♪ 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. coming "daybreak asia"

to you live from bloomberg headquarters. happy monday to you. york, a. sunday in new beautiful evening outside. there is a live shot on lexington avenue. a big week for u.s. markets. on pretty much all indices, s&p 500 flat. week, noeets this press conference, but looking for clues on the balance sheet unwind and inflation and where , all leadinghere to the u.s. gdp report on friday, forecast at 2.6%. but techsdaq, flat, earnings this week, google, facebook, samsung as well in asia. plenty of headlines, the outlook

of the health care bill, donald trump jr. and paul manafort testified before a senate judiciary committee. advances,ack to back the longest winning streak in four years comes some consolidation on the index, down .2% at the moment, the kiwi unchanged. australia, equities futures headed lower. the rba deputy governor played down that neutral rate talk from the rba. meeting in st. petersburg key for the oil price $45.74, brent of losing steam after hitting $50. livia and nigeria unlikely to join output curbs and put more weight on the oil price. futures in japan, chicago

futures also hitting lower, down 10 points. a down day friday on the nikkei 111 point 12.n that is the latest in the region on this monday morning, but first word news with rosalind chin. the u.k. says removing trade barriers could generate additional business. reaching a deal won't be easy. the trade secretary is in washington for preliminary talks and warned the american team has far more negotiating experience. the u.k. cannot negotiate trade deals until it leaves the e.u.. britain has called for an end to the diplomatic isolation of qatar. saudi arabia and three allies cut ties, accusing the country of supporting extremism. rex tillerson said washington is satisfied with the efforts doha,

but the saudi alliance says qatar must revise policies before talks begin. a combination of a domestic a promptedaning demand refiners to look abroad. ,iesel shipments jumped 20% while gasoline exports rose 8%. a shanghai-based commodities researcher says domestic demand has been hit by hybrid and electric cars and ridesharing. a new low for shinzo abe's, down 10% from a month ago. the prime minister faces questions monday over allegations of cronyism. woneconomic policies have support from the president of nippon steel. japan's the general economy

is heading in the right direction with employment starting to recover. monetary policy is an integral part of abenomics. i hope to see the continued effort from the boj having a more positive impact on the economy. rosalind: the indonesian prime minister has stepped up the campaign for election support by announcing millions of dollars in aid for farmers. farmers will be given cash handouts and have death wiped off. many of the ruling coalition have been hit by financial scandals. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: thank you. fresher earnings and economic data will share the spotlight, hearings on the trump administration's potential ties to russia, the fed meeting this

week to decide on interest rates. su keenan has what to expect. a busy week on wall street. let's start off with gdp data. >> it is a number widely watched. 2.6% annualized growth rate expected, a pickup from the first half, a lot of that being fueled by consumer spending. that would be an contrast to the beginning of the year. in terms of the big economic reports, durable goods expected to show acceleration. in the middle of the week, economic reports at the end of the week. the fed expected to announce its rate decision wednesday, expected to stand pat. janet yellen caught in a bind with inflation muted in the job market robust, and as a result, expected to make no

change wednesday with investors and economists parsing this statement. investors looking for clues on how officials plan to proceed in reducing their massive balance sheet. trump,dlines regarding more details later on that, but, asked to testify at a senate hearing. the investigation into potential ties between the trump presidential election campaign and russia heating up in a big way. the headlines surrounding that expected to dominate trading. it is hard to ignore the headlines and the tweets that come out on these issues. you obviously get the headlines on the political front, but in terms of the earnings front, it has been quite positive, so give us a quick recap of last week and what is ahead. beene earnings have

driving record levels, especially the s&p. 6164 shows the equity market prices have not: up in a vacuum. fundamentals have played an optimistic role. 12212 month trailing eps at , an all-time high, and 59% above the last cycles peak. a consensus for 12 month eps expectation at 139, also an all-time high. take a look quickly at some of the companies that reported in the past week, a mixed performance. goldman sachs with strong numbers, but the focus was on the weakness in the core unit. ibm the focus was on yet another decline in revenue for the 21st

quarter, even though the company expects growth at the end of the year. netflix blowing subscriber growth out, hitting records every day towards the end of the week. let's look at some of the numbers this week. merck, glaxosmithkline, ford, gm, boeing, a lot of the energy companies like exxon and total, but the big spotlight will be google. it could be confusing as its parent company alphabet reports. we know they will set aside $2.4 billion for a fine levied by the eu. there will be focused on whether that fine increases in my possibility. aey are expected to report dollars $.25 a share on revenue dollars, -- $25.6 billion, so front and center. yvonne: certainly the case.

thank you. investors watching the expected testimony from donald trump junior and jerod kushner this as the whitespeak house says it supports new sanctions on russia for meddling and last year's election. from get the latest washington, d.c. good to see you. we got the fireworks when donald trump junior released those and promisedtings information from the russian government damaging to hillary clinton. are we expecting more surprises this week? >> the only surprise would be if there are not any surprises. this has been an amazing period. one thing we don't expect is to have donald trump jr. or his brother testify publicly at this

stage. it looks like at the very least that jerod kushner is going to key congressional committees behind closed doors, manafort jr. and paul former campaign manager have because theypass are cooperating to talk behind closed doors. they will have to go public at some point. i think we are not quite there yet. trump andis comes as the gop push towards a vote on the health care bill. does it have any chance of success at this point? trump has tweeted numerous times about the need for republicans to get behind the health care plan. he tweeted today that republicans are not helping him enough. senate republicans don't even know which of the two more

versions of the health care plan will be up for a vote this week. it could be a repeal and , certainrepeal only senators on the conservative and moderate and don't like either option. we don't know which day the vote will come, so a lot of uncertainty we have not seen before, and senators such as susan collins saying to her party leader, send this back to committee. let's do this publicly. it is too important to do behind closed doors. yvonne: it certainly is. a shaky time for trump when it comes to the communications department with the promotion of huckabee sanders and anthony scaramucci and the resignation of sean spicer, pretty shocking news on friday. what does this say about the trump administration at this mark? , theis btv 8522

president's job approval falling again. >> think anthony scaramucci is somebody extremely loyal to the president, hasn't always been the case, but coming in as somebody the president thinks can reset the communications office. there has been a lot of debate within the white house about .hould trump continue to tweet how should he operate his communications. i think anthony scaramucci supports what the president is doing, and i'm not sure too much will change. i think we can expect to see the incendiary tweets from the president, so we need to wait and see. yvonne: obviously we will see how he does. thank you. still ahead, st. petersburg

talks later this hour with j.p. morgan scott darling. next, how markets are preparing for the week ahead. ig asia joins us next. this is bloomberg. ♪

yvonne: we are counting you down to asia's first major market open. look in tokyo, futures as well, down 120 points. 111 territory.nd the fed holds a two day policy meeting this week. no one is expecting any changes. thestors will go over post-meeting statements about reducing the balance sheet, any indication of the timing of that.

let's discuss all that with ig asia live from singapore. great to have you. when it packed schedule comes to earnings, the fed, and that gdp fron print on friday. what will you be watching the most? >> a lot of the attention has been on monetary policy, but the and fomc capturing the market attention. ,2 gdp at the end of the week expectations on growth and earnings will be continuously pouring in. for u.s. earnings, especially s&p 500, we are in the heart of the earnings the season. yvonne: everyone still seems to think that equities still have further to go here.

far, we haveso seen stocks and bonds rally, which is counter intuitive. can both be right? i think this is a complex situation currently with the markets. there are a lot of expectations on growth and policy, but at the same time uncertainty, but ultimately until the end of the year, we will see more clarity and more certainty and that will change the situation. it is interesting you mentioned the dollar. we see it in a downtrend despite a busy central-bank week. other banks star link back expectations when it comes to reducing stimulus. 5536, even more bearish positions on dollar,

which is interesting. given the weaker greenback story , does this force the fed to raise rates because financial conditions are loose? upcoming fomc the not one ofrtainly those policy meetings where we will see productions -- projections. anymarket does not expect change in interest rates and the focus could be on the balance sheet timing of the one key piece of the puzzle. not thes this week will a significant reversal, especially the backdrop of dovish and has come but sentiment i think will change this week. numbers, but attention is still on inflation rates.

yvonne: does this give further room for the emerging-market rally in asia to catch up? revisions continue to be upgraded, close to 20% for 2017 already. >> right. on the emerging markets side of supported andy there is renewed optimism at the moment. there could be continued momentum, especially for key markets in the region. yvonne: credit suisse came out with a note that said these optimistic forecasts come down to several markets. honed in on south korea in particular. if you exclude that market from april 2 now, we see earnings -japan haven asia ex

turned negative, leading to downgrades in india and indonesia, so is it time to get more selective as we see record highs for the indices? is the expectations and in which sectors can we get growth. report -- suisse investors have been pouring into many domestic-focus markets for fear of what happened with the .arket we see jakarta being quite overheated at the moment. the markets might be more cautious going into the latter

part of this year, especially the second half. there could be a bit of reshuffling. you foresee any other sectors that could outperform beyond tech? you been looking at singapore banks recently as well. >> definitely. the markets are still focused on tech in my opinion. move inve shown an up recent sessions, especially the u.s. following stress tests, giving the banking sector a new lease on life. what we should be looking for in the longer term is how the interest rate outlook is going to be. the current dovish outlook, i don't think there will be too much on the upside there. for the singapore market, bank earnings at the end of this week, so investors will be

bank earnings if can continue the trend of good results in the first quarter. great to have your perspective as we start off the week. you can get a roundup of the stories you need to know in today's addition of daybreak. for bloomberg subscribers, go to and on your terminal smart phone with the bloomberg anywhere app where you can customize your settings to get news on industries and assets you care about. make sure to check it out on dayb . global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

♪ yvonne: this is "daybreak asia" in hong kong. the business flash headlines. deutsche bank and j.p. morgan chase to pay $148 million combined to resolve claims they

liborred to fix the yen rate between 2006-2011. neither bank admitted any wrongdoing. they have paid billions in fines over the last five years to settle similar allegations. shares gaugeap cheaper than the gnostic for the first time. the price index valuation base hit on -- based on reported earnings is now cheaper than the nasdaq, the narrowest gap since 2010. inext is mostly made up of tech companies. stock exchange operator preparing to consult the market on changes to its option system ahead of the open. the option will debut monday. the exchange working on the pre-open session.

the 30 minute option is currently split into a 20 minute session at 9:00 for order input, and the rest for order matching and preparation. betting on india with demands for its equity fund oil drilling to $3.5 billion in the past year. india's economy is expanding seven times the pace of japan, buoyed by a growing middle class. shares have hit records this year as optimism about the future continues to grow. continue to watch the open in japan and korea. let's go over to japan, futures down about 10 points. dollar-yen dynamics one of the big drivers. it could lead to downside on shares, but after back-to-back advances in the msci asia, expect to see some consolidation to start the week. plenty more to come on

bloomberg. up next, smartphone maker xiaomi expanding into online lending, a sector dominated by tencent and alibaba. is xiaomi these days families want to be connected 24/7. that's why at comcast we're continuing to make our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most.

♪ morning7:30 a.m. monday in hong kong. one of them were quiet and uneventful days. dark clouds still looming, 36 degrees. just minutes away from the major market open. let's go to new york has see how things are faring there. it appears to be a gloomy picture there is well as they start to ramp up their weekend. you are watching daybreak eyes -- asia. let's get to first word news with rosalind chin. rosalind: president trump playing down this weekend's tweet that he had complete power

to pardon. they do have the conversational -- constitutional power to do so but the supreme court would have to rule on if he could pardon himself. but others say the issue is not on the table. >> i am not sure, but it does not matter anyway because it is one of those stupid hypotheticals. he will not have to do it, because he has done nothing wrong. rosalind: the parliament has approved an extra budget of a muslim delay. it is the centerpiece of the plan to create thousands of jobs with the plan to increase gdp. it was delayed by disagreements over the parties over civil servants. the philippine president has one congressional support for extending martial law as the army continues to battle in the city. people were in favor of the

move, 245 to 14, while the senate approved 60 votes to four. he will make his state of the nation address today. the french president emmanuel macron has seen his approval ratings sink over voter confusion with the tax reform. his ratings fell 10 points to 54%, the second-biggest decline for a president so early in the job. he was elected despite never having held office. by a marineaptured robot show what is thought to be an melted nuclear field inside a reactor at fukushima. this was the bottom of the number three reactor which contained melted fuel, but they will take time to confirm that. the images captured by the robot designed to withstand the level

of radiation. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: we are counting your down to major market opens in the asia-pacific. let's get to the latest with adam haigh joining us from sydney. good morning, seeing stocks looking to start the week slightly down. do you think earnings live up to expectations? adam: good morning. they are very lofty expectations , and we will have to see big try to keepis week the rally in equities going. the interesting thing is i am hearing from a real cross-section of companies, glaxosmithkline, credit suisse, then you have amazon and alphabet and tech giants as well. it is a good cross-section and should provide investors with a decent understanding of how the earnings season is progressing,

one of the busiest weeks we get in the u.s. we have the federal reserve decision coming, but it is around the statement with the central bank balance sheet reduction, how will they do that? any commentary can be very isful for how that positioning. we know the bond market continues to expect far fewer rate hikes in the federal reserve itself. we have the focus on the micro data, company fundamentals and whether we can push the bull market further. yvonne: despite the record highs, we still see enthusiasm fade when it comes to u.s. equities. do we see more rotation towards e.m. as well as europe, especially with the two-year high? adam: you are right, the euro story does not give up. but the waning u.s. dollar, lack of enthusiasm for the u.s.

stocks i think is reaching another level as well. one interesting chart we have been looking at here is the s&p 500 trades in new york. one of the most liquid assets out there, and this is showing for the month of july we are on course for a fourth consecutive month of outflows. that has not happened since the bull market started in 2009. as we saw last week, bank of saying investors now are the most underweight on u.s. stocks they have been since 2008. these two things showing that picture of money coming out of u.s. stocks as we hit high over high and setting new records. the money looking for places to go, and one of the places is emerging markets. we are seeing money flowing into europe as we mentioned with continued optimism on how the economic recovery is to covering

-- is coming in europe. we will want to see how they play out, but certainly the bears are in charge when it becomes to outflows with u.s. stocks. yvonne: we are talking about -- shruggingng off off rising regulation of the tech sector. and the investment alibaba has in syntax, pushing into online lending and other p2p services. they say shanghai is big enough or more players. >> over the past few years, we noticed problems in the industry. they need some regulation in place to enforce the activities and behaviors and to make the industry do better in a good way. >> is it important to regulate

the for those regulations stifle innovation? because difficult sometimes we sometimes take more space to innovate. if enoughe time players in the market are not self-contained, self regulated, the government needs to be in place to make sure everything is fine. >> what is the biggest risk to you? >> mismanagement. many people, the debt income ratio is so high, they can't, some of them have trouble to act, and the other side is over the past few months, we have

increase so huge and squeezed our profits. so that risk we are seeing. >> your chairman talked about the troubles xiaomi has had of late, losing market share and sales coming down. maybe the company grew too fast. but are you late to the game? >> i would not say late. tois just about timing extend our business into this space where we have over 200 million users. over 60 million iot devices connected. that translates into a lot of customers. >> but are you at a disadvantage because you do not have been chat hasllion users we

and the multi-platforms alibaba has? so you are limited by how far you can go. >> chinese market is huge enough. so as i see it, we have enough space to grow even with the huge monsters, competitors in the market. >> monsters. >> i take it back. the big players in the market with enough space to grow. ofnne: that was the head consumer lending speaking to stephen engle. oil producers meeting in st. petersburg, we get j.p. morgan's view on the energy market.

♪ we are counting your down to the first major market open this morning for you to see downsides when it comes to

equities, futures down 120 points right now. this is daybreak asia. i'm yvonne man in hong kong. russia's energy minister said libya and nigeria might join oil opec cuts agreed to buy producers, but only when their own production stabilizes. both are trying to reduce supply. the participation will be's -- be essential. we have more from deceptive and the dean. -- yousef gamal el-din. the secretary-general of opec, mohammed barkindo, just sat down. he is confident, he is optimistic it is working out, but he has described the level of compliance as excellent. once this has taken place, both onshore and offshore so we are pretty sure the rebalancing

,rocess may be at a slower pace but it is on course, and is bound to accelerate because of the compass. >> monday morning things really kick off with the monitoring ofmittee that consists progeria and venezuela on one hand, then you have russia and oman. they first met for the expanded rule, so they will look at data and be in a position to make recommendations us how to best reply going forward. that brings up all kinds of scenarios about the past. when it comes to libya and the jury and output as well as the issue of accelerating the rebalancing global inventory. i'm yousef gamal el-din, bloomberg tv. yvonne: look at the latest out

of singapore, the original head of gas, scott darling. at the meeting, is there anything opec can say to's shock the market at this point? >> we don't think so, and we think the opec becomes less compliant towards the year end, print forecasthe of 2018, around 25% below. bearishthat is pretty indeed. you have seen the likes of libya, nigeria, the output cap being ruled out, the saudi's possibly cutting one billion bottles -- million barrels, do you think that is what the market needs, or is there an appetite for the cartel? scott: if you look at u.s. productivity gains, and the

guidance for some of the companies, your own analysis around lastrowth is year from q4. and you could have this shell throw when million -- one million barrels per day. unless there is actually global crude build for the next year, it is forecasting for the moment. yvonne: i would be curious for the conundrum opec deals with with shale. anytime the cartel cuts u.s. shale,r loses they are willing to come and more, so can the group still persevere, or is there more of a chance that they could abandon this deal and revert to every man for himself? scott: we had j.p. morgan think

the latter, there is risk of a domino effect here. you have oil ministers who have said different things, that they will not adhere to these targets. the oil minister of australia wants one million barrels a day. it will be interesting when they are recovering their outputs. you put all of that together, you can look at the materials, and the other thing in the u.s., you have started to see draws in crude. -- let's nott forget u.s. crude is 10 million barrels ahead of the five-year average, so we are quite -- quite well supplied. mentioned opec will be in compliance. it will be interesting we heard barkindoindo, mohammed , he said it was excellent. who do you think is more likely

to cheat in the second half? scott: we would agree in the first half of this year, compliance was reasonable with opec. i think ecuador stated they would go to these cats. i mentioned iraq, i would put iran on the table as well as i mentioned nigeria, libya and a lot of the heavy lifting. a lot of the first half was done by saudi arabia. it would be interesting to see why they want to sustain further cutting in the first half of this year. yvonne: the change has been dramatic. we were talking about $50 being optimism for wti, now we are seeing analysts bring down their forecast. you think that could change from the upside? scott: it is a good question. demand where we are now in asia,

it has been tracking well. you have had india recover they should demand in the first few months of this year. the other upside risks, let's not forget venezuela. you have seen venezuela still 2% of global supply. you are starting to see that decline in the last few years. that is a risk. yvonne: it is interesting, is that why you have upgraded the reef writers in asia? we heard from the cftc that there would be severe overcapacity issues over in china right now. scott: we have a differentiated view on reform. if you look at net refining additions, the below demand growth, the actual net additions, you also look back in the last couple of years in the developed market countries, we are closing refineries. if you look at asia, until 2020,

you have material specifications especially in china, and india. that grace -- gives greater incidence and prolonging the very good refining margins especially in the next few years. that is hardly why we have been more positive, selective refiners, which have been lacking. the chinese performers have been spared when it comes to dealing with the industries, even though we continue to see the country provide more fuel than it can consume. morehe chinese refiners because of that, we could see more upside? scott: there is still scope or china or the world doing this. it could be next year the utilizations around the world for refineries are at a 10 year

high, but that does not mean they are over 90% or so. i think in china you have asset rationalization to some extent, small refineries being closed. you have not had large-scale refineries going out. but they are ramping up as we speak. apart from that, there is a lot theefineries upgrading for fuel specification changes being rolled out in china. scott darling, always great to have you. life for singapore. look at oil and other commodities through the market. we are joined by wealth management on where they think prices will be posed opec meeting. you can catch any of our interviews and watch us live using the interactive tv function. you can find it at tv and become part of the conversation

by sending us an instant message throughout the hour. this is for bloomberg's harbors only very we hope you are -- subscribers only. this is bloomberg. ♪

♪ yvonne: this is daybreak asia, i am yvonne man in hong kong. the australian competition and consumer commission is seeking information from car manufacturers in the government about the recall of cars with takata airbags. the statement urging drivers to find out if their car has potentially lethal device fitted. a man was killed on july 13 in new south wales when the airbag ployed.yd here -- mis de soy want their own range of autonomous vehicles.

this is level five, they expect to employ 700 staff by the end of next year. so now they have partnered with general motors, land rover and waymo. theming to the top spot at box office. the film is being talked about as an oscar contender for warner bros., holding more than $15 ,illion and another debutante girls trip from universal. that took $30 million. besides the movies, plenty coming up, we are covering them all on daybreak asia. the boj, after last week, they dug their heels in again and maintained the ultra-loose monetary scam. they are also pushing back on the 2% inflation target, but we will get an update on how the

japanese will use that when it comes to the inflation prices. we are not expecting too much fireworks really. take a look at what we are looking at for retail sales. but here we have this chart when 7942,es to inflation, btv and we are well off the 2% inflation target when it comes to core cpi. even if you do the nationwide figure, the yellow is japan, which is the core core cpi which excludes energy or food. you are seeing a turn higher, not what we will need the 2019. so that is key data to watch out for on top of the gdp data. and for cars, looking at the second half earnings figures out of gm wednesday and fourth thursday. in tesla is launching on friday with a full autonomous driving system and a starting price of

$35,000, making it more affordable than the earlier models. tothat enough optimism really bring back the stock into what we used to see? it does not seem the case in terms of the market cap. we do see in white tesla losing market share as the market continues to doubt if elon musk can shift the target of $500,000 of the model three sedans into the market. in the meantime we are seeing forward going up in market share, but here is tesla under general motors. so feeling the intense competition when it comes to automakers. we have more to come with the major market open minutes away. ,et's go to sophie kamaruddin watching sydney, tokyo, and full. -- seoul. julie: we have caution -- sophie: we have caution in the

tech week. earnings galore from the tech space, banks, big pharma. we have the fed decision on friday. and this morning ahead of the data that you highlighted earlier, we are looking out for preliminary pmi numbers in half an hour and futures for the nikkei losing 200 points ahead of that. we are seeing some slight gains in seoul extra president moon's budget, shares under the week under open. what's for gdp as we have monday the money sterile -- ministerial meeting. crude is continuing to fall today after sliding the most in two weeks on friday.

that is a brief look at what we are watching when trading gets underway with australia, japan, and korea. this is bloomberg. ♪

whoooo. i enjoy the fresher things in life. fresh towels. fresh soaps. and of course, tripadvisor's freshest, lowest prices. so if you're anything like me... ...you'll want to check tripadvisor. we now instantly compare prices from over 200 booking sites... ...to find you the lowest price... ...on the hotel you want. go on, try something fresh. tripadvisor. the latest reviews. the lowest prices.

♪ yvonne: asia-pacific stocks set to slide, we dominated by earnings and the fed. focus, weakening as producers discuss output. fears they won't be it would to drain the glut. loans, but india is giving it a run for its money. this is the second hour of "daybreak asia" coming to live from bloomberg's asia headquarters. week,on the docket this

out of the u.s., the fed meeting this week, not expecting too much, but looking for clues in the timing of the balance sheet unwind and inflation expectations, leading -- and after that u.s. gdp numbers on friday. lots of earnings for the s&p, nasdaq, tech earnings, samsung in asia. let's get the latest with sophie kamaruddin. sophie: it looks like a packed week. the fed rate decision, earnings of plenty out of tokyo, korea, production reports out of miners in australia to consider as well. , maintaining the tension there. , soave potential downside keep an eye on asia players. the s&p falling at the open.

,he nikkei 225 falling .7% waiting for pmi numbers at the bottom of the hour. we do have the kospi seeing slight losses, but may see glover momentum after we had 's budget moon jae-in passing saturday, helping south korea reaches 3% gdp target. we are waiting on that gdp update this week. elsewhere, base metals sliding, iron ore as the bulls unwind a position. aussie yields falling ahead of cpi data wednesday. the aussie trading .1% higher, coming off session lows despite the weakness in iron ore prices.

, the strongest since june 16. euro holding onto gains above that 1.16 level, the dollar near a 14 month low with a technical level signaling more losses ahead for the greenback. some key support levels for the dollar, it has been tough to break through this market. that downtrend momentum is seen to be sustained, especially with the fed on deck this week given what we may be anticipating on the balance sheet unwinding. another support level, another 1% lower than what we are seeing currently. with a fed in a bind given muted inflation and robust job market, bond traders have made up their mind on the tightening path for

the fed. 10 year treasury yields fell nine basis points last week, the biggest drop since april, pushing yields through the 50 day average and the 100 day average, and now eyeing that , that fibonacci retracement of the rebound from the 2017 low of 2.1%, when we saw a jump to 2.39% on july 7, so keep an eye on this key line, 61.8% this week. yvonne: thank you. let's get you caught up on first word news. rosalind: the u.k. claiming removing trade barriers to the u.s. could generate an extra $50 billion of business by 2030. ministers admit reaching a deal will not be easy. pulmonary talks in washington, and one the american team as far more negotiation experience.

the u.k. cannot sign trade deals until it leaves the eu. britain has joined the u.s. and calling for an end to the diplomatic isolation of qatar. saudi arabia and allies cut ties on june 5, accusing the country of supporting extremism. rex tillerson said washington is satisfied with the efforts that doha is making, but said tom: must revise policies before direct talks can begin. of diesel ands gasoline surged as a combination of domestic a lot and waning lookd prompted refiners to abroad. diesel shipments jumped 21% whileed to a year ago, gasoline exports rose more than 8%. a commodities researchers says domestic demand has been hit. the malaysian prime minister has stepped up his campaign for election support by announcing

millions of dollars in aid for farmers. they will be given cash handouts and have debts wiped off. many of the ruling coalition have been hit by financial scandals. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: plenty to watch this week, including the imf latest economic update, fed decision, and u.s. gdp. from get the latest now jakarta. great to have you come about what is the theme it you will be watching as you wait for key releases this week? imfhen we talk about the and gdp, let's get those out-of-the-way. percent to 3% to

that we have not been able to break out of since the global financial crisis. the lasta key wants, time the imf updated its economic forecast, the mood music was much more positive about all regions of the global economy finally starting to show signs of growing in the same direction. we don't know what the report will say, but let's look for some continuity in that language that waspril and now the most upbeat the imf forecast had been for some time. 3% we have, 2% to not been able to break out of, not great, not terrible. this expansion is getting long in the tooth in the u.s., still 2% to 3% after eight years is pretty good. yvonne: pretty good. we've been hearing of this

global synchronized recovery, but japan and china better than expected, so maybe some upgrades from the imf, but that 2.5% for the u.s. scenes disappointing. now?is the story there are we not factoring in any fiscal stimulus now? that story has pushed back to 2018? disappointing versus what? this has basically been the since the economy began growing in the second half of 2009. were there a lot of expectations built into this idea that greater confidence would translate into greater growth? seen any legislation passed, so here we are where we were between 2% and 3%, not great, certainly not terrible.

yvonne: it brings me back to inflation. we expect the fed to pause on raising rates? >> it depends on which you mean by paulus. at a meeting between the quarterly meetings where we get not just the press conference, but critically the forecast, there is not much going on. let's look for some nuance in the statement, but the fed prefers not to do much between those quarterly forecasts post conference meetings. you mention inflation, a critical theme. the fed has been disappointed and puzzled by the retreat in inflation. hit that 2% target in february, but it has gone the opposite way. when the jobs numbers remain strong, at some point fed officials say we still believe the models will kick in, but why is it receding now? they don't really know. refreshment, not

saying too much super substantial in this statement could be a a way to go. the ecb dampening some expectations as well last week during their meeting. onwill get back to you later to talk a little bit more about the global economy. we stay with the u.s., watching for any move on health care and trade does the trump administration moves paschi personnel changes and the russian investigation moves on with president trump son-in-law set to appear before a congressional committee. jodi schneider joins us now for more on this. let's start off with jared kushner. we are learning these will all be closed door. >> that's right. jared risner is set to testify before the senate and house intelligence committee this week , closed-door hearings. he has said he will tell everything he knows about his

meetings with russian officials and be forthcoming. manafortlso hear paul in the president's son, donald trump jr., but again behind closed doors. obviously this is moving closer to the president, and people are thinking one of the reasons he had the shakeup in his legal and communications team was to prepare for this and get past revelations of leaks and to move forward. yvonne: let's talk about anthony scaramucci for a second. he is known to be a smooth talker known in wall street circles, but do people know about him in washington and what he can bring forward here as we passed the six month term for the president? is goodf the things he at is bringing for the president's message on television. he has been doing that before he got this role. , this weekendg it

he was all over the sunday talk shows in washington from so he is going to be the tv message man for the president. withd a press conference the press last friday, saying i have made comments before and the president teacher mining me, he saidus one where something a president like and then said he reminds me of that every 50 seconds. the question will be how does he do in terms of that message. the president always doesn't stay on message as we know, and rein going to be able to in that tweeting. the president was treating this weekend saying why wasn't the justice department investigating hillary clinton, things that seem to be off message, so he will have an interesting task ahead of him, and sean spicer

resigned when this was announced , so already more changes. we keep seeing more and more changes. yvonne: sarah huckabee sanders replacing him as press secretary. let's talk about the u.k.. there areill be speaking with his counterpart in washington today. they are hoping for some kind of quick post-brexit trade deal, but how quick can it the? be until after brexit, so they are talking about something that will happen years down the road, and the u.s. and u.k. have always had a good trade relationship, so i think a lot of this is going to be about trying to, some will be symbolic, but trying to put a face on this. they want to move forward with trade post-brexit, as well as what they can do now. the other questions are what are trades. and u.k.'s to relat

relationships going to be with other countries. we saw some of that with japan last week did so there is a reemerging trade picture, and the tpp, president trump took that off the table, so the trade picture worldwide is changing. yvonne: thank you. a preview of what to expect. how india is giving china a run for its money when it comes to bad debt. capital economics will join us this hour. up next, are we closer to asia heading down a tightening path or will central banks continue to the verge? that's next. this is bloomberg. ♪

♪ ."onne: this is "daybreak asia"

ahead to thising week's fed decision, especially as a tightening path the emerges from the boj. standard chartered joins us live from singapore, and we bring oss..dan m we were just talking about how the imf in april was quite optimistic about the global economy with that 3.5% growth in 2017. do you think that rhetoric or language will change today? >> i don't think it will. i think 3.5% is the same number we are looking at. the positive surprises have come from the west, especially europe . the story in asia is almost dull , growing relatively strong ly, even with all the surprisingly strong tightening

in china's financial sector. that from the q2 data has not been interfering with growth and the rest of the economy. yvonne: that is true. we were talking about inflation. 6022, bond traders calling janet yellen's loft when it comes to inflation. the 10 year auction last week to the weakest demand in nine years, bringing us back to levels we saw in the global financial crisis. ak loudly than what janet yellen is saying about inflation transitory, or do we assume that prices will go up this year? >> i will clear my throat and n say we need to be careful extrapolating what traders are doing to fed intention. if we go back to that first

increase in march, don't forget the headline at the start of the traders call janet yellen's bluff. all it took was three speeches and 72 hours later and it was 100% forecast for a rate increase, and that is what we got, so we need to be careful there. the vulnerability in the fed's ,rgument and the feds forecast inflation instead of picking up and staying at target, which it hit in february, is receding, and they don't know why. when the first couple of months going away from 2% came out, there was some sort of language that this was transitory and discussion of cell phone pricing, prescription drug benefits, but we have had a couple of mrs. now and the pce is drifting further away from 2%. it's not supposed to be doing this at this point in the cycle, and you are starting to see they

don't really know why. what we willing of see when it comes to rate hikes from the fed, it seems like they want one more this year. there yet,e ecb not but on a similar path. the bank of canada raising rates for the first time in seven years recently, so if we see this global synchronized recovery, what does this mean for asia? does it force their hand to begin normalization? >> it is an important message on whether or not we are seeing the fed doing as much as is priced in and whether it makes a difference. thinking back to that hike in march, where in january it was there that was still not disruptive for emerging markets. that is the key channel through which we need to judge whether central banks in the region

fellow blotch because the fed is hiking to be following suit to defend their own currencies or prevent any disruption in their markets. the place where we think the biggest risk of more easing is india, and secondly, indonesia, going in the opposite direction potentially, but critical will be can they do that because the financial backdrop is supportive enough to allow for it. we think it will be, especially if we get only one hike in december this year, a fed that has been priced in by the markets, and let's not forget the disruption caused by fed tightening has been going on since 2013. the peak of it was immediately after the election of donald trump, the peak of the euphoria and reflation trade. you need something like that to come back to for central banks to be changing tack. prices in particular have

been dragging down inflation and countering the initial rise we saw it in energy-let inflation, and there is nowhere this year we expect to see hikes. maybe korea next year. >> david, i want to come back to on those china points. you made the observation that credit tightening underway and china has not hurt growth at all , yet there is a constituency that keeps looking for china to undergo a dramatic slowdown, and he keeps never happening. can you explain that phenomenon, why there is a clash there between expectations and what actually happens? problem is we know china since 2009 when into a credit engine unprecedented historically, and the consequences longer-term through 2020 have meant even weaker growth and a misallocation of

resources into supporting zombie , sostries, excess capacity the drag has come from inefficient allocation of resources rather than collapsing growth. an a situationbe where we were in 2007 and interbank funding costs were soaring, the u.s. in particular, and compare that to china today, the main difference is that at any point the central bank in regulators have the ability to control exactly what happens next. if people are worried about some major systemic risks creeping in , and that is the major difference between this situation of excessive leverage growth running through a modeling people may have thought through, and that is why people keep getting caught out. the asset position is strong. the ability of coordination in the worst case is also strong, but it does not mean the

challenge isn't they are and it will be a drag on growth. heading towards 5% plus growth best through the 20 20's, something that can be dealt with. have a't have to solution forced to buy a crisis first. china in the 1990's found a solution without a financial markets meltdown. yvonne: thank you. you can get a roundup of the stories you need to know to get on your going dayb terminal and on your mobile phone on the bloomberg anywhere app, where you can customize the settings to get the news on the companies and assets you care about. check it out. dayb . this is bloomberg. ♪

yvonne: a quick check of the

business flash headlines. deutsche bank and j.p. morgan to fine of millions of dollars to resolve yen-libor fines. inext is at 36.2, compared with 34.3 for the nasdaq, the narrow us to cap since 2010. hinext is mostly made up of tech companies. the hong kong stock exchange operator preparing to consult the market on changes to its option system. and expanded closing auction

debuts on monday. they are now working on the pre-open session. the 30 minute auction is split into 20 minutes for employee and the rest for matching in preparation. this is bloomberg. ♪

♪ 28 degrees in the lion city, 8:30 in singapore. .2% humidity you can almost see it. not what we are seeing in hong kong. you are watching "daybreak asi " ." let's get the first word news with rosalind chin. rosalind: president trump's playing down his tweets that he has complete power to pardon. while he does have constitutional powers, the supreme court would probably have to decide whether he can pardon himself. his legal and communications team said the

issue is not on the table. >> it does not matter anyway. it is another stupid hypothetical. have to pardon himself because he has not done anything wrong. rosalind: the south korean parliament has approved a budget of 9.8 billion dollars, the center pace of president moon jae-in's plan to return to 3% gdp growth. it was delayed over issues including the recruitment of more civil servants. the filipino president has one congressional support for extending martial law as the army continues to battle islamist fighters. was overwhelmingly in favor of the vote, to 45-14, the senate approving it 16-4. he will make his state of the nation address later today. french president a manual cronje has seen his approval rating

after a voter confusion dispute with the head of the army and unease at labor changes. it is the second-biggest decline for president so early in the job. he was elected despite never having held office and his lack of a political base makes his position inherently fragile. fueline robot show nuclear inside one of the reactors at fukushima. black rock and sandy substances can be seen at the bottom of number three reactor, which will likely contain melted fuel. the images were captured by a toshiba robot designed to withstand the levels of radiation inside the reactor. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to see how the

asian markets are shaping up. it looks to be a down day. sophie: monday blues for stock traders and asia. 200nikkei 225 and asx losing .9% this morning, aussie shares looking at a second day of losses. iron ore miners sliding given the weakness for that space. aluminum also on the downtrend, down .2%. aussie yields falling and the aussie dollar study. is to speak onr wednesday, expected to reinforce rates on hold in australia and the currency is too strong for the economy. elsewhere, we have the kospi down .2%. the government is seeking to raise capital gains tax for large shareholders to 25% from

20%. might be offsetting some potential optimism over president moons extra budget passed on saturday. weakness across the board for tokyo shares. energy shares falling about 1.4% givenorning, the weakest the pressure on oil prices. brent just below $48. the nikkei two to five on course for a second day of declines, trading at its lowest level in a month. steelmakers are one of the bright spots in tokyo, mission steel adding 7%. this is japan's biggest dealmaker, nippon steel, expected to post a 70% jump in profit for the last quarter. we did have the ceo of nippon steel cautioning there might be

a battle for the japanese industry should u.s. steel tariffs come to pass. sydney,elsewhere in miners and their, an output after a 49% yearly jump in first-half production of mineral sands. newcrest gaining 1.2% this morning after its fourth-quarter output beat estimates, but did report a drop in gold production of about 8% as one of its mines is still suffering damage from an earthquake there. .2%share price falling since that earthquake. shares falling in sydney given the weakness in oil prices. lng producers under pressure as they wait for confirmation from the government that gas export

curbs may be in place 2018. we are waiting to hear from the resources minister on that. yvonne: thank you. oil markets now, the secretary general saying it will need more crude from libby and nigeria as it rebalances at a faster rate. investors are concerned that rising production from libya and nigeria are offsetting the cuts by other producers. >> this target we have is thesegent upon addressing challenges, security, funding, logistics, and opec insult with solidarity with member countries look forward to these countries overcoming these challenges in the fullness of time and returning to the market, because everybody who can produce will be needed.

yvonne: for more let's bring in ben sharples on set. about peakking optimism and everyone was thinking $60 for the year for wti. it seems we are way below that now. it raises the question whether these production cuts have worked. >> we are marginally above the area where we were before they agreed to the initial cuts. at the moment, the cuts are happening, but slower than what many had expected. a report saying compliance is starting to slip. ,t's adding a lot of pressure but at a slower pace than expected. this to rampnted up quickly so they did not have to cut for too long, but it is a

slower pace than many wanted. yvonne: they are saying nigeria and libya are going to be playing any part in these output caps, pretty central in this meeting as well. you think the saudis will have to offset this? >> they are back on the agenda because their production has been ramping up, adding the most to the output over the past couple of months, so that puts it on the agenda. , theare talking about the nigerian oil minister said they are willing to cap. the be a has considered if they can get to 1.2 5 million that millionl cap -- 1.2 5 that they will cap. they are back on the agenda. come a degree of caution needs to be taken with these two countries given the conflict that happens there on a regular basis. yvonne: what about the demand

picture? it looks like we will be seeing a faster rebalancing. without boost prices in the second half? has been a next flirtation that demand will climb faster and the second half. the iea said demand was rising quicker than expected. the constant issue we come back to is supplied. iea report,o the they also mention compliance by opec. compliance is at its worst since the cuts started in january, worse than the countries participating outside of opec, like russia. they are performing better here. little.it is fraying a we can talk about ecuador. compliance is faltering, production rising, but offsetting that is rising demand , so it could be a status quote

until that production continues to climb. it is a bit of a wait and see, but seems there is more tension in that group. yvonne: some cracks forming among the members in the cartel. ben sharples, thank you so much for joining us. we look ahead to the opec meeting. a new week on wall street, fresh earnings and eco-data, the -- trump'sntial ties potential ties to russia and a decision on the interest rate this week. su keenan is here to talk about what to expect. a it will be buckle-your-seatbelt kind of week. gdp data at the end of the week. anticipation we will see annual growth 2.6%, gross domestic product, and that is based on an increase in consumer spending, very different from the start of got off toere we

a slow start. durable goods expected to show a pickup in factory activity. middle of the week, tuesday and wednesday, the fed begins its two day meeting and will announce on wednesday whether to raise rates. that's in a statement, not a press conference. they are expected to stand pat with investors and economist parsing this statement on how they plan to proceed. the fed is in a bind trying to explain their tightening path amid a data miss, inflation nowhere near target goals, even though it referred to it as robust, and trump, the headlines will probably, the russian investigation heating up. his son being called to testify in that senate hearing. all of this as the potential ties between the campaign and russians being looked at very, very closely. yvonne: absolutely.

we are looking ahead to earnings. week, tech first and foremost this week. will they deliver? , one of the big names, let's go into the bloomberg and take a look at the way the record s&p numbers have been driven by record earnings. what we are seeing is that the earnings are not happening in a vacuum. the fundamental trend has played a role in pushing the s&p higher. this is 12 month trailing eps, now tracking 122, an all-time high, then we have the consensus twelve-month eps expectations for the s&p 500 currently at 139, also all-time highs for companies in the index, so all of that pushing us higher. some of the earnings last week, there was a mix of performance. , the 21st down

quarter in terms of revenue, although they project stronger growth at the end, a story of the cloud disappointing. goldman sachs with strong earnings, but investors folk missed on the weakness in core units. net flicks blew it out in the u.s. butle could be a headline, it will be confusing. they will set aside $2.74 billion for that fine. they are expected to report eight dollars 25 cents a share on revenue of ¥25.60 dollars, but the big focus will be the elephant in the room, that fine. they plan to do fight it. , a lot of the energy companies, exxon among them, so it should be a rock 'n roll earnings session indeed. yvonne: thank you.

su keenan joining us live from new york. up next, china is loans, the regional rival india anything it a run for its money. we will discuss that with capital economics asia the next. this is bloomberg. ♪

yvonne: this is "daybreak asia." trouble,india are in distressed assets among the economies,a major and signs things are only getting worse. this is btv 5692. about china's nonperforming loans. this is india's bad loan ratio. it is quadrupled the size of china.

one big issue is what can we expect coming from the government. capitalscuss that with economics asia live from singapore. great to talk to you. this is in the midst of what we have learned about the government giving the r.b.i. more power to tackle this bad debt issue and this new bankruptcy law that passed last year. is there a sense now the measures are different than in the past, measures that have largely failed? >> possibly. there has been signs that the rbi and government are realizing the scale of the problem they have. the banks ignores the scale of that bad debt problem. is already 8% of loans in india's banking system, which is incredibly high by emerging-market standards. tests pipeline, stress

another 8%, so it is a real problem. there are a few signs the government, the new powers you mentioned given to the rbi could help at the margin for insolvency proceedings to begin, but this only scratches the surface. the extent of the problems, there is no real indication that banks could even take on the haircuts that might lead to a resolution, so much bigger measures are needed. yvonne: on the fiscal side? what could revive this banking sector? well, one of the biggest measures we need to see, a much larger scale capital injection from the government.

thanks to don't have the requisite capital to deal with taking on major haircuts, if that is what is agreed under these insolvency proceedings, so we need to see larger recapitalization. the issue with that is that the government itself is attempting to tighten fiscal policy, so the capital is not there in terms of the public sector. i think this could be potentially dealt with by the government actually selling off some of its assets in the state owned banks which account for 85% of india's ranking system, so there is scope to lower its stake and increased privatization. that will help to recapitalize the banking sector, but without damaging the government's finances. politically, this is a difficult move in india and does not look

like something the government has the appetite for. yvonne: it raises the question how muchther participation should the private sector have when the system is so broken. could this have a knock on effect on growth if you increase the savings rate or have private banks lend out to some of these corporate firms? >> certainly, so what has happened with state owned banks, eventant to lend, so though the demand for credit is there in india, utilization rates are tight. the time is right for a turn in the investment cycle. demand should be increasing for credit. on the supply side is where the problem is, banks worried about meeting the global capital requirements and not willing to lend to smaller and medium-sized

enterprises, and that has led to a significant slowdown in growth. unless this is resolved, this is a reason to think india is unlikely to meet its growth potential over the coming years, move toif we did greater private participation in banking, we could see lending rates recover. smaller firms would have access to finance, and that could lead to a boost to growth. as i mentioned, these measures remain off the table for now. yvonne: last month, we heard i, identifying the in d falters -- defaulters the country. is this a potential litmus test for india's new banking code or wilbanks just have to provision more? >> i think it is a let us test.

codes,he new bankruptcy the idea is to have bankruptcy proceedings wrapped up within six months, so the 12th biggest lenders account for a big share of these non-performing loans. if progress was to be made with insolvency proceedings and it could have a significant impact on the sheets of commercial banks, however, there isn't really a clear sign of what the consequences would be if these , theuptcy proceedings timelines and deadlines were not met, so it is a litmus test. see some cases wrapped up in six months, that would be taken as a positive sign, but it is still too early to say how things will result themselves. have you.eat to

capital economics asia live from singapore. on the bloomberg is our interactive tv function at tv . seecan watch us live and previous interviews and dive into securities or bloomberg functions we talk about. downan click and scroll and see some of the charts we talk about. you can become part of the conversation, send us an instant message. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

♪ yvonne: this is "daybreak asia." newcrest mining climbing despite gold production fell. output fell 8% after an earthquake on april 14. it still be as simmons. the site accounted for half of earnings through december, and the ceo said the quarter shows the company's resilience. the austrian competition and consumer division seeking information about the recall of cars equipped with takata airbags, releasing a statement urging all drivers finding out if the car has the potentially lethal device fitted. a new south wales man was killed

when the airbag in his car mis-deployed. to benefit from the stumbles of uber and launch its own range of self driving cars. they expect to employ several hundred staff at the new division by the end of next year. has focused on partnerships with the general motors, land rover, and waymo. the northormed a top american box office on its we can debut. is being talked about as an oscar contender for one or brothers. it pulled in more than $60 million i had of girls trip which took in $30 million. that is almost it for us here on "daybreak asia." time for a look at what is

coming up on bloomberg markets. speaking of reserves, opec. we are talking to when gordon of ubs. do they have any real options? he has to producers exempt from the cuts, nigeria and libya. they will not do any cutting until they normalize output. the president of the philippine second state of the nation address later. has he achieved anything? are we missing the underlying fundamental story here? yvonne: thank you. this is bloomberg. ♪

♪ david: haidi: i am haidi lun. david: this is "bloomberg markets: asia." ♪ haidi: japan leads the asia-pacific down at the start of the week dominated by earnings and the fed. the yen heading for a fifth day of gains. david: watching oil weakening as producers discuss output. fears growing that current curbs