♪ haidi: earnings and trump's ties to russia dominated the market this week. also the fed policy meeting. oil producers discussed the at-bat -- the output will not be able to drain the global glut. the nasdaq is more expensive than the -- i am haidi lun in sydney. we are hours away from the open here in australia becoming the first intermarket to come online

for the week -- major market to come online for the week. the get a recap on how u.s. markets ended on the friday session. largely unchanged, of course ahead of a pretty big week when it comes to eco-data. the head -- the fed meeting not expecting any move, but markets will be watching the statement for any guidelines on how the balance sheet outline will work. we also have gdp numbers as well. indications on inflation will be key whether we see the bond market, the tips market beginning to second-guess janet yellen. indices, wehe bank are close to record highs. the s&p largely flat, the dow did thisth of 1%, ahead of a big week of tech reports. in asia we have us futures pointing south ahead of the flat

close on the u.s.. new zealand is trading down 0.2%, the kiwi dollar looking like this. the u.s. dollar holding onto losses the end of last week. futures in australia, the asx shaping up for the open. we are seeing a downside of 25 point or half a percent in the negative yield. the aussie dollar is falling quite steeply on friday. really clarify where the markets ran with the idea that the future cash rate and sending the marke close to the 87 sunday. looking at commodities, key to the oil patches, looking at the opec meeting, nigeria was happy, but now both ahead of the minister saying they need to pump at it higher level.

new york crude off a quarter of 1% come up 4568. gold futures were up for a second week. down one and 3/10 of 1%. let's get you caught up with first word news with rosalind chin. thelind: u.k. is claiming removal of trade barriers could leave an additional $13 billion a business. the administers the same this would be the easiest. for person is in washington talks and warned the american team has more negotiation experience. the u.k. cannot make trade deals as it leaves the e.u. calling for an end to the diplomatic isolation of qatar. saudi arabia and other allies , reporting qatar extremism. the u.s. secretary of state rex tillerson said last week washington is dissatisfied with

the progress, but customer must revise policies before talks begin. -- qatar must revise policies before talks begin. gasoline surged in the first half. refiners need to look abroad. they stopped almost 21% from a year ago, when exports rose 8%. , theyanghai-based group said domestic demand has been hit by hybrid cars. ministeralaysian prime has stepped up his campaign for electric support by announcing millions of dollars of aid for farmers. cash handouts the end of next month and some debts wiped off. many of the people have been hit by the scandals as the world leading -- global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

i rosalind chin. this is bloomberg. ♪ haidi: thanks for that. as a new week get underway on wall street, fresh earnings, eco-data sharing the spotlight with trump's ties to russia. the fed has a meeting on interest rates. su keenan is here with a look of what to expect. let's start with gdp. betty: something -- su: that is something the market is looking at the end of the week. 2.6%.g to ask there was a pickup in consumer spending. we are getting a report under what we can expect to be ticking up. this is after the fed begins its two-day meeting midweek, wednesday. that is the end of the two-day meeting when the fed will be announcing the latest rate decision.

what is interesting is the bond market is singling -- signaling trips, which are treasuries after inflation, the bond market saying they do not see any sign of inflation, so they don't think there is a question for janet yellen. how will she continue the positive rate hikes when there does not appear to be any evidence inflation is approaching the fed's goal of 2% let alone something else? that is an interesting road for janet yellen, so it will be interesting to see her remarks on wednesday. the market looks to the fed's comments for what is ahead. and a lot of the economic data will be overshadowed by the heating up of the trump investigation, the possible tries -- ties between his campaign and russians during the election. we will have a reporter catching up on all of the results, but

there will be a senate hearing in the coming week, and trump's son being asked to testify. that will clearly be sending a series of headlines that have been dominating main street and wall street alike. fari: yes, politics not from the forefront. it is a huge week of earnings. range have had a strong of earnings, all of them noteworthy. let's go to the bloomberg. take a look at how the s&p 500 has been pushed higher by record earnings, and you can really see the eps or the blue line is for some of the top earnings per share numbers, and that goes up, so has the s&p. looking at the highlights for last week, ticking off the financial centers of the ?eginning, was a disappointment

mainly because of the core business, even because they did well on the earnings frank, ibm another disappointment, down in quarter and revenue, though they are predicting pick up to the end of the year. netflix blew it out on the subscriber front, not just in terms of u.s. domestic increase and subscriber, but internationally they have become a powerhouse. people have been piling in, and the bank stocks getting a record all week. ,et's look at what is ahead different earnings in the spotlight, everything from the alphabet company which is google's parent company, reporting earnings. we will also be hearing from twitter, the auto's gm and ford, a lot of the energy companies, exxon and chevron. it will be a robust week of earnings if you will along with other events hitting the table. haidi: absolutely robust.

thank you so much for that. su keenan in new york with a look for what to expect. as she was talking about, investors will be looking at the expected testimony from donald trump jr. and his brother-in-law , jared kushner. they are due to speak to report sanctions on russia for the alleged meddling last year. rosalind joins us now. but what is the latest we know? >> the main thing to keep in mind, three words, behind closed doors. trump's son-in-law and jared kushner are expected to speak to the house intelligence committee and the senate intelligence cases,ee, but in both they will speak in private. we may not get much of a readout on that. we also expect paul manafort, the former campaign manager, and the oldest son donald trump jr.

to speak behind closed doors to the senate judiciary committee. there is a lot of action going on that could be behind closed doors. the other question is whether that is sworn testimony or a fireside chat. haidi: right. and as these political theater goes on, or misadventures, there is something on the policy front , the vote on health care. will that happen? ros: it is likely to happen. it is interesting because the senate majority leader mitch mcconnell is keen to have a vote this week on health care, but even some of his senior lieutenants, for example john thune of south dakota on one of the sunday shows, he does not know and others do not know which version of the obamacare replacement will be under

consideration. it could be repeal and replace. it could be a straight repeal with no replace. both of those plans have had pretty negative reviews from the office management and budget of how that would affect health care consumers. thune doesn't know, senator collins, nobody knows, and we may not hear -- we may have it -- here is the night or maybe not for a few weeks. it is not expected this week. haidi: we are looking ahead to that and implications for the political capital ride the president is trying to push. ross krasny in washington. from the fedected this week, but investors are pouring over that statement for the next hike and the balance sheet. , differenters sections of the market. this is bloomberg. ♪

♪ ,aidi: five haidi lun in sydney you are watching daybreak australia. the energy minister of nigeria could join the oil cuts agreed to buy opec but only once they stabilize. most companies -- countries were exempt last year. their participation will be central to talks on monday. bilateral deliberation is in full swing. the secretary-general of the market just stepped out of his car. he is confident and optimistic it is working out. what he has described a level of compliance that is excellent. monday morning, things kicked off with the monitoring committee. that consists of algeria, kuwait

and venezuela on one friend, and then you have russia and oman. front, and then you have russia and oman. they will make recommendations how to refine the deal going forward. that brings up scenarios we've spoken about in the past when it comes to the central question about libya and nigerian output but also the issue of accelerating the rebalancing of global inventory. plenty to look forward to. yousef gamal el-din, bloomberg. haidi: plenty to look forward to we are doing that with daniel hynes, good morning. happy monday. i want to go to the stage remarks from mohammed barkindo of opec because he seems to suggest that going into the meeting they are not worried about how to react to market dynamics. let's take a listen. >> it is not about the market

conditions or the market adapting to what we are agreeing. it is just for the committee with the assistance of insuring the technical effort together the dynamics of the current market which has been increasingly complex, intelligent. are going tod they a value which market dynamics but not -- they are going to evaluate market dynamics but not respond. do you think the caps are starting to work? daniel: there are signs, but it has been a lot slower than they expected. the market as well. it is a little bit wrong to andest you need to analyze listen to what the market is saying but not respond. they were clear at the start of this crisis they wanted to be a part of the market and the

investment community more so this time that i have in the past. -- they have in the past. this goes to the issues. we can in the background still wait and play this thing out, in the shorter term they need to be a little bit more proactive about the investment community is saying. haidi: update the cuts? daniel: i don't think they do. if we look at six to 12 months, things are playing out as expected and how that looks through the later half of this year into 2019 is a tight market. that could reduce the inventories. if the market is calling for more, and pressures and prices subsequently, they might have to react in a small way. meetings,ng into the nations that have been exempt, whether they would get on board? daniel: listening to what nigeria and libya have to say

about their outlook. they are still cautious about sustainability of this, that might be enough for the market to say, look, these talks of levels of growth we are seeing and the output term may not be sustainable. if they are confident of seeing continuing to grow, it is bearish. haidi: i want to bring up this chart. every time opec meets, we asked the same question. 8881 on the bloomberg. , theproduction on white difference is in the middle. his opec still producing? whatever ground they manage to gain, you have u.s. shale, u.s. production filling that gap. daniel: when you talk about the swing producers, is usually high cost. opec is on a cash cost basis.

they think the u.s. shale producers have taken that spot essentially. they will react to the market forces much more quickly. and at the moment, they are responding to the relatively good prices compared to the level of cost at the moment and pushing additional supply into the market. haidi: where does it reach a level that does not happen? daniel: we are in a sweet spot at the moment. you can only get five dollars or so on the downside with the u.s. tole react, but if we push back on taps turned again. you are in the middle. haidi: are you looking at mostly largely supply-side dynamic at the moment, or are you looking at demand? daniel: at the moment demand is relatively ok. we saw a bit of a weak patch

earlier this year, but things are picked up in the u.s. it is not a game changer, but against the broader commodity complex, better macro backdrop coming through. demand, growth in china has been better than expected. so that is starting to play its part as well. it might creep up on the market if people don't keep an eye on it. haidi: we have had commodities overall do quite well. iron ore in particular. what is happening there? daniel: i think the market was overly bearish on the demand side. there was a lot of skepticism about demand particularly with those constraints on the housing market in china. the infrastructure side has met all instrumentation -- expectations in the growth

story. that has resulted in the steel mills becoming more bullish on the outlook, and that has enabled them to restock into the second half. haidi: have you had to renew your projections? daniel: we have been more bullish. haidi: not yours in particular. daniel: the market has been all over the place. they are ranging from $40 to $70, a huge context. the market has had to reset the expectations. it has been a big part of that so far. we are seeing that stabilize now . we would need to see a few more months of positive economic growth and numbers come out. i do think the bearish side is starting to revise their forecast. these are concerns that all the promise of infrastructure spending will come through on the policy side in the u.s. daniel: he has definitely taken

a hit. the flight for the market in the second quarter, we saw the weakness in commodity markets as trade,t of the trump off so to speak. i don't think it was a strong driver to start with, so the impact at the moment is relatively limited. haidi: one final word on oil, what is the dem -- the outlook on oil? daniel: the level of disruption level,ting the non-disruptions are fixating. it will be an issue the market has to deal with. but clearly the u.s. shale producers, they are very resilient producers and still talking the talk at the moment. of start tos sort constrain their output, like we in the first decline

u.s. for a while. there are signs they are , that will begrow something for the market to contemplate. haidi: daniel hynes, the banking group senior commodity strategist. ahead of the opec meeting. .t will have more we will be joined by jpmorgan head of research. markets,on bloomberg blaine gordon will be here at 11 -- 11:10. you can get a roundup of the top stories you need to know to get your day going in the edition of daybreak. bloomberg subscribers can go to dayb and also available on the mobile. customize, tweak your settings.

you can get the assets you care about. this is bloomberg. ♪

haidi: i am haidi lun in sydney. you are watching daybreak australia. get you a look at the business flash headlines, deutsche bank and j.p. morgan chase are going to pay $48 million with results they conspired. the pair is accused of manipulating the rate between 2006 and 2011, and the agreement was reached despite the wrongdoing. they will pay billions in fines over the last nine years. china's small caps share change is being cheap on the nasdaq. the index valuation reported 36.2% -- that is the

narrowest gap since 2010. it is mostly made up of tech over the and has 25% last year. the nasdaq has risen 26%. exchangeng stock operator is going to consult the market on changes. and expanded closing option will expand monday. the 30 minute auction is set the a 20 minute session and order operations. nomura is betting on india with demand for equities. more than $3.5 billion in the .ast year india's economy is expanding seven times the pace of japan, being boosted by a growing at all class and more than one million young people joining the labor force every month. shares have hit multiple records

this year alone. optimism continues to grow. , uranium and sending a test shipment to egypt --

♪ haidi: it is a: 30 a.m. in sydney, markets open locally in 30 minutes' time here looking at futures, pretty negative open across asia, broadly after u.s. stocks ended unchanged. tech earnings a big week, financials as well, gdp rounding up a big week. same for the u.s. economy. let's you caught up with the first word news. plant president trump's team has been playing down the comment he asked about complete power to pardon. he cannot pardon the supreme court.

they would have to determine if he could pardon himself. the legal team said the issue is not on the table. >> i am not sure, but it does not matter anyway. this is one of those stupid hypotheticals. he will not have to do it because he has not done anything wrong. oliver: the parliament -- rosalind: $9.8 billion in spending is the plan to create thousands of jobs for the gdp growth. the vote was delayed with disagreement over issues including the inclusion of more civil servants. the philippine president has support for increasing marshall support. representative voting overwhelmingly in favor for the. the senate approved by 16 to

four. this is the second annual state of the nation address later today. french president emmanuel macron has seen approval ratings sink over the tax reform confusion. points tos felt 10 $.54, the second-biggest to climb for a president early in the job. he was elected despite never having hold caucus -- held office. new images captured by a moving what is being melted in the waters near fukushima your blackrock and sandy substances at the bottom of the reactor -- it will take time to confirm that. the images were captured by a designed tot

withstand the reaction. powered by 2700 journalists and analysts in 120 countries. this is bloomberg. haidi: thank you so much for that. let's get you a quick update on the markets as the trading week gets underway in asia and new zealand where trading is underway. 0.2%.w is down the kiwi, the u.s. 72.49. the dollar holding onto losses, futures in australia just a couple of minutes ago, pointing points. the aussie dollar 59.11 after comments from the deputy governor, taking the wind out of the aussie's rally. close to $.89 last week. we are looking more broadly at the yen. at's bring that up, sitting 129at the moment, sterling

.97. gilts, ahead of the fed -- yield, a lot of scrutiny. the number coming through towards the end of this week. a reminder how the stocks closed last week largely unchanged with the s&p 500 slightly in the negative. we are watching trading in asia. let's go to adam haigh as we look ahead. looking pretty muted into trading, but a huge week for earnings. adam: it is massive indeed. the micro getting in place because we have tended to move away from individual companies, even in the equity market, investors have been so engrossed in the central banks. we will hear from the fed on wednesday. that will be key, but it is micro driver company specific

sphere we have credit suisse, amazon. we have a lot of tech and banks andalso rack so smith line all sorts of bellwethers for their industries. just setting up for a slightly weaker start on monday. oil just a little bit weaker ahead of the opec meeting. it will be close to keep an eye on. haidi: we talk about the relocation out of the u.s. after record highs. in the spdesting are, one of the most liquid assets out there with the biggest etf for the u.s. traded stocks. this chart shows you hear the money flowing out, they are now foring for the fourth month july. that would be a record straight going back to the start of the bull market. that sincer seen 2009 with a massive bull run started, so that is very

important. as we are talking about earnings, earnings need to deliver for us to get the next leg up, otherwise it is across the board we see money coming investors u.s. stocks globally are very positioned to an underweight stance. haidi: particularly with political risk pretty high from washington this week. thank you so much. let's take a look at what we are watching in terms of australia today. paul is here with me. there could be a letdown, the market expecting 19 thousand ounces, down 600 from the previous quarter. but the reason for that is the earthquake, australia does get small quakes him time to time. it -- negative 4.2, but

impacted a.2, but it mind. -- mine. then they moved on to lower grade or, so the cost went up. it may not be a first grade quarter. we are waiting on that any moment. interesting story on uranium, australia has a new customer in india. sophie: that has been a long time coming. they refused because of the nuclear nonproliferation treaty, but all of that changed in 2012 given the obstacle to -- here we are three years later, the first shipment of very small one. it was a test shipment sample. you will see the quality of the uranium, but good things hope to

come from this. theralia gives a third of requirements. they thought you could double the size of the industry, increase export revenue to one $1.75.- it can be processed into plutonium. monday, thank you. up next, u.s. growth numbers and dividing fed policy, reading the tea leaves, this is bloomberg. ♪

♪ into is.s. is staring 2019,cession in 2018 or but we know it is coming because this is the longest in the last

hundred years. >> there is a recovery in the world today. the united states is picking up steam. >> we have seen increasing strength in the labor market. that continues and also relaxes the process. that is something that overtime will put upward pressure on wages and prices. haidi: various comments on the u.s. economy from several people. we will watch out for that report later this weekend the fed meeting. they are expected to leave policy this week, but the fomc could have plans for the balance sheet. let's talk about that with the high-frequency. great to have you. it is about details and how the great unwind will happen that we are looking for out of the data. >> they have given us the

details already. they laid out the plan at the last meeting. it is a question of, when do they activate that plan? my rating, including the fed it is activated at the september meeting. not this week, but there is a good chance it would change their wording a little bit too hint further that they plan on starting the balance sheet normalization in september. haidi: what are you expecting in terms of commentary on inflation? it is transitory, that they are looking to pick up? you look at the market, they do not give bond traders to continue. janet yellen, the weakest in a decade, what does that tell you? who is wrong here? to agree withined the fed. the former chair alan greenspan

used to say all the time that the laws of supply and demand have not been repealed. unemployment rate only dropped through the whole unemployment level in a few months, and it is not that they are below the level that you were supposed to get significant pressure on inflation. we are getting 1.5% per year in employment. it is not a blooming number, but labor force growth is 1% of that. it is straightforward that the unemployment group is going forward. you will see more pressure. wages started to accelerate already. i think the fed is right, but they are waiting to see what is next. even, they can pretty much repeat their language from last time when they stated inflation has come down recently, running below 2%, and they expect it to move up to the 2% goal.

they are monitoring inflation closely. it works again this time. haidi: you sound more optimistic than a lot of people have been, certainly in the fixed income space. justifyally hard to what has become a consistent set going into anytime soon with inflationary pressures. haidi: you would not expect -- jim: you would not expect inflation to start soaring, but as number went from as low 1.5% in 2015 up to 3.5%, now 5.7, almost back to where it was over two years ago and there have been some special factors recently. the plunge in cell phone prices jumps out. arguably it is only in the last few months it has dropped below

the employment level. if unemployment were to stop falling, would you get a significant inflation problem? do not do anything on policy, you will have issues. that is the way they are looking at it. the way they are describing their actions, they are backing off in terms of stimulus, taking their foot office accelerator but not jamming on the brakes. lack ofs this kind of inflation what defines strong levels globally, the fact that we don't see inflation/wage growth the way we would usually? do you think this is signifying structure change for the global economy that we need to look at wage growth in a different way? haidi: that is the ongoing --

jim: that is the ongoing debate. it is true inflation expectations, which are an important part of the in -- the process of very low, and that is testimony to the bed's credibility just the fed's credibility. so that is a factor holding down inflation. and in the u.s., we are barely got through the full employment. looking at europe, the unemployment rate is still very high. it is still higher than the u.s. so the jury is still out in terms of the relationship between unemployment and inflation, and we hope unemployment is not the only thing that matters for inflation in the short run, but most been looking at it as pressures, and i have inclined to agree. we will see how that plays out over the next five or six

months. i want to listen to remarks from mohamed el-erian. about the other issue the fed is preoccupied and thee systemic risks need to tighten before that gets out of control. -- isloyment is a agreeing -- he is green, inflation is yellow. the third factor that market underestimate, concern about future financial stability, this may be a tighter fed them with the markets believe right now. -- van what the markets believe right now. haidi: we have seen a louder chorus of fed speakers talking in theystemic risks market. do you think this is increasingly consideration taking place when they are

having the durations? -- considerations? jim: it is secondary to the mandates directly, but it is in the conversation not just from the perspective of whether markets are getting stretched and there is risk of instability down the road and the market gets more and more stretched, but even more so the extent that financial conditions have been easing, the market going up, the fed coming down. if you look at the conditions, they have been easing since tightening last december. at the bloomberg financial conditions index, it has been steadily easing since late last year. the fed's perspective, that only encourages them to keep tightening. the goal of tightening is to make financial conditions less common.

so the financial conditions we have producing 1.5% employment growth. the unemployment rate already is below the risk of unemployment, so you leave everything as it is and everything else is falling. they need to see financial conditions tightening. i want to throw up a quick turn and get your views on politics and how this plays into this. this is president trump is job approval rates. in his first six months he has proven to be the least optimal president in that time since the of modernnt it up -- polling. in the amount of diminishing political capital he has even within his own party. if you look at the ability realistically for the president to affect his policy agenda, do you think that is a massive downside pursing janet yellen

and have? -- and co.? jim: they need to look at the outcomes, they will look at fiscal policy. even without anything of consequence from the fiscal , the trendsective are strong enough to justify tightening. beneficial,at the they assume no significant stimulus. to the act of washington, there reinforcement the case of tightening. so the approval rating itself is interesting although i think you have to line it up with the confidence number is in general, and there is a correlation between approval rate and the conflict numbers. the numbers have been pretty strong.

always a pleasure, the chief u.s. economist, thank you for joining us. looking at the international monetary fund report later. we have a lot of guests on that. and we have the u.s. gdp numbers coming through this week. we will be hearing from the here anda economist going from there. at 11:40 oning us bloomberg markets. this is bloomberg. ♪

haidi: breaking news, newcrest mining just releasing its output figures for the fourth quarter, .eduction at $552,000 that is better than expected, looking at a number of 522 point

$9,000, so showing production is still more robust than expected despite the april earthquake. their gold mine were shut down to resume production since july. group,ing fourth quarter $902, so just some numbers for new crest. risingis shrugging off regulations in the financial sector and alibaba had it fifth intact. they are pushing to lending. the head of lending said syntax is big enough for more players. >> over the past few years, we noticed problems in this industry, this industry needs reparations in place to enforce activities and the measures and

to make the industry, to do better. >> is it important to innovate before those regulations stifle? difficult because in a way sometimes we need more space to innovate. if a lot oftime, players in the markets are not self-contained -- regulated, the government and revelation rules. they need the rules in place to make sure everything is fine. >> what is the biggest risk to you heard or -- risk to you? >> management. many people have trouble to pay

back, and the other side is the financing side. the cost increase so huge and squeezed our profits, so those are the risks i have seen. >> the chairman has talked about the troubles xiaomi has had losing market share, sales coming down. maybe the market grew too fast, but in financial services, are you late? >> i would not say it is late, it is just about the timing to turn our business into this space. we have over 200 million phone iogs and over 16 million devices connected. that goes into a lot of customers. >> but are you at a disadvantage

because you do not have the users we chat has or the multi-platforms all the -- alibaba has? you are limited by far. >> chinese market is huge enough. i don't see that as we don't have enough. we have a huge number of competitors, monsters. i mean, the big players in the market. we still have space to grow. haidi: that is it, almost yet for daybreak australia. yvonne is up with daybreak asia. india, debt story in sounds a familiar refrain. yvonne: we talk about it with china, but india is quadruple that of china. we have seen some stats from the rpi, new powers that don't want them to tackle this issue and

the new bankruptcy law last year. we will see how they do this. ♪ haidi: looking forward to it. that is it for daybreak australia. this is bloomberg. ♪

♪ yvonne: asia-pacific stocks, flat started best. earnings and the fed. producersharply, discuss output, fears curbs won't train the global glut. xiaomilate than never pushes into the fintech market. this is "daybreak asia"