity. Theres no indication that a vaccine will be ready by that date. Sophie thank you. Jodi schneider, our Senior Editor in hong kong. So that mercedes are picking up after a First Quarter. Spoke with bloomberg about the new plugin hybrid s class. We have made the strategic decision to go towards co2 neutrality. You will see a whole host of electric vehicles in the next few years. Perhaps covid will also add an additional push. Some of the legislation of the covid money that the government is putting into their stimulus packages here in europe also contained pieces to incentivize low carbon vehicles or electric vehicles. It could be. I think we also see what people have taken for granted. Your individual freedoms, selfdetermined mobility. The perfect way to do that is the car. Maybe we will have a renaissance of that thinking as a result of covid. What kind of recovery are you seeing now . The ministry of economics here in germany just said, the recovery will be stronger. The downturn wasnt as bad as they thought. When will we see 2019 levels again . Its hard to pinpoint exactly when we will get back to that level. Now, after wee had the First Quarter affected by the pandemic, the Second Quarter in the europe and the United States. Sales are picking up again. China is leading. We are already three months in. Quite healthy growth in china. The United States and europe are not on that level. After that unprecedented drop we had in q2, we are starting to come back towards normal levels again. You have a battery deal in china. You have big shareholders out of china as well. Are you concerned about the rocky relationship between washington and beijing right now . We have very strong partnerships in china. Its our biggest market on the Passenger Car side. Its our second u. S. Market. Our most important market on trucks in the United States. More than 25,000 employees. 4 billion worth of sales. 20 factories that we have there. For us, its not an either or. We have to be in both of these important regions. We are building our investments in both. Are you confident that you have a solid Battery Supply and a stable commodity pipeline in order to build the cars that you want to sell . Absolutely. Weve added a couple Strategic Partnerships in the last couple months. We took an equity stake. Not only to secure supply. Thats important. But really to go into r d developer together. Looking at innovations for the future. How can we get Better Energy density . Yes, we are in a strong position. In terms of the market, weve seen a lot of prices come down. I know you arent in a hurry to do any m a. When you look at some of the iconic brands that have been hit hard, especially in england or india, do you are you tempted at all . We have no plans for m a at this stage. We are focused on this. Thats our core. We know our customer. We are in engineering driven company. We want to be one of the architects of this transformation. I dont think we need a distraction at this stage. Focus on our company, make it financially strong. Its a good time to be in the finance business. Rates are low. Youve been able to take advantage of that with a big bond offering in the beginning of the year. Do you think you could go back for more . Our financing portfolio is substantial. The leasing side. Yes, we had a very strong subscription when we issued that bond. In spite of covid, the rates a reachable stayed reasonable. Thats important. Its a good sign that Financial Markets stayed rational. Wendy you think daimler shares will be able to get back to a place that you are happy with them . There a lot more potential. This company does and only have a great history and tradition. It has an even greater future. Its up for us to unlock that in terms of share price. The current share price should have significant upside. Ceoi that was the daimler speaking to our colleague. Up next, a former r. B. I. Deputy governor has words of advice for the Global Economy as they recover from the pandemic. With miss a big interview the u. K. Trade commissioner for the asiapacific. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Headlines. Sources in washington say that Trump Administration is debating the scope of legal action against tiktok and we chat. They will make an announcement later this month. se Commerce Department drafting classifications on specific transactions that will be banned between the companies and u. S. Businesses. That decision may come around september 20. Global Coronavirus Infections are approaching 26 million. The cdc telling local state officials for a vaccine to be ready by september 1. The government anticipates the treatment will be available just before the reelection. His chances are seen as the reliant seen as reliant to his handling on the virus. A leader has tested positive for the coronavirus and is working in isolation. The 83yearold leader recently returned from holiday in sardegna and is campaigning and head of regional and local elections. The vote is seen as a test of the stability of the Prime Ministers government. Germany says tests in a berlin hospital show that the russian Opposition Leader was poisoned by military grade nerve agent. Reporters merkel told that he was the victim of a crime intended to silence him and berlin will be seeking answers from moscow. The u. S. , the u. K. , and france are demanding a response from the kremlin. An update on the Business Outlook and asia. Private pm eye readings just out. Posting hisket results for singapore and hong kong. The whole economy pmi for singapore falling to 43. 6 in august from 45. 6 in july. The Prime Minister warns that the virus support cannot be sustained indefinitely. The economy is seen shrinking 7 this year. Hsbc is betting that stocks will be able to benefit from a cyclical recovery. In hong kong, we are seeing the pmi shrinks slightly. Remaining in contraction territory for the lowest reading since may trend may 2020. The latest numbers from japan. Pmi readings on the composition there. Slightly higher but still in contraction territory. Flat afteraying stalling in july. Retail sales are picking up. In sales for august. Lets get to on the line. What signals are we getting from this from about the strength of the recovery in asia . It is underscoring the challenges ahead. Look at the numbers in hong kong this morning. It reflects what happened in august with those tighter social distancing moves as cases increased. That had an impact on Business Activity. We saw new orders fall. Just from the hong kong story, we expect that to be getting going Getting Better going forward. The japan story reflects whats happening with the coronavirus and the measures taken there to control it. Nonetheless, it will be seen as a disappointment. We had been Getting Better indicators on japan and new exporters. These numbers this morning all highlight that. The broad asia economy story is still stable. It is so recovering. There are points of weakness. It is uneven. In some individual economies, there remains heightened risk of an ongoing contraction. Haidi what does the export story continue to tell us . Nda it is one of recovery and rebound. Im not sure if people are convinced there is much more momentum left in it. Look at china. We know there has been a vshaped recovery on the industrial side of things there. That reflects Global Demand coming on stream. We know that china benefited from the big surge in demand for medical equipment. More broadly, we know that theres been demand for Electronics Goods that are made from south korea and china and singapore. The export story is one of recovery. There is a long way to go. We are nowhere near back to the levels in volume or value we were before the crisis. If anything, this recovery we are seeing is starting to flatline rather than get another leg of momentum higher. U. S. China tensions. Australia china tensions. What are the concerns that these geopolitical overlays could affect the recovery . Enda it has to be one of the biggest concerns, especially are we on the run in to the u. S. Elections. Tensions are already a cold war levels. The concern is if they get worse, it will have a spillover effect on business confidence. We see whats going on between australia and china when it comes to trade. We see whats going on between swine a china and the u. S. The concern is that it will get worse from here. It will have an inevitable impact on investment in china and the flow of goods between china and the u. S. And the rest of the world. It has to be one of the key risks facing the world economy, along with the coronavirus, in the near term. Haidi always a pleasure. Dominance is a key concept for the former Deputy Governor of the reserve bank of india. Hes concerned about what that means for central banks. He told bloomberg that an exit route is a risk in this fiscal setting. And economics, theres a concept called fiscal dominance. That means that when the governments following programs becomes a large, to keep rolling them over year after year, it will become very costly. Possibly even difficult. It might evenly to a fiscal. In such situations, the central bank gets dominated. It starts focusing exclusively on its Monetary Policy. Helping the government rollover debt rather than focusing on its long run price stability inflation objectives. Fiscal dominance is a feature that has been very common in emerging markets along the lines you mentioned. It is something that i talk about quite a bit in my recent book. I think we are likely to see it hit the shores of developed economies very soon. One could argue that what the European Central bank has effectively done in the last seven years is to play a fiscal rule to help these countries deal with their debt. Why is this important . Right now, in some ways, there are some supplies building up. Especially in emerging markets. Causing inflation to rise. Because of weak demand and discretionary spending, there are Deflationary Forces at work. When we come out of the pandemic and the private sector is willing to grow again, invest again, get credit from banks, at that point, will the federal banks become fiscally dominated . In which case, they will allow inflation to run away and continue to print money. We could end up with a high inflation scenario. Or we could see financial the privatein which sector is not allowed to get credit. We could see deflationary pressure. The risks have risen substantially because of the war bank in developed markets. Are those risks being reflected in negative real rates . Im curious what you see when you see negative real rate across the u. S. , europe. In some cases, switzerland and germany. Real nominal negative rates as well. By and large, these conditions have led to a search for yield. If the fixed income instruments are also getting very repressed at the long end because of large quantitative easing programs, direct interventions in the bond markets, then its natural that will actually carry over to the equity markets as well. While it is still too early to give definitive evidence on this thatmy and i have no doubt the disconnect between the really economy and the stock market has of to do with the search for yield which is happening in the equity markets. I want to ask you specifically about india. You are the former Deputy Governor there at the reserve bank. You came to a lot of peoples attention outside of india when you gave that speech a couple years ago about central bank independence, about the stresses in the Banking Sector. When you look at the state of indias Banking Sector right now , when you look at the stresses in the corporate sector there, and you look at the contraction we have seen in the economy, what steps do you think the government can take at this stage to dig itself out of that hole . Thats a great question. In the previous chapter of my book, i gave an explicit blueprint. Let me focus on two or three key ideas. One idea is that indias Financial Stability can no longer be separated from the stability of the fiscal situation. The fiscal deficit has been rising, growth has been slowing down. Even in the precovid phase. What that means is that india needs to actually create a mediumterm path of credible fiscal outcomes. This cannot just mean that you spend your way out of the current problem. If growth doesnt recover as well, gdp ratios could start getting into fairly treacherous territory. Independent,n bipartisan fiscal council. This will be the equivalent of a Congressional Budget Office it office, which is nonpartisan. Governmentshe progress on Fiscal Consolidation going forward. That was the former Deputy Governor at the reserve bank of india. Haidi we have breaking news. [inaudible] thats according to people familiar to the matter. Books will close at 5 00 across each region on thursday. They had been scheduled to close 12 00 p. M. On friday on hong kong. We have seen that the retail attion of the share sale 6. 67 times oversubscribed. They are suspected to and trading on september 10. This is bloomberg. Likely primes next minister is vowing to follow shinzo abes signature. Hes all but guaranteed the job. What this means for japans politics, connie, we are joined by Koichi Nakano. Wonderful to have you with us. How do you rate him . He has been the back room man. Hes done a lot of the work in the background. The you think he is fit to be the leader . Will he be able to live up to our to the position and stature of shinzo abe . Koichi i think the Financial Market is generally welcoming his ascension to power. Why is precisely the reason he was handpicked by mr. Abbe himself. Because he is the continuity candidate. Whats vowed to continue on shinzo abe has been doing in terms of policy and defending the policies. Covering up for the scandals that have emerged in recent years. Haidi tell me more about your theory as to the scandals. You are saying that this is not as simple as a Health Crisis as to why he is stepping down. Koichi right. He has been dog by scandals related to personalization of power. Under him, there have been misuse of public funds, abuse of power, even an attempt to promote against the law his favorite prosecutor. Bureaucrats dr. And destroy public documents against the law. Whats frightening is also the fact that almost nobody has been held accountable. Servedly they have almost eight years now. Theyve gotten away with that. I think that his task is to continue to deny that there were any problems and that his legacy will be cemented on the positive side. I have to say also that he is quite experienced in terms of domestic policy. He has close to zero experience when it comes to foreign policy. That has been the favorite playground for mr. Abbe himself. Hes very little known internationally. He really doesnt have much of a network. It will be a real challenge for him. Not just being likable and presenting a positive image. Japan, he has an putin. As a mini he has to be liked. Theres a Public Campaign going on on television about that. Given that he is seen as the more favorable candidate when it comes to the public opinion, is there any scenario you can paint that would see him be any competition . Is this a done deal . Koichi it is a done deal. Theres no way there can be an upset victory. Hes 100 certain to win already at this point. Havef the major factions formed a weight behind him. Everybody is in the Parliamentary Party to join the back wagon. Hoping to make a good show cartel war cabal making a decision beforehand, even before the vote takes place. That way, he can continue to hope to replace him if he turns out to be an unpopular Prime Minister. Stated inzo abe a will shinzo abe fade into the background . Koichi for now, because hes resigning for the second time, not very good timing as everybody can see. Of course, for fear of appearing irresponsible and unreliable, i think hes trying to withdraw from the scene for now. Although he does hope to retain influence. He can count on that, for sure. Sophie haidi before we let you go, im wondering about the implications for foreign policy, particularly as we live in this diplomatically fractured world. What are the implications for the japanese relationship with china . It is always quite stimulus. I think the difference between them is almost negligible. One can point to several differences in personality or perhaps policy preferences. Suga is even more probusiness. Compared toothered shinzo abe i buy nationalism. Comfortableely dealing with these issues as well. Continueably likely to the opening to china that shinzo abe initiated. In part because President Trump of the United States wants to wage a trade war against japan and china. With regards to the relationship with the u. S. President , much depends on whether donald trump stays in power. Abes can match shinzo skills in pleasing donald trump. Suga is not a good diplomat. I think he will have a real challenge getting along with donald trump, even if its for several months. Koichi nakano. Is shapinge mega ipo up to be the Worlds Largest debut. It is signaling a long protracted war with consent. We will tell you why. This is bloomberg. Haidi a quick check of the latest business headlines. Oracle has lost its legal challenge. He tried to claim the pentagon violated its own rules when a deal was set up. The court affirmed an earlier ruling that oracle was not harmed by any pentagon errors and didnt qualify for the contract anyway. Microsoft one that contract. The indian unit is no longer considering bank proxy after winning legal relief in its payment dispute with the government. The fine print of the judgment shows the company doesnt need to make any immediate payments after judges gave it 10 years to pay a combined 19 billion in back fees. The chinese Delivery Firm regular express surged 259 after alibaba increased its investment stake by nearly 1 billion. The share purchase more than doubled alibabas interest to just over 20 percent. Its one of the largest Logistics Service providers in china. The upcoming mega ipo is read headed for recordbreaking fundraising. Lets get the details from our finance reporter lulu chan. . Ow much of a threat is 10 sent lulu it took the social Media Company only five years to carve out a huge chunk of the countrys 36 trillion online payment business. Right now, you see the wider ecosystem attacking their Payment System and Financial Services business from all including wider tosystem Portfolio Companies keep chipping away at the mobile Payments Services that they are offering. Haidi this battle for users, for traffic. In what areas do you expect further competition . Lulu going forward, we are continuing to expect that aunt and alibaba will put more money into aligned groceries. Into anvesting heavily Online Community grocery service. Thats competing directly with the tencent conglomerate. Another area that they will go headtohead is entertainment services. Also, ecommerce. Gave up years, tencent on working on Ecommerce Services. We are seeing an emerging trend where we chat is trying to create its own Ecommerce Services via mini program. Thats a really concerning sign for aunt as well. We chat has its allinone universe. Nt canre any way that a have expansion beyond fin tech . Lulu it seems to be trying to imitate that strategy as well. They have their own equivalent of many programs. In terms of figures, monthly user numbers, the two are locking arms horns. The two companies started out in very different places. The emerging trend is that they are trying to copy each other strategy and become more like. Haidi r Bloomberg Finance reporter there in hong kong. Thats it. Markets coverage continues. We are looking ahead to the start of trading in hong kong. Bloomberg markets the china open is yes. Next. This is limber. Bloomberg. David this is my Kitchen Table and also my filing system. Over much of the past three decades, i have been an investor. The highest calling of mankind, i have often thought, is private equity. Then, i started interviewing. I watched your interview, so i know how to do some interviewing. I have learned in doing my interviews how leaders make it to the top. I asked him how much you wanted, he said 250, i said fine and did no due diligence. How does it feel to get up in the morning and know that 330 million americans want to know the state of your health that day . As a youngoymy