there, two point 24% on the u.s. 10 year bond. not to trivialize what happen in the u.k., but again, it seems that investors are just looking past events there. comes yeah, but when it to the pound, the sterling is giving up that strength, slipping in early asian trading. , thea look at my bloomberg function. moves follow that drop we saw yesterday after the u.k. threatened to walk away talks on it's the parts are from the eu, so being exacerbated. let's talk about this developing story that happened overnight in europe. officersterrorism holding an emergency meeting after 19 people were killed in an explosion at a music concert in manchester. we have stephen engle monitoring the story and the latest headlines. >> they are treating it as a terrorist incident until they know otherwise. indications point to that, but that is just from witness accounts. we have heard from the police constable and greater manchester, outlining basic information. 19 people confirmed dead, about 50 others injured. this explosion in the adjacent hall to the manchester arena. you are seeing footage of the main performance bowl that seeds 21,000 people. the explosion happened just outside after the concert had ended. these concertgoers were filing out. this is a concert for a 23-year-old american popstar ariana grande, so a lot of these concertgoers would be children or teenagers. that is one of the biggest concerns. at happened after 10:30 5 p.m. u.k. time, five point five hours ago, and information has been trickling out. police did not take questions, the constable. let me play what he had to say. this is in hopkins, police constable of greater manchester police. currently treating this as a terrorist incident until we have further information. we are working closely with national counterterrorism policing network and intelligence partners. this is clearly a very concerning time for everyone. we are doing all that we can come at working with local and national agencies to support those affected. as we gather information about what happened last night. he also said they are working with antiterrorism and intelligence agencies at this hour. cap other news that u.k. government ministers will hold crisis meetings, supposedly according to sky news at 9:00 a.m. we have very statements, including the u.s. the permanent homeland security, saying the u.s. stands ready to assist our friends in the u.k. nancy pelosi the democratic leaders saying the manchester attacks demand condonation and fierce unity. those are a month some of the other comments from around the world. daivd: lots of questions right now. do we have any idea when the next update will be? it was a fairly short statement. in light of the upcoming elections on june 8-9, has there been any announcement. are we seeing campaigns suspended at the moment? the tories have announced that they have suspended temporarily the campaign in the middle of this election. we did get a statement from prime minister may saying we are working to establish details of possible terror attacks, but again, this would be with 19 dead, 50 injured, the worst terrorist attack on the u.k. soil since 2005, and comes at a critical time in the middle of this election campaign season in the united kingdom. we don't have a lot of information. it is the middle of the night. they have cordoned off the area and are doing their investigation. the constable did not take questions. he did not want to perhaps speculate as they were putting together this investigation. daivd: absolutely. great reporting there. stephen engle's joining us live for the latest out of london. london is waking up to the situation. right, let's get it over to paul allen with first word news. president trump's first budget has been presented, showing proposed spending cuts of $3.6 trillion over the next 10 years. the proposal claims to balance the budget within a decade, however, it relies on a tax plan for which the administration has provided precious little detail. toppled south korean president park again hey and court, denying charges of extortion and abuse of power that could keep her behind bars life. she arrived wearing a blue jacket, but was clearly handcuffed. she is accused of coursing big business to funnel millions of dollars to a confidant in return for government favors. it is ready tos begin mass production of a new medium-range missile, saying sunday's test proved it is combat ready. state media said the missile is capable of hitting u.s. bases in japan and is "an answer" to president trump's policies. an official statement said more launches will follow and scientists are continue to work on nuclear warheads. havearea finance ministers failed to break the impasse on greek debt relief. athens will need the money to pay its bills in july and the delay adds to uncertainty around an economy that has slipped back into recession. i am quite confident that in three weeks, we should find an agreement, a compromise among the member states. todayd like to emphasize the work we have made together was a very useful and very constructive job. tom: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. angie: coming up this hour, netflix's main competitor in southeast asia is making a major push into emerging markets. we speak to its head about plans for expansion. next, board member for the german bund's bank joins us to discuss policy, risks, and brexit. this is bloomberg. ♪ ♪ daivd: this is "bloomberg markets: asia." . am david ingles angie: i am angie lau. noble requested a trading halt after continuing its plunge towards an all-time low. s&p global rating says it could default within the year and cut its long-term rating to triple c plus. singapore listed noble stocks and bonds have consistently fallen since 2011 on concerns estimated liquidity will not cover the debt due. reports from japan say sharp will release its profit forecast through next march. accompanied will be by a three-year business plan. the nikkei news says it is expecting net income of $360 million, and revenues of $20 billion. the european union has finalized a tough brexit position, reiterating a hard line on the uk's potential divorce bill and refusing to discuss trade ties until there is an agreement on departure arrangements. the eu negotiator says accounts must be settled on both sides to build trust. as bill has been put as high $112 billion based on past financial commitments to the eu. daivd: for more on brexit and the future of the eurozone, let's bring in our next guest, a board member at deutsche bundesbank. thank you for coming on the program. >> thank you for inviting me. daivd: let's get straight to it. the media has a tendency to obsess over issues like eric brexit, and aike lot of times people miss the point. what is the one risk we should all be talking about that hasn't seemed to have garnered a lot of attention as it pertains to financial stability? in hands pretty much on mode now after 10 months of operation. we are now having this two-year transition, listening to the positions. i'm not saying this will be prolonged for brexit. we are talking about two years, and it does not look like a soft brexit. it looks like a hard brexit or very hard brexit, so now is the time for the banks and market participants to prepare for that. i believe the brexit is manageable for banks, but i think we need a thorough preparation and we have to do this in an efficient manner. there is a financial stability risk for european corporations, and the biggest financial stability risk is that the german corporate's, the products they have been using in buying in london will not be available on the continent, so it is important from a financial stability point of view that the products which have been offered to london will be offered somehow on the continent in a legal way for european corporate's to buy them. otherwise, again, i think brexit is manageable for banks if and when there is precise, efficient, and well-timed preparation. is a big if. in the event banks might need to pull out of london, and i know the deutsche bundesbank is not promoting a plan b, but as a former banker when you look across the continent, is there one european which you see that offers the same sort of infrastructure, legal framework, even the capacity to match what and and can offer? >> no. and i expect london to maintain the financial center of the region for a long time. singleworking under a rulebook, so it should be very much make no difference whether the banks will partially relocate to dublin, amsterdam, paris, or frankfurt. when you say we are not promoting frankfurt as a financial center, we are not working against frankfurt as a financial center, but do not see it as the job of the central bank to promote one single center over the other, but to make sure we don't have a race to the bottom in regulation and supervision, and that we all work from the same, from the same platform. if should the banks relocate from london, or relocate to paris, i am willing to offer my good colleague in paris some of my staff in order to make sure that we don't go to a cliff edge effect or any other city, because what we really have to make sure is that this is not going to become a dangerous situation, but a situation which we manage on a european basis has two europeans. problemould it be a moving the european banking authority from canary wharf to someone else in europe -- somewhere else in europe? >> i think it will have to be moot because we are expecting a brexit, then the european banking authority cannot stay in canary wharf for much longer, but where it moves will be a critical decision, and central banks for sure don't have a say in that. angie: i want to ask you about the health of the german economy . we had chancellor angela merkel speaking to students, saying that trade surplus is a concern, but only if you can increase the mystic spending. she is blaming the euro, which eak as of late. what needs to happen? is it about domestic consumption? >> the german economy is doing rather well. we have seen a gdp growth of 4.6% in the first quarter. is on a quarterly basis, not an annual basis. if you compare that with the fourth quarter of 2016, that was 4.4%, so we are doing better. we expect good labor markets in germany, which means unemployment will be low and some wage increases possible, which would mean consumption auld go up, so we or see robust economy in germany, that only for the next quarters, but also 2017 and 2018 and 2019, so quite a sustainable good economic path in germany in the heartland of europe. angie: that is europe, but if you look at the global picture, there are some concerns. for our bloomberg subscribers out there. you can see the trade relationships, that ended relationship germany has with china and the u.s., political turmoil in the u.s. billing into global markets right now, and also some key chinese economic indicators coming in a little low estimates. that that make sure does not drag down the health of the overall german economy? listen to you, you can almost get the feeling that we ahead of an immediate collapse in the chinese economy. that is not the case whatsoever. we do not see that. we see for the short to medium future a solid economic development in china, so that is all i can say good with regard to trade and political circumstances, we have to wait and see how things develop, but the economic foundation for what we are talking is reasonably strong, especially in china, and we don't see anything like an immediate collapse in the chineseeconomy or in currency. angie: let's pick that up after the break. stay right there with us. we will talk more about china global markets in germany. more, coming up. this is bloomberg. ♪ daivd: let's continue our conversation with our board member from deutsche bundesbank out of tokyo. thank you for sticking around. .e talked about the euro it strengthened against all its g10 counterparts this year. i imagine he gets to the point where puts a recovery at risk, even becomes deflationary. has there been a conversation within the deutsche bundesbank over currency strength? have a currency target come and you would not expect me to make that assessment of the future of the currency. i have been in office of little more than seven years, and one reason is i never comment on the future of the euro or any other currency. i will not change that. as you can see, the economy is inong, not only germany, but all of the euro area, and that is a factor. note come upt monetary policy does take some time to have the desired effect. i'd liken this to a hunter where you need a few steps in front of that accuracy. macro data seems to suggest the economy is strengthening. do feel this year is the proper time for the call for the ecb to discuss normalizing monetary policy? what we are looking at of course is the rate of inflation, and as you have noted, inflation ,n the euro area is up markedly headline inflation according to fresh estimates in the euro zone is at something like 1.9% for april after 1.5% in march, so inflation is somewhat up. i don't see any deflationary tendencies anymore. i have to admit i did not see than a year ago, but for sure there are no deflationary tendencies, and what you see is , theu look at inflation tailwinds from a stronger economy will also have effects as i mentioned earlier on wages and on consumption, so according to the ecb estimates, we will be close to our target or at target the latest 2019, which means aat we will over time get to price stability goal of 2% are close to 2%. i should also mention in april stands at 1.2%, which means that we still have quite some influence from the effects of oil prices, and if you exclude energy prices and is 1.2he core inflation percent, so we are quite far away in that respect from price stability target of 2% or close to 2%, which means the present monetary policy stance seems justified at the moment. bring it backto to china. what opportunities do you see there in the bond market, especially with the bond connect the pboc is pitching at some point in the future? >> i am not the biggest export in that expert in chinese markets, rather european markets, but i must say that as i said before that i see the positive.ther i am not afraid of immediate downside effects. what everybody is watching of course is what is happening in the chinese real estate market, and it depends on how you value that. you also look at different ivels of debt in china, but believe any speculation of bond markets to the people who make money in it and who know that best. there, andrtunities of course you are there in tokyo. how is it going with the third arrow? a also come you are asking question which i would hope you would ask the japanese government. i think we need all three arrows in japan. notclose that is or not is for me to say, but it is important to have all three arrows being shot at some point in time because it is a package of things, and that is why the third arrow is of course potential to the program -- essential to the program. angie:e: we are looking forwardo the effort in business in tokyo. this is bloomberg. ♪ >> it is 11:29 in hong kong. i am paul allen with the latest first word news. police have confirmed 19 people were killed in a suspected terrorist attack at a concert in the northern english city of manchester. 50 others were wounded in the blast at the manchester arena at the end of a performance by the american singer ariana grande. anti-terror officers are meeting, the number of deaths makes it the worst incident on british soil since the bombings in 2005. opec hopes of draining the oil glut of being undermined by iraq, pumping 80,000 more barrels of oil in the first quarter than permitted by the production curbs. the restrictions are expected to be extending through to march when opec meets. iraq's noncompliance may persuade others to break the agreement as well. iron's record supply of ore has grown bigger. reserves expanded for a fourth week, rising by a total of 22 million tons this year, easily surpassing 20.9 million tons last year. the price of iron ore has stabilized in the $60 region after sinking in march and april on concerns rising production will top demand. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. juliette: we have seen more upside coming through following the news of the manchester attack. we did see u.s. equity futures start to fall away, and the yen and gold rise. you are seeing positive moves from some of these asian markets showing resilience, particularly upth korea's kospi index, .9%, and good buying from singapore. china csi 300 up by .4%. new zealand the index. currencies have we can, although the malaysian ringgit is holding to six-month highs on the back of the rally in crude. this is where you are seeing that hey faith and -- that safe haven, bonds higher, yields falling across the board. in terms of the other currency -- commodity markets, brent has fallen by .4%, but still above $53. this is the reaction in the british pound, a little weaker following the manchester attack against the u.s. dollar. that is the state of play across asian markets today. daivd: thanks. let's talk big tech. tencent, we are following the stock closely. ,t has become in a lot of ways a put or call if you're long on the hsi. tradestually tracks your . there we go. you are looking at volume and the size of those trades at the bottom. it is hard to imagine that just before christmas last year we 180.trading at that is $100 to the upside on tencent. this is #8781 on your bloomberg. now the mostly heavily weighted stock on the hang seng. a 12% weighting, but 16% down. in other words, where the stock goes, chances are that's where .he hang seng goes to angie: yeah, let's talk about that adding $100 billion of value. let's bring in our greater china analyst. you see them going hand-in-hand comes skipping along calling going up that hill. >> the correlation is so high. where ever tencent goes is where the market goes. $100 billion just this year. that is the size of a company , three times ebay, and that is just five months. everyone loves this stock. it has 44 buy ratings, not a and analysts are expecting a rise of 10% in the next six months. daivd: since you mentioned it, i want to bring up this chart on correlations going back to 2008. the other thing is when you look whichlysts, no sells, tells me to get on the other side of the trade. i would just flip this around. #8783, what is the target price at the moment? 9%the target price is about higher than yesterday's close, and that is the next 12 months. rally is not just in hong kong good there has been the tech rally around the world, even the nasdaq, we are seeing the climb to new highs so must every day, so this is not just tencent. last week, the company reported , sord profits, record sales it is based on fundamentals. it is only trading at 30 times earnings. the tech stock and there are tech stocks a lot more expensive than this. angie: could that valuation keep this rally going. , it looks like it is going up and up. is there any possibility that this valuation play will start getting overcrowded? risk, and theat stock has been it overbought levels for two weeks now. it climb are seeing again, higher today, the fifth straight record, so we will see that because the market is so heavily weighted towards the stock and people keep on buying it, if market sentiment does slip, that is a buy for the market in general and you have such a heavy driving the hsi wherever it goes. absolutely 16% as you said. thank you so much for that as we continue to track these two hand in hand. martin ford has looked at the economic consequences of the advance in technology, and he says it is not promising. weaken well robots will key inches of growth. he joins us from hong kong. it is a prophecy that a lot of people are fearful of. lookingone of those into the crystal ball and seeing a lot of concern when it comes to the future of it did to be specific, you cannot necessarily criticizing the robots, but in fact the broader culprit, capitalism. to some extent. what is happening is that these advances in robotics and artificial intelligence will accelerate the trend towards inequality. that is something we are ec, especially in the united states. that is not to say these are bad things. there are tremendous positive benefits that will come from artificial intelligence and robotics, so the last thing we would want to do is halt that process. we need to find a way to address this inequality issue, and i think the reality that a lot of jobs, especially jobs performed by average typical people are very likely to be threatened going forward, and we will have to find a solution to that or we will have serious problems. this point int industrial revolution 2.0, where we can unleash the power of humans from day to day monday and tasks to do better things, to help society, why now have we gone over the precipice in your view? well, we are approaching what i would call an inflection point, where we reach a tipping point because of how powerful these technologies are becoming. machines and technology are transitioning relative from being tools to make those people more productive, more viable, two in many cases being autonomous, so they replaced people, and that will not be true of everyone, but it will be true of a lot of people. we will have to find a way to address the problem where a a lot of people are essentially left behind because they can't find a foothold in this new economy that we are building. david here in hong kong. this displacement process, it has been around since the start of time. ever since the first caveman sharpened his stone to use as a tool, so what makes this phase of different from them and why should i be worried over that? well, right, you are right. it has been a concern around for a long time going back to the luddite revolts in england 200 years ago them up but there has been this process of acceleration. we have been seeing acceleration for decades and decades and computer technology, so things are moving faster than they were in the past. the crucial thing is that the machines are now starting to think and learn, and if there is anything you can point to that is really destructive, it is machine learning, the fact that machines are learning and adapting. ask yourself the question, why is it that given this advance in technology that we aren't already all unemployed come and surely the answer is that people have been able to adapt and learn to do things in the but now we see technology, artificial intelligence, beginning to compete with that core capability come of that thing that sets us apart and makes us unique. the machines are coming after that to come and that will produce potentially a different outcome. angie: the question that borders on the philosophical, how creative and smart can these machines get? there isn't a limit to that. for the foreseeable future, real creativity is something that is associated with human beings, but there is already research into building computers that are creative, computers that can write an original symphony, that can paint original works of art and so forth, and that technology will get better and better, 10 years, 20 years, 30 years, the most creative entity might be a computer and not a person. angie: we will wait for that day, but in the present at least, china is one of the most prolific when it comes to installing the most industrial robots, and yet it is trying to urbanized and lift one billion people out of poverty and into a different level of the economy, so what happens to social stability if jobs go away because robots have taken over? they are already feeling that threat. >> right, as you say, i do think that is the potential challenge we should be concerned with. china is now at the point where it is trying to shift to more of a service economy, and especially more to our economy driven by domestic consumer demand rather than infrastructure and exports. harder and harder to do that as those jobs evaporate in factories, and of course at the same time, we are seeing technologies come to the service sector. it is the service sector that isn't there he going to absorb all the workers that move out of manufacturing, so those things will happen simultaneously. trying toy china is make the transition that the united states and other developed countries made long ago, but china is doing it in the robotic age, and it will be a real challenge. angie: rise of the robots, martin ford joining us. it sounds like science fiction, but it is becoming a reality more and more. thank you so much for sharing that with us. up, similar names come up, similar names, but different iflixgies, southeast asia targets markets as it looks to topple netflix. that is next. this is bloomberg. ♪ angie: apple's remarkable success story is seen passing a major milestone with rbc saying it could surpass a market cap of $1 trillion over the next 12-18 months. the potentialhas to generate eps of $12. that would take it past the magic $1 trillion mark. data compiled by bloomberg has sells. and no sophie: daivd: teach aviation to become the first carrier to accept bitcoin for tickets. imagine that? the crypto currency will be in place by the end of the year. the airline aims to link government in its uses. the ceo wants to encourage tourists to visit less well-known parts of japan. is no closer to expanding in china despite the injury agreement announced earlier this month by washington. it's all china promising full access to payment processors. chinas struggling in while local competitors expand abroad. right, it is all about entertainment. it always is anyway. phones, wees, smart are talking iflix, a video streaming service with its eyes set on emerging markets. thank you for coming on the program. the first thing that comes to mind is obviously netflix. much has been said about potential competition there. i want to know whether you think there is room for more than one player and whether you can meet your objectives coexisting with someone else. foret me say thank you having me here. we definitely do. there is a big transition and how people are viewing entertainment. it is going from being consumed in the household to an individual basis, and the focus mr. deliver a localized service across asia, emerging markets in asia, middle east, and africa with local content, local payment capabilities, and the hearing to local censorship requirements. daivd: does that bring your costs up? if you localized stuff, doesn't that make everything more expensive? not necessarily. western content can be expensive on a per viewer basis. interesting, there are common factors across emerging markets, and we are seeing trends where common tastes are treating massive demand for content such as korean or thaqi horror. tastes, preferences, cultures are different across the board, so how do you measure progress? people to turn to iflix as their primary entertainment as users. watching the they shows and how often are we meeting their daily needs? that is how we differentiate against competitors like netflix. we are doing it in a way that is convenient for local consumers through mobile phones. sounds like you might be competing with netflix for a lot of the same local content. i see a lot of korean dramas on netflix as well. another thing that distinguishes they are netflix specific productions. do plan that with iflix, for specific iflix content? doing a series of comedies across southeast asia. in southeast asia, as well as original productions in selected countries across asia. we will be bringing the strategy to the middle east and africa, but on a localized basis with local actors, directors, producers. angie: local meaning the price point is much lower than a $10 million per episode of marco polo or the crown? >> of course. much, much lower. we think demand is higher for that lower price. angie: look, you are charging two dollars to three dollars per subscriber, probably about what half of what netflix is charging. first of all, do think this is enough to make money, and number two, people can download stuff for free, and they have been comfortable doing that outside of the u.s. how do you combat that? >> it is interesting you mentioned that we view our primary competition as piracy. we have to deliver a service at a price point and with convenience that is even better than piracy, that delivers a better service than piracy, because piracy does require downloading or buying dvds, and we believe we are delivering a service that may cost a hit, but because of our integration with partners across our footprint, it is more convenient and we are seeing users willing to pay our fees because we make it so convenient. daivd: there is no plan to enter china at the moment? >> there is no plan to enter china. countriesused on the that everyone else's not making an effort to be in. they are not making an effort to have local teams to open local entities and pay local taxes. daivd: is it first mover advantage, or is a first mover does the mistake, and second mover takes advantage? welcome as many people as possible because it creates and pushes people to try to be entertained in this new way. daivd: how do you see the product evolving? demands forollow customers across markets and make it is convenient for them as possible. hesiod more and more and part and to deliver services that in companies the connectivity costs as well. daivd: how long does one person spend on this? i am eight netflix user but i will admit that off the bat right now. are we talking hours a day? >> on average, definitely. youd: well, good luck to and thank you for coming in. that was the head of asia for iflix joining us here on the program. the key takeaway there is the market is big enough for multiple players to coexist. coming up on the program, tata , whetherport earnings the bar is high or low. we will be live in mumbai next. this is bloomberg. ♪ daivd: welcome back. this is "bloomberg markets: asia." angie: indian markets getting under way. let's check it out for you right now. atare seeing at the rupee that level. the nifty and sensex down fractionally. that move rolling the asia-pacific market flattening off now. tatadia, we are watching motors. say the recovery has to wait because of the pound weakness against the rupee. we are now live from mumbai. what should we expect? >> thank you for having me. motors is set to report earnings today. on certaine keen numbers, the operating profit margins. january is critical for tata thats, 18% comes from unit. key,e ebitda margins are and also what are the products loss that could incur? and how jaguar land rover has than in key markets like china, south america, and europe? these are the key numbers that analysts will be watching when tata motors announces. that, becauserom what stands out to me when we reported these earnings a quarter ago, a massive drop there. you can see at the bottom of your screen, dropping 97%. and we expect an improvement and what other factors should we be watching, other aspects of the business? >> it is unlikely to have a surprise. the parent company in the last 10 quarters, seven quarters of losses. it is also reeling under the trouble where india moved to new emission technology. a good portion of their vehicles do not meet the new fuel emission standards, which they will need to be refitted or be scrapped, or they can re-label and reexport to other markets. we will have to wait and watch and see what provisions they will keep aside for this. absolutely, and as you mentioned, that report later today. thank you for joining us. of the hour, bloomberg markets: middle east coming up. i will be joined by tracy, who is standing by in to buy -- dubai. what are we talking about on the show? latest on the suspected terrorist attacks in manchester, but also geopolitical events here in the region. we will bring you the latest on the last leg of president trump's middle east tour. we will be on the ground in tel aviv to find out how his attempt to bring peace to the middle east is going. i know you were just speaking with the deutsche bundesbank about brexit preparations good we will go live to abu dhabi to talk to the executive director of the company that puts together global rankings of financial centers. brexit find out whether will have any impact on london's reputation as the top financial center. daivd: absolutely. tracy, thank you for that. bloomberg middle east markets is coming up at the top of the hohour. that is it for us here. join me and tracy next. ♪ ♪ k it's 5:00 a.m. here in the -- u.k.. 19 concertgoers are killed in a concert. anti-terror officers are holding talks. you are watching bloomberg markets: middle east. >> i am here in jerusalem or president donald trump is that the beginning major counterterrorism speech. he comes fresh off -- fresh off