♪ betty: stocks drop, the dollar weakened. a grand jury handling the russian inquiry. yvonne: sterling headed to its biggest drop since junune. the bank of england cuts its u.k. growth forecast. betty: investors are eyeing friday's critical job numbers. for 180,000ion is new jobs in july. yvonne: the u.s. has sanctions on venezuela with oil restrictions. betty: "daybreak asia this is,"

live from bloomberg's u.s. and asian headquarters. i am betty lou. 7:00e: it is just after a.m. here in hong kong. i am yvonne man. u.s. jobs, it does not disappoint. seems like this russian investigation is heating up a bit. it makes you wonder. we saw jitters in the market. it makes you wonder how much of the trump trade is being priced in. any time we hear robert mueller it seems to sendwe saw jitters . shocks. betty: you get conflicting opinions. we will ask our guests what their opinions are. all of this bad news is priced into the market. on the other hand, it does not seem so when you see the sharp five point drop in the s&p when reports came out about robert mueller convening this grand jury. according to different investors

and analysts, split on how much the markets are pricing in this turmoil. yvonne: let's see how asia plays out. there is choppy -- choppiness ahead. some of these markets like the kospi and hang seng welland overbought territory. new zealand, flat on the nzx 50. same goes for the kiwi. we saw the dollar falling for all of g10. the boe decision we will flesh out in a bit. the qb holding steady at .7442. rba will have a statement on monetary policy. we hear more about the inflationary pressures. we are holding at .7956. oil flying to the lowest level this week. downturn on the asx 200 today.

japan, the day after the governments cabinet reshuffle, if you can collect that, we will look at that later. we see a risk off tone that is dampening dollar-yen. 109.97. equity futures showing a lower open in tokyo today. toyota set to report later today. in the wall street session we did see big moves when it comes to stocks and earnings. we ended the day skittish, in the red. betty: we did. let's all the boards up on how the markets closed. you can see skittishness reflected in the mixed, confusing session. the s&p closing down 2/10 of 1%. the dow barely budged. was off 3/10 of 1%. su keenan has more. su: it looks like an unchanged close. we did see the dow expand on that all-time high.

a sucker punch strategists called it, because of the grand jury line. when there is concern of an overbought market, you do not need much of an excuse to sell or take money off the table, which it looks like what is happened. let's go into the story stocks. what is not on the board is tesla. that was up in a big way off the strong earnings. we also had a rockwell up in a big way. activision -- rockwell i should point out makes avionics, a supplier for big airlines. analysts said it was not amazoned by boeing. verb in terms of a big player taking over little players. we also saw pioneer natural companys, and energy

down some seven and a half percent. -- some 7.5%. let's go into the bloomberg. 175, iflook at g #btv you are playing along at home. we saw the record rise in u.s. equities. we are putting it against the global stock market and it is nearly identical to the rest of the world. nothing special about what u.s. companies are doing to push the market higher. when we see it reflected across the world, it at concerns of fund managers who think they have to because just taking money off the table in case a market is setting up for a pullback. yvonne: to some of the after the bell earnings, gopro seeing a turnaround. su: setting up for a strong open on friday. a very strong earnings report, the stock was up 18% in extended hours. let's go into some of the headlines as we talk about this.

gopro beating on it easier to use camera. they beat cost cuts, keeping their promise. the second quarter results beat in the list expectations improved cost cuts are stemming the losses. software updates are reinvigorating demand for their cameras. second-quarter revenue jumped 34%. this 18% gain selloff throughout the extended trade up to a 12% gain. we are likely to see that sizable gain in the friday session, once the wall street trading begins. standing out in after hours, a kraftod company, craft -- . eps caiman net-- 98. there appears to be a theme in this latest quarter. thank you. yvonne: su keenan with a wrapup of earnings on wall street.

let's get first word news with ramy inocencio. >> japanese prime minister shinzo abe has presented his new oninet, pledging to focus jobs and the economy to shore up his approval rating. it is the 43 shuffle since abe took office in 2012. fumio kishida become head of policy and is thought to be planning a challenge for the premiership. india sees fallout from the sales tax. the business condition has deteriorated the most since the financial crisis as the levy upsets supply lines and distribution. the pmi gauge fell from 52.7 back in june. that is the steepest drop since of 2000 -- 2009. in south america, venezuela's controversial assembly meets of 2000 --friday with critics g president nicolas maduro has sidestepped democracy.

to body has been said rewrite the constitution and is more powerful than any other branch of government. the u.s. has imposed sanctions on maduro and is preparing other measures. >> i spoke to the president and vice president. you can expect any time maduro do something outrageous, the white house will respond with further sanctions. the chinese government pushing to reduce leverage and financial markets by putting pressure on the nation's most aggressive dealmakers. it has been dragging down mainland stocks. stocks and bonds are poised to rally because the worst is over. >> as far as market impacts are concerned, the most violent phase of this campaign style deleveraging is over.

i am sure chinese financial institutions will continue to be under pressure from the regulators. >> we will hear more from them on daybreak asia at 8:10 a.m. hong kong time. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. betty: the big story in the u.s. that hit the markets earlier was this story about special counsel robert mueller using a washington grand jury as he investigates alleged russian interference in the presidential election last year. they can issue subpoenas for documents and witnesses until prosecutors determine whether to bring criminal charges. nathan hager has been tracking these developments in washington. for those who do not know about the process, how significant is it that he wants

to put this grand jury in place? nathan: if nothing else, it shows the investigation the special counsel has been conducting for weeks is potentially growing in intensity. as you say, the special counsel grand jury does have the power to issue subpoenas, the call witnesses under oath, and potentially bring indictments if there is evidence of a crime that can be brought forward. this is ationed, grand jury forming in bc -- washington, d.c. this is on top of those investigating michael flynn's allegations in alexandria. grand jury gives them closer proximity to the panel we have been told has been working for weeks. betty: the fact he is putting this in place, does it usually lead to criminal charges?

is that where the markets took is so hard? nathan: is certainly can. we have seen grand jury's bring criminal charges when they are warranted. in this case, it is hard to say what exactly the grand jury is investigating. we do know special counsel mueller has broad authority to look into all sorts of aspects of potential russian election meddling and possible trump team ties to russia and potential collusion, but is the aspect of this investigation the president has called a witchhunt. we are told the grand jury is potentially looking into not only those things, but some of the president's financial dealings with russia, those of the types of things the president told new york times this week to read if they did investigate those things, it would cross a redline for him.

is interesting, we are hearing other things as well at the trump administration. the president was scheduled to make a speech targeting china when it came to trade and intellectual property practices. but it has been canceled, why? nathan: we heard that would be canceled. it was supposed to happen tomorrow and there was supposed to be a member -- a memorandum signed at the white house. it is unclear whether speech was canceled. we have not heard much about it. theooks as though after president holds this campaign-style rally that is getting underway now invest -- in west virginia, a state that one heavily for the president in our last election, starting tomorrow, he begins his first long vacation as president. he will spend two weeks at his namesake golf club in new jersey. he will play some golf

here during summer break. thank you for joining us live from d.c. venezuela's economy in the balance despite u.s. -- further u.s. sanctions. how outage is would hit the market. lined plenty of companies up to report second-quarter -- second-quarter earnings. this is bloomberg. ♪

yvonne: this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty liu here in new york. 3/4 have beaten estimates. next week will be dominated by retail sales from cbs on monday the jake -- the jcpenney on

friday. i want to bring in a strategist. peter, we are 80% through. it seems this is the saving grace of the market. the earnings momentum among companies. what i continue as we round up the last 20%? peter: so far it has been so good. we expect the earnings to continue to be positive as they have during the first month of the earnings report. some sectors we have been watching, whether i.t., financials, energy, are really carrying the s&p earnings higher. betty: they have been. do you expect that to continue? peter: we do. two of the key factors we are watching our consumer sentiment and investment activity. betty: i want to bring up a chart i have for you what -- which compares the s&p and the u.s. market cap, versus the rest of the world.

i amhas been interesting, a sure if you can see this chart, but it shows the s&p rising to near those records. the market cap of the u.s. market as a percent -- as a percentage of the world market cap has been steadily declining since the beginning of this year. despite everything we have seen an earnings, it raises the question about whether the u.s. is still the best place to be earning a return on your dollar. reasons forf the the market cap remaining at the level it is, is from the beginning of the year, we have seen a strong rally in international markets. whether we're talking about developed markets or emerging markets. as funds a flow into those markets, they move from cash on the sidelines into those markets. the market caps internationally begin to take pace and overtake

the u.s. yvonne: -- betty: it could be. but what about the idea of money flowing out, washington not being able to get many policies they promise done? they could not get health reform done. lots of guess we talked to said tax reform is very, very unlikely, no matter what steve mnuchin says. isn't that going to hit the market? peter: we saw some of that hit the market 6, 8 weeks ago, when we had uncertainties around the health care bill and whether tax reform or infrastructure bills could actually pastor congress. we have to work through this. on our end, if you're watching the fund flows, mutual fund flows, those of been declining. we are seeing investors move from the sidelines into the market.

while sentiment may be falling around politics, investors are still piling money into the markets. yvonne: i am so glad you mentioned international markets. it has been a decent earnings market in asia. marketicular, the japan come i want to show what we have been seeing. go to dayb on the bloomberg. we have seen surprises when it comes to basic materials. tech, telecommunications in particular. we see them beating estimates by 15% or more. hong kong, china, korea, those companies showing upgrades as well. what is the ultimate driver? is it mostly tech and financials? peter: when you take a step back and look beyond the sectors, look at the global economy. for the first time this year, not only are we seeing improvements in the u.s. economy, but in europe, japan,

some of the hard-hitting economies like brazil, russia. for the first time in many years, we see a synchronized -- recovery in the global economy. a spending and rebound in business investment. economies geared toward international trade, which japan is, industries within that economy are going to benefit. yvonne: what is the sentiment from your clients? about investing in u.s. and european companies that have exposure to asia? or is it investing in multinational companies in asia itself? peter: our client base is mostly retail. they have a home country by us. we have been pushing our clients to first consider those multinationals. those are blue-chip companies in the u.s. that have operations outside the u.s. we start recommending what seems familiar.

what seems familiar is europe and japan. those are two areas we have been focusing on. yvonne: how big of an impact will fx be? softnesseen continued in the dollar and weakness in the end. -- yen. peter: in terms of corporate earnings, you have sharp weakness in a country's currency. countries like japan will say earnings have declined because of the week currency. day, theseof the multinationals build and currency fluctuation into their business model. we believe corporate will manage currency fluctuations. from a historical perspective, over the long-term, movement in equity markets outpaced movements and currency markets.

we are making calls on equity markets, telling clients to keep an eye on the fx market. but earnings and fundamentals drive the returns. yvonne: thank you, joining us from wells fargo investment institute. hour, ast under half an look at the u.s. jobs numbers. betty: don't miss our exclusive interview with an asset management ceo. he will join us and our hong kong studio. nomura executive economist and former boj board member joins us exclusively. he has been strongly opposed to governor kuroda's radical stimulus. 10:00 p.m. if you're watching in new york. this is bloomberg. ♪

betty: this is "daybreak asia," i am betty liu in new york. i am yvonne man in hong kong. struggling commodity trader noble drop sharply. iceberg says noble is sinking in a perfect storm, going toward bankruptcy and liquidation. noble has been in decline since 2015 after losses and concern about debt, and accusations it inflated the value of contracts. they had a quarterly loss of $1.8 billion. betty: reports from tokyo says japan's credit line is worth $1 billion. they say they are leading funding with additional backing from nonfinancial companies. japan announces a turnaround plan next week which includes consolidation and early retirement for staff. last month they said they were accepting drastic reform. yvonne: softbank continues to company.to an online

they expand products for small businesses and offer insurance and payroll services. they say they are talking to banks from china, japan, india. age is considering an ipo in the next 12 months. we are counting down to the opened in japan and korea. in japan we are seeing equity futures in the red by about 60 points from what we saw last close in the nikkei 225 on thursday. after the government cabinet reshuffle we saw five of the members change their positions. women, new additions to the cabinet. we will see if that boosts shinzo abe's approval rating. dollar-yen seeing strength after these developments from d.c. with u.s. special counsel robert mueller paneling a grand jury.

still a little risk off. betty: the jobs report will be important for the markets tomorrow. what is interesting, it is a tight labor market. by one stat hear from the bloomberg, which said 19% of small businesses are planning to beef up their workforce. 19%, over 1/3 are having trouble finding workers for these positions. the labor market is tight in the u.s. if there is so much demand for workers, why aren't wages rising? there is so much demand, where is the wage growth? we have a lot of focus on the hourly earnings number in that jobs report. staying on the jobs report and the economy and other factors for the markets, u.s. sanctions on crude from venezuela may remain a strong possibility.

we will examine what that will mean for the equity markets and global oil market. this is bloomberg. ♪ we check our phones 85 times a day. so it only made sense to create a network that keeps up. introducing xfinity mobile. it combines america's largest, most reliable 4g lte with the most wifi hotspots nationwide. saving you money wherever you check your phone. yeah, even there. see how much you can save when you choose by the gig or unlimited. call, or go to xfinitymobile.com. xfinity mobile. it's a new kind of network designed to save you money. i enjoy the fresher things in life.o. 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: 7:30 a.m. friday.

away from asia's first major market open. betty: does not look welcoming at all. it is 7:30 p.m. friday, a beautiful summer day in new york. markets confused and muddled by the news from special counsel robert mueller's office late in the day. i am betty liu in new york. yvonne: i am yvonne man in hong kong. let's get to first word news. bloomberg sources say special counsel robert mueller is using a washington grand

jury as he investigates russian interference in the 2016 election. it helps prosecutors determine whether to bring criminal charges. president trump's own counsel says he was not aware of the grand jury. but the white house is prepared to cooperate. transcripts of the january phone call between president trump and the prime minister of australia confirming a sometimes tense discussion. president trump called a supposed refugee swap as a stupid and called the phone call the worst of his day. but he praised the offshore refugee detention center saying, you are worse than i am. -- accusing him of crating malware designed to hack banks. marcus hutchens was hailed a hero in may when he found a way to stop wannacry from spreading.

he is held on charges of computer misconduct related to the distribution of thechronos banking trojan. part of the fiji fishmarket destroyed by a fire. it broke out in the outer market. as shops closed for the evening -- it is popular among tourists. they come to buy ingredients for japan's finest sushi. no one was injured in the fire. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. betty: we have been looking for these numbers from crown resorts. they seem to have come out, in these last few minutes. fiscal year net income from crown resorts at 1.8 7 billion aussie dollars. cents. of 3 aussie

the normalized net income at $ million australian dollars. the estimates were for 367 million. these are numbers just coming out right now for crown resorts. investors watching very closely this case in china and the detention of their employees and jailing of their employees as they go after chinese consumers and gamblers. how that will affect this company in australia? yvonne: james packer returning to crown resorts board as a director. as chairman in august of 2015. we will continue to watch that an see how the stocks react to those numbers. looking ahead to dps earnings,

should be any minute out of singapore. we are counting down to major market opens in asia-pacific. adam haigh is joining us live from sydney. focusing on australia, we are winning the monetary policy statement coming from the rba after a tough week for the aussie dollar. it has been a very tough week. should behink we expecting too many fireworks from this online statement. note,l be interesting to the general expectation is for growth expectations to be kept in line. the inflation number, they may nudge that down, based on what we see in the wage price russia recently. this comes on the back of the statement from the rba during the week. thethe focus was around aussie dollar, it continues to see a drag on prices down here.

that will be interesting. the aussie catching a little bit of a bid. it has been a very tough week. that is taking maybe a little of the edge off. statement -- one interesting thing for bond investors, there is a great chart here. g #btv 1755. it shows you a difference and how bond expectations are so much more of a deteriorating or weaker outlook from the side of bond guys. certainly the bond market, a lot more downbeat on the economy and how far it is going to be until the rba can lift rates where -- they already had

a hike from the rba. betty: the big question in the u.s., when are we going to see the next correction in the stock market? it is a favorite question of international investors, not just those in the u.s. of the some, they have done interesting historical tracking of 5%, 10%, and 20% declines in the s&p 500 over the course of history. it has been 75 weeks since we had a 10% downward move in the s&p 500. that compares with the average of 33 weeks over the course of history. clearly, a long stretch. clients and money managers asking the question as to when the next correction will come.

and indeed, what will spark the key policy risk at the moment. it seems to be around the tightening of monetary policy and the winding back and reduction of the balance sheet, and whether or not that creates a rupture in's in the stock market. it looks like political turmoil comes back onto the radar. earnings dominated by and central banks more so come other report out from the wall street journal today shows us we cannot take our foot off the pedal in terms of focusing on washington. you can get disruptions and it can cause volatility pretty quickly. betty: more on the markets later on "daybreak asia," including an exclusive interview with martin gilbert. a.m. in hong8:30 kong. venezuela's public prosecutor wants to an all the assembly

meeting friday for the first time. president nicolas maduro is determined to install the legislative body. he is denying claims of vote rigging. our guest joins us from caracas. what could change over the weekend? what are people saying on the ground? thing, thet constituent assembly is meeting tomorrow. there is confrontation between the opposition as both supporters have called them not civil on the street. democracy.o defend [indiscernible]

the installation of the constituents, we are expecting more violence. we can see people on the streets trying to figure out what to do. many shoppers online, trying to get as many supplies as they can, because they are expecting [indiscernible] betty: in disarray there, so much chaos on the ground. by thee exacerbated more possibility of sanctions against , oil sanctions against venezuela by the u.s.. what kind of impact will the have if it does indeed happen? decides tohe u.s. have sanctions over oil [indiscernible]

venezuela is currently in a humanitarian crisis or people cannot find basic goods, medicine, at all. market, thatat will bring more crisis to venezuela. there will be more disruption on salaries. we saw that dramatic video this week of opposition leaders being dragged from their homes. it is interesting, i read this profile piece in the washington post that talks about the rise of nicolas maduro. it was quite fascinating. he did not graduate from high school, he was a former bus driver. how does a guy like that rise to the ranks and becomes part of what president trump calls the

exclusive club of dictators? of the things one that makes venezuela so special. came tosident chavez power, he spoke to poor people, so people felt they had support. [indiscernible] toporters felt they had comply. [indiscernible] regardless of his background and whether he was well educated or not. work.s how things they have more a passion for less for rational decisions.

the other half follows the opposition. it is a two-way situation. there is not any escape here. yvonne: thank you, joining us live from caracas as we look more into venezuela, how a possible oil boycott may move the energy markets. this is bloomberg. ♪

♪ ,"onne: this is "daybreak asia i am yvonne man in hong kong. betty: i am betty lou in new york. the most important data of this month. we are waiting for payroll numbers for july with expectations around 180,000 new jobs. that will influence the fed thinking about further rate hikes, depending on where it

comes in. kathleen hays is here with more. job numbers are very closely watched. what is the chatter right now? kathleen: let's remind people why it is so closely watched. it is the first number that covers the entire country, all industries. it is a broad sense of what is happening in the u.s. economy. what is happening now. that is why the fed is watching and waiting. i will show you a conundrum on g #btv 189. that is why the fed is watching and waiting. unemployment is falling, wages are not rising. unemployment is supposed to get down 4.4% to 4.3%. wages have peaked 2.5%. that is not what the fed wants to see. in terms of specific numbers, you said 180,000 numbers. the whisper is $185,000. --mployment is supposed us

fall to 4.3%. supposed to fall to 2.4%, year-over-year. fed officials speaking yesterday, one saying she thinks full employment is not 5%, but 4.75%. fed hawks say that should be boosting inflation. let's look at one more chart, g #btv 49. this gets to the bait. if it is below full employment, if it goes to 4.3%, does it have to push inflation around? inflation was up around 2%. shouldn't it go up? that is why they watch it so closely. yvonne: we have breaking news out of singapore, dps out with earnings. let's get the details from haslinda amin. it is just shy of estimates. >> falling below estimates.

second-quarter net income at 1.13 billion. singapore banks, they are falling short of expectations. allowances for credit coming in dollars.ingapore it is given out about 30 cents per share. dbs is the largest bank in singapore. before, it has been betting on a growing business. dbss growth -- remember, has just completed its acquisition of azx banking units. it is hoping it will expand

businesses in indonesia and buffer growthg to in the lion city. we talk about bad loans linked to the oil and gas industry. here is the risk from local lenders. we heard from the ocbc chief. they have said before that he sees that stabilizing. dbs falling short of expectations, net income 1.13 billion. the estimate was for 1.16 billion. what weet's get back to were talking about with kathleen, the jobs report. our next guest says he expects a solid report. presidentnker is the -- one of the top ranked forecasters, as well as a bloomberg view columnist. kathleen hays a stays with us. jason, you expect a solid

report. why? jason: if you look at where we are in terms of jobless claims and the numbers that came out today. we have seendices, a trend of solid job creation. it does appear that it discontinued last month. that is the good news, an economy chugging along at 2%. i want to look at what is not chugging along. let's go to g #btv 49. you can see what the fed is debating. unemployment is down to 4.4%, supposed to fall to 4.3%. inflation they want to see up to 2% is down 1.5%. low full employment and below the target. what is going on? jason: a couple things.

labor force participation rate has never recovered from where it was before the great recession started. that is part of it. we are just not seeing inflation. the fed has a green light to monitor monetary policy from the job side of the equation. inflation presents no urgency at this point. some of these changes in the year-over-year inflation rate is partially a base effect. you might see that number rises we get toward the end of the year. yvonne: what if it doesn't? if inflation continues to go the opposite way, could this alter the fed'syou might see that nums we get toward the end of the year. yvonne: thinking when it comes to unwinding the balance sheet? jason: for sure. the balanceg of sheet is something the fed will handle very gingerly anyway. the european central bank tried something like this between 2012 and 2014.

they dropped it from $3 trillion to $2 trillion. they risked going into a recession. now, we are well over $4 trillion. it more than doubled the balance sheet. that is something we need to be careful of. growing -- slowing of growth and dampening inflation, at a time when growth is not that great. we are seeing modest growth rates. and yet the job market still looks good. betty: a couple questions. risk? still see recession you are seeing that several quarters ago? jason: there was a risk. there are still some risk fear. especially with fiscal policy disappointment. we look at the attempt to reform health care. reform fails, it

could falter. next year will be highly dependent on what happens with tax reform. if we do not get the tax cuts that have been priced into the equity markets and revaluation trade -- the equity markets are not up because of a reflation trade. if those tax cuts do not come, the disappointment to the market will be significant. in reductionsult in business investment, growth, job creation. reason i ask, there was a great story about getting lots of client calls saying, when is the next downturn, the next correction in the market? when you think that could happen? jason: there are some risks for next year. our clients of greatly increased their expectations in april.

some expect the next recession to start next year. about 40% of them expect the recession to start next year. there is a lot of risk predicated on tax policy. the economy has been in a long expansionary cycle. it does not go on forever. kathleen: could the fed help push toward that level? let the proceeds runoff and push the economy, tilted in that direction? could it be a good mistake? here, especially with reductions in balance sheet, seeing what happened with of the ecb, if they do not manage that process slowly, they could definitely push the economy in that direction. especially if there is no fiscal

policy stimulus. we get a very big tax cut and more infrastructure spending, -- things we cannot afford that if we get those, you could get more inflation. and then the fed may need to counter those things. if none of those happen and the fed tightens the belt anyway, then yes, that could contribute to a slowing situation. yvonne: jason schenker, thank you. also, kathleen hays us in this conversation. get a round up of the stories you need to know in today's edition of daybreak. onscribers go to dayb your terminal. it is also available on your mobile. this is bloomberg. ♪

>> welcome back, you are

watching daybreak asia, the opening markets are just moments away. we will wrap things up quickly. betty: we are looking at a lower open to start off. interesting 24 hours that were punctuated. u.s. stocks managed to maintain their stocks ahead. flipping the board show you some stocks to watch here in asia, watch for reactions crowns results resorts. toyota will report their first-quarter numbers. it's making headlines. it's set to mold a potential hire a with mazda. check out suzuki as well. the managing officer also said it is still studying its

cooperation with toyota. it is ramping up on its electrical vehicle technology to get in on that action. that is a look at what we will watch when trading gets underway. just a moment from a nap. this is bloomberg. ♪

♪ >> the grand jury hurts wall street and the dollar, however it may be just a local story expecting to price today. investors turn to friday's critical payroll numbers, expectation for 180,000 new jobs in july. boost his hopes to ratings with a fourth reshuffled cabinet. he also raises a potential challenger. title planning attire mazda, a joint production plant in the united states. this is the second hour

of daybreak asia. i am yvonne man in hong kong where it is just after 8:00 a.m.. betty: it's just after it :00 p.m. in new york, i am betty lou. we have been following the earnings season here. just getting the number from crown results. the will likely dominate in trade in the local markets. here in the u.s., we will be focused on the jobs report. yvonne: that will be the key thing to watch. looking for some type of indication of a wage growth and the monthly number that gets , let's lookoned in at how the rest of asia will play out. betty: we did have u.s. stocks largely off the tremor and that is expected to be the case in asia. we had a number of local drivers

earnings like toyota on the radar and then we had japan cash earnings as well as retail sales. we have risk playing out the. that is trading near a one-month high, weighing on the nikkei 225, which is opening lower, 4/10 of a percent. check out the cost be gaining. -- the kospi gaining. rising,an won is now snapping a three-day drop here. elsewhere in the region we have aussie shares trading flat, but we have the aussie tracking higher ahead of the rba policy statement. but the aussie dollar is heading for its first weekly drop since the start of july. the kiwi dollar is gaining 1/10 of a percent. the euro failing onward and upward. it's heading for a fourth week of gains.

when it comes to the g10 currencies, the pound is looking steady after sliding from an 11th month high -- 11 month high. fed cup forecast for economic growth and wages. wage growth front and center around the globe. a left look at commodities, we games nearitching to crude, climbing above the $49 a barrel mark and it's just around $52 bail. betty: wages a big focus here. let's get first word news with paul allen. db has reported second-quarter earnings fell short of estimates. the net income was the equivalent of a $132 million. was 1.4 billion u.s. dollars. the momentum was often set by

margin trading income. the pressures on asset quality continuing, including risks from the oil and gas support sector. bloomberg sources say robert mueller is using a washington grand jury as he investigates alleged russian interference from the presidential election. the grand jury can issue subpoenas and documents from witnesses and health posters determine whether to bring terminal charges. president trump's own counsel says he was not aware of the jury, but the white house has committed to full cooperation. controversial constituent assembly meets for the first time on friday, with nicholas underwrote saying they have sidestepped democracy. rewritten the constitution and is more powerful than any other branch of government. they have imposed sanctions on venezuela and will prepare further measures. >> i talked to the vice president yesterday, we have been in constant contact. does somethingro

outrageous, they will respond with additional sanctions. >> the fbi has arrested the man credited with shutting down a attack,orldwide ransom credit malware that the tax banks. hewas hailed as a hero when fettered -- figure out a way to stop the crisis. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen, this is bloomberg. prime minister shinzo abe has praised the man who might one day take his job. this man will play a central role when he takes a senior party role in his cabinet shuffle. joining us from tokyo, isabel. we are anticipating this shuffle

yesterday. talk us through what happened. mentioned, heve is one of the most important factors in the shuffle. he has been taken out of the cabinet, which looks like a demotion, but in japan it is not. the a good position for election which we expect in september last year. whether abe runs again and whether people have a chance of beating him will depend on whether he can bolster support to this reshuffle and see what he does forward. -- couplef chairs other interesting implements is showing the degree of humility. he is willing to accept critics man as hisnet like a foreign minister who is a lot more liberal, perhaps friendly to his neighboring countries

than abe himself. he has also brought in a contemporary who plans to run against him in the presidential election next year. some interesting choices there. certainly the case, humility as you mentioned. shinzo abe mentioned he wants to bring back and focus on bread and butter issues. what does he mean by that? >> i think he very much want to make clear he will focus on the economy. that is what won him the election in the first place in 2012 and is what enabled him to win elections ever since. the fact this year he changed his focus, he started talking about a very rough path to change. that would have been part of what hurt his image. he said something interesting about the constitution last night. he said he thinks it should be looked at but he will not stick hard and fast to the schedule of having it done by 2020, which he

talked about before. he will bens that distracted by the issue and lose focus on the economy. focusing on the economy, a bit of a makeover in the cabinet. tothis enough for shinzo abe see a boost in those approval ratings? i think most analysts have been saying there will be a slight boost, a few days before we see polls on this. i do not think the cabinet will do the trick itself. if he goes forward and has successfully doing the things he wants to do like raising wages, he might be able to build his support further, but otherwise we will see a fight in the election in a years time. yvonne: we will have to look forward to that. reynolds, joining us from tokyo, thank you for that. murderers and markets with aberdeen asset management, the cofounder and ceo martin gilbert

joining us. up next, white one of china's top hedge funds are poised for a rally. this is bloomberg. ♪

♪ on betty liu in new york. yvonne: i'm the man in hong kong. the most violent phase of china's television campaign is over, eating domestic stocks and bonds market is for a rally. new crackdown on companies making overseas acquisitions has been blunt but effective. >> within the chinese markets have entered a new normal. more and more investors are starting to pay attention to bolster economic and corporate fundamentals. do you see more upside for

asia? current the -- >> currently, yes. we are more positive for the market at this current juncture than six months ago. conditionshe current to be sustainable and we should declinenterest rates to and that should help create ideal conditions. it will be good for both bond and equity markets. >> which sectors are presenting the best opportunities at the moment? >> discretionary's and we also like manufacturer company home developed technology that are globally advanced technologies. we also pay a lot of attention to the potential for uniforms.

benefitmpanies could from uniforms. >> there has been conversation about the deleveraging campaign being pursued by policymakers. how do you see that feeding into the markets? how effective is it being at the risking the financial sector? as marketit as far impact is concerned, the most violent phase of this campaign style deleveraging is over. chinese financial institutions will continue to be under pressure from the regulators to deliver. >> i'm talking about the regulatory environment in how you assess what we are seeing in terms of regulatory crackdown on the large conglomerates? how should we read what is going on there?

>> they're starting to pay ialention to financ systematic risk. they are paying attention to the --cerns expressed by many china has too much leverage. it keeps rising and is not sustainable. take a mores to direct approach. they prefer to take direct action. to cut down your debt by selling assets. blunt and not market friendly, but it is also effective. in the last two years, chinese arencial markets

characterized by financial innovation. have gonee changes we too far, too quick, now there will be backtracking in terms of going forward again. next year, we will see a much different regulatory environment as far as an agile markets and industries are concerned. the president wa ng. tom, quite interesting insight. what is the outlook for china's economy in the second half? what did he tell you? thinks the tailwinds have supported growth in the first half of the year will start to slow in the second half. he also think there is enough momentum that will feed through to the economy to see really good growth in the second half.

his comments are coming after we have is pni numbers that shows the economy is slow in the second half, but relatively robust. there is relative strength in there. gdpe not 6'9"'s percent test 6.9% gdp, but we are likely to see healthy growth and the second half and one would concur with that. it's worth reiterating what he was saying on the deleveraging campaign, saying most painful. r that isd fo over. thatsupports his thesis second-half growth will be good in china. he thinks there is going to be a dramatic shift, a genetic change in the regulatory environment in china. you'll see more of that after congress for the end of the year. a more coordinated regulated approach and more reregulation

to rein in these risks. as he said, this will be another factor that will eventually be supportive for growth in china. d.c. any signs we are getting closer to lifting curves? how tametic media said the yen has been and they're considering widening that trading band though it may be a symbolic move. some indication that we might be seeing easing in terms of capital controls and not to mention in terms of restrictions. did you see any of that in the premarket in china? -- property market in china? >> he doesn't think curves have been put in place. and he thinks though a stringent ones will be removed any times. it was a heavy-handed approach, but it was effective. becauseven longer-term the seems to be a major change

authorityitude of part, the role of real estate helping chinese economy in general in the long run. strategy to take in a to deemphasize the financial component or financial aspect of the real estate sector. andn a smaller third fourth, you are seeing these being drawn down. they had problems with numbers in the department. second, you are seeing title liquidity. that is putting the squeeze on weaker developers and he expects to see further consolidations in the property sector. he says it will benefit the big listed developers because this

shakeout is going to be in their favor. i think another key takeaway, he says don't count on the property sector to be a main driver of growth. he is right on that. it changes the narrative for many people looking at the chinese economy has many go and assume the real estate sector plays a consequential part in the economy. that is a fact, but going forward, he says it will play a less important role. the government wants to d emphasize -- deemphasize that. yvonne: did he have anything that was the key risk to him? positive. was particularly compared with the previous six months. inoutlined a selloff he saw 2015, 2016, big shots that shook out the market. is aid what we have seen

tick up in asia and that supports his bullish approach. he did say like many observers of the chinese economy, there is the debt question as the main risk and he would concur with many analysts say this needs to be addressed. but he points out he does not see there is an imminent financial crisis on the horizon. hinks the right steps are being taken on deregulation. on, you are was going to see a very different regulatory regime going forward in china and that will be a key positive. yvonne: great interview there. don't forget to check our interactive tv function at tv on your terminal. you will be able to watch us live and dive into some of the charts and securities and other functions we talk about, also looking at some of the

interviews we did. you can also become part of the conversation. send it me and that he messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

betty: the bank of england holds .ts key set of the economy will continue to do so. carney has taken a faster pace of rate hikes. say theommittee members benchmark should have been raised years ago. think i am with the minority who are voting for rising interest rates, not because i think this is the best time to raise interest rates. i think we should have done it two or three years ago and if we

gradually raise them over that. we would be in a better position now. i'm struggling to give you a coherent narrative, is what she said, mark carney said rates need to rise more than the markets currently apply. what is the narrative from today given those two slightly jarring factors? >> i think the explanation is that they missed opportunities 2016 one bit economies grew. we would be in a similar position to the u.s. or perhaps slightly higher in interest rates. it's a big challenge after the global financial crisis where he cut interest rates to dramatically low levels. responsibility to normalize relationships and i do not think

they have taken on that was volatility in the u.k.. in fact, they cut interest rates in 2016 which is probably a mistake. betty: it's always difficult to predict what would happen if you had done something else, walk us through what you think the economy might look like if the bank started to raise rates sooner. >> i do not think it would have hit her. we can see this in the united states. growth has not suffered as the fed has raised interest rates. earlywas a song in the 1980's, which was a hit, called it ain't what you do, it's how you do it. gradually raising interest rates is the right policy and delaying it raises the risks that you will rise more sharply in the future. the banks have ducked out of this for some time and they need to embrace the challenge of getting interest rates to normal

levels. that was andrew stanton, who will be talking more about global policies later in the show when we are joined by averaging -- aberdeen asset management. toshiba is going to be building a new flash memory chip. they will spend $1.8 billion on expanding their set up in western japan. toshiba owns the land and the building. softbank needs to invest, plumbing to $50 million into cabbage, and online lender. they will use the cast to expand its product for small businesses and may offer insurance and payroll services if there is an efficient -- sufficient demand. they will talk to japan and india. they are considering an ipo in the next 12 months.

toyota is interested in a tie up with nasdaq and will post a proposal to the board on friday. there take a 5% stake in the other, paving the way for a joint production plant in the u.s.. we expect an announcement later on whether toshiba will report earnings. they are trading the highest in six months. we are seeing shares of 5.3% in toyota. asia-pacific,g in we are seeing mixed pictures. gaining 2.25 with the dollar yen strength weighing on equities. rebounding after one of the worst days we saw on the benchmark. the asx 200 down 12 points. betty: we will stay exclusively on these markets with a man who has had he will live in the

u.k.. the equity asset management ceo interview is next. this is bloomberg. ♪ is this a phone?

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yvonne: i'm yvonne man in hong kong. betty: i'm betty liu in new york. you are watching daybreak asia. let's get to first word news with paul allen in sydney. japanese prime minister shinzo abe has presented his new cabinet pledging to focus on jobs and the economy to shore up his tattered approval ratings. lowest levelourth since he took office, the last one year ago. the former foreign minister becomes head of policy and is widely thought to be planning a challenge for the premiership.

fire has engulfed one of the tallest residential towers in the world for the second time in two years. tower fire friday morning. no injuries have been reported so far and firefighters are on the scene in the city's marina neighborhood. the tower is more than 80 re were also and the no casualties in 2015. january phone call between president trump and the prime minister of australia confirmed a tense situation. trump called a refugee swap deal stupid and describe the call as the worst of his day. the president race australia's offshore refugee detention system saying, you are worse than i am. part of tokyo's fishmarket has been destroyed by a fire that burned throughout the day. it broke out in the outer market.

it's possible among tourists in a market where markets are held and seafood traders come to light ingredients for japan's sushi. nobody was injured. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. allen, this is bloomberg. time to see have the asian markets are shaping up on this monday morning. let's get the latest from sophie kamaruddin. >> we are seeing bonds climb and the yen rise. 1.09.rading at it's down one third of a percent and we did get the japan cash earnings wage growth falling for the first time in working months on lower bonuses and overtime pay. is getting a third of a percent here. it will resume gains for a

fourth session in five. energy and material stocks are leading it higher but in tokyo, we are seeing resources and property leading sectors normal -- sectors lower. we have auto stock, suzuki reading gains here among the better performers. suzuki close at a record high after delivering a beat in the first quarter. mazda moved for a tie up. beer makers karen and sapporo are leading. cheeringollowing -- falling despite of strong outlook. yvonne: a quick gauge in the markets, as well. aberdeen asset management is due to be completed on august 14 and nity, and thee ceo martin gilbert is joining us now. welcome to hong kong, glad to have you here. i want to focus on what people

are talking about in the markets it hasn't fascinating. the beginning of the year was a stronger dollar. it was u.s. fiscal policy dropping the markets. change.as complete we have no fiscal policy in the u.s., weaker dollar, lower bond yield. how is your read on all of that? >> clearly people think trump is good for markets in the u.s.. rest of.s. booms, the the world grows. i do think it is good for em. yvonne: d.c. anything in the space? >> i'm not in em space. i'm more in development market bonds. that summer like india, local currency is good there. tohink em is ok, relative develop markets. is it because the holden

amex of em has changed so much now? it's more about commodities and iron ores. is that what will be driving it? >> a lot of it is about domestic growth, as well. you are investing in emerging markets to get the benefit of the domestic growth as well as the export led businesses. they have the best of both worlds. the emerging markets. i'm curious and i want to bring up a chart for our yours. only talk about the u.s. markets world,r the rest of the when you normalize it, it's interesting, right? the us equity markets seem indistinguishable as this chart says against the rest of the world. atused to be the idea that least you are in the u.s.

because it was the cleanest shirt in the laundry of the world and you wanted to be here with the rate differentials. is that now a thing of the past? is that turning into a thing of the past here? >> i think the global markets are catching up with the u.s. markets. the u.s. have had a great run over the last four or five years, relative to emerging markets. it's the rest catching up more than anything else. the rest of the world is not just emerging markets. they have had a torrid time over four years compared to the u.s.. the rest of the world is doing better. yvonne: does it also mean the u.s. is running in place, so to speak? especially given some of the mixed picture you are getting in the u.s. economy. >> the us economy is doing pretty well.

i think whenever i speak to people in wall street now, ahead of the big things and so on, they are very happy with the way the ministration is going. and more positive than i have ever seen them in the last 10 years. respect, i think it is still going ok. but the rest of the world is sort of catching up and benefiting from the. hat. yvonne: your views on china have always been quite bullish. possibly some more opportunities in the mainland for you. how do you view china at the moment even this branch off in deleveraging efforts in beijing? >> they are doing all the right things. i have just come from beijing and sentiment there is pretty good compared to print his visits there.

-- two previous visits there. to previous visits there. i'm positive on china and the economy in china. where we find it more difficult is to find the companies to invest in in china. that has always been the difficulty. yvonne: the latest crackdown from china we saw, reportedly asking anbang to sell some of their overseas assets. it is not just a pending deal, it is a closed, private deals. are seeing some more questions about the overall strength of the financial system in china? >> i think they may be tackling the issue before it becomes a problem. we have seen history in the last 20 years when countries started expanding aggressively abroad and spending huge amounts of broad. it can go wrong and i think it sure itwise to make

does not become a problem. betty: i want to get back to a point you made about clients and what they are saying and asking you. particularly when it comes to what is going on in washington with a restriction. we had a story a little while ago about eliot bernstein getting calls from a lot of their clients asking when is this next correction going to happen in the markets? nervous about what they are seeing in the headlines. you are hearing the opposite in your clients? >> know, when i said i was speaking about the head of the big banks and in wall street, more positive about the outlook than they have been for some time, i would say clients are nervous about markets, but that is good, because what you do not want them to be is wildly optimistic. fear and weit of are definitely seeing that. i think that is positive. betty: we have much more with

you and will continue our conversation and exclusive chat with the asset management ceo and cofounder. this is bloomberg. ♪

♪ this is daybreak asia, i am yvonne man in hong kong. betty: i'm betty liu. the bank of england holds steady. devoted hike rates to rein in rising inflation. what is the majority see that the centers did not? saying it is aby six-to vote. let's hike rates now. what carney said at the press the big drop in the british pound. he also sees that along with

this heightened brexit uncertainty taking a bite out of the u.k. economy. they have shaped its forecast for gdp and inflation over the next two years. here is what mark carney said about that. >> there is an element about brexit uncertainty which is affecting the weight bargains. potential material number of firms are less willing to give bigger pay rises given it is not as clear what their market asset is going to be. what you see is the squeeze on the u.k. consumer because inflation is headed up so sharply, which growth is stalling out. this is taking a bite out of consumption. also a big bite out of business investment. the monetary policy committee receives 23 business investments, 20% are not on this chart now. they wouldhe level

have seen before the referendum, before the >> -- before the brexit vote. you expect it to be a little bit above target by august 2018, so they are pricing in a rate hike by that time. mark carney said the economy goes faster, they could have more rate hiking. maybe that was a not to include that possibility. it is not seems a certain that will happen as this exit drama -- brexit drama drags on. who knows what will happen now? betty: the picture is looking cloudier after today's statements. kathleen, thank you so much. kathleen hays joining us. we have the aberdeen asset management ceo here. i'm curious to get your take here. what giving mark carney was alluding to, that brexit will be a lot more chaotic? it will be much more disorderly and that will have a bigger impact on the u.k. economy then

perhaps the original forecast. >> i totally agree with everything mark said. i think the issue is not inflection and i agree with him it is caused by the exchange rate. , interest rates will not go up until we see the conclusion of the brexit negotiations. everything is too uncertain and to stickt unwilling with the other five who voted with him to put interest rates up now. why put them up when there is so much uncertainty? betty: mark carney was also talking about business sentiment. in the minutes we have with you, i want to talk about your business. you are about to undergo a big change with a merger with standard life. how are you feeling right now? >> i feel very excited.

this gives us a great opportunity to compete with the big u.s. houses. we'll be the largest independent outside america. still edging into the top 10. the competition is fierce in asset management these days and this gives us a chance to compete on the global stage. yvonne: there are a lot of critics that say it it's not enough to challenge the rise of passive investing. it's not going to attract money out of the trends they will stay. what is your answer to all of that? >> it helps to compete, but i would say we are better positioned than a lot of the big houses that are suffering from the rise and rise of passive because emerging markets in global equities, there is more scope to outperform their because they are less efficient. where we are seeing the battle

is the u.s. camp at the moment. -- we areything but everything but u.s. large cap. this gives us a way to build an active business. we heard people that told the sca the rise of passive investing has led to the bigger role in hedge funds in determining asset prices. this may cause to virgins when it comes to values and long-term fundamentals. do you agree with that? >> the more money day goes into passes, the more opportunity there is to outperform and we see that in japan where we have a good active track record. that it so passive gives you great opportunity. passivehis right of investing does not seem to be going away anytime soon. you find you will have to join this game and join this game big?

it's not going away. away, butis not going it is a larger percentage of a bigger pool so people have to save more now to plan for retirement, etc.. good, smartry capability and rather than compete with the black rocks, the smartth them in lite area is going to be our strategy. joiningthank you for us. he will be heading to bloomberg radio any moment now. you can get around of you need to get your day going in daybreak. go to tv on your terminal, also available on your mobile. you can customize your settings so you only get the news and industries and assets that you care about. check it out. this is bloomberg. ♪

♪ yvonne: this is daybreak asia, i'm yvonne man in hong kong. betty: the two biggest cap reported higher first half morning -- first have earnings. we saw that income rise 7% of $2

billion but below estimates and to $1.2ofit climbed 14% billion. lee said he remains cautiously optimistic. sc reported a profit for the first time since the first quarter of 2016. $11.7aw a net income of million in the three months through june compared with a loss of over $7 million a year earlier. shares have fallen in the regular session earnings new and optimistic forecast saw them sort in foreign trade. itty: gopro surging after beat estimates, beating analysts expectations by 10%. losses narrowed thanks to cost cuts. gopro is focused on making its devices easier to use and rolled out an app feature called quick stories that uploads videos to smartphones. rose afterft shares

the food giant recorded strong second-half earnings despite a decline in tales. budget tightening has helped the company reach a profit of $.98 a share. sales held 1.7% during the. period. getting hungry. taylor reporting first-quarter earnings friday afternoon, wall street time. coming after the latest auto sales numbers. expectations are pretty low for these numbers. at the wall for a pretty. >> definitely low going into this. autot the numbers for sales and those work negative across the board except for toyota, which was one right green light. it said this is where we stand. looking at these numbers, sales are generally going to be a net income and operating profit. they are expected to miss the

$62 billion for sales. with all of this, hop on over to the left side of the screen. terminal, thisg is a bar chart form of what i have just told you. analysishe financial auction on your bloomberg terminal for tokyo shares -- toyota shares traded in tokyo. take a look at the orange here. these are the revenue lines by quarter. the green is the net income. we are looking at the transparent orange here. this will be up by just a little bit for year on year for the first order of 2016 to the first quarter of 2017, up by 2.47%. that is the only good news we are expecting here. look at the green here. that is expected to fall. you can see it here, but that is expected to fall by 60%. is in part due to

what is happening in the united states and in factories. toyota has been trying to automate and get component parts on the assembly line at once. a couple analysts have come out saying prospects are lackluster and profits are probably going to be bleak looking ahead. not good words when you are trying to pull your company up, but this is what we are expecting when earnings come out tomorrow. betty: this seems to be a divergence between operating profits. are theyrcumstances, going to improve over the next few years? ramy: that is what everybody is wondering. i want to show you one other terminal function. that, thisnot answer gives us a little bit of a look into what is going to be happening for operating profit in this past quarter in the

first quarter, but also possibly what might happen for the first -- full fiscal year. take a look at operating income. if he goes down, that will be seven quarters in a row. that will be a fall of 15% from the last quarter. take a look at this yellow line. this is the yen trading at 1.09, 1.110 right now. we look ahead to the rest of the year, the estimates that cannot earlier are for the yen at 1.05, so this could help when you repatriate its earnings to japan. that is something further ahead. first-quarter earnings will happen later. buckle up, i guess. yvonne: that is deftly the want to watch at the close. that is almost up for us on daybreak asia. you are on bloomberg markets. very excited about your interview in the 10:00 hour.

a former dissenter of the boj. >> will be talking to the former boj and asked what is it like, what were meetings like? we had not done much apart from the bond buying program. what was the debate? yvonne: they have consistently been dissenting majority for every meeting for quite some time. >> and what do they want and what would he do if he was in the shoes of the governor? i hope we don't get the brush off on that one. we have earnings to analyze securitiese have sei here to give you an idea. it's about the u.s. in large part here, the cycle and how it turns. yvonne: tilde is a standout among the pack here. -- toyota is a standout among

the pack here. >> absolutely and when you have those headwinds, you pay higher incentives and that could feed into your bottom line. looking to the biggest data event of the month, arguably, is the u.s. jobs report coming out later on today. at tailor-made ceo. su: talking about -- yvonne: talking about china. that is it for daybreak asia. i hope you have a great weekend. betty: indeed, quite busy and it will get busier tomorrow with the jobs report. standby with the bloomberg jobs report. this is bloomberg. ♪

♪ rishaad: 9:00 a.m. in hong kong. 9:00 p.m. on the eastern seaboard of the united states. i am rishaad salamat. russia inquiry turned another page, reports of a grand jury and donald trump says powerful forces are against him in washington. markets waiting for july payrolls, and the fallout from china's campaign against leverage, midsized tech companies say they are being squeezed, and it hurts. this is "bloomberg markets: asia." ♪