betty: optimism sneaks back into the market as they are awaiting the fed decision. soft inflation raises questions about janet yellen's plans. they're looking for clarity about the balance sheet. betty: jeff sessions addressing congress, saying claims he colluded with russia are a detestable ally. boss takesr's

unlimited leave as the company navigates a wave of scandals and criticism. we have world coverage here on "daybreak asia." we go to beijing for the latest on why a chairman is stepping down. stateside, we are focusing on washington in the reaction to the all-day testimony by the attorney general. this is "daybreak asia," live and asianberg's u.s. headquarters. i am betty liu in new york, it is after 7:00 p.m. yvonne: it is after 7:00 a.m. here in hong kong. i am yvonne man. south korea, the unemployment picture from a looking better than expected, 3.6%. the estimate was for 3.9%. labor market playing through than the previous month of 4% unemployment. we continue to see signs of healing and south korea. the government has proposed an jobs budget to help boost

and income. hopefully that will help with the youth unemployment factor. economists have raised estimates for growth to 2.7%. we will see how korea reacts in an hours time. let's look at the state of play in asia. it looking better than 24 hours ago, after that tech share rebound overnight. nsx 50 up 0.4%. the kiwi heading lower after we saw that the current account surplus returning for the month. .t it was less than expected, 7210. industrial production, retail sales out later this morning. below $46 overnight briefly. industry data unexpectedly showed an uptick in u.s. stockpiles. theres up seven points on

board. not a lot of movement in japan. in japan, futures higher here. maybe a return of 20,000 on the nikkei. 0.06, above the 110 level. a good boost for equities today. what a difference a day makes. you cannot collect the top of a tech rally just yet. we are back to seeing records almost. betty: yesterday we were wondering, is this the start of a bear market in tech shares, or just a blip? it looks like perhaps it was just a blip in the market. we saw the equity markets rally back. shares.cular, tech we will go through exactly what happened in the market. no, we will go through that now. u.s. markets moving higher. the nasdaq leading the gains, up 0.7%. the dow adding 92 points. the s&p higher by half a percent.

that the decision tomorrow. let's look at some of the tech movers, the big ones that helped the markets along, including over 1%, almost 1.5 percent. microsoft, higher by 1.25%. visa gaining almost 2%. some of the big movers we had today in the session. let's get to first word news with nina melendez. they cane insurer says no longer perform duties for personal reasons. the business magazine said he was detained on friday, and the report said of the insurance , but gavemet anbang no details. they scaled back and had questions about ownership and financing. the warning that markets are threatened by low interest rates, aging populations, and

global warming. stocks are at record highs, but the u.s. economy expected to grow around 2% extends what some are calling secular stagnation. an investment outlook, they say do not be mesmerized by blue skies. all markets are increasingly at risk. the u.k.'s new junior brexit minister calling for the fastest exit possible when negotiations begin. they spoke as prime minister theresa may flee to paris to meet resident macron -- president macron. it would involve the retention of free goods and labor. saudi arabia insists there is no and they willtar, provide food and medicine that is needed. a foreign minister said all qatar's ports and airports remain open and that kingdom has not denied use of the airspace.

to cutd other countries off diplomatic links because of terrorism. >> the airports are open. we have denied the use of our airspace, this is our sovereign right. the limitation of saudi airspace is only with regards to qatari airways, not anybody else. the seaports of qatar are open, there are no blockades on them. they can move wherever they want. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mean melendez, this is bloomberg. jeff sessions heatedly denied having any improper meetings with russian officials as he addressed the senate intelligence committee. denied he colluded with moscow, calling them appalling.

for more on the implications that want to bring in alisa parenti. what did we learn here today in his hearing? ofsa: there were not a lot revelations. but, what did sessions discuss with president related to the russia investigation? sessions would not reveal any of his invest -- conversations with trump, citing policy. a wanted to know about his conversation with trump about firing former fbi director james comey. he declines. sessions was asked about his contact with russian officials. he called any secession -- suggestion of impropriety a spurious allegation. >> suggesting i participated in any collusion, that i was aware of any collusion with the russian government to hurt this country, which i have served or toonor, for 35 years, undermine the integrity of our democratic process, is an

appalling and detestable lie. relatedly, there is the assertion i did not answer senator franken's question honestly in my confirmation hearing. colleagues, that is false. says: sessions that because he has recused himself from the russia pro, he is not received any updates on the hacking that is believed to occur during the presidential election. words, and a very combative jeff sessions during the testimony. might firerump rubber mueller as special counsel -- is there any more on that? alisa: it is interesting, it was a friend of president trump's who made that suggesting, that robert mueller may be fired, that the president has the right to fire the special counsel. they try to discredit him, saying he would not be as impartial as believed. republicans when out and hotly

denied that and suggested this would be a very bad move for the white house to make, for them to fire mueller. they were walking back the possibility of firing him today. there was a lot of criticism from democrats after testimony. some felt he was stonewalling, that he had little basis to avert questions without claiming testimony. some felt he wasexecutive privi. is that a fair assessment to make? how did he respond? alisa: he seemed to know what was coming. he said, i am not stonewalling, i am following the historic policies of the department of justice. walk into any hearing or committee meeting and reveal confidential medications with the president of the united states. sessions says he is protecting trump's writes to executive privilege. but it is something we have not

seen trump do, which is odd. there were many questions he said he could not answer or reveal that. you make a good point, he was quite testy. thes normally right on level, but we saw him very animated today at his testimony. yvonne: republicans would call this testimony -- there was no smoking gun, nothing new we have learned. what really happens next? any question whether this investigation in russia or the comey firing goes? alisa: it looks like we will have closed testimony, subpoenas. they are looking to get the documents that comey made his that comey made, his notes. there could be closed testimony and more to come. absolutely. alisa parenti, thank you. and itsead, qatar neighbor exploded to the global gas market. betty: we're counting down to

the fed's widely expected rate hike. former executive vice president at the atlanta fed telling us what to look for in janet yellen's testimony, -- her statement. and why he thinks there could be a chance we won't see a rate hike. this is bloomberg. ♪

yvonne: we're counting you down to asia's first major market open. japan futures holding firm. atking to see modest gains the tokyo open this morning. dollar-yen above 110 territory. this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty liu in new york. our next guest thinks the rate hike is only a 50-50 that.

this is the chief economist at cumberland advisors and former said it is vp of research director. also joining us is kathleen hays, who covers global central-bank policy for us. bob, you may be an outlier. you do not see this as a done deal just quite yet, right? bob: it is easier to justify a rate increase when you come on after -- come after a strong economy. we had a dismal first quarter. wasmost recent jobs number not supportive. i do not see an imperative for them right now. especially since the age book showed a similar modest expansion. there is no urgency to act. by september, they will have a reading on second-quarter gdp, more job numbers. it is truly had a number that is way down.

it is still something of concern. the inflation is on target. on balance, it is a 50-50 situation right now. -- kathleen: i hear everything you're saying. i have the good fortune to ask a couple months ago. labor is not rising. there is some softness. inflation has just started to soften. other feden and officials said the inflation softness will be transitory. labor markets are getting tighter and wages eventually will rise. why would janet yellen and her colleagues back away from that now? they had a history of saying everything is transitory. a lot of it turns out not to be necessarily transitory. it is still a question mark. ultimately, they would be able

to justify a rate hike if in fact they had a substantial adjustments in the forecast. i just do not see them adjusting up the forecast. a number of the people, presidents, have indicated their discussions and the speeches that they have marked down the growth forecast. i do not see a strong case at this juncture. and why risk it if you do not have to? we have plenty of time, things are not out of control. the only question that exists in people's minds is whether financial markets are getting greenspan kinda of word. you do not want to use interest rates to deal with that, necessarily. you mention about financial conditions but we see them a loosen after three rate hikes from the fed already. is there a risk that the fed does not move? bob: there is an interesting

thing going on. right now, 40% of access foreign are owned by institutions. they are faced with either paying 70 basis points to the central bank in the case of europe, are getting 1% on funds here. the more we raise rates, the more attractive the arbitrage flowes and the more funds into the u.s. potentially, putting downward pressure on interest rates. in fact, you can argue that a rate hike could actually be more accommodative and generate more accommodative financial conditions. bob: what about the balance sheet? there seems to be an urgency to reducing it further this year. to reduce it, they said we have to have interest rates reduced make thatmet -- to happen. isn't this one more reason to hike? don't you agree it is important

to reduce the balance sheet? bob: i definitely agree. i would argue they should do it now, start now, not postpone a rate increase. because what that would do is release about $500 billion over the course of between now through 2018 into the marketplace. that would essentially be structure,ross the and moderate arbitrage in the short end of the curve that i talked about earlier. i think the wiser move is to go ahead and start running down the balance sheet at this point. we saw the last time in the and this is where the more interesting questions will be tomorrow for janet yellen, is, what kind of progress have they made on their proposals? i was quite struck by how

cautious they were in the proposal they made, but they were talking about setting caps. obviously being transparent. but essentially reinvesting a modest portion of run off and letting only a small version of return securities actually run off into the marketplace. i think the stronger move and better move would be to start the balance sheet normalization. mentioned before how you are coming out of a soft tax, what is the harm in holding off? it seems like if you are looking at treasuries, that is the idea or thinking among bond investors. i wonder, in your view, a 10 year yield around 2.2 percent right now -- shouldn't that be lower, given the uncertainty in the economy? or is it appropriately priced? bob: it is probably

appropriately priced, under the circumstances. i am not particularly concerned about that at this juncture. yvonne: we're going to leave it joining useisenbeis, there from sarasota. the's boss steps aside as company deals with a string of scandals. we look at the roadmap for uber. this is bloomberg. ♪

betty: this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong kong. has denied anaire fraud and diverting loans as he appeared in court in london to fight extradition. he was arrested on charges of conspiring to defraud banks,

through a $1.4 billion loan to is now defunct airlines. he was told to surrender his airport. he moved to england, saying he wanted to be closer to his children. the jury in the u.s. trial of former nomura bond trail say they may have trouble reaching a verdict on at least one charge. they began to liberating last week after a month-long trial of federal court in in connecticut. the three are accused of lying to customers about the prices of mortgage-backed securities. bloomberg has been told the carlyle group expects between $5 billion and $6 billion for its fifth asian buyout bond. the group aims to close a new fund in the second half. competition for buyout deals have increased in asia, with a sovereign wealth funds, pension funds, and a large corporations joining the fray. uber ceo travis kalanick

says he is taking a leave of absence without disclosing when he will return. he is handing control to a management committee as a wave of scandals. for more, here is eric newcomer in san francisco. date forno return travis kalanick. and also, he will be stripped of some of his duties, right? eric: yes. at first we thought it might be three months, but now it is totally indefinite. no matter what happens, when he comes back, former u.s. attorney general eric holder out these recommendations. we finally saw them today. the top recommendations were about a new chief operating officer doing some of the -- giving authority to someone besides travis kalanick, saying someone else needs to come into up the company figure this out. let's also get an independent chairman to oversee this. the recommendations were clearly trying to diminish travis , whether he took

a leave of absence or not. betty: is this a firing disguised as a leave of absence? eric: travis kalanick basically runs the company. he has a lot of power on the board himself, and has close allies. i do not think they could fire him outright. we cannot speculate about what would happen in the company, where the public shareholders decided travis was at the whim of his board of directors. but this is a case where he has a lot of power. solution,gotiated where he can step away a little bit, grieve about his mother who recently passed away, and figure out who the new chief operating some of thecan take day-to-day decision-making. yvonne: a lot of growth to his

employers, which i wanted to bring up. 2.0 andwork on uber travis 2.0 to become the leader this company needs and you deserve. it seems to be the case that they want a fresh start and this was the right move. do we also see a power vacuum in uber? there is no ceo, no coo. who will be stepping in? eric: it is literally a mystery to me right now. aey hired francis grade, harvard business school professor, an expert in this sort of issue. i think they are hoping she can help them out. it is not clear what the mechanism for how this management committee will make decisions, allocate budget to something -- how will that work? i have a lot of questions myself on those issues. it is not clear they are all sorted out at the moment. a lot of the chief operating officer is can look to that person. will the whole management committee report to them?

there are more questions than answers in terms of, how does it uber run without travis kalanick? a different face for uber, moving forward. thank you, joining us live from san francisco. let's look at markets as we look ahead to the opens in sydney, tokyo, and seoul. new zealand looking firm when it comes to the nzx 50. kiwi at .7202. we did return to a surplus, but it was less than what economists were expecting. futures in australia pointing to modest gains, up seven points. a bit of a bounce yesterday on the asx 200, up 95 points. the aussie going nowhere, .7534. crude wti dipping below $46, once again after we saw

inventory data show an unexpected rise in u.s. stockpiles. in chicago pointing to gains. about 30 points on the board for nikkei futures after they were flat yesterday. this is bloomberg. ♪

yvonne: 7:30 a.m. here in hong kong, 30 minutes away from asia's first major market open. no rain in the forecast for the morning, but still pretty cloudy out there. betty: it does look quite easy -- hazy. not so much in new york, it was sunny and sweltering hot. 7:30 p.m. tuesday here in new york. markets closed higher, a nice rebound in tech shares, up 0.5%. i am betty liu in new york. yvonne: i am yvonne man in hong

kong. this is "daybreak asia." >> attorney general jeff sessions has denied is speaking to russian officials about any type of interference with the 2016 presidential campaign. calling accusations of collusion and appalling and detestable light. he told the senate intelligence committee that while it appeared russia did medal in the election, he knows nothing but what he is read in the papers. not have any recollection of meeting or talking to the russian ambassador or any other russian officials. if any brief interaction occurred in passing with the russian ambassador in reception, i do not remember. franklin templeton says deterioration in the australian labor market force may force the rba to cut rates early next year. they expect more trouble for employment because household spending is constrained by debt, low wage growth, and rising nondiscretionary costs.

recessionhas avoided for 26 years and the jobless rate remained at 5.7%. an american student jailed for 15 years and north korea has been freed and many backed -- medivacked out of the country. coma for a in a year. secretary of state rex tillerson said his department secured his release. pyongyang confirmed the news but gave no more details. in asia-pacific is set to pass out of europe for the first time, partly because of the political and economic uncertainty unleashed by brexit. western europe household wealth was at $40.5 billion last year. seen taking the lead by the end of this year. spain has accused portuguese soccer superstar cristiano 16aldo of failing to pay

point $5 million in taxes. at the madrid prosecutors says the world's best paid athlete knowingly used offshore accounts to hide income. earlier this year, a spanish another appeal against a conviction for tax fraud. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. yvonne: thank you. trading gets underway in asia. we are joined by garfield reynolds joining us live from sydney. comingthis tech selloff to an and for now. one less thing for the market to worry about. i guess we should focus on the fed. garfield: it seems as though equity markets in asia are not going to be that focused on the fed. they are more focused on the recovery from small text

selloffs we had, which perhaps disturbed everybody a lot because no one could quite be sure what is driving it. be that as it may, major equity futures in asia are set for gains. japan, more than half a percent. korea, 0.3%. beyonduld set the kospi the record high it reached earlier this month. the aussie dollar fell against most of its major peers last night, which was a surprise after the rally we have seen. how vulnerable is it to further decline? the aussie could be quite vulnerable to the fed and whatever the fed might indicate. while the u.s. is raising interest rates, the rba in australia is definitely stuck at 1.5%. it may even potentially go lower after the next year if templeton

franklin is correct when it comes to how the labor market will work out. another concern for the australian market overnight, oil has dropped. if you want to look at a chart, see how iron ore has been coming down, it is australia's biggest export. the australian dollar has been defined for the past few weeks, that drop in iron ore. but it will come back up or the aussie will go crashing back down. another factor is, australia's interest rate premium on ten-year bonds over the u.s. has dropped to just 20 basis points. that is the lowest it has been since 2001. back in 2001, the aussie dollar was under $.50. now it is at about $.75. plenty of downside for the aussie dollar. betty: garfield reynolds, thank you. the stash of cash, another thing we are watching.

u.s. companies are hoarding overseas. now approaching $1 trillion. remy inocencio has the bloomberg report. that is a lot of money, $1 trillion. about one trillion dollars, betty. amazing figures we are talking about. 2017,s where we stand for $925 billion. as of a year ago, $807 billion. that is plus $117 billion. up by 15% or so. put in context, that tax loophole companies make profits overseas do not have to pay their taxes if they do not repatriate those back to the u.s. all that money floating around in the world, just not in the u.s. let's look at what is happening in terms of the biggest cash quarters. these are the top five cash hoarders. hoabiggest percentage cash

rder is here on the left, johnson and johnson. cash areits profits in overseas, this tiny sliver, 1.4% is in the u.s. total, -- because of this percent, it is only $41.3 billion elsewhere in the world. take a look at how the others stack up. microsoft, 90% of its caches overseas. $126 billion in total. , almost 97% there. apple, 93.3%. apple has the biggest amount of money in total in an absolute value kind of way because they have nearly $257 billion in terms of its cash and marketable

u.s. ores either in the around the world. 93.3%, thatk at the $239.6 billionut outside of the u.s. yvonne: we are still away from tax reform coming out of the white house. you could also cut back, how much money are we talking about? ramy: taking a look at donald trump's promise of 10% repatriation rate, which would be a one-time thing, versus the corporate tax rate, a standard of 35%, this is how it would stack up in terms of the biggest five companies that have the biggest cash stashes. $24 billion is what apple would potentially give back the united looking atwe were that 10% repatriation rate.

microsoft, cisco, alphabet, oracle, you can see the numbers rounding up the top five. this is what they would potentially send back to the u.s. all of this is $65 billion or so. this is just the top five. when you look at these companies, they are all in the techsphere. all five of these have $55 billion or so outside someplace other than the u.s. thecan see the heft of money out there. we see volatility in tech stocks over the past few days. if this money goes back to the u.s., all told, $925 billion, that could be $92.5 billion that could come back to the u.s., that could go in the term of capital expenditure, buybacks, dividends. but if you happen to the bloomberg terminal, here we go. 500blue line is the s&p

buyback index. that is beating the white line. the white line is the s&p 500 efficiency index. -- blue line, the by buybacks, have been beating the white line, capital expenditures. in the top 50, you're more likely to see a benefit and boon because of a buyback, rather than if you are in a company dealing with capital expenditures. money, we are waiting on donald trump the potentially pass this repatriation tax reform. yvonne: thank you kvitova speaking of apple, as promised, our exclusive interview with tim cook. about the company's plan for a self driving car. describes autonomous vehicles as core technology that he sees as crucial. i think there is a major

disruption looming there. not only for self driving cars, ecrification.el if you have driven an all electric car, it is a marvelous situation. ons, you have ridesharing top of this. changee three vectors of happening in the same timeframe. if we look at it and what we are focusing on, publicly, we are focusing on autonomous systems. purpose ofe autonomous systems is self driving cars. of there are others. it as the mother of all ai projects.

it is probably one of the most difficult ai projects to work on. that is is something incredibly exciting for us. we will see where it takes us. from a product point of view, what we will do, we are being straightforward that it is a core technology that we view as very important. betty: again, our exclusive interview with apple ceo tim cook. 10 days since tensions between qatar and its neighbors ignited. a look at global gas markets. this is bloomberg. ♪

betty: we are counting down to asia's first major market open. japanese futures looking a touch higher after the rally in u.s., up 0.1%. this is "daybreak asia," i am

betty lou in new york. yvonne: i am yvonne man in hong kong. investors are asking if a dispute with qatar and its neighbors are felt more broadly in the gas market. world's biggest exporter of natural liquefied world gas. we are speaking to jeff brown, he joins us live from singapore. good to see you. this gulf crisis now in its second week. we do not seem to be saying diplomatic resolution between qatar and its saudi-led a block blco -- bloc. what are the chances it could turn into a energy crisis? jeff: right now, relatively small. when we look at qatar, in terms of the energy market, their relative minnows. people are focused on tensions with opec.

on the gas market, as you isnted out earlier, qatar huge. the largest exporter in the world. they have complicated relationships at times with their various buyers. that is where you could see -- disruption is a strong word. so far it has been, latest have been impacted in the sense they have had to move cargoes to strange locations. goingggest risk for qatar forward is, buyers will start to take a closer look at the contracts they will find going forward and say, they have been very reliable in the past and a very good supplier, but they have been tough with us. with this coming up and this in the background as we move forward, should we look at other options, at least at the margins, for some of our volumes? yvonne: we see some of that coming out of japan. but there seems to be confusion

rangingw wide raging -- these bands are. is it a general ban? all ships to qatar? at the end of the day, who is hurt most by this in the uae? is it qatar or the saudis? jeff: the saudis do not get any gas from the qataris. what has been affected so far is deliveries and the uae. that is about 1.5 million tons. areaiggest buyer in that is egypt. at this point, the regulations or restrictions have been around qatari vessels going into egypt. they had cargoes going into from different flagged

vessels. they have moved a few of their cargoes around the cape, rather than going through the canal. again, they were not restricted in any way but decided to do that. it is definitely having a disruption on what just ask. you are 100% right. we are seeing cargoes coming from the u.s. that would have gone into kuwait, being diverted to replace cargoes in the by -- dubai. had a huge impact on stock prices at this point. people are talking about it a lot. but in terms of the short-term impact to the market, it is not really there yet. all of these big gas projects cost billions and billions of dollars. there are a lot of people angling to be the next big project. have a lot of

volumes coming off contract as we get into the early 20's. yvonne: that was my next question -- can other energy producers come to the forefront? i am talking about u.s., and russia. can they steal some market shares from qatar? standingre is a round in line when we look for new projects, such as papa new guinea and mozambique. the russians have talked about exports, they have some coming in. where the next wave will come from is not clear yet. they are waiting in the wings. the issue -- the qataris have been very reliable in the past, and remain reliable, to this day. it will give a leg up potentially to other projects and existing suppliers like malaysia, that want to sign new contracts going into markets in asia. you mentioned the u.s.

buyers think of the u.s. is very much a different market, in the sense that u.s. and gas is priced offer u.s. prices. when they look at u.s. gas, because it is differently priced, i would say they do not necessarily see it. at least our clients, as a direct substitute for qatari or other lng, which is typically priced off of oil. this is more of an impact on the other projects, mostly in asia. betty: speaking of asia, i want to bring up this chart on my bloomberg for our viewers to seem. i'm sure you are quite familiar with it. it shows you how much imports, comparing oil imports to japan or oil exports to japan from saudi arabia, versus the lng reports -- exports into japan from qatar.

it shows the gap is widening between the two. japan is importing more oil from saudi arabia than it is liquefied natural gas from qatar . imt -- in your view, does that give japan leverage in this situation? or, does it have the opposite effect? it is no secret that japan has a very large contracts -- all these contracts are long-term. a lot of these contracts are rolling off with of the qataris in the early 20's. these are in negotiation. people are looking at this, deciding how much they want to read new -- renew. they had quite a bit of leverage in the lng market because it is a relatively long market. this is a little bit on the margin. there are 10 different things going on at any given time in the lng market, and this is

another big one, obviously. betty: thank you, jeff brown. we will continue to watch this unfolding crisis in the middle east. you can get a roundup of the stories he needed no to get your day going. bloomberg subscribers go to dayb . it is also available on mobile. so can customize settings you only get the news on industries and assets you care about. this is bloomberg. ♪

betty: this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong kong. it looks like the end of an era for coal. production fell by a record amount last year. top user china burning the least in six years.

most major economies are shifting to cleaner methods of generating energy. although president trump wants to revive the coal industry in the u.s.. indonesia has reached a settlement with google over a long-running tax dispute. they said google owed three and 70 finally and dollars in taxes and penalties for 2015. documents showed it paid just 390,000. struck. has been other techrgeting names such as apple and facebook. failing toations amass popularity of american counterparts. park disneyland has been an independent company for 27 years. they needed at least three bailouts in that time. sharesrced the buyout of and the listed the company as of

next monday. no love for disneyland in france. betty: no love, indeed. plenty more still to come. hopefully some love for the bowls in asia's market. asia's market. yvonne: let's get more on the market. >> the bulls maybe coming out to play in korea and japan. thanks to that rebound tech shares. we do have slight losses seen at the open in sydney. we do have data on deck in asia, china. investor outlook and another catalyst for weakness could be the drop in iron ore prices. we saw it fall to a june 2016 low overnight. when it comes to potential market movers we are watching, gaining stocks have been feeling the love.

check on reactions to nintendo's new games at a conference and l.a.. the stock has soared 120% in the past year. that market,da in the carmaker reportedly adding over 200,000 workers to a joint maker with china to ramp up china suv output. we have seen the likes of honda and kia against backlash when it comes to chinese consumers. take a look at crowne resorts in sydney on the radar. cba strategist chris walters sees less the vip plays from china. although the casino player still has high rollers. while they are still flush with cash, puts it in a very comfortable position. we did see crown shares snap a five-day drop on tuesday. this after reports its staff in

shanghai have been charged in that region. that is a brief look at what we are watching when trading gets underway in australia, japan, and korea, just moments from now. this is bloomberg. ♪

>> asia-pacific stocks set to rise as optimism sees back into the market. soft inflation. speculation surrounds china's , theaggressive dealmaker chairman can no longer perform his duties. germany opening the eu door if

the eu changes its mind on brexit. the second hour of daybreak asia. it is just after 8:00 a.m.. on firmere markets footing with the tech shares rebounding the focus is going to be on this fed meeting. some of the data coming out in china. >> it doesn't seem as though the market is too concerned. selloff seems to be short-lived. it puts to bed questions on whether this will be a fundamental crack. asia is still celebrating at this point. let's get the latest. >> i want to show you the global picture.

impact to theed global equity rally we've seen over friday and monday. tech shares rebounding which sent stocks to a record. survey showed more fund managers see equities is overvalued and over half think internet stocks are expensive. we have the fed meeting on deck. surveyslient sentiment fell to its lowest level since the start of 2017 and with the rate hike all but certain the dollar is looking softer. in asia we have the nikkei up 4/10 of a percent after a two-day drop. the jobless rate improved slightly to 3.6%.

aussie stocks joining the regional uptick. take a look at the aussie dollar. little changed here. data" jobthat numbers. that may test all the support. the pound is holding on to some gains here. inflation in the u.k. rose to a four-year high in may. i want to point out with the canadian dollar, tracking higher. the yen is looking steady ahead of u.s. inflation data which is key to market sentiment. betty. >> betty: thank you. let's get to the first word news.

>> the attorney general has denied speaking to russian type ofs about any interference with the 2016 election campaign calling suggestions of collusion a detestable lie. he told the senate intelligence committee while russia did metal in the election he knows nothing but what he has read in the papers. >> i did not have any recollection of meeting or talking to the russian ambassador or any other russian officials. if any brief interaction occurred with the russian ambassador during that reception i do not remember it. u.k. junior brexit minister's calling for the softest extent possible. steve baker's spoke. the u.k. election results has prompted secular -- speculation they may seek to retain

membership which would involve the retention of the free movement of goods and labor. nodi arabia says there is blockade of qatar and will provide food and medicine that may be needed. allforeign minister said airports remain open and the kingdom has merely denied the use of airspace. --di arabia close the air links in a dispute over terrorism. >> we have denied them use of our airspace. this is our sovereign rights. airways.ited to qatari not anybody else. the sea parts, there is no blockade on them. they cannot use our territorial waters.

this is not a blockade. the chairman can no longer perform his duties for personal reasons. the business magazine said he was detained friday although the note was later deleted from its website. the insurance regulator met staff on saturday but gave no details. he scaled back a global acquisition spree in the questions about ownership and financing. global news 24 hours a day powered by 2700 journalists and analysts in 120 countries. this is bloomberg. >> thank you. this week's rate hike will spark more questions about the fed plan to unwind the $4.5 trillion talents share. kathleen hays is looking at this for us. it is more rate hike certainty than the balance sheet.

is that going to be the focus tomorrow? >> it is certainly out there. we thought last year the balance sheet was in the distant future in now it is so much preoccupying market participants. rate hike is seen as a certainty when the meeting wraps up wednesday afternoon. odds nearly 100%. meeting,ee the june can't get too much closer to that 200%. we just spoke to bob at atlanta fed. for a couple of reasons he thinks the fed might not hike their rates. we can see the things he is looking at. unemployment is low. but the fact of the matter is not all numbers have been strong. inflation has been getting weaker. why rush if you don't have to.

was on bloomberg television earlier today. he thinks the fed is not communicating effectively and that is one of the reasons the fed keeps saying three rate hikes. the market doesn't seem to believe that. the fed has to do a better job of this. >> it's not that the markets believe the economy is different . i think it is because the markets have come to believe that the fed says it is going to do this but we don't really believe it. look at how they have behaved in the past. that spread, that divergence between market expectations and what the fed seems to want to be saying is a creature of the fed challenges of communication and its desire to be discretionary. he said look at this green you are hiking rates but that

tightens policy. keeping a balance sheet big is stimulative. what is the fed really communicating to the markets? as soon as they can decide they start laying out a specific plan of when this starts, how big it is, etc.. >> we got a glimpse of it in the the cap that could be set for the balance sheet unwind. are we going to get more clarity on that? could it be a level they should set the caps or the numbers? >> you tell me, my dear. for sure she will get asked questions. you would think they would be getting closer to having a definitive outline for people. we will see what we get. it's interesting to me our bloomberg team put out a piece today calling for the fed to say more about unwinding the balance

sheet. the rate hike decision is easy to people understand. tell us when they are going to start shrinking the balance sheet, how quickly they are going to reduce it, and how big is the smaller balance sheet going to be. bloomberg also spoke earlier to randy, the former fed government -- the former fed governor. they have,g the goal how much they want to shrink, that is going to help to from their point of view stabilize things. yellen one hour, lots of journalists, i'm sure there will be a lot of people trying to clarify if there is a june hike if it is leading to september. if you're going to start reducing the balance sheet, does that substitute in some sense for rate hikes.

complicated in this stage of monetary policy. it is uncharted waters. a brave new monetary policy world. in march you were at that press conference with janet yellen. she stopped a bit, she was hesitant when it came to her answer when it came to the prospects of inflation. what are you looking out for in this? more on yellen may be that side of the argument now i'm more worried about week inflation. a couple of things, there were two or three fed officials who only sold to -- to rate hikes this year. what if you get more dot plots that have pulled back from three? that could be interesting to see . the fed will be updating its economic projections.

in the policy statement, it may be a signal they see stronger gdp. we are going to be action-packed by tomorrow going through all of this to put it all together. >> we sure will. we continue our focus on the fed. coming up next, what asian central banks are doing. >> a preview of today's china factory data. by some are predicting a slowdown in growth. this is bloomberg. ♪

>> this is daybreak asia. aresian central banks stockpiling and rebuilding foreign-exchange reserves against a third fed hike in six months.

tim joins us now live from singapore. great to see you. i want to start off with the fed. they are the leader of the pack when it comes to exiting qe. has it changed the conversation in asia on exiting stimulus? we are heading in the right direction now? >> i believe it is. it is difficult for central banks anywhere to contemplate anything other than tightening when the fed is raising rates. of theght that some central banks would be in a position to ease policy this year. indonesia might be able to. the imf is urging thailand to ease monetary conditions but i think for most it is a stiff headwind to that approach the

fed is tightening. reserves.ioned the fx this is b2b 27. it shows the stockpiles for some of these countries, they have been on this upward path. to suggest that in terms of the defense side they are covered for now, how much longer can central banks hold off? do they have opportunity to pause? >> i believe they do. they are like the u.s.. there's no inflation in asia. gdp is doing ok by and large. it's not breaking out on the upside. we don't see any vigor in domestic spending anywhere in the region. exports are showing more life but that is about it. the urgency to tighten monetary conditions is not there.

we don't really think we are going to see the central banks actually following the fed in a lockstep. we did see china in march tighten we don't expect them to repeat tomorrow. for the rest we think they can push that into 2018. >> for 2018. it's interesting because we see the em picture looking more reselling it. currencies are strengthening, which have been based on this weaker dollar story. can that continue? is there a risk it could strengthen? >> there is obviously a risk of that but that is not the baseline for ing. the dollar is heading lower against the euro, the most important they are for this part of the world. dollar weakness against the euro

is going to translate into asian dollar weakness. more reserve accumulation as central banks manage that appreciation. that creates the monetary conditions that are favorable for stock markets. we are seeing asian equity markets on a tear this year. this is the best year since 2009. that trend is your friend. >> i want to dig deeper to show another chart here on the back of the forex reserve. to look closely at the chinese -- foreign currency stock while which you see has started to pick up a little bit after the months of decline as you were talking about. you mentioning the greenback and the weakening, that has been helpful for these foreign-exchange reserves. how much has been an evaluation

situation because the dollar has weakened so much? >> in the case of china the reported increases in foreign reserves have been entirely valuation driven. weaker dollar means a higher euro value of their reserves. foreignle's banks assets on their balance sheet, the u.n. equivalent of their foreign reserves, they have beaten declining every month. signals the pressure has come off greatly. but they are going down. that was the motivator to adjust fixing formula. the way it sets its daily exchange rate against the dollar every morning. they wantedto --

that currency to appreciate against the u.s. dollar when the dollar was deeper he she other major currencies. they felt that was reflective. go,ust briefly before we some speculated china was keeping the currency stable in anticipation of being brought into the msci. i know that decision is coming up shortly. do you think there is going to be any kind of decline or volatility in the currency after that decision is made? >> i don't think so. i take the people's bank at its word. they have a formula that they used to set the currency every morning. that is delivering outcomes that they have said are what they expect to see when the dollar is weak against major currencies. that is what -- this is not an

area of policy in china that is broken. i don't think they are going to fix it anymore. >> thank you. you're going to leave it there. germany's finance minister says the u.k. would be welcome back to the european union if it decides to exit brexit. our exclusive conversation next. this is bloomberg.

>> let's do a quick check of headlines. denying fraud and diverting loans as he appeared in court in london to fight extradition. he was arrested on charges of conspiring to defraud the bank to his now defunct kingfisher airlines. he was told to submit under his passport -- surrender his

passport. the jury in the u.s. trial of brief mortgage bond traders has indicated it may have trouble reaching a verdict on one charge. they began deliberating last trial.ter a month-long they are accused of lying about the prices of mortgage backed securities. group will raise between five and $6 billion for the fifth asian buyout fund. the private equity group aims to close the new fund in the second half. competition for buyout deals have increased with pension funds and large corporations joining the fray. minister saysance the u.k. will be welcome back into the european union if it decides it no longer wants that divorce. the french president has endorsed open doors for return

but warned it would be harder to achieve once negotiations have started. bloomberg spoke in the first interview since the election exclusively. >> my british colleague told me that they are thinking what does it mean that young voters voted for labor, not for conservative hardy. the idea that the reason why , i don't know. been if you look , theme french elections , very much inon opportunity to bring europe forward.

of course, we agreed from the brexit is the decision we have to accept by the british voters but we will minimize the potential damage and maximize the mutual benefit. voters,ink these young do you think britain has the ability to turn that around? is a possibility brexit doesn't happen? >> it would not be helpful if we start speculation. decisions.e the it is a matter of respect. but if they wanted to change their decision of course, they would find open doors. i don't think it is likely. >> what if they want more time to negotiate. the u.k. needs to sort some things out before they come

to the table. it has been three months and they haven't started. can they have more time? >> the negotiations will now start. that inthey have agreed the first round they will negotiate brexit and as soon as it is done then we can do what will be in terms of the type of regulation and further relations between the u.k. after brexit and the single market and european union. therefore let's start the negotiations. at the entry we will come to reasonable decisions but it is too early to discuss. >> that was our interview with the german finance minister. still ahead, one of china's most

aggressive overseas dealmakers back in the spotlight again. the latest on the ouster of the chairman. this is bloomberg.

>> dark clouds looming. a: 30 in singapore. >> it looks dire over there in singapore. you are watching daybreak asia. we have some breaking news out of australia. consumer confidence index coming in lower than what we saw in the prior months. this is for the month of june. last month it was 98 even. that's a decline of 1.8%. 1.8%. last month

these are for the month of june. they are a good gauge of current sentiment now. given the concerns about where the australian economy has going thatt about the currency, might be seeping into the confidence numbers here. >> that certainly seems the case. we will watch now coming out of australia. >> franklin templeton says the austrian labor market may force them to cut rates early next year. the company expects more trouble for employment because household spending is constrained by debt and rising nondiscretionary thoughts. they have avoided recession for 26 years in the rate remains at 4.7%. american student jailed in north korea has been freed and medevac

out of the country. his parents say he has been in a coma since march of leicester when he was convicted for asking -- acting against the nation. secretary of state rex tillerson says he has secured his release. pyongyang gave no more details. pass westernto europe for the first time. probably because of the economic uncertainty unleashed by brexit. boston consulting says household wealth reached $45 trillion last year. 10%.sia pac saul almost lead by theng the end of the year. spain has accused portuguese soccer superstar cristiano ronaldo of failing to pay taxes. the madrid prosecutor says the

world's best paid athlete used offshore a cure -- accounts to hide income. earlier a spanish court rejected his appeal against a conviction for tax fraud. bill gross has repeated his morning markets are threatened by low interest rates, aging populations and global warming. stocks at near record highs specter to grow by 2% this year and next expands what some are calling secular stagnation. he said don't be mesmerized by the blue skies. all markets are at risk. global news 24 hours a day powered by 2700 journalists and analysts in 120 countries. this is bloomberg. >> time to see how the asian markets are shaping up so far. looking pretty upbeat now. >> that seems to be the case

with that tech tumble. sustain that.ould we are seeing some caution with the drop led by the dollar. the kiwi is the worst performer this morning. the current account balance missed estimates. and a three-day drop, we are .eeing a slow surge analysts are seeing the 10 year yield a 2.4%. the commodities space, 1% getting knocked off of prices here. andening inflation crumbling food prices may encourage the fed from acting beyond wednesday. down nearly 1% as well. brent futures formed a death cross, when the moving average crosses below the 200 day line.

that is a signal the momentum may be drying up. int time we saw this was 2014 when oil prices collapsed. i want to end some equity movers in asia focusing on japan. jumping the most since december after announcing the first buyback in seven years. rising asfamily mark the companies consider a tie up. , theshrinking population two firms could also consider working together overseas. four and a half percent. >> thank you so much. one of china's most inquisitive company says the chairman has stepped aside for personal reasons. he was detained by chinese authorities on june 9. our china correspondent is looking into this story. a fascinating story from beijing. what more do we know?

>> there is a lot of intrigue surrounding this story. he's one of the most aggressive dealmakers and chinese companies. it opened its doors and 10 years later was buying the ward off a story a. tuesday, aw is respected business news magazine here published a report saying that blue had been taken away by authorities on june 9. that report was deleted online. we heard from the post quoting sources saying wu had indeed been working with the authorities for some time but this was the first time when he had not returned home. china's regulators have been paying close attention in this space, particularly concerned about the use of insurance

policies to fund their acquisitions and the corporate structure of the company. this is the highest profile case since january when a financier was whisked away from hong kong to the mainland and has not been heard of sense. anecdotecolor and an regarding the chairman. at the age of -- asia-pacific summit we are told by sources he was barred from rooms where president xi jinping was attending or giving speeches, possibly what has appeared to have happened over the last few days for this company. >> a story we have heard before in china. issues,a transparency questions of ownership in financing, what more do we know about who owns the company and its ties? >> this is where it gets interesting. the chairman is married to the

granddaughter of the famous reform leader in china who had considerable influence until the 1990's here. it is believed the company to be held by wu, his wife and family members. in terms of the deal making they have been doing, they have done deals with blackstone, expressed companiesin kushner on 5th avenue. he looked at investing their before pulling out. a16 they invested four and half billion dollars in strategic hotels and resorts. at the same time as making that bid for starwood hotels. which got them into a price war with marriott. they eventually pulled out of that. there is increased focus on some

of these insurance backed conglomerates now and as this risk-taking is of increased concern, we have yet to hear is goingo what exactly on and we only have this statement to go on. we are going to have to see what impact it may have on international partners. >> thank you. beijing, morem from our interview with the apple boss tim cook. fiercestny faces its local competition anywhere in the world. cook says there are huge opportunities in china is an incredible market when it comes to talent and ideas. >> china for us, we make our decisions for long-term. we are not investing for next quarter or next year. we're thinking about many years out. ic megatrendshina

there that make china a incredible market. i don't just mean a mel -- a market to sell in. i made a market for application developers. a million and a half application developers in china now. probably closer to 2 million. it is an incredible market place for talent and in terms of the size of the market place. the short-term kinds of economic gets up and down i don't too excited about. >> how realistic is it to expect double-digit growth for apple to continue? >> i did say i think we will do that are this quarter than we had the last several. that doesn't mean that we are growing double-digit or going to grow. it will be better than the previous one.

i feel pretty good about that. iphone 7 is the most popular smoke on their smart phone in china. the size of our business was almost 50 billion in greater china. we are going to stick at it because i think china is a huge opportunity over time. >> long-term in china. it was our exclusive interview with tim cook. why some seeina, china's factories easing off the accelerator. this is bloomberg. ♪

>> this is daybreak asia. china reports retail sales mayfactory output, the data

have softened slightly. now, the first quarter, that is where we have seen the chinese economy peak for this year. >> yes. since the first quarter, which showed abnormally strong thatity, there are signs it may normalize further in may. if we look at the power of forecasted data, we 6.2% year on year lower than expectations. the growth rate is still higher than the annual average. successive investment

decelerated because of tighter financing to developers and households also affected by inflation. car sales remain sluggish. put the data together, we still think the second quarter gdp .rowth will be above 6.5% >> still at that target the government has for growth. continuedng to see a given that it seems like we saw that strong growth in the first quarter, that we will continue to see that slow down into the end of the year? downsides and upsides for the rest of the year. the downsides outweigh the upsides. the inventory cycle now works against the industry production.

successive investment may continue to be affected by the property tightening. will affect the cost. another way is deleveraging means a reduction of financial activity and it is part of the civic center. >> i want to bring up this chart here. you mentioned hitting the gdp target, the blue line. six and a half percent. if you look at other trackers including the bloomberg monthly gdp estimate, it had a nice peak . it is coming down a little bit but around 7.1%. could we be underestimating gdp growth? >> it is still difficult to

but i would number say that first and second quarter has built a comfortable target.r the because of that the government has been very persistent in deleveraging, it has gained importance in the work agenda because the downside risk of growth is basically contained. >> does that window to tighten get narrow as you see a slow drawdown and growth in these numbers of retail sales, specialty fed set to raise rates this week. it is near certainty, that could undermine china's efforts to deleverage. >> yes. i mean soft deleveraging. it's not going to be hard deleveraging.

>> more targeted? >> this is a very important political year in congress. growth ability, the first priority. deleveraging can go on as long 5% on grows remains above a quarterly basis. .e talk about the downside risk some include capacity reduction, deleveraging. those are self-imposed. if the target is threatened the government can shift policy to support. >> you mentioned that. you could argue we will see a stronger yen now. we see interbank rates at those highs. leadhey in a position to the fed more so that follow it? thatwould say most likely

the central bank will keep the money policy. course observe what is happening in the u.s. but china's policy will mostly be driven by domestic consideration. >> it is still considered to be a short-term fix, right? to confront this issue when growth of the start to slow. >> yes, indeed. that is why we think current stability is applied. it benefited a lot from the dollar weakening. the real test is when the u.s. dollar starts to rise, it may fuel depreciation expectations again. reason part of the monetary policy will remain.

we have been talking about this discussion of the central balance sheet. fed, they are reducing their balance sheet. where the ecb is looking into this as well. massive one, could you see them following the direction of the major central banks out there? >> the balance sheet is more than a few years away. for that central bank balance sheet they will continue to extend. they will have to cut the requirement. in any case what matters more is the balance sheet of the financial banking system as a

whole. there is no doubt that the banking system balance sheet will continue to increase. >> thank you. great to have you. you can get a round of of the stories to get your day going in this edition of daybreak. also available on your smart phone. you can customize your settings. .ake sure to check it out this is bloomberg. ♪

>> this is daybreak asia. the uk's new junior brexit minister is calling for the softest exit possible when negotiations with the eu begin. theresa may flew to paris to meet. deal, theresao a .ay meeting with arlene foster a government official said the talks were proceeding well. those talks will continue wednesday after theresa may continues from meeting emmanuel macron in paris. it was business as usual in the house of commons with mps reelecting the house speaker.

the discussion continues over what sort of frexit the u.k. might be seeking when it begins negotiations. we've had reshuffling in the brexit department and conservative grandes calling for theresa may to back away from a hard brexit. there is a sense that she's going to have to find some sort of consensus not just within her party but taking into account the use within the conservative party as well. forfarren has been calling that. wolfgang, germany's finance minister saying if brexit were

to be overturned u.k. would find open doors. >> production fell by a record amount last year. >> president trump wants to revise the industry in the u.s.. discusses a tax dispute. million.d $300 document showed it paid 390,000. targeting other tech names including apple, twitter and facebook. cutting dozens of executive

positions, limiting management and expanding the role of its boss. on space going more systems will split into smaller entities reporting to paris. that is almost it for us. time for a quick look at what is coming up on bloomberg markets. coming down to that data. car sales have slowed. retail doesn't look too good. when it comes to inventory we have gone from d stocking to restocking. positive corporate profits and that should help to sure up many balance sheets. this, a look at all of jpmorgan, talking about

production numbers. just over an hour to go before we have them from 10:00. that little thing there. what we have here is look at the market implications. we had that run down of tech stocks. is that they, after the storm? the -- or him before is the calm before the storm? ♪

♪ rishaad: 9:00 in hong kong. i am rishaad salamat joined by coming to you from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia." asia-pacific stocks on the rise, traders waiting the fed decision.