Breaking investment rules. This is daybreak asia, coming bloombergsrom headquarters. I am shery ahn. Betty, it seems to be all about earnings this week. We had netflix overnight, but we are gearing up to bank of america, goldman sachs, ibm. Earnings season is usually friendly for stocks. We see another round of gains. Betty we absolutely will be. It is interesting because, you know, we know earnings will be a driver, but there is certainly differing consensus or differing aboutamong strategists how much earnings will propel markets higher. We know mike wilson says it could propel the markets up 10 . We have a guest coming up who does not think quite that, is probably on the opposite end of that spectrum. Diverging views are forming. Shery i will be quite curious to ask him why he is so pessimistic. Many in asia are looking forward to other data points including chinas Property Prices, not to mention we do get rbas in the july Meeting Minutes. Take a look at what the markets are doing right now. New zealand flat at the moment. 76. 97. New zealand flat at the moment. 7697. Missing estimates, coming in flat or no growth when it came to inflation. Take a look at sydney. Futures right now losing ground. We saw the asx 200 losing. 2 in the previous session. The rba july a Meeting Minutes coming up. Not a lot expected on that front. Of course, we do get the volatile numbers on thursday. Also japan coming back from its holiday. It did gain ground in the last week. The japanese yen barely moved over the last couple of sessions, and it is not doing much. 112. 62. We do get the boj policy on thursday as well. Were looking forward to a lot of data points including central bank decisions. A lot to do with what the u. S. Dollar is doing. It halted five sessions of the kleins, and that is a face of affectingnd that is markets, bedding. Betty little change. Discretionary shares, they were offset by health care companies. Atpretty much help starts the end. Joining us now is su keenan with more. Give us the rundown. the real strong performers were the metals and commodities. Copper up. Close. Ou see the it did not really reflect the activity of the day. If we go into some of the big movers, tesla was under big pressure. The car that had a crash and ended up upside down was on autopilot. The driver emailed of the company, and the founder, elon musk, said the guy was not on autopilot. Have him telling people he thought the stock was overvalued and he backtracked a bit from that comment. That added to the pressure. Sales growth will be hurt on the computer crash. That put a stock under pressure. E mentioned freeportmcmoran let us going to the bloomberg. Risk is on. What you are seeing here, that white line, is the global risk aversion macro index. You notice it peaked in 2008 and 2009. Look at the far right side of 2017. It is dropping as we head for those new highs. We had a poll out. Many people, most are disappointed with the president donald trump. Take a listen to this fund manager on how Business Leaders are as well. There is a rising level of frustration. We had optimism early in the year, and now, were sitting here in july, and there is a recognition that a lot of the promise of what we wanted to get done, tax reform, infrastructure, just is not gathering momentum. Su questions about momentum, disappointment with washington. All of this while we are flirting with new highs in the market. Push and pull of the market. Betty flirting with new highs, at netflix. They killed it. It was not just the sales beat, but also subscriber growth, which was where some people were more skeptical about the company. Give us the highlights. That is where they came in the strongest. They shot it out of the box, and the stock is responding, up better than 9 in afterhours rating. That will set up netflix ready a strong trade in the tuesday session on wall street. What they said was the streaming video provider went to a record Second Quarter in terms of surpassing forecasts for growth. They boosted in terms of subscribers, they blew away the numbers by double. They are spending 6 billion on programming in 2017 alone. Projecting 2. 6 million new international signups and they got more than that. The mojo looks like it is going to continue. They are going to add 4. 4 million new subscribers. Versus an instrument of 3. 9 million in the current quarter. Net income will likely be . 32 per share. Aat is quite optimistic given shot in the arm for investors buying after hours. Your to date stock has done very strong as well. In the got more earnings financials. We have goldman, bank of america, and harley davidson. A widely followed a stock. They will be reporting on tuesday as well. I think i helped netflix. I mean my subscription. Su keenan, thank you for joining us from new york with a earnings we netflix just drop your letters get the first word news with nina melendez. Talks in brussels with the u. K. Acknowledging little has been achieved so far. David davis says it is crucial to reach what david davis called the substance of the matter. The two sides discussed the rights of citizens in the u. K. And britains potential divorce will. Michel barnier has ruled out trade talks until those two issues are dealt with. Six months into the trump presidency, most americans feel fairly optimistic about their jobs, the economy, for the foreseeable future. For the latest Bloomberg National poll, it shows four in 10 approve of what a trump is doing of what trump is doing in the white house. That is up 12 Percentage Points from december. Blackrock ceo larry says the u. S. Economy is growing more slowly than expected. Administrations inability to act is a threat. He told bloomberg there are dark clouds building and there is not a rise in personal income said he hoped. He said revenue missed expectations for the fourth consecutive quarter according to data compiled by bloomberg. Time smallcap index plunged more than 4 on monday, its theest loss, extending retreat by 10 , worse than any of the 96 global benchmarks tracked by bloomberg and compares with a 10 rise by the msci smallcap index. Jobs are being hurt by concerns of rising costs. Corporate governance, liquidity, and regulatory oversight. Go from his 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am nina melendez. This is bloomberg. Shery there is a new twist in the tale of wandas ambitions. China may cut funding and will not give Regulatory Approval for some deals. Wanda is held by chinass second richest man. The move could stymie his plans for a Global Entertainment empire. Bloombergs reporter joins us from l. A. Tell us which deals are threatened here. Guest it is interesting. Apparently, there are six different deals being scrutinized according to our reporting. Those include ones which have been completed already. Cinemas, asf nordic recently, deals that have made wanda the Biggest Company that is running movie screens around the world. They are really a number one when it comes to exhibition in the movie industry. They havent tried to get a greater share of content states in movie companies, which he has not done quite yet. This has put a lid on any of those ambitions. Betty absolutely. Does it make others in hollywood even more wary of not just partnering with wanda, but other chinese investors . Anousha definitely in the first six month of this year, we have seen a Chilling Effect on any kind of deals. I have been talking to people here in los angeles, dealmakers and others that work in the industry, to get their reaction, and while some might have seen this coming, sellers that would have liked to sell to chinese buyers at a high price, will have to factor in the added risk of closing, even if there was an price. Ade, an attractive that is what has been happening in the past. You have deals like the sale of Legendary Entertainment and wandas offer for dick clark, a producer of tv shows, for 1 billion, which is seen as very high. That deal did not go through in the end. You might have had a buyer with a very big ticket price, but the risk of closing now is probably too high. Betty probably. Anousha sakoui, thank you for joining us on the fallout on this crackdown from wanda. We will follow this story. Wongs joining us later. We will talk about the push towards a cashless economy in asia. Shery up next, we will ask what to expect from the latest michael,season with predicting growth for the rest of the year. This is bloomberg. Shery we are counting down to asias first major market open this morning. Japan comes back from its marine day holiday. We are seeing futures on the downside right now. This is daybreak asia. I am shery ahn in hong kong. Betty i am betty liu in new york. A big week for earnings in the u. S. You mentioned we got a earnings from bank of america, goldman sachs, morgan stanley. Andorgan stanley, ibm, microsoft. Netflix blew it out of the water. Likely to hit the nasdaq. Joining us now to tell us what to watch for is the chief global strategist, michael purvis. We were focusing an earlier on this call coming out from mike wilson at morgan stanley. I dont want you to pretty bullish year saying we pretty bullish here saying we are going to grind higher, but certainly to another record here of 10 . What do you think of a bullish forecast like that . I know you are on the opposite end here. Michael i am not necessarily on the opposite end. Betty they are pretty low though. Michael yeah, that was from back right after the election when everyone was laying out there 2017 and 18 forecast where we went through price targets and earning targets. Recently, i took my earnings target, 127 for the year, down to 116. The lowest of the topdown strategist on earnings. Keep in mind, to your point about, can we have further momentum to the upside, sure. Even and earnings reduction with the macro background we have doesnt necessarily have to be a hugely volatile event. We may wealthy another 100 points higher on the s p before we end up back to 2350 or 2400 at the end of the year. I think this issue of earnings, just as we are at the Second Quarter come unfolding, i think is very relevant. Betty i want to just pull up a chart, which kind of shows you forecast is,in earnings and where it has been, and show you this gap we are seeing. This chart, b btv 49094. You can see this is at 113. 13042. Forward eps at it has been widening lately. What is going on. . Michael i have a different version of that. Betty you are clearly on this and here. Michael i think what has clearly happened is that there has been a couple very positive developments. Growthbally synchronized to varying degrees has been on and off and that is a very powerful notion. Is that in that gap the first half of 2016, you had pretty low numbers, so what came. Ut of the earnings, q3 into q4 i think the reality is, as we get into the second half of the year, deep into the second half of the year, labor day and beyond, i think we are going to higher ind a big leg basic economic fundamentals in the United States to help support that. Right now, when you look at consensus for bloomberg forecast for nominal gdp, you are sort of at the 4. 6 level. Over the last several years, that typically supports Earnings Growth in the singledigit. It does not support you get to 130 this year, which is what that number suggested. That is 20 yearoveryear Earnings Growth. Effect from the second half will be much harder than they were in q1 or q2 for that matter. Michael, i want to point to Risk Appetite right now, because Risk Appetite seems to be pretty strong. If you take a look at this chart, 4503, you can see that Citigroup Global risk aversion index has fallen to a threeyear low, and in fact, that is back to precrisis levels. If you have a strong risk on sentiment, wouldnt equity markets rise . Or is it that you are forcing some sort of session in the second half . Michael im not seeing any sort of recession whatsoever. I think my main point is the twoet may be paying another multiple points higher than advertised by consensus estimates. That is all. If risk is on, and it seems to be on, you have globally think ,he nice growth, Central Banks all in a reasonably constructive environment, and certainly very gradual, that could be very powerful. It is important to point out that since the great financial crisis, there has always been one major economy in the doghouse. That in 2009, it was the united rates and the u. K. As you got in the United States and the u. K. China in 2015. Today, you have every major economy not in the doghouse. Doingthey are not great and japan is figuring out some things, but i think that is a very important reason why that graph you just posted is where it is. Shery and you also have to talking about Central Banks you have to look out the german s are doing. It shows the correlation with u. S. Treasury yields will affect the market. Michael that is a very important point. If you look at eurozone economic and inflation metrics, they are the most developed markets. Look at core inflation, actual inflation, where the spread between eurozone and United States inflation, you know, really has been improving in favor of the eurozone. So the point i am getting at has been at the bund very stressed yield, cap that 50 basis points. Point cap would roughly correlate to our 250 basis cap on our 10 year treasury yield. The followthrough on European Economic data and the inflation data, that could push mario draghi into a decidedly more hawkish stance. If the bund yield would pop up to 150 basis points, that would take the u. S. Treasury curve up with it, but if we do not have the Economic Data to go with that higher yield, that will be negative for risk in the United States and for the United States economy as well. Betty absolutely. Michael, great to see you. Thanks so much for joining us. Michael purves, chief global strategist. One feature on the bloomberg we would like to bring to your attention is our interactive tv function. You can find it at tv. You will not only be able to watch us live, but the previous interviews, dive into any of the securities or bloomberg functions are talk about, and you can become part of the conversation with us by sending us into messages during our shows. Yes, ask us. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Shery this is daybreak asia. I am shery ahn in hong kong. Betty i am betty liu in new york. Said to be seeking a buyer for a bundle of assets in europe as it seeks to incorporate its acquisition of meet antitrust demands. The assets generate about 200 million in annual sales and are mostly part of the Companys Agricultural Solutions unit. Potential buyers are said to include australias new farm. Shery tesla is adding diversity cs a board some critica say is too close to elon musk. Roles on take up the thursday. The news comes after the stock tesla crashed a on autopilot. The driver said his car accelerated and overturned while running itself, but later confirmed the system was the activated. Betty bnp paribas has been fined almost 250 million by the fed for failing to prevent fromncy traders manipulative prices. They reached a three and 50 million settlement with new york. 300 50 million settlement with new york. Bnp has been ordered to improve oversight and internal controls on Foreign Exchange trading. Shares have been soaring in extended trade after subscriber Growth Numbers crushed estimates. That is get the details from bloombergs lucas shaw in los angeles. I am a surprise the stock is roaring right now. What was holding that the company was a skepticism about subscriber growth momentum, and yet, they killed it. How did they manage it . Netflix is not the most forthcoming company when it comes to details of where they get their subscribers or who is watching it. The best you can tell is that they are succeeding all over the world because they now operate in 190 countries. They have a lot of places from which to draw. They added customers in the quarter, 4. 1 million of which came from overseas. My guess, based on what you see from analyst estimates is it is a mix. They will get 600,000 from germany, 400,000 from brazil. So on and so forth. There was some concern that offlix had tapped out a lot the u. S. Market and international was going to be a big challenge for them. What we have seen over the last couple years is they have adequately moved into some of these new markets, figured out what the customers liked, and made shows and the livered. At the same time, internet tv continues to spread. They do not have a whole lot of that court is to look back on. Shery ok, but 6 billion in programming costs in 2017. Do they really just spend that much money for our entertainment . They would say they need to spend more. The continue to increase amount of money they will spend on programming, largely because they are putting more and more into originals. It has only been five years since they made original programming and than this past thaner, they released more 50 programs from original series, movies, standup specials, documentaries, kids programs, so on, and so forth. As you point out, it means they are spending a ton of money and theyre Free Cash Flow was very negative. Their operating margins are very small, but longterm, the business looks good. Investors are forgiven them for it. This year, for the first time, their International Operation will have a positive operating margin. As the business exist as they paid for it, it is making money, but they keep putting it back into investing in more shows. Betty they are investing in their business. That is what they do. Thank you so much, lucas shaw on the netflix numbers, watching the nasdaq move based on this surge we are seeing in netflix. Much more ahead. Wandas negative watch. The reasons behind that, next, at the pressure grows on wanda. This is bloomberg. So new touch screens. And biometrics. In