♪ betty: dialing up big numbers, apple forecasts sale that will smash wall street estimates. gm and ford gasol slumping deliveries last month. the cars, no longer driving the growth. profits.ny's quarterly headwinds ing

brazil and russia. in twoe highest and -- years. betty: i am betty liu in new york where it is just after 7:00 p.m. yvonne: it is just after 7:00 a.m. here in hong kong. it has been about the apple earnings. it was maybe a slow quarter before the new iphone, that we were going to see potential delays on that front. betty: it feels a little like deja vu. we have seen apple disappoint before on their numbers with investors for giving apple. there is certainly more tepid revenue numbers just in anticipation of the new devices, the new iphones to come. this one that is anticipated

really has to deliver or justify the amazing stock rally we have seen an apple. yvonne: absolutely, i think it is 30% this year. let's see how the rest of the markets will be. a little quiet on the d.c. front. here is how new zealand is faring. we just got the jobless rate 15 minutes ago, falling to 4.8%. the reaction on the kiwi, we are down 6/10 of 1%, .7421 for the currency. we are seeing the post rba reaction. a longer statement from governor philip lowe yesterday. in particular, talking down the currency. that dollar strength helping -- helping things a bit. for thetill at .7961

aussie. we see oil pullback ahead of that u.s. inventory report. going futures not anywhere. japan, the bank outperforming. dollar-yen, we're back above 110. these as speculation stoploss sell orders would twist under those levels. but they are above positive territory, above the 110 handle. it was not -- it was not all risk on. mixed data coming out of the u.s. when it came to auto sales, income, and spending. there was a lot of focus on that 22,000 down. -- dow. betty: let's pull up the boards to show you where the markets settle today. as you mentioned, just shy of that 22,000 level on the dow.

shares trading in the after markets, if they keep up this momentum, they will open it up -- at a record tomorrow. let's stay on apple. a strong outlook from the company. following apple, joining us now from san francisco. a lot of this is an anticipation of the new phones to come. is there too much anticipation? any skeptics out there that apple might not meet those numbers? alex: i think that is why the shares have reacted so strongly today. the sales numbers in the summer period, would be particularly disappointing, and that is not proven to be the case. they see the strength of the brand is standing up. everyone is expecting the

blockbuster new iphone later this year. that could do even better than we have seen in the past 12 months. betty: is there evidence people are holding back from buying new iphones because of this new iphone 8? alex: yes, that is noise the case. they see how cycles work. apple generally doesn't do iphone every two years. that has not happened this time. was broadly similar to them 6s, which came before it. product launchhe cycle, there is a slowdown. betty: what is priced in the stock? are any saying the stock is getting carried away? alex: you have to look at two elements to read it is not just the iphone 8. ofre is the expectation offshore cash expatriation.

we have yet to see progress on that from the trump administration. those two elements are what are firing it up to read we will have to see in six months time if expectations for the iphone 8 will work or night. apple surprises investors with how enthusiastic they are for the product. yvonne: if you are a long-term investor it does not matter if it is a september launch. alex, when it came to china, it is interesting. we hear tim cook say he is pleased with what is happening. but we have seen slower growth of 10% compared to what we saw year ago. i things turning around in the mainland? no, sales declined in china. the message changes when it comes to china. a salesuarter is one decline is not as deep as in previous quarters. china has been a huge growth

driver over the past five or six years. in the past 18 months it has dropped off. apple attributes a lot of its declines to currency. if it was not for currency effects, it would have been flat. similar in taiwan. the big problem market is hong kong, where they have actual declines in growth, and that is driving the comparable decline. yvonne: deeper into the china market for apple in the next half hour. let's get to first word news with nina melendez. china company lanning to raise money on the purchase of riotinto's coal assets. two chinese investment groups well offer a further $1 billion.

the senate has confirmed the christopher wray as the new fbi director in a bipartisan vote. he vowed the independence of the bureau after president trump fired his predecessor, james comey. he disputed trump's description of of a witchhunt and called robert mueller a consummate straight shooter. the one calling for calm on all toes after forces loyal president maduro arrested the opposition. the former mayor of caracas, detained 24 hours after the controversial constitutional vote. it shook markets, drew international condemnation, and brought the threat of new sanctions from the u.s. russia's economy minister says the ruble has stabilized. he told bloomberg, oil is having less of an impact because of a

fiscal mechanism introduced this year. he reiterated that any price above $40 is comfortable. he also said the u.s. is using sanctions to gain a competitive advantage over europe. about european businesses and u.s. businesses. relationships have become worse after the announcement approved by the senate. [indiscernible] >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mean a melendez -- nina melendez. betty: adjusting the latest

corporate earnings. here is su keenan. tomorrow we will be talking about the reaction of apple. but today it is car sales, to build the markets. -- but there was was buoyancy in the market. the dow 22 thousand looked like a reality, temporarily. had the markets prepared for a strong report from apple, that seem to be delivered. let's look at the standout stocks. they speak to a couple factors. sprint moving higher on word it could be exploring a sprint-dish merger. norwegian cruz lines, one of several, carnival and royal caribbean, on strong demand for cruz is. general motors is part of the story. it was the lowest -- its biggest sales plunged since 2010.

sales were down 15% in july. let's go into the bloomberg g #btv 7243. themeg the brakes is the of this chart. if you look at the white line, it is from 2007. you can see the correlation of car sales with the s&p 500. look at the red circle. that is where you see a divergence. the car sales, the white line, going lower. while the blue line heads toward records. could sales dragged down the s&p? theser warning sign technical charts seem to be showing up. yvonne: let's take a look at commodities, we see oil falling back below $50. there is a chance we are setting out for some inventories in the u.s.? su: that is a big question mark. you see yes, $50 oil was a miss in the tuesday close.

closedthe first time we at $50 since may. as the market pulled back, there is anxiety or speculation on what the government supply data will show. because on tuesday we got the whiche supply data, api, showed a buildup in crude supplies last week. and the key hub had a big build. one trader said any build an inventory is negative for the market because this is the time of year when inventories drop naturally. that would be a countertrend. as opec works to rebalance, there is an uptick in output. one trader saying it is a marathon, not a sprint. that is what new investors are looking for, a quick answer to the direction question. copper at a two-year high. a number of factors supporting the bullish trend in copper. in addition to strong numbers out of china, the biggest consumer, the u.s. economy

showing strength. the u.s. dollar continuing to sink. yvonne: thank you. apple banks big on its upcoming iphone. by revenue forecasts saw shares dial-up in an all-time high. betty: the brick nation meet in shanghai where there live for the latest on trade talks. this is bloomberg. ♪

yvonne: this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty liu in new york. global politics are overshadowing this meeting of brics nation trade ministers and shanghai. when the term was coined in 2001 it was for a powerhouse of emerging economies. you can invest in this bloc. how has it worked out since? let's get to remy inocencio with a look at the brics and how it

has fared. >> on the whole, a positive picture. let's look at it from a investors point of view. the bloomberg terminal. on a normalized basis of 21, if you in -- if you invested in the , it would have performed twice as well as the world index. this is clearly a positive. looking at gdp growth next, it is a mixed picture. 8568.is g #btv . that is at 6.9%. it is at the lowest in 25 years. but still higher than beijing's 6.5% target. notable because we are headed to the fall party congress. in purple, we only have data going back to 2012. . it is fallen from 7% to 6.1%.

there is the demonetization policy. we are expecting a rba rate cut. in blue, russia down because of oil recently. bricfor brazil is the only nation with gdp contracting a negative percent. blame, because exports are a factor. bilateral trade has fallen by 25 percentage points, since 2013. we have to talk about inflation. inflation across the world is either stagnant or slowing. that is the case for them bric nations. for china and india in the purple and white, that is at 1.5%. for india in purple it is at a record low because of falling food prices. for brazil, falling food prices mean good news.

inflation has fallen from 3% from 11% at the start of 2016. for russia, inflation is rising. it is that 4.4%. higher than moscow's 4%. higher moving ahead into the third quarter. a mixed picture for inflation. finally, if there is one thing that is clear, it is that investors are piling back in a very big way. the flows were actually negative, but now they are at their hiatus -- highest, at more than $160 billion. a question we ask our next guest, emerging market equity strategist joining us in the hong kong studio. it is interesting, you called it a new era for em. it is mostly about the improving are we talkingr

super valuations, or investors chasing yields in this space? equities, we are in a new phase, which happen in the first quarter of 2016. prior to that was a five-year down term. which was a classic tightening positions, which led to a fallen profitability. there was a significant decline in energy and commodity prices, which is a huge trade hit to some of the markets we have been talking about, russia, brazil, and other commodity producers. now we are exiting that. we are exiting that with rising operating profit margins. we have always had in these markets premium nominal gdp growth to the developed markets. the problem was, we were going through profit recession. we are exiting that. i think we haven't up cycle here.

let's talk about cycles rather than new eras. we are investors, we look at economic conditions, earning conditions. yvonne: we talk about this gps upward cycle we see in asia right now. but if you look at the tech-heavy stocks or benchmarks like the kospi in korea, some major downgrades we are seeing are in india, as well. thatsay you can see how consensus goes to records. but the earnings growth is just not there. do you support that kind of thesis? adrian: i think india is the exception rather than the role. the eps revisions out of india had been negative in go in the opposite direction of what we're seeing in the balance of emerging markets. it is beyond tech. if you look at the materials el, petrol chemicals and aluminum, i think there is a broader story than just tech.

the issue in india is, expectations are high. but they have had to deal with two significant monetary events. demonetization cause problems with recovery. now, indian businesses are --paring yvonne: and the r.b.i., as well. adrian: the r.b.i. has been cautious about cutting rates. real rates in india have been moving up, as well. india is the exception here. as we look at india going into 2018, we do think there will be decent earnings growth. these high valuations will probably be acceptable. i would caution, we are neutral on india. of the key sectors in india, particularly places like i.t. and health care and consumer staples, which are expensive. yvonne: i meant r.b.i., not rba.

themtwo --y to get easy to get the two mixed. what are the sectors where you s-like.est bric where are you overweight or underweight? adrian: there is supply-side discipline. we have had decent recovery in commodity prices in the last couple months. average commodity prices in 2017 would be higher than 16. i think that is all supply discipline rather than demand shock. if we look at the overcapacity industries in china, most notably steel, but i would also throw in petrochemicals, aluminum, cement, margins are

staying high in those sectors. you can play that indirectly. we are bullish on taiwan and korean materials. effectively, they are living under the pricing umbrella of china. it is a great irony the u.s. is focused on anti-dumping duties against china steel, when chinese steel companies have a record high margins. we have some very cyclicalit iss focused on anti-dumping duties sets. the other area i would highlight is chinese banks. you look at the free cash flow of the old economy in china, it has recovered very genetically from the lows of 2015. what does that mean? of chinese, old economy companies to pay their debts, has improved dramatically. we think one of the big value sectors investors should be very overweight in the second half of this year is chinese banks. betty: those are great sectors

to take a look back -- take a look at. looking around the world, what do you think it is a emerging market that is perhaps under the radar, that others have not paid much attention to? we have been quite positive on markets such as chile, where positive political developments are going on. we think that will enable a re-rating. elsewhere, i have to say within em, our focus is into the larger emerging markets. we have overweights today in china and korea. markets those two together, you were at over 40% of the benchmark. it is a condition that tends to be focused on large markets rather than the smaller market, the contrary markets. mowat, thank you

so much. one feature on the bloomberg we would like to bring to your attention is our interactive tv function. you can watch us live but see previous interviews and dive into any of the securities or bloomberg functions we talk about. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

yvonne: a quick check on the latest headlines. didi chang and uber going head-to-head in europe. the right taylor is back in estonia with cash and tax -- tech support as they expand. didi chasedd -- uber. betty: sprint soared after

positive talks with other companies. his optimism comes hours after they said they were interested. softbank is exploring a link ♪

yvonne: 7:30 wednesday morning in hong kong. minutes away to asia's first major market open. a cloudy picture this morning. betty: quite gloomy there. 7:30 p.m. tuesday in new york. markets also closing pretty hot. 22,000.at a record, apple might push it over the edge tomorrow. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." capital says anthony scaramucci's deal to sell his stake remains on track after his white house firing. it still needs to cross national

security hurdles. they want to sell to a subsidiary to china's hna group. but it is far from certain, according to those familiar with the panel. to be among chinese companies under scrutiny for using domestic asset to secure loans overseas. sources say the regulators is reviewing guarantees involving insurance, as well as dalian and other companies. it does not mean the companies have done anything wrong. bloomberg has been told wall street regulators have agreed to rewrite the balkan role to loosen the restrictions central to the u.s. response to the financial crisis. our sources say the five will begin working together on revisions that would let the trump administration bypass critics in congress. they missed estimates in

the second hour. they will have to cut jobs. they are reeling from a 3.3% drop in the american box office due to a string of disappointing hollywood sequels and remakes the summer. it is seeking $30 million in savings. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. yvonne: apple has predicted revenue this quarter ahead of analyst estimates, signaling strong scale -- sales of iphones. it is a product that accounts for almost 2/3 of apple's revenue. it three new models are expected this year. mark gurman joins us from san francisco with more. i cannot help but remember what happened in early 2016 when we saw iphone sales of fall for the first time in 13 years.

everyone was saying, we will get a new cycle of iphones. that did not live up to expectations. and then everything shifted. is it different this time around? everyone talks about the super cycle, can it live up to that hype? this i feel like we have conversation every year. as long as i can remember, people are saying wait for the next iphone. oh, this next one will be amazing. it is an annual story. almost a by quarterly -- bi-qu arterly story. iphone sales were up 1%, 2%. and 3% in terms of revenue, year-over-year, for the third quarter of 2016 to 2017. it could have been worse. we are at a fever pitch for rumors about the iphone 8. being up 1% to 3%, that is good news for apple and investors. yvonne: in terms of the

hardware, we have seen a couple links on what will come out for the new iphone generation. can it live up to the buzz, given the fact we saw a leg up when it came to samsung and their s8 launch? mark: bloomberg has been reporting on this new iphone for months. we had a big story in april. i would encourage everyone to check that out. yes, this will be a big deal. for the first time, apple will have three new phones out in the fall. the 7s and 7s plus, with camera upgrades and enhancements. and then this new 8, an entirely new design. ae samsung s8, it will have 3-d facial scanning system so you can unlock your phone by looking at it and making payments by just scanning your face very quickly. oled oled screenw

to produce color, black and white more accurately. it looks great. samsung will have center bezels on the side. overall, they are shrugging it, it is about the size of the iphone 7. people who want a smaller phone the bigger screen won't have to make that choice. the phone will offer both ends of the spectrum. seen given theve politics and situation in washington, any company that gets big or bigger, successful, starts did be a target. we saw tim cook talk about apple. there has been speculation about apple and other companies building factories in the u.s. what is tim cook say about that? mark: tim cook dodged the question completely. i was expecting him to have an answer, even if it was just to decline the comment.

he changed the conversation. he was asked on a call by ubs on this report from the wall street journal that cited donald trump saying apple would build three factories in the united states. talked aboutt and the app economy and the 2 million jobs created in the u.s., retail app development. he said nothing about those factories. in my opinion, president trump was likely referring to the foxconn factories. -- referring to the foxconn factories. they are linked, but that -- but that does not mean that when the foxconn factories built in wisconsin that it is building for its biggest customer. india isok also said like china was several years ago. they certainly have their eyes set on this being a very big growth market for them. mark: they have been saying this

for years, but they really need a big growth market. china was big for two or three years and then it stopped. you do not see big sales increases in china. but you still see it referred to as it key segment. india is also producing new iphones. it is the start of things to come. in two or three times we will have a much clearer picture. betty: thank you so much. we will continue our coverage of apple. in the meantime, how is that going to play out in asia? we are headed toward the major market open at the top of the hour. adam haigh in sydney for us. how are these apple numbers going to affect trade, particularly tech stocks in asia? as marc mentioned, the big suppliers will be the key focus for investors. foxconn, the korean

supplies. that trade in hong kong, they make the speakers for the apple iphones. there is euphoria or optimism that comes through with these apple numbers around expectations for future iphone sales. they certainly play into the hands of these producers and technologies.c we have a few more in japan, as well. andbroader context of apple how much of a player and leader it is in the tech space, just buoyed sentiment. we saw dow futures jumping after that move. we are looking at again in japan after we start equity trading shortly. this is in the context of an earnings season across the world that is been beating expectations. more so across the u.s. than in japan. it is been a good earnings season so far.

that largely supports the opinion of equity investors, and that the global economy is intact. earnings are good enough to deliver a push higher in prices. that is where we are at the moment, looking for stocks open higher in asia today. yvonne: we were just talking to jpmorgan about forex, and the rally in bonds. something to look into more, as well. things have gone a little too far, where they calling time on this run-up? man growth is the largest -- largest publicly traded hedge fund in the world. the key player in this space. they are talking about the possibility of a rally. at whichtude and speed this run-up has occurred, that worries them, valuations getting testy. the were fairly bullish on

class. they have been adding to physicians and played that reasonably well. they benefited from this run-up. now they are increasing their net short positions. expecting we're at it key inflection point, loaded up on downsize bets, expecting a given what we have seen. to carry thosee bets back a little. yvonne: adam haigh, thank you. it is crunch time for spending in the u.s. the economy likely won't be able to rely on consumers this quarter. this is bloomberg. ♪

♪ we are counting you down

to asia's first major market. points on the board, head of the open in tokyo. dollar-yen, seeing weakness, at 110.47. this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty lou in new york. consumers feeling that growth come are being tested. a broad measure of spending slowed. auto sales hit the skin. kathleen hays joining us for more. partmer spending was a big of the second-quarter gdp numbers and the rebound. what happened in july? we had the week first quarter, stronger second-quarter. betty: there is no boom anywhere. kathleen: people are hoping it will go at the second-quarter growth rate and not get weaker again. that is the question, why people

are watching these numbers closely. we had spending kind of flat, incomes looking stagnant. that is not a fuel for stronger spending. personal consumption expenditures up 0.1% in the month of june, after being a 0.2% in may. it is the second month with lower income spending. dividends shot up. there was a special circumstance, but now they gave back most of those gains. this takes out taxes, as well. and then you get a drop in july. auto sales, how can it be a good sign for the consumer. let's look at? 86.let's look at g #btv 89 there is partly a correlation between auto sales and consumer spending because auto sales, the can -- the turquoise line, are a broader part of the consumer spending.

you can see with auto sales peaking and dropping off, it is a signal that the best consumer spending will get drop. this is what people are watching closely. it was the biggest drop since august 2010 in car sales. wages were up 0.4% in june after being flat. the purchasing managers index in 56.3, easing a little from may. nevertheless, let's jump back into the bloomberg and look at world interest rate rejections. projections. -- december, they are down below 40%. you have to go out to march before you get above a one into in two chance.

do you think, maybe we should think twice about that. yvonne: a very different picture in europe. region.ated across the one thing you can pinpoint as a sore spot is inflation. what does this mean for the ecb? kathleen: let's take a look at your earnings in growth. if you are mario draghi, or the bundesbank, you are saying it is picking up. growth is accelerated, gdp growth, 1/10 of 1%. has best continuous string of growth since 2011. spain, its fastest growth since 2015. now we consider gdp versus the eurozone emi. pmi, 56.6 in july. you are looking at this turquoise line, that rise in the

pmi six year high, a little bit of a pulled -- a little bit of a pullback. you can see how they correlate. as the purchasing manager numbers grow, they work together. moving up like this, a little pullback. this seems to be a strong signal for gdp remaining strong. getting back to this conundrum isgrowth versus inflation within the euro area pmi, prices paid sell to a nine-month low. signal not been a strong of pressures boosting inflation. one more reason everyone is waiting to hear mario draghi at that kansas city fed symposium at the end of august. he is not spoken out there since 2014. conflicting ideas in june when he talked about deflationary forces. the minutes from the last

meeting seemed to say, not so fast. the growth numbers out of the euro area are a positive signal for the region overall. another one the ecb has to consider when it is time to pullback that monetary policy its is easy, at least when comes to purchasing bonds. yvonne: the euro is that 1.18, highest of the year. the be reason for mario draghi to stay a dove. kathleen hays, thank you. to calm investor concerns after debt rose to a record, saying oil spill payments for the rest of the year and bonds and asset sales will ease the burden. second-quarter net income beat estimates. oil and gas was 10% higher. is cashsaid bp breakeven at below $50 a barrel,

forecasting prices next year between $45 and $55. profitsiotinto net surge to more than $4 billion, up from 1.5 billion korean a year ago. they are expected to under pitt prices peaked at $95 a time earlier this year. yvonne: india's biggest steel producer had the first profit drop in six quarters. net income fell 44% in three months through june, compared to the record profit of $175 million a year earlier. they reported is a private gauge of output slid to an eight year low. betty: you can get a roundup of that story and more to get your day going in today's edition of daybreak. subscribers go to dayb on

your terminal. it is available on mobile. you can customize your settings to only get the news on the industries and assets you care about. this is bloomberg. ♪

♪ ,"tty: this is "daybreak asia i am betty liu in new york. yvonne: i am yvonne. we will be watching sony shares and a couple minutes. profits topped estimates with chips, music, and the playstation 4 among the growth drivers. sony declined to raise its profit forecast. it is crucial to maintain the crisis mentality, no matter how much are profit recovers. that profit was not sustainable after positive earnings 10 and 20 years ago. we should not be such a situation. the market situation is volatile

and we will need to be flexible to adjust to changes. yvonne: let's bring in a reporter live from tokyo. it seems his turnaround plan looks to be on track. >> yes. it was a good quarter, a strong quarter. and a quiet quarter. not a lot happening. becauseusual for sony since last year when they have the big earthquake in april number of have had a one-off items almost every quarter. in february, they have the pictures, the $1 billion write-down. after all the volatility, it was a fairly quiet quarter. you saw chips made the biggest contribution. the camera sensors. music did really well. but there were not many big games coming out this quarter. compared to last year, it was a

60% drop because last are they had a big title. games did not do that well this quarter. the overall theme, you are seeing stability in terms of sony. you are seeing profits from outside of games step up. israll, first quarter generally high. shapeooks to be in good to meet their full-year targets. as you said, they did not raise their guidance, even though a lot of people asked for it. betty: you mentioned they kept the guidance in place. is there any chance we might expect a surprise revisions soon? yuji: you played a segment of the chief financial officer yesterday at a presser. he was grilled about that. sony is doing great. months ago you put out a full-year forecast that was conservative.

questions.a bunch of they increased the sales forecast, but not the same for the profit forecast. in chips, they lowered their sales forecast because the iphone. but they increased their profit forecast. the overall message, they are still very conservative. the quote you just played, a sense of certainty, a crisis. there turnaround is more or less complete. but they are still very cautious. that is one worry for investors. if they are in crisis mode, it is hard to take a lot of risk. and you need to take risks for growth drivers. tech is their bread and butter. ago, theyee months had an interesting lineup. the playstation 4 is headed toward the end of it cycle.

what is going to come next after that? people worry they are may be too cautious. but it is a solid quarter. the first quarter was pretty quiet. yvonne: we will see how the stock trades in a couple minutes. thank you. we are looking ahead to japan, south korea, australia. i have to talk about my home turf, honda -- hong kong. 590. at this chart, g #btv 8 the manufacturing pmi, a surprising upside. different from the official numbers. we did see slippage in the month of july. still in expansionary territory. check out the flows into hong kong. mainly coming from the mainland, seven straight months we have seen stocks gaining. other shares reaching the 11,000 mainly coming from themark somen two years.

hong kong continues to be a refuge for chinese investors. that is amid the crackdown we see in beijing. betty: if i can connect the dot to one of our big stories today, which is apple, it is interesting. hong kong stocks seem to be on fire. but it is not so much for apple. it was interesting to hear tim cook talk about how hong kong is one of the low spots for the company. they saw declining sales. you might see all that money flowing in from china, but that is not flowing out into purchases of iphones. plenty more still to come with asia's first major market open. sophie kamaruddin is watching the opens. >> it looks like earnings will be a key driver today. we're looking at a mixed open. we may see an effect from that tech giants outlook. sharp, japan display, will move.

perhaps an upside when it comes to earnings. we also have honda beating estimates. hyundai motors after its sales in the united states. this is bloomberg. ♪

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♪ >> apple calls fears by forecasting sales that would smash estimates that should live confidence. >> wrote space and headwinds in brazil and russia, but flows are the highest in two years. >> sony's turnaround remains on track. by camera chips, ps4 and music. >> washington sends a message saying the u.s. is not a threat, but you are.

yvonne: this is the second hour of bloomberg daybreak: asia. betty: we have been talking about this one particular stock that is likely to be the focus of asia trade. let's love how apple shares are trading in the after-hours. you saw that pop after numbers were released. after the conference call. that will be a record if it opens around that level tomorrow. there will be a lot of after stories about apple and its growth in the u.s., but also, its growth in china and new growth markets like india. yvonne: india is the new china, i guess. you see revenue growth they're from 10% thatng we saw a year ago. we will talk more about that in the next hour.

here inet has opened asia, particularly with the tech shares. sophie: earnings optimism is likely going to drive momentum today. costa look at tech heavy up about four tenths of a percents. we has seen japanese lift the nikkei 225 up for 10th of a percent. yen is back above that 110 a dollar level. positive guidance from apple thed potentially refresh one, the taiwanese dollar and missing dollar. we are seeing pressure for the one down, a third of a percent. the aussie dollar is down to $.80 asf 8%, back below metals drift lower. we do have the bloomberg commodity index under pressure. about 1% and u.s. crude

is back below $49 a barrel and brent back below 52. i want to highlight what is going on with the kiwi dollar. sinking 6/10 of a percent after a surprise drop in second-quarter employment with it being seen as the july 21 load as 73.94. you probably noticed this big, red glaring box. this is showcasing the drop we saw in venezuelan bond deals -- i am sorry, the rise in sovereign bond yields. after two sovereign leaders were arrested. this asthma during makes a power grab. there could be a risk of potential default. debtank is recommending with the highest recovery value, like five-year credit default swaps. , they haveencies been a good bet against the dollar, but they aren't carrying

well against the euro. as you can see from the white line here. they lost about six and a half percent against the common currency since april 23, that was the first round of the french election. in that time they gained 2.4% against the dollar. what this showcase has been is the euro strength against the dollar. it is a five-month winning streak for the current currency. the euro strength has been big for european exporters. 5% year torned to date. you can see that from the white line. it is under what we are seeing when it comes to asia stocks, which have seen a 90% rally year to date. this could be driven higher given the earnings plan. we have toyota due to report next week and i want to pull up the board to show you japanese carmakers following the u.s. sales number we got overnight. toyota was the only major sales, whileeport

sales for a honda and nissan felt less than forecast it. honda up over 4%, rising the most since january. japanese peers stretch better than american peers. honda up also since its estimates for july. standby standby >> supply languages might delay it until october. u.s. auto sales are falling dramatically, that is a rolling drag on the economy. gm plunged 16% last month, that

is it's worse performance. ford reported its biggest decline. chrysler saw it second-worst for the year. nissan and honda both need -- projections but saw fewer sales. toyota posted a sales gain. over to washington, the fbi has a new director. they confirmed christopher wray in a bipartisan vote of 92--- 92-5. after donaldd it trump fired comey. he disputed trumps russia investigation as a witch hunt. he called special counsel robert mueller a straight shooter. rex tillerson has tried to ensure north korea that washington is not looking to make a regime change. ofing a six-month review international policy, he said the u.s. is no threat to kim jong-un, but north korea is a threat to others. tensions run high after the north latest test of an

intercontinental ballistic missile last week. accelerated seek an unification of the financial or an excuse to send our military and we are trying to convey to the north koreans we are not your enemy, we are not your threat. you are presenting an unacceptable threat to us. >> global news 24 hours a day powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. russia's economy minister says his country is improving growth trajectory will not be derailed by sanctions from the u.s.. tom covering the meeting in shanghai. tom, he brushed off these latest sanctions. what did he say? tom: he was playing up the splits that we saw between the , at least the.

u.s. congress. we heard from france and germany who were upset about this bill that was passed, almost unanimously with strong support in congress for additional sanctions on russia. the economy minister was pointing out that there were those divisions. take a listen. u.s. sanctions is not about pressure, it is about the fight between the u.s. business and european business. relations are becoming worse after the announcement that was made -- after it was approved by the senate and congress in the united states. that trying to achieve competition against european countries and limiting a loss. : he was pointing to those french/germany concerns, particularly the air companies might be affected by the bill.

also saying he is fairly optimistic on the growth aspect, which he said could rack up more than 2% gdp growth by the end of the year. bank's about the central target. they are forecasting growth of about 1.8% by the end of the year. he said the credit cycle is improving amongst russian businesses and saying, the russian economy remains open for foreign investment. i asked him about these deteriorating u.s./russia ties, he acknowledged those tensions were there, but said the russian economy and market remained open because there have been suggestions that some u.s. consumer companies could be hit by retalix tory measures. -- retaliatory measures. he emphasized that he sees as an improving environment in russia for foreign investors. know russia's economy is still largely dependent on oil. where does he see prices going

forward? tom: the russians have initiated this new fiscal rule, or fiscal policy. economythat means the is comfortable with prices anywhere above 40 u.s. dollars. of course we are above that at this stage. he sees the oil market as .tabilizing currently he thinks that stabilization will continue towards the end of the year. he is comfortable with where prices are at the moment. in terms of what that impact has on the ruble, he says it has normalized. he said it was a little high in april, pete he expects the ruble rate versus the u.s. dollar will continue and hold it stands into the end of the year. he said trade flows are improving up 30% for china, and increase with other brit partners for russia.

the geopolitical sanctions, whether crimea or north korea, and russians role there, those remain and those are the big risks, even as the global economy improves. looking ahead to the opec and not opec meeting. joining us live from shanghai. still ahead, rewriting the rules on housing. we talked to the man behind a startup that is getting top architects to design affordable and deliverable homes. an r.b.i. cut is seen as a done deal. we will look further down the rope with the chief india economist. this is bloomberg. ♪

yvonne: this is "daybreak asia."

betty: stay drop we have seen in inflation, the reserve bank in india is expected to cut its key rate on wednesday. here with the preview, it is not just about today, but it is about the rbi signal for the future. >> the change in inflation is getting to be much more marks, and something they cannot ignore it the rbi is seen cutting its key rate by 25 basis points to 6%. for indiane number inflation has dropped 1.5%, far below their target. there is a steady drop also in core cbi's across the board, which economists say this is a signal of weakening demand. jump into bloomberg with me.

you have the three main measures of core inflation. the white one is pretty standard. the blue line is the core cpi, food, fuel. the yellow one, very important in india, you take out food, fuel and gold and silver. they are all down to about three and three quarters percent from well over five and a half percent a couple of years ago. one thing people are talking about is the new goods and services tax, how that could be a drag on growth. the drop ingot india's purchasing managers index in the last 24 hours. it fell to 47.9, it was just over 50, still signaling expansion. all of these things add together. are they going to cut by 25 basis points, maybe drop their neutral stance and moved to an accommodating stance, which would be a signal that they will be ready to add another 25 basis

points. the think, no, we will get cut and sit back and wait and see what happens. betty: our next guest is the chief india of economist in singapore. kathleen will stick with us to talk about the rbi. -- they will actually paths after this rate cut -- possible rate cut? think the most likely scenario is that there will be a 25 basis point rate cut. this stance will stick to neutral. move forward looking in its view and move forward looking at installation -- inflation. forward-looking good, about 7%. in light of that we think they

will deliver a cut, but maintain , giving it flexibility to move if necessary. do you suspect we will see a little bit more ascension among the board of governors at the rbi? think that is quite likely, at least one of the the members ofly departure. on the other hand, we could see one of the most dovish members, he worked for a 50 basis point rate cut. we would not be surprised if it is a 40 position. we would expect some dissent in the meeting. i want to pullrt up just to underscore how real rates are rising in india as inflation falls. it takes a look at the key rate, the repurchase rate.

what you see is this steady move higher. how much does that enter into the thinking at the reserve bank of india? it is now pretty much dominated by the dove. think it has to be forward-looking. the inflation number of one and a half percent is fairly low, this is our third draft. the forward-looking view on inflation is that it will be at inflation has already started rising. the other concern for the reserve bank is that inflation expectations are adaptive. they should come down, but they are adaptive. this is important, but cannot be the sole driver of policy decisions. we know the governor loves to surprise, i guess the surprise would be if he does not signal further cuts. what will they say about growth. far you have a drop so below 50 in one month, doesn't

that even convince him that maybe it is time to do with the markets expect and signal a more accommodative expanse? sonal: there are two issues to your point. one is, the surprise would not be a signal. the surprise would be if he does nothing. they are saying it is transitory. they say we are front row -- front rolling. quite small.s also there is chance of r.b.i. staying on point. our baseline is that we -- they are going to ease. pmi getting into the contractions, let's not forget that we just implemented gsp. there is a lot of uncertainty for france. that is the main reason the pmi went into contractions zone. i do not think we should be talking about this, the future outlook index or the pmi was higher. >> it could be temporary

slowdown there. could it have a bit of a side effect? i am talking about banking reform and relieve the banks to clean up their books. we are looking for a reason to pause rbis. you think dealing with the bad loan issue could help india's lending a little more effectively? that is the more important question, the 25 basin -- basis point cut will be effective. investment, private the answer is, not really. the banking resolution needs to happen for us. the cleanup, raising capital by banks, that needs to happen. that has been the transmission process and it will get much faster. the logjam could be one of the reasons the rpmi will be a bit more cautious than what everyone

is expecting. >> there is a sense, since they moved to a neutral stance in february, if they moved into an economy stance it could be too quick of a transition. it might look negative for the rbi. how much do think that factored into the central banks thinking? sonal: very important. i think the idea would be to communicate more stability. even from their perspective, the last nine months have been anything but normal. you have demonetization and you have the gsp shot. how does someone adjust to the destruction that you are seeing? this is normal. for them to take a clear stance that inflation and growth will be here. the policies will happen, food inflation, not too many people have a good handle on that. there is too much uncertainty for them to accommodate -- for them to commit.

if they want to have a further looking view on inflation. we do not think we are in the most accommodative stance in light of that. >> when you think of what the central bank's job is, it is to grow the economy, keep prices stable, help the economy. what is the biggest challenge for the rbi right now? sonal: the immediate challenge is banking, it is not just the rbi. that is challenge number one. the second challenge is that while the economy is weak, there is coming a time of high inflation. it is taking time to come down. the second challenge is to bring down expectations and build the long time credibility. it is not about the next six aboutinflation, it is more medium-term people believing that inflation will

stay at 4%. that credibility, they need to build to the decisions and the communications that they make. >> before we go, i want to bring it to this. really what has been happening with the dollar, how much is the their balance sheets complicating the situation in india? sonal: india is facing the same challenges in terms of pressure on the currency. there is a substantial amount of effects. it is a good challenge, but a good problem to have. the unwinding is something that is playing on their mind. i would say, in terms of overall policies and higher rates, we are less -- compared to emerging markets. that is something that would play on their minds in terms of

what might pan out in the next 6-12 months. one of the reasons they stick to their stance is to accommodate it. economist.f india is feature on the bloomberg our interactive tv function. you will not only be able to watch us live, but see previous interviews, dive into any bloomberg functions we talk about. it is for bloomberg subscribers only on tv . this is bloomberg. ♪

>> a quick check with business headlines. first quarter process -- profits at mitsubishi sirs -- surge 52%. made up for a drop in lending profit. net income increased $2.6 million representing there to percent of its four-year goal. it was the last of japan's three

postingks to report, higher earnings, despite the doj's negative interest rate policy. sony's turnaround appears on track. revenue jumps 15%. demand for smartphone camera chips, the healthy music is this sales helpaystation profit reached $1.4 billion. it lifted its sales forecast by 3.8%. we are seeing shares up three quarters of 1%. >> hello kitty parent saw last quarter profits fall 37% to $12 million while sales fell 11% in april through june from a year ago. the company blamed lower revenue of licensed products in the u.s., as well as rising competition as well as characters in the media. structural change and retail in the industry and maintained its guidance. shares are down by the most in nine months.

to newhares surging highs. we look at its tricky relationship with china, and also why sales in hong kong are falling. what is behind that? this is bloomberg. debt isur credit card out of control

8:30 in singapore, a live look of sun. we are now half an hour away from trading. i am in hong kong. betty: you are watching "daybreak: asia." the value of treasury is owned by foreign and central banks. the fed top $3 trillion last week, that is its highest since december of 2015. fed data does not show which countries are buying, but treasury department numbers --icate china and the and and japan are among increasing owners. china give bond traders another reason to bet on a steeper u.s.

yield curve. economists think japan's consumer prices are set to peak as soon as this autumn. a bloomberg survey saw a forecast will turn inflation to crop out at 0.8% in the fourth quarter, or earlier because of flatlining energy prices. this is a contrast from the doj, which still maintains inflation will head towards that 2% target. music streaming company soundcloud is close to selling stakes to boot to -- boutique bank. a deal with rain could come this week, but we have yet to see details. soundcloud has attracted more than 175 million users with a combination of rough cuts from famous artists, as well as mixes by unknown djs. all of that has failed to generate much of any -- any cash from any of those users. germans unlikely to be automakers are the -- as they send up a challenge from teslas model three. they saw a 40% sales decline in

july while mercedes c class fell 22%. those models have a similar entry level price. three is the mass-market electric vehicle starting at $35,000. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. how thetime to see asian markets are shaping up. seems to be all about apple through the last couple of hours. are seeing power ahead of the i.t. space given what the tech giant said. we are seeing a 10th of a percent. the nikkei 225 gaining a third of a percent. we are seeing materials and asx 200 lowered by 2/10 of a percent. we are seeing this play out in

the asian session as we have commodities under pressure. iron falling nearly 1%, oil also on the back foot. i want to point out what is going on in the country space. we are seeing the kiwi ease some losses, but still at that 7430 handle after the surprise miss in the employment report. take a closer look at what is going on in tokyo. a little surprised to see that telco and i.t. stocks are leading gains. they are also being led higher thanks to auto stocks given. we had the likes of honda ad the most points after beating u.s. sales estimates, along with nissan and toyota. we have honda leading a gain in car space of about 4%. it did post a record sales in china as well. we are seeing it lift its .perating product it was reduced at no more.

i want to check at japan listed shares of apple supplied. they are on the advance after apple projected fourth-quarter revenue that topped estimates. we have the likes of japan aviation electronics gaining over 3%. overall we are seeing a nice boost from what apple had to say overnight. apple, appleg on shares reaching those new records an extended trade. including what ceos said encouraging resolve out of china. we followed apple. joining us now from san francisco. china encouraging there, but it was interesting to hear how hong kong was a disappointment. i think when he says encouraging, truth is relative. it has been a fairly atrocious year. they take a lot of pressure from local competitors. all that happened was that the

pace of the decline in china was tempered slightly. it is not as great as it has been in prior quarter. about a 10% decline. we interviewed him earlier and he told us that the actual excluding currency fx decline in mainland china. it was pretty much flat. which affects the market as a whole. is largelyin china flat. the biggest declines were coming in hong kong. there was no currency fx. -- effects. talks about fewer tourists going and buying apple products because of other currency effects and people going into hong kong. this point, no clear explanations for why. it is a bigger market, it is china, it is more important for overall china and apple. it was interesting to hear on the call. he said india looks like china was several years ago. tell us about that.

alex: that is something he has said a couple of times in recent courses. india has been investing repeatedly. they have a couple of big apparatus -- operations in maps and they are opening a factory making the iphone. behind of where we asked if he was seeing material impacts, he did not confirm about the case. there is still a long way to go in the indian market. some arems of pricing, talking about the new iphone that will be running roughly about $1000. can they say as a luxury phone in china and asia? you have the low end of the spectrum dominating the market. bex: one thing that will

interesting with the next-generation of iphones, they will retain the higher versions of the iphones. there will be three iphones next month. and the seven s plus iphone eight, whatever that might be called. they will be lightly lower-priced. the most expensive iphone right now, which is the seven plus, is $750.the options it is not that much to get to the $1000 mark. yvonne: that is true. just a couple more bucks. in the last week we learned about apple stripping out it's a vpn apps in china as well p or heard from tim cook saying it is abiding by the law in china now. is there any impact when it desk comes to the chinese consumer when it comes to changing decision about buying an apple? you: that is something might know better than me. tim could did say there is still

vpn apps available in china. they had to strip some out at the store to abide by local rules. there has been pushed back from chinese authorities on a number of different fronts. live video sharing, or the local they are unable to sell books or movies on itunes still. apple is treading very careful politics and does not want to be excluded from that market, as others have been. joining us live from san francisco. the company aiming to become the first billion-dollar start up with prefabricated luxury homes. we start to the ceo of revolution pre-crafted. he's you get a roundup of the stories you need to know to get your day going with this additions of "daybreak: asia." it is also available on mobile and bloomberg anywhere go at. you can customize it so you only get the news on the assets you

care about. this is bloomberg. ♪

>> this is "daybreak: asia." businessquick check of headlines. honda beat estimates of net income rising more than 18% to $1.8 billion. forecast is raised to $6.6 billion. analysts are looking -- looking from within 7 billion. honda sought record sales in china with deliveries jumping 19% in the first six months of the year. those in north america declined. yvonne: they are going had it can -- head-to-head again in europe. a are backing a stony is tax with cash and tech support. it is expended in two major cities. it is already backing grabs.

ubers main competitor in southeast asia and supports lyft in the u.s.. talks he had positive with charter communications and a deal could be close. his optimism comes after charter said it was not interested. sprint owner softbank is exploring between sprint and dish. an unidentified executive is saying letting go of sprint is not an option. yvonne: filipino developer wants to change the way we think about prefabricated housing. revolution pre-crafted, a company he hopes can deliver a major disruption to the global real estate market. usssover to haslinda joining in singapore. born in manila, but it wants to be a global player. if that is not enough, it wants

to be the unicorn in the philippines. good to have you with us. luxury does not go hand-in-hand. >> it is almost a oxymoron. is notpany prefabricated. it is playing with the word and wordg to reposition the prefabrication. itactually want to provide throughout the world. cashnda: you have get combined with architects. have people been receptive to the idea? robbie: tremendous. twore about to supply those 12,700 homes, mostly focused on what i call a business to business strategy. really land owners and developers throughout southeast asia and the world. we are going global.

which are the key markets you are going global? gamma -- philippines, indonesia, population of 350 million people . tremendous land bank. outside the cbd area. that is really the play and the strategy of this company. is key to making luxury accessible to the common man? dozenerage price is 300 dollars at one point, it is now lower. how did you get there? my reference was america. i thought the value proposition would be formidable, if i was 20% cheaper than the most desirable prefabricated house. being present here in asia, that is double or triple

the price, what a midmarket consumer would be able to afford. i wanted to actually bring it down in a significant manner. really trying to average 70,000 u.s. haslinda: are you already profitable? robbie: the first quarter after lunch. it is on the road to becoming a real state technology company. ofis really a convergence branding, which is what i have been doing. the traditional brick-and-mortar company. then re-technology, because we are trying to reconstruct the space to create the house and the homes. haslinda: who is invested in the company? isfar as i know, start a 500 one of the investors. who are you reaching out to? robbie: the company will be doing a series soon. haslinda: how much are you trying to raise? robbie: close to $20 million.

it will be one the ground, perhaps. haslinda: you are also the managing director at century properties. there has been a tie up with the trump's in the u.s. trump towers being built, or have been built. give the sense of the occupancy rate and how the project is going. not 100% solde out a year ago. that has been tremendously successful for the company. right now the company century properties is not just doing luxuries and affordable homes, which we just launched our first project earlier this year. brandda: has the trump launched century properties? robbie: it is a very powerful brand. extremely formidable real estate brand. especially with markets. many of the brands are mostly

hospitality. in terms of residential -- been quotedu have in a magazine article saying that the trumps and the inonio's have a farther plan mind that could be projects in the pipeline. could you shed some light on what some of these projects might be? robbie: that was prior to president trump becoming president. there are no plans because they will not be doing international deals. the trump organization will not be doing it. haslinda: is there a conflict of interest, we know your father was recently appointed as special envoy to the u.s.. some say that could be a conflict of interest. this is also intertwined in the relationship. what is your view on that? andie: the project is done it is practically sold out. my father is doing a special envoy for the country. there are rigid lines between

business and politics there. he is not the present ambassador to the americas. haslinda: properties have been focusing on higher tier markets, but it is also looking into the affordable space. why the change in focus? robbie: there is about 5.7 million people who need help, it is a backlog in the philippines. we want to conserve that market. that is a very sick market. we really want to provide rooms for all these people. haslinda: what are some of the projects in the pipeline? are you also going to fill unfilled markets in southeast asia? mostly aenturies of philippine company. revolution is obviously a global company. expand strong plans to selfies asia, china, india, but

very strategically. we have three phases and three out of the 196 countries that we have identified 18 countries to penetrate for the next three years. it will be a very strategic approach to executing this business model. we know that properties recently converted an issue shares to preferred shares. what is the plan? when were the shares be sold, and where will the money go to? ofbie: i have the department ir. go strategies for central properties, what would that be? cut building the affordable market it is a strong focus. we are also doing tourism, we will announce in about three

weeks. tourism, project in a5 project, about an hour and half away from the cbd area. it will be an amazing project. it will be the world's first livable aardvark. it will be curated by some of the world's best architects and designers, local and international. really trying to taper to retirees. haslinda: the founder of revolution. also century properties giving us insight on the shionogi for both companies. betty: thank you for that great interview. lots of great guests coming up on bloomberg today. we will talk care traffic and tourism with sri lankan airlines. do not miss goldman sachs ceo talking to bloomberg founder at 8:30omberg, that is

a.m. in new york, or 8:30 p.m. in hong kong. ole miss it. this is bloomberg. ♪

>> this is "daybreak: asia." betty: i am betty liu in new york. the are set to release second half of results with the profit forecast with the strong

commodity prices. paul, what are we expecting -- what is the market expecting? paul: great things for the first half between four and 4.2 billion, which is a huge jump when riosame period tinto posted underlining profit of 1.5 6 billion. the recent for this is commodity prices. rio is the world's second-biggest of iron all. ofcourse during the period this we saw it peaking out in the mid-90's. this will propel these numbers are it we do not get them off to the australian market is closed, and before london trading begins. other things we will watch for is with earnings. what is the dividend payout going to be? what is the debt reduction program looking like? and will there be any more asset sales? sold tohat period they

yang poll. >> we heard this morning saying that they are in parking -- in barking on a big capital raise. a half billion dollar raise. 2.3 5 billion in title men offer, also 150 million placement for strategic investors at $.10 per share. that is to purchase those assets for the agreed price of $2.9 billion. yang zhao is the parent company of yen coal -- yancoal. beenal shares have performing well in australia, but have been suspended for sometime. it will be interesting to see what happens when trading resumes. >> paul, thank you for joining us live in sydney. we will be speaking to rio tinto this wednesday. catch our talk at 8:20 this

evening in hong kong. 20 past 8:00 in the morning if you are watching from new york. stay tuned for that conversation. as paul mentioned, we are's expecting big things out of rio tinto. here, 8601, we have a remarkable run, 30% or more gain in the price since june. it seems like, when it comes to china efforts to cut overcapacity, that seems to be taken hold and benefiting capacity. a lot of where iron or goes depends on chinese property markets. we have seen real estate investment has shown signs of peaking. the otherarts to go way, it raises the question of how much further doesn't go? been incredible to see this rebound in prices. it does not have everybody convinced. there is still a lot of debate

about where that price is headed. the fact that we have not seen that investment in the property sector makes them wonder if there is too much froth in that price anyway and that it might fall back to earth. certainly something to watch. also for those in australia as well. >> that is almost it for us here on "daybreak: asia." what are we watching? >> apple. we will have a look at sony as well. what a turnaround this country has been having. two years ago we were looking at it as being another one of these japanese basket cases. >> we have chips, music, ps4. films are just doing fantastically. coming along and 45 minutes.

given his take on the sony earnings. probably a word on apple as well. bank of india, great decision. people suggesting it is a done deal. doesn't interest rate cut in an economy like india? >> it doesn't really pass on. rishaad: we will see later on after that. >> thank you. that is it for us here on daybreak asia. market coverage continues with rish and heidi. >> standby for "bloomberg markets" this is bloomberg. ♪

♪ 9:00 a.m. in hong kong and singapore. a look at our top stories. tackett leading the asia-pacific up. apple assuaging fears with a confident prediction for its new iphone in autumn. of united states, gm and ford hitting the brakes. i am haidi lun in sydney. back, up, the brics are inward