clearly shifting across the aisle. the five-star movement, the eurosceptic populist movement, is getting 33%. the centerleft coalition that i told you about just now, matteo renzi and his group, 23%. they are the parties in purple. you think the center-right coalition could hold something together, but they have not hit a threshold. flip to the next pie chart. that 37% is actually made up of everything on the right-hand side of your screen that is not yellow here. the five-star movement is one thing, but on a party basis, yvonne: welcome to "daybreak that is actually taking up the biggest slice in terms of parties here. asia", the president fires a nafta warning unless the u.s. the leaders of both parties are actually saying that we think we wins a deal he wants. can hold a coalition together, but now, they are both trying to betty: and i am betty lou where do the same. over the next few weeks, they york onst 6:00 a new are going to try to see who comes out on top. this monday, and investors think the tough talk is not or to yvonne: given this political uncertainty, we take a look at the euro, and it really has not translate into concrete action, moved much since that election. what does this imply? ramy: a lot of people are asking -- will this catalyze the and controlling china, critics

say the concentration of power of one person is dangerous. pullout of italy from the euro? of course, we are too early to ♪ say this. it is interesting to see in the terminals how this actually has played out in the run-up to these elections. hop into the bloomberg. g #btv 4850. yvonne: some breaking news and i want to show you the volatility of the euro cross. south korea, inflation data for february coming better than expected with a bounce back from we see brexit volatility up by the lows that we saw in january. 25 here. we see the french elections here last year in april. than 1.2%i is better do you see anything close resembling that here in terms of volatility for the euro? that economist were expecting, not really. whent less than a 10 here and your number at 1.2%, it is a pick up here from what we saw in election results were expected. the lows of january. we are seeing people thinking that this was already priced in. headed to my next bloomberg different factors g #btvl chart, the #-- weighing on inflation of late, and talking about the and unwinding and the seeing thean yuan is -- back of korea with rate hikes. you can see this in your purple dot right here.

finally, looking at commodities, we are watching how it 0225. a big if i guess, yvonne. impacts the bank of korea and we have more south korean data coming out -- the surplus narrowing. from 4.1 billion we saw in the prior month of january -- the culprit is the the italian equitiesthe italiant their lowest. the least expensive relative to the main indexes. the yellow line is the dax. services deficit rising to 4.4 9 the blue here, the stoxx 600 as we look ahead to the next few weeks, we are facing macron, mr. macron, and miss merkel thinking billion in january compared to about what are we to do with the 3.7 we saw in december. germany? trying to coalesce around a that could your bidding a lot of what we saw of the current stronger euro zone. we have to figure out with going to happen with italy. account surplus and it dramatic a have two weeks until parliament convenes. narrowing we are seeing in south korea. then, even our latest bloomberg aonne: we are still seeing news reporting, we are seeing the president could wait as much as three months until he sees nine inflation -- benign support in both houses of parliament for some kind of inflation. coalition, possibly a grand let's look at how things are coalition that we are seeing coming out of germany. yvonne: certainly still a lot of looking at the asian markets, and where are talking about trade tariff concerns.

moving parts. thank you for breaking it all down for us. seeing it filtered let's bring in bloomberg intelligence senior european equity strategist, tim. in asia.r face through in the asia-pacific, and new zealand up half of 1%, and qa holdingwhip and welcome back. we have seen three separate political dramas happened in the last few days. let's start with italy. this lack of they clear and trading in australia -- result. do we have to worry about exit retail sales and the rba has a italian? meeting today, and were not expecting surprises from the central bank, and no news for another hike for the rest of the tim: the answer we can, is no. italians are famous for drama, and that's great, but it's year, and the aussie, ahead of tim:interesting thinking about italy. on the one hand, it's only 10% the policy decision, stocks up of the earnings contribution of about half a percent. the euro stocks, the core of we see yields bumping up higher european earnings. -- looking the trend we saw on number two bank, it has been on treasuries overnight. the rise over the course of the last year or so. in japan we're expecting a jump quite markedly, relative to the according to futures of more rest of europe, with banks, than half a percent, especially the nikkei 225. at dollar-yen, we are seeing coming back to life after a decade of relative decline.

106.21 -- it is going to be a and an awful lot of italy is relief for some of the equity driven by what happens bulls out there. at thea closer look externally, not what necessarily happens internally. the key from our perspective equity cause, stocks rally with looking at how politics play out, banking regulations and the help of the hedge fund trade, and if those are just manager who called the threat of debated, and no action takes a trade war a political show. place, which is it possible, investors.surance to then we kind of have the rest of the wind blowing things along. one fund manager said that tinm, the split the news of this is there is no bad news -- we didn't see it looms large. what is the outlook for u.k. stocks from here? going to the chart, and what we tim: the u.k. is interesting for got is into the green. it had a bullish reversal end of the day, better than 1% gains in a whole set of different factors. each of the indexes. from our take, the u.k. is to a degree relatively stuck from an equity perspective. second day higher for the s&p on the one hand, the trades are 500, and it's go into the market snapshot because the dollar was at a lower multiple, which is stronger. when you see below, yet the fine. it's growth rate is also compared or curtailed index transportation average toected -- they were slower

to the rest of europe and the u.s. go into positive territory, lighting behind the major indices. big movers in the regards to steel and aluminum tariff story. huge weights in consumer olympic steel up as much staples, mining, and energy, along with the core of banks, that is a wholly different and non-cyclical -- it does not play into industrials orhuge weightsr discretionary like the rest of europe that plays with the recovery -- and to the degree as 9% in the session and reduced that the internal politics theme to have died down -- seem to gains, and major players in steel and aluminum -- register have died down a little bit, the losses when the talks of tariffs debate is ratcheting up between perhaps not really going through theresa and her group and those as trump has planned. in europe. i am sure that drama will continue to play. that certainly caused stocks to how that impacts business and back off, and let's go into the consumer confidence from here is bloomberg -- this chart is key. and we stay more on the sidelines. craighead, bloomberg titled domestic appeal. how do you trade a potential trade war? intelligence senior european the recommendation was small equity strategist. you can get a roundup of that story and many more that you caps, she saw the russell 2000 take up last week. need to know to get your day going in today's edition of daybreak. the economists and analysts said bloomberg subscribers can go to dayb on your terminal to read it's available in mobile. we are likely to see a reversal of some of the actions mentioned.

and we saw the russell he's off you can customize your settings so you only get news on the with talks that perhaps the russellr -- we saw the industries and assets you care about. this is bloomberg. ♪ ease off. the billionaire and former adviser to the president did appear to sell off about 30 million in his shares. he remains a large shareholder a day before the tariffs were announced and that may get more scrutiny as we go down the road. let's talk about commodities now, we saw oil gained the most in two weeks and both taking cues from this we have seen volatility in gold rise the highest in years, which is late to the party while the rest of the party is going to gyrations in recent weeks. fromlso have a prediction one top analyst that gold could year.o 1400 this

, albeit the analyst saying the path for gold will be bumpy. oil higher, and will go into that later, and silver rising. it could be four rate hikes this year -- and we look at the two factors pressuring the trade -- pushing oil higher. one is the anticipation that this week's data report will be very bullish. there has been recent reports -- a private report that supplies and storage tanks in a key hub called cushing, oklahoma, have been draining. a lot has to do with the strengthening economy, and there is a view that the iea could betty: this is "daybreak asia." inicate that oil output are i am betty lou in new york. yvonne: i am yvonne man in hong kong. the u.s. is continuing higher and could be a counter measure. for a look in rish right now, the price seeming to at what to look at. go higher, take a quick look at rishaad: tim will be here. the one-month chart for oil.

he is a strategist. down from the 64 we were a week ago, but again, well above the asia-pacific stocks $50 mark that was the big story absorb yields going up to 3.25% last year. su, thank you. or higher? put all of that to him we see the ruble can party with speaker right rejecting the president trump plant tariffs, as he get the direction we are saying we are worried about the going. the fiddling have a call that if they were not up to 4.5% -- we consequences of a trade war and did see a 25% decline in equity are urging the white house to not advance with this plan. prices. going to be asking about that even though it is an unrealistic scenario. who knows what can happen? meanwhile, president trump is downplaying a potential of a trade war. i don't think you are going our guest joins us come a china renaissance ceo. to have a trade war. they have been investing a lot of startups, and seeing where we betty: let's go now to are in the tech space in this washington and bring in joe part of the world. the npc, what does it hold for us? s. steve will be talking to the foundation about that. certainly now we see a break indeed, much more after from him and the president -- yesterday's opening sell those coming through -- salvos. why now, why trade? policy onwhole trade

betty: it's going to be a lot happening, rish, coming up next tariffs has raised alarms among to a let's take a quick look at republicans in congress. how markets are trading in asia. that was an unusual break with the president by paul ryan -- spawning to the rally we are seeing in the u.s. the nikkei up a solid 2%. rather direct. the house ways and up 1.2%, taking means committee chairman is circulating a letter and getting other republicans to sign on urging trump this skill back on so tariffs and not do it just a hit a bit higher. the four hand over to rish and broad-based, warning it will harm the u.s. economy. bloomberg markets -- before we congress has been seating more and more authority to the white house on trade and tariffs. had over to rish and bloomberg markets, taking a look at the markets matt tobin. yvonne: taking a look at china there is a limited amount they is do right now, and there ,nd hong kong, we are seeing this extraordinary public when it comes to singapore, pressure campaign being waged by futures down about 1% right now. taiex seeing a bit of a rebound the republicans, primarily. a lot of democrats actually support the president on this and favor increasing tariffs on here. of course, this is about some of the trade tensions easing. steel and aluminum. there is still some room to president trump saying he does not think there will be a trade wiggle and we are waiting to war yet. he's not backing down on his find out where that will go. tariffs plans just yet.

betty: the worry was with peter there is still a lot of, you know, push and pull when it navarro sank the difference comes to paul ryan and between exceptions and country republicans saying "hey, mr. president, i hope you can exclusions, and they did not see reconsider when it comes to any country exclusions. yvonne: is the president likely these tariffs on steel and aluminum." to budge on that front? a lot to watch on the trade joe: he has room to do so, yes front. asia, much more exposed, given a lot of these markets are export said several things in the past has independent as well. saying making blanket statements that is that for us here on "daybreak asia." betty: stand by for "bloomberg that will occur in the backpedal markets." -- his own advisors don't seem to know who exactly which way he this is bloomberg. ♪ is leaning. that theysuggestions may carve out some industries, but not necessarily countries. how expensive that would week when trump is supposed to announce more details of what his plan entails. how is affecting negotiations on after? nafta? joe: there was another round of

negotiations -- and it caught negotiators by surprise. it has created a dour mood during negotiations with mexico, and the u.s. trade representative today said. that things were not going well. . maybe they will go for bilateral agreements. been atingly, china has target of trump's trade fire. canada and mexico in this case will be among those most affected. betty: joe, thank you so much with the latest on the tariff situation. let's get to first world news with jessica summers. >> we start with the bloomberg school. oop.

trump adviser as he will ignore been askeda and has to appear before a grand jury on friday but doesn't intend to spend hours raking through emails. the subpoena demands his communications with several former trump aides including one-time strategist, steve bannon. meanwhile, china's national people's congress continues in beijing with delegates awaiting a briefing from the commission focusing to discuss the legalization of gambling on the island and also examines the debt woes which is headquartered there. hong kong indexes tumbled the most since the weekend. and former italian prime down,er is stepping saying the centerleft party will not join any government led by the anti-immigrant lead are the populist five-star movement.

he said both parties represent an anti-european is an that will ♪ not support. the asia-pacific faking and reports from japan second a million are up on optimism jungle and has agreed to meet that president trump's tariffs with the south korean president, will not be happening. attention is still there and the news comes after south korean envoy's hold talks. however, all ryan calling on the president to abandon the plan. it is the first that he will president trump says, he will meet delegations since sold not back down. since he took power in 2011 though flight washington to brief the trump administration. in hong kong, am rishaad salamat . global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. >> and in sydney, i am haidi this is bloomberg. lun. also come, consolidating control coming up next, we will in china. a consult -- consultation of power in one person hear about a global slowdown that is underway, and potential banks are not paying attention. betty: and later this hour, independent analyst joining us to discuss the move to extend

power will impact foreign investment in china. this is bloomberg. ♪

betty: this is "daybreak asia". yvonne: a quick check of the latest business headlines. billionng a $15 purchase of xl group, and the ofl will act as the provider casualty cover it up rumors rise, following hurricanes and wildfires in the u.s.. shareholders were less than enthusiastic, and the paris-based firm fell the price being on the upper end of expectations. given theadcom majority voice, so qualcomm has a mandate to negotiate a 117

andion dollars hostile bid opposition from qualcomm management, and shareholder meeting scare the road for tuesday has been delayed -- scheduled for tuesday has been delayed. yvonne: amazon targeting cashless customers -- where told that there are talks with jpmorgan, capital one, and other banks tocrating online mirror deals reached i pay paul by aligning with banks and credit card companies rather than fighting them and shares closed up more than 1.5%. betty: and don't forget our interactive tv function, tv , go into the bloomberg functions we talked about and be part of the conversation by sending us instant messages during the show, what questions you might have for guest. this is for bloomberg subscribers only. this is bloomberg. ♪

yvonne: this is daybreak asia and i'm yvonne man in hong kong. hedge fund manager ray dalio says president trump's tariffs will have little impact and he wrote that what i believe is happening now is a political show than a real threat. let's turn to ecr i co-founder -- you agree with ray dalio that we are overplaying the trade war threat? >> i think for the time being i would agree for two reasons, one as we are not in a recessionary window of vulnerability. my mom is from the show me state of missouri, and this could be a bite.re bark than

if you look at the details proposed, it doesn't account for much trade. it is one or 2% of trade, and when you look at the u.s., there is some trade issues. nonpetroleum goods deficit blew out to its worst reading ever in trump's first year. he is feeling the pressure in some sense, but when you look at what is driving that, it is china and mexico and doesn't have a lot to do with steel and aluminum. betty: so we may be focused on the wrong thing? >> that is fine. betty: it would not be out of the realm of possibility. >> i do think it is a huge deal at the moment. betty: i want to pull up a chart you say the measurements you are looking at, we are in for a global slowdown, ais

that right? >> we have been saying since the fall that we're looking at the global secret nice slow down after the upturned last year. that is no longer a forecast, it is a fact, the chart shows gdp growth and it is quarterly annualized gdp growth for the largest economies. the u.s. at the top, eurozone in the middle, and japan in the middle. you see to have begun to roll over, and gdp is looking in the rearview mirror and it has already happened. betty: if that is the case, i artt to pull up another ch thatrepresented by the blue lin, they continue that yields are going to back up your in the treasure markets. they seem to think the longer-term market needs more

inflation at the economy will continue to expand. treasury market is tricky because of supply and demand issues which is going on, which may argue for higher rates. i think to the extent there is expectation of continued secret night growth in 2018 -- the market will be disappointed. i am seeing wall street research -- this global growth slowdown. i think the bond market has a lot of information in it. go away from the treasury market and go into the corporate bond market and look at double corporate which is investment grade corporate's and jock and thespread -- and junk, and spread is widening for many months now, totally consistent with the slowdown call. i think there is evidence, and

it is growing, that the call that we made is the correct call. what will be interesting is if the central banks and policy -- makers are fullbore on tightening mode. we got to see jay powell last week and was a bit more hawkish than expected. -- and he came out said maybe we will end. yvonne: it is interesting though, you mentioned that this will eventually bite into what we are seeing in profits growth and this is going to be a downturn, which is likely. it seems we are far from that, us. a chart that shows the u has the trump tax cuts changed your thesis? thehe tax cuts flow to bottom line in many cases for corporate profits.

i think that is what we are seeing towards the end of the chart, however, the global growth slowdown is still going to bite. i think what you are looking at may be as good as it gets in terms of profits growth. a is very hard when you are larger company to dodge economic slowing. here, i showed you, the united states and eurozone in japan are all slowing. recently with the national party congress and said were going to try to get explict 5% growth in 2018. that is going to be hard because -- thear their growth strong as economy since 2010, which is behind this already. we are starting to see the deceleration phase, so i think it is about as good as it gets. even some of the coincident data

starting to fray. lofty theven how profit forecast are, what is the timeline for all of this to reverse? >> i think it is starting to show up in what i like to call, the wall street talking consensus now, it is starting to show up there and you see a number of active notes coming out saying, there is something going on. some of the pmi's are starting to fray, which is something a lot of trade looks at. ton when you are starting look at gdp data, it is decelerating. it is not a forecast, it is hard data. it is a hard nobody noticed. we had the olympics in korea, big focus in korea, and there is gdp contracted for the first

time since the global financial crisis. largestly driven by the plunge in exports out of korea in 33 years. they are the canary in the gold mine. they are not the largest economy but they are a big exporter and plugged in to global growth. peoplen that happens, don't see it because there is a lot of groupthink that synchronized growth is going to continue. theralized backs think upturn we had last year, which is real and really good, is some sort of structural shift that we left the low growth. i don't think that is actually happening. yvonne: certainly a warning for all of us. co-founder joining us. asia, up on daybreak promises he cannot keep when it comes to the economy.

this is bloomberg. ♪

yvonne: 7:30 a.m. tuesday on this cloudy morning in hong kong right now. it seems like it's the humidity trickling in. the states.pring 30 minutes away from asia's first major market open. freezing and they wonder storm coming in new york in a few days. 6:30 p.m. monday evening in new york. markets closed brighter, right? another day of our rally in the markets. i'm betty liu in new york. yvonne: and i am you fun in hong kong. you are watching "daybreak asia ." first word news with jessica summers. jessica: president trump says he will not back down on tariffs

despite paul ryan urging him to drop the idea. brian said tariffs on steel and aluminum and the possible failure of the nafta talks could hurt the u.s. economy. he said he was extremely worried about the consequences of the trade war and he calls on the white house not to jeopardize recent gains. the president is refusing to budge. many years, for nafta has been a disaster. we are renegotiating nafta as i said i would, and if we do not make a deal, i will terminate after. -- terminate have to. if we do make a deal, that would one of the points that will be negotiated. tariffs on stilts for canada and mexico. patrick is the latest to criticize president trump's proposed tariffs. he said the plan would hit consumers, hurt the u.s. economy, and failed to create the president's claimed new jobs.

he called on the president to change his mind. , wen the steel and aluminum have got to organize. manufacturers, they have optimized the supply chain. customers would have to pay. jessica: one of the bank of japan nominees says policymakers have the necessary tools to withdraw from record easing without disrupting the market. told his confirmation hearing the boj can adjust bond yields in the stable manner with the time comes. hirohito kuroda says he will be discussing an exit after april of next year. a private survey says the indian services sector contracting for the first time in three months. it adds pressure on the modi government to boost growth as the r.b.i. terms hawkish. the nikkei india services pmi slid from 51.7 in january, the

businessnce august as conditions deteriorated due to poor command. demand. powered by more than 2700 journalists and analysts in more than 120 countries, i am jessica summers. this is bloomberg. yvonne: we counting down to the market open in tokyo. sophie kamaruddin. street,ce back on wall we look set to follow those gains, but we are not completely out of the woods. sophie: markets are gauging just how serious trump is when pushing ahead with these tariffs he has atopposition home. american corporate coming out in opposition as well. callinginum industry is on trump to hold back on the 10% tariffs on aluminum exports. taking a look at the terminal, i want to show you this chart. you have alumina makers in japan very much under pressure.

this of course, given the concerns they face regarding these tariffs, and goldman stocks selling japanese to accelerate sharply. with the yen gaining ground, that is unlikely to spur large buying according to them. when it comes to the equity action, we are expecting gains at the open. perhaps gains as much as 2% as we kick off in tokyo. front, south korea's trade minister set to visit the u.s. this week to plead for exemptions for korean steel ahead of the finance minister meeting in one of cyrus -- in beunos aires. you have the korean cpi data to consider as well as the north korea and south korea talks. be inflationwill numbers as well. turn to australia, and rba meeting happening. any rate hikese

this year as well. what are we looking at when it comes to things down under? --hie: the rate hike retail sales on hand. the forecast is for a pickup in january of it .4% month on month gains. that compares to the slowdown when the retail sales fell by .5%. let's take a look at the aussie, below the 78 handle. for the aussie to move below the fundamentals 75 level, commodity prices will need to fall. he says interest-rate differentials have had little effect on currencies, but the aussie, the line in white on this chart, has nonetheless weekend this year as yields dropped below the u.s.'s for the first time since 2001. a last look quickly at how the trading is faring in sydney. aussie stocks rising almost 1%. materials by energy,

also on the rise. we have aussie shares snapping a four-day drop, giving us a taste of what tuesday may look like for asian markets, yvonne. yvonne: i'm going to take it -- betty: i'm going to take it from here. sophie kamaruddin, thank you so much. two of china's national people of congress anticipate briefings on trade and possibly permitting casinos. china stepped up its drive against financial risks on the budget deficit since 2012 and set a growth target of around 6.5% this year. tom mackenzie joining us now from beijing with more on day to bring. -- on day to bring. -- on day two. monetaryuggest tighter conditions in 2018? kathleen: let's liquidity -- tom: let's liquidity in the system seems to be the target. achieve six point 5% gdp by the end of 2018, but

they are reducing their target to 2.6%. the first time they have done that since 2012. the credit they pumped into the system, they want to remain stable, in line with what we saw in 2017. we have the pboc. there monetary policy will remain neutral through the year. that is their take. the economists like those in eurasia group saying they are affecting to see tighter monetary conditions. they say the eurasia group makes sense given the policy priorities to tackle poverty, pollution, and curb risk in the system. it may have an impact on the exporters to china, the countries like australia, for example. >> how are policymakers planning to balance the shanking deficit and deleveraging all at the same time? when you heardm: from pantheon macro economics. they said it was an impossible challenge. policy makers plan to cut taxes

by 126 billion u.s. dollars. they are reducing the deficit and the deleveraging campaign. they say it's not going to happenthey say it's not going to happen and there will have to be some on the fiscal side. the deficit target may well not be met according to pantheon, at least. yvonne: we have heard these growth targets and seen the work before. what else should we be watching for today? tom: coming up today, we will bring you all of the details when they come. we will go to the reform commission, hoping to get some lines from them potentially on the trade tensions. you have been talking about the u.s. and china. they oversee any tariffs china on chinese agricultural products. we are going to be going to a briefing by the delegates in heinen island with the conglomerate having to sell down

their assets for the debt crisis. we will be talking about the fate of that company and potentially, as you punched on, plans we have heard to potentially allow gambling on the island, which can have significant implications for the casinos in macau. yvonne: i certainly here rumblings early this year as well. in confirmation. you, tom mackenzie, our china correspondent, joining us from beijing. let's bring in co-author of red capitalism, one of the big watchers we have talked to. fraser, you're talking about this. overpromising and under delivering when it comes to some of these targets? it may look a lot for the are than it was, but this is a highly stage-managed performance, and changing the constitution, there are serious things going on.

it is clearly important news that can come out of it. yvonne: it is largely a rubberstamp. >> of course. if you give it a lot of media attention, it gives it the credibility that it simply does not deserve. the decisions have largely been made. the leverage is in xi jinping's hands. this is completely a rubberstamp. yvonne: this is coming at a time when we see the president consolidating his power. is he capable of bringing in this modern authoritarianism in china at all? fraser: i would like to think you cannot. it is a worrying development it is. this is coming at a time that there are a lot of political risks in china. xi jinping is getting the power into his hands. are no checks and balances. the problem in china when it comes to leadership transition, when it comes to corruption issues, the problem is -- the problem is there's so few checks and balances in the system. there are no signs that that

accountability is improving. if anything, it's going backwards. yvonne: there is the public persona that what everyday chinese see the president as, of father, the center confucianism. is there a difference in the public persona and what he is behind closed doors, which has been kept secret? fraser: 1.2 billion people. obviously, there is a lot of different opinions and a lot of people who like xi jinping and sense he has been a strong leader clamping down on corruption. the chinese can be the most a historic people in the planet. the worry is that whether he will get a third term is not entirely clear. what you're putting in place is a system which allows -- which can allow for abuse of power and

strict authoritarian rules. you think that is not an encouraging sign were -- a signor a sign of -- or of a modern economy. yvonne: some might say why shouldn't xi jinping be rewarded for doing something that other leaders have not, which is really, you know, be serious about the anticorruption drive? the deleveraging that has happened under his leadership? why should they not reward that? what do you say to that? fraser: that is frankly nonsense. you can certainly make an argument that a one-party state -- and china has had a single party state which gives stability. ruleeed single-leadership first ability? china hasrs, et stable power. this does not encourage stable transition of power. clamping down on corruption, great.

corruption clearly is a bad thing. running out of control. rewarding xi jinping -- who is rewarding him? it's not as if this is a popular outcry. outcry. this is coming from xi jinping himself. he is awarding himself these powers. betty: and the reality, removing these term limits, a timeline that is indefinite at this point. in reality, how long do you think xi is going to stay in this position? how long are we talking about? fraser: we know on the term they all get to terms effectively, so 10 years, which seems a healthy period of time to be running a country. they allyou get a third one, is five years. a fourth 1, 20 years. one, 20 years. let's remember, this is china. making history --

predictions is worse than anywhere else. the volatility of the economy, there is also at the things that could go wrong in the next five to 10 years. china basically has stopped biding its time and is becoming more assertive, whether it is in asia or the globe. the potential for risks and problems is much higher. the book. wish xi jinping. there are a lot of things out there. >> or do you make of this increase in spending? are we looking at some type of military arms race with the u.s.? numbers are very large. i think it is in asia. you look around asia, and china, amazingly, as much as its growth has developed world in asia, china has no friends in asia. north korea, literally. they have a friendship with pakistan. all of their closest neighbors are highly distrustful of them. you see a lot of southeast asia and stay two are clearly very uncomfortable with china. you look at the militarization. yvonne: you have trade tensions

which could spark allies to get closer to beijing. fraser: there is a whole host of ways this can play out. but often china is some sort of benevolent power. as much as it would like to play that. when the south koreans take steps to protect themselves against north korea, china make no friend in the region. people are worried because it's intentions are unclear. yvonne: fraser howie, independent analyst, and co-author of red capitalism. a key investor vote on the hostile takeover bid from qualcomm. the latest roadblock, next. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. i am but he do in new

york. qualcomm has delayed a shareholder vote. even i am but he so, broadcom 'n course to win all six seats it is seeking on qualcomm sport. alex barinka joining us from san francisco. alex, what is happening with this bid, exactly? like it is going ahead, and at this moment, it seems like broadcom has the upper hand. past 36s changed in the hours. by sunday night u.s. time, it seems a qualcomm was going to have their annual meeting in san diego tomorrow. i was preparing to go down there. they ordered a delay so they could look into this bid. that set off some more harsh words between the two companies. qualcomm,lammed filing a decision to secretly file a request, saying it was a theerate act to entrench board of directors. qualcomm fired back, saying that has no basis in the truth. as of now, our sources tell

bloomberg reporters that the six looks to win seats it was going for with a bit more than half the votes in. , what isust remind us the pursuit for broadcom? alex: broadcom had tried to acquire qualcomm. $30 billion. when qualcomm decided to pay more for its acquisition of another company, and xt, broadcom -- nxt, they said no. the deal is sitting in at a $117 billion bid. it is still a hostile situation. qualcomm and broadcom have no agreement to move forward on this. 100 $17 billion undervalues the company. broadcom is kind of jockeying right now to get this majority because that would give them a mandate to actually negotiate with qualcomm. willinge not been to do that in good faith.

yvonne: you mentioned about some of these initial vote counts. what does that tell you about the shareholders' thinking on this hostile takeover? alex: it seems like folks are leaning to broadcom and maybe this bid sees more value. people can change their vote before the actual meeting, whose date has yet to be set. that was our bloomberg tech reporter. coming up next, los angeles. the 15th annual montgomery summit, next. this is bloomberg. ♪

betty: we were just talking about qualcomm and broadcom. let's stay on technology. executives gathering in l.a. for the largest company conference

in the u.s., the 15th annual summary summit. ai, blockchain technology, empowering female norse, key themes joining us. joining us, jamie montgomery. thank you so much for joining us. no shortage of tech news on the agenda. what would you say are the biggest questions being tackle that this technology summit? >> thank you, first of all, for having me back on bloomberg. it's great to be back here. one of the key issues is how all of the large, incumbent industrial companies utilize the emerging technologies, including blockchain, ai, machine learning, in their enterprises, and how they deploy it. it's a key opportunity for the start of companies and a key issue for the larger companies about how they continue to be competitive. the underlying issue is that technology is cutting across every industry globally, and 25%

of the dow is tech oriented, and every industry is being disrupted by these technologies. yvonne: it absolutely is. it almost seems like these days, you cannot talk technology without talking blockchain and bitcoin. was that a catalyst for this year's summit? know, reallyyou concerned about bitcoin and some of the shady characters are in that business. the underlying technology of blockchain is very disruptive manifested in authentication and health care, financial services, logistics trails, so i think it's one of those things that is super hyped early on. i think it's important to understand what is real and is what we, and that is computing, quantumquantum

storage, quantum communications, and i think a lot of the talk has been on competitive of the china and ai. i think the conversation will happen in the area of quantum, and that will be very important over the next five to 10 years. yvonne: i'm glad you brought up china. i want to move away from the summit and talk more about arch capital. what are you looking at in terms of deploying your capital? when investments are you seeing? what about china in particular amid the national people's congress this week? jamie: i don't really have a good call on china. we have two large investments in india. we are very focused on southern asia and southeast asia. malaysia, indonesia, india. the next billion people are coming online. two of our key things have been india andetization of payments. people coming in

from india and the opportunities that creates. question, one billion new users is one theme. theme isd industry. this is where industrial companies and technologies really had the industrial world. most companies have been impacted by technology. the industrial world, manufacturing world, really has legs. is therd area application of ai, machine learning, into enterprise software. those are the big three, and we are excited about all three of them now. yvonne: we only have a couple of minutes left. i was going to ask you, of the theyoth that is softbank, of course have invested in a lot of payment systems in india as well. how big of a threat is that when it comes to not just stealing

these promising deals, but boosting valuations? jamie: i think we always invest before softbank. they are putting a lot of capital in this system to grow businesses. the $100 billion was the start. probably $300 billion. again, the tech industry is so large. it can absorb that amount of money. they are strategic investments for them. them.come softbank comes along after us. plenty more liquidity in the market which ultimately is a good thing. jamie, thank you for the time. jamie montgomery, cofounder of march capital, and founder of the summit in los angeles. coming up, what to expect from china's national people's congress with the managing director of orient capital research. why andrew collier is not

optimistic about economic and financial reforms. got your market got your marke, coming up in tokyo and seoul as well. keep it here. this is bloomberg. ♪ mom you called?

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>> 8:00 a.m. in hong kong. bloomberg'sfrom asian headquarters. i am yvonne man. welcome to "daybreak asia." asia-pacific markets its brexit rally on walle street. rally on wall street. investors are optimistic the trump tariffs will not happen. attention is still there. he won't back down. in newi am betty liu york, where it is after 7:00 p.m. on monday. xi jinping consolidated control in china. critics say the concentration of total power in just one person is dangerous. is it time to talk? reports from north korea suggests kim jong-un is ready to

meet his counterpart from the south. yvonne: what a rebound we did see on wall street overnight. kind of makes you wonder what trade tariff concerns are we seeing right now? it actually makes sense. perhaps the markets overreacted early last week. this is g #btv 640. these trump tariffs may be send a little more bark than bite. the actual enforce we are seeing are small. did it actually weren't a knockoff -- warrant a knocking off of $5 billion market cap we saw since wednesday? some are saying that not the case.

we have so many of these export-dependent countries. we have not -- we may not have seen the worst yet. betty:we all this talk of sparkg a bilateral trade war with china may much ado about nothing as well. we have seen exports of steel and aluminum products fall. vietnam, south korea, other asian countries, much more important in that respect, so we might just be, as you say, perhaps exaggerating the devastating impact of these tariffs. yvonne: we certainly are ue in asia.he c the latest with sophie kamaruddin. sophie: we are taking that cue from wall street and running with it. japanese stocks rising over 1%. the yen is holding above 106 after the biggest drop in nearly two weeks, as we have opposition to a trump's plan at home. paul ryan throwing a wrench into the works. yen traders probably also in wait and see mode ahead of theaa

drop. rising 1.1%. the aussie sticking your two-month low before we get retail sales. the balance of payments data and the rba decision, not expected to rock the boat. after korean inflation edged came inand the surplus at the lowest, the kospi up over 1% while the korean won is 6.80ming gains at 107 against the dollar. a quick check on the risk radar after benchmark treasuries rose to 2.88% overnight. we are keeping an eye on that given the speculation about whether or not trump will push through with his terror plan. the dollar is holding up -- terrace plan. riff plan. the dollar is holding up. the iea said it may raise its

forecast if oil stays above $60 a barrel. before i go, a quick look at kobe steel, gaining 2% after a five-day drop. the stock on the radar as the company is set to announce the resignation of its ceo and chairman, kawasaki, along with other executives, including the head of the aluminum and copper division. scandalven the quality that has involved kobe steel. >> let's get to the first word news with jessica summers. jessica. thanks, betty. one of the bank of japan nominees says policymakers have the necessary tools to eventually withdraw from record using. he taught his confirmation hearing the boj can adjust on yields in a stable manner when the time comes for normalization. governor haruhiko kuroda says he will probably begin discussing an exit after april next year.

former italian prime minister matteo renzi quit as leader of the democratic party after its poor showing in sunday's election. he said the centerleft party will not join any government led by the anti-immigrant league where populist five-star movement. those partiesh of represent and anti-european is some he would not support. meanwhile, reports from japan's a kim jong-un has agreed to meet moon jae-in. tilde quotes and north korea news agency, caseinate, for the story, and the news comes after south korean envoys -- it was the first time he met a delegation from seoul since he took power in 2011. it will fly to washington later this week to brief the trump administration. bloomberg with a scoop. sam says he will ignore a subpoena from special counsel robert mueller as part of the rus russian investigation.

not intend to spend hours raking three emails. the subpoena demands communications for several former trump aids, including steve bannon. global news, 24 hours a day, powered by more than 2700 in morests and analysts than 120 countries. i am jessica summers. this is bloomberg. president trump says he will not retreat from his , despite pauls ryan saying the economy could suffer. let's discuss the implications of our chief is a economic correspondent, enda curran. i want to bring in -- we heard from paul ryan. he says trump really should not be going ahead with the tariffs, and republicans seem to be behind him right now. what are the terms the party at the moment? enda: what the republicans like paul ryan are warning mr. trigge

war. they pushed through the tax reform policy and think that is going to rejuvenate and rev up growth. a risk to derailing the u.s. economy. they want to decent a great -- disintegrate into the wider economy. some of which are made. his own constituency. ofre is certainly some kind division emerging. whether or not they can talk him down or not remains to be seen, i guess. yvonne: the question is whether these are negotiating tactics. people are saying this is a ploy to get what they want when it comes to nafta as well. enda: we had light hazard are overnight saying that if mexico cuts a deal with us in nafta, we will happy to take him out of the steel and and you million -- and aluminum tariffs. one, you deal with

have the rest of the world clamoring for a similar deal. yvonne: is this all just a political sideshow, seeing these kind of threat. are going to retaliate, and in the end, it will not put much harmonic to? -- much harm on each other? >> trump is sitting around watching fox news all day. he has no strategy. he came up with his pitbulls, lighthizer among them. at the end of the day, there's too many corporate interests weighing against this, too important to trump's base, particularly in beijing, because they don't want to trade war with china. you are saying it's negotiating tactics. light-may have thought that. but trump is basically whistling in the wind. i don't think this is going anywhere. >> any possible ramifications for the talks around

nafta? andrew: it's true this escalates potential renegotiation of nafta with other nations. the problem is they are stirring the pot so much in terms of escalating the war of words. it is like using a blunt instrument with a scalpel will work. andrew, following on that, if this is sort of just, you know, blood thing or just a lot of rhetoric here coming out from the white house, why do you think it's being taken so seriously by the market? tradem to have seen dominating the talks over the last two days. just it has rattled not the market, but it has rattled

u.s. allies. the reaction out of asia. japan having to remind the u.s. they are not a threat to national security of south korea. australia said they are disappointed. when you look at the potential losers on tariffs and lu many a man steel, -- aluminum and steel, mr. trump is trying to shrink the trade deficit with china and these tariffs seem to be heard in closer u.s. allies rather than china. there is a fear that people are uncertain as to where it will go next. have the investigation coming up against china, and if the u.s. starts spreading tariffs into a wider basket of goods, that would be a source of concern for the world economy. yvonne: is the concern here that this is a foreshadowing of things to come? that the next set for the u.s. will be on these intellectual property rights and maybe technology, semiconductors?

>> those are serious issues. the cloud computing issue that nobody talks about in china is serious. they are forcing microsoft, apple, oracle, and other companies, to make their service available to the chinese leadership. that is a serious issue which affects national security, ip protection, or bunch of stuff. m&ahave got the qualcomm deal going on. those are serious issues that have to be dealt with by the congress and anything else. however, that is not the same as peons toer these trump's ego, which is what aluminum and steel are doing. enda: if the u.s. was to go , the ip probe, is that potentially the start of something more significant? the start of a classic trade war per se? andrew: i think they will end up back in city us, because it is a black box that trump can

maneuver any way he wants. the chinese would understand that because that black box is the way they operate. national security is an issue a lot of people are behind. that will drift back into the quarter. enda: there are legitimate grounds for the u.s. on the ip side of things. andrew: very much so. the chinese have been stealing microsoft word for 20 years. obviously, that's an issue. before we go, on a final note here on tariffs, what if we actually see an order signed? of talkhere is a lot about minimizing the impact or even just that we might not see anything happen at all. what if something is signed? is there going to be any big impact on the markets? do you think it is being priced in now? andrew: there is going to be a huge backlash among our partners. mexico, canada, and europe. and they are going to go right start start filing

oppositional or cases. it could tie up a lot of this for quite some time. >> ok, all right. thank you so much. bloomberg chief asian economics correspondent, and the karen -- enda curren. and you call your -- is going will stayew -- andrew with us. he will meet his counterpart from the south of the first time. yvonne: up next, trade talk and gambling are expected to be hot topics at china's national people's congress. we will be in beijing. this is bloomberg. ♪

betty: this is "daybreak asia." i am betty liu in new york. yvonne: i am yvonne man in hong kong.

anticipated briefings on trade and possibly on permitting casinos on the island. it cut its budget deficit for the first time since 20 tell than such a growth target of around 6.5% this year. that's gets a tom mackenzie, joining us from beijing right now. plenty on cap here for a day two as well. tom: absolutely. the focus really yesterday was getting these targets and tying together a picture that seems to suggest tighter monetary and financial conditions with the gdp target and deficit target being reduced to 2.6% from 3% last year with the money supply being kept on hold. and of course, a big focus still on the deleveraging campaign. monetary policy remains neutral and prudent. we are looking ahead to what we are hoping to hear from the big state planning session.

more details from the delegates about whether they plan to allow casinos to operate on theirmore details from islana challenge that might pose to the casinos in macau. yvonne: it certainly is going to be something to watch out for a come on macau casinos. are we just saved you assume we are expecting tighter monetary conditions in china this year? yes, that seems to be the economiststhe that have been looking at this. ntc,e first day of the given this decision to reduce the deficit target and the deleveraging campaign given we don't want to see a big uptick in credit pumped into the we are wee hours --

looking to soften growth at the edges. this not seem to be many indications that they have a great stomach for significantly reduced -- they say it does make sense to start to soften the platform for the underpinning of the growth picture as china looks to tackle these issues. whether that is curbing the pollution, reducing poverty, and of course, better managing risks. it could have implications for some of china's trading partners. arehould note that they going to cut taxes significantly. they plan to cut taxes by $126 billion corporate and private individuals. how they do that whilst continuing to deleverage -- deliver is something that economists are looking at.

betty: what else should investors be watching for today in day to bring of thewo of the? tom: we will be looking at this big state planning organization. we may get comments from them or whether or not -- on whether or not they will be pushing back on a we have been talking about. we oversee the tariff regime in china and also, we are looking to get more details from the delegation about the potential plans to open up that island to casinos and whether or not they are putting additional measures and to safeguard hna group, but conglomerate facing this debt crisis. are hoping to get interesting comments from the delegates later this afternoon. we will bring you the details, of course, throughout the day. shortage of topics. tom mackenzie in beijing, our china correspondent who is reporting on the nbc. let's turn it back to andrew

collier, the managing director at orient capital research. andrew, i thought tom laid out very well the issues and headlines we just had. he made a great point here on the economic, i guess, puzzle, that is taking place right now in china. everything from trying to deliver tax cuts to also saying they want to bring their budget deficit down and the lever -- delever the- and economy. andrew: there is no deleveraging campaign. that is hogwash. if you look at the credit, they are above gdp. that is a bunch of stuff is not being factored in. the work report two days ago mentioned that land sales are up 40% in 2017 to 5 trillion renminbi. that is a huge amount of cash flowing into the economy. there was a 37% increase in flows of funds for local governments. most of what's come on assuming, are coming in from private

individuals. you have cash coming in from other sources, which beijing loves, because it is not that. at the end of the day, they are getting money and have been doing that for the last 10 years and shifting a lot of the fiscal burden onto the backs of consumers, who are getting returns for their money at least. title see that there is a deleveraging campaign going on. betty: all of this is just a sham, andrew? andrew: the interest rates are higher. thing forbeneficial the state banks. they have net interest margins. of theueeze risk out financial systems in the smaller banks plan lots of games with their balance sheet. the de-risking i think is a reasonable campaign. the regulators have done a pretty good job on that. yvonne: if you look at something with what they have done with anbang, some of the billy

used to get off the quick with the connections for business and politics, at least now, there is a regard to that and concern over that that they need it to stop? andrew: in some ways, these are good moves. they have gotten way out of line in terms of spending money. the irony is that there is decentralization of the economy on the lower level. thethey have gotten way out of y says that lower governments can now basically manage the economic affairs on the around. 's strengthening control from the top down, but letting the bottom-up have more capitalism. nobody is talking about this because he cannot control the fiscal conditions of local governments. i call it capitalism from below. yvonne: does that usually lead to some type of democracy, economically? andrew: democracy and economics are not the same thing. i mean, if you have a local ,overnment that creates a fund then that is a form of sort of

state run capitalism, but the companies are independently owned. you can call it capitalism. i would not call a little bit about the opening up of the economy. completely opening up when it comes to manufacturing, expanding access to other industries as well. we heard these places before. restricting certain access points, certainrestricting certs points, certain technologies, everything is the same. andrew: the state to go over one of its largest insurance companies, anbang. that is an indication there is not a lot of freedom. the banks have been struggling for a decade to get in there, and they are not having much success. they are pushing a whole semiconductor, state run semiconductor plan, so i think it is the opposite. yvonne: there is a lot that they are trying to overpromise. you know,rying to --

they are not deleveraging the economy, but it seems they are trying to. they want to cut taxes as well. at some point, something has to give. he can't really do all of those things and achieve around 6.5%. what is going to be the thing that has to give, the fiscal side of the monetary side? andrew: the task at its very interesting because a lot of taxes are collected locally. if beijing says we are cutting taxes, they may turn to the province and say we are cutting taxes. good luck getting revenue. we don't know how that will be split yet. i just found out from my asearch analyst that there is province where there is a $100 million fault with p2p lending was one group that nobody has reported on this. there could be a lot of default occurring that we just do not know about. a lot of people getting pushed out of work. i know this is true for the aluminum industry because i was up there in the fall, and they have fairly significant layoffs. there is a lot of pain being

felt in the system that we are not seeing. collier, orient capital research, managing director, joining us here in hong kong. you can always find an in-depth analysis of the big newsmakers on bloomberg radio. tune into "daybreak asia." you can download the app, bloomberg radio plus, or access it via bloombergradio.com. this is bloomberg. ♪

>> a quick check on the latest business flash headlines. close to buying a stake in two offshore wind projects in france that will cost billions of dollars to develop. sources say the treehouse is in exclusive discussions about the deal. construction is planned for next year with generation to begin in 2021. yvonne: paul singer is said to be building a stake in telecom italia.

the take on the carrier's largest shareholder. elliott management may nominate directors to the board and push for other changes at the country. elliott is said to be concerned about telecom italia pot share slump since he took control in 2016. this is bloomberg. ♪ mom, dad, can we talk?

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>> it is 11:30 a.m. in sydney, where markets have been open for 90 minutes. the asx 200 zynga bounce back of 1.2% on the benchmark. we have been following the cues from wall street after we saw trade tear concerns. i am yvonne man in hong kong. betty: i am betty lou in new york. you're watching "daybreak asia." breaking news right now. yvonne, on the australian economy. theng a look first at current account deficit, which continues to widen in australia to 14 billion aussie dollars, as we have seen exports continue to fall year. net exports of gdp continue to fall down about 0.5.

the expectation were reading is slightly better than the reading of. looking at retail sales numbers, continuing to disappoint. aspect inionary retail sales despite the volatility of this number, just .1%. significantly undershooting what economists had estimated for a gain of 0.4% in the month of january. it is a slight recovery from what we saw in the prior month. again, these numbers have been pretty volatile over the last several. yvonne: at least in positive territory now. 0.1% really is not going to do much for the rba in terms of signs of confidence in the economy, but taking a look at the aussie reaction, not seeing a whole lot. just seeing a slight upside of .1%. betty. betty: consumer spending, trade, exports -- that we saw with numbers -- all-important

to the rba. governor philip lowe wrapping up a policy meeting today. here with more. kathleen, the rba is expected to keep their record low rates unchanged. kathleen: even though they have a pretty healthy view for growth this year. when you look at those retail sales, they have terrible retail sales at christmas time. they started the year on kind of a week footing. .here has been concern high household debt, which is not growing quickly, and signs that spending will pick up, because jobs have been stronger. not too much help on that front. the rba is expected in the poly stating -- policy statement to hold to the forecast over the next couple of years. growth will top 3%. why want they do the one rate hike sometime? why don't they signal a 2018 hike?

because inflation is still so weak. take a look at #btv 3871. like a lot of central banks around the world, the red line is the 2% inflation target. the white line for example, australia cpi year-over-year, they have fallen below 2% and have not risen above. what has happened is the following. i want to try to move onto another chart now. let's see if it's going to come up. #3464. it shows how the rate hike bets have really fallen. i really want to go over here because you can see that there will be a rate hike by sometime out here. at 2018.oking here, we are looking at 2019. the view of this happening has continued to fall because the white line is looking for more hikes, and after we got back january cpi report, where it did not burst back above 2%, you can see going out that white getting less strong down

here. maybe stronger out here. you can see the expectations now for the hike this year looking even -- the changes here. people are doubting we are going to see this now. one bright note is we did get some consumer confidence. this is conditions have been rising as well in terms of businesses, so that seems to be picking up. yvonne: what about the threat of a trade war? will that influence the rba's decision in any way? kathleen: it is something that has been talked about a lot in the past, and in fact, i think people are figuring you could see signs of that in the policy statement. they will say something about a trade war being one more factor that makes them think they can go gradually and cautiously on .ates that will be seen probably as somewhat dovish, yvonne.

i want to share something that phil lowe said in the middle. that will be of february last month. he was saying the open markets, foreign capital, keyed australia's economic success and says australia has more at obviously onhing his radar screen. when you look at the international radar screen, you are thinking about rate hikes by the fed. they expected to stress that on a trade weighted basis, the aussie dollar has been pretty stable, downplaying concerns they had to be concerned about the fed moving, and what it could do to their currency. yvonne: we look ahead to that decision and a couple of hours. kathleen hays, our global economics and policy editor. time to see how the asian markets are shaping up this morning with a close-up look with sophie kamaruddin. looking much better than what we saw couple of days ago. jessica: looking much better after five days of losses. asian stocks finally gained ground with major benchmarks. is extendinge yen

its biggest drop in two weeks given the mood has turned risk on. this rebound could help regional equities, in line with treat the which could prospect of a trade war far more calmly. .rade tariffs they are gaining ground this morning. regionaln won leading fx higher here and the aussie dollar did pare its gain on the back of the retail sales data as well as the bop coming in less than expected. we are seeing pick up again, up about .2%. that is not dampening appetite for all the stocks. we have to snap a four-day losing streak. you can see bonds are under pressure, and you have gold advancing while oil is building on gains. keep an eye on the space. iron ore futures in singapore glaring red.

some movers in japan that i want to highlight. you have japan steel works jumping the most since valentine's day along with toyota as trade war woes ebb. it plans to spend $2.8 billion on its self driving software. sinces rising the most november for its cystic fibrosis treatment. the nikkei reports the company will be supplying core parts to smaller rivals in china this spring. factory automation players have been popular among nikkei 225 players given the move towards factory automation in china and other regions in asia. betty. betty: thank you so much, sophie kamaruddin. headlines coming out on prime minister justin trudeau.

according to government officials, saying that trudeau has spoken with trump about these tariffs and that he told president trump that the tariff issue is an impediment to the nafta negotiations. no surprise on that stance of course. there are threats from the white house, and you are seeing a substantial or significant -- you can see a strengthening of the canadian dollars here at 129. we will continue to watch the currencyin the current markets. trudeau said to told president trump that this will be an impediment to getting a deal done on nafta. let's get more on all of this news around world with jessica summers. jessica. thanks, betty. total ceo, patrick, the latest to criticize president trump's proposed tariffs. speaking to bloomberg, he says the plan would hit consumers, hurt the u.s. economy, and

failed to create the president's claimed new jobs. he said he has always opposed trade barriers and called on the president to change his mind. supply chains are organized trips countries, mexico, canada, the u.s. khamenei factor is have optimized the supply chains. -- car manufacturers have optimized the supply chain. jessica: president trump says he will not back down on tariffs despite paul ryan urging him to drop the idea. ryan said tariffs on c line aluminum and the possible failure of the nafta talks could hurt the u.s. economy. he said he was worried about the consequences of a trade war. he called on the white house not to jeopardize recent gains. the president is refusing to budge. pres. trump: for many years, nafta has been a disaster. we are renegotiating nafta as i said i would, and if we do not

make a deal, i will terminate nafta. if i do make a deal which is chaired to the workers and the american people, that would be -- i would imagine -- one of the points we will negotiate. terrace on steel for canada and mexico. china's national people's conference continues in beijing with delegates awaiting a briefing from the development and reform commission. they may discuss legalizing ofbling and the debt woes hna group. they say china faces an impossible challenge while cutting debt. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. yvonne: reports of north korea via japan say kim jong-un is ready to meet his counterpart from the south for the first time. if true, that would be an

in-store first. let's bring in our managing editor, joining us here in hong kong. this comes in a roundabout fashion from caseinate, the north korea state agency. how likely is this going to happen? >> this is one of the steps after kim invited moon to a summit in pyongyang. that kicked off this whole detente over the olympics. we have kim's sister going to seoul, and this is the next step. going to pyongyang, meeting kim jong-un for hours. yvonne: what did they talk about? >> it's unclear. they always put out a diplomatic release. whether they actually got into denuclearization, which is the main thing, we do not know the extent to which they talked about that, but that is certainly, you know, the keith in on the agenda. yvonne: what would a closer relationship between them look like? this could be a potential wedge between the allies. seoul onle envoys --

envoys are going to speak with trump. he is keen to maintain this a appearance that they are walking together in this. the u.s. is concerned that moon will give away things, that he will accept some form of nuclear south korea or giveaway concessions that allow them to maintain nuclear weapons and water down the sanctions and the trump administration. thee are tensions for meetings this weekend next, which are trying to paper over this. betty: china and japan say they would like to see progress on denuclearization. any sign north korea might agree? >> the signs yet, and that is the real issue for the u.s.. you know, north korea all along in this process has said denuclearization is off the table. we need these nuclear weapons to

deter the u.s. from invading. there is no sign that kim is going to give up his nuclear weapons. americanweapons. american strategists often say the big problem now is kim's ability to take an icbm and potentially strike the american homeland. he has had this nuclear threat for years. whether they can come to a compromise, whether they freeze the missile program, this needs to be worked out. neither side is budging. kim wants to keep american weapons, and the u.s. wants to get rid of them completely. >> thank you so much. the managing editor for asia government. much more ahead. more turmoil in italian politics as we see renzi quit as leader. we will have more. this is bloomberg. ♪

yvonne: "daybreak asia this is

"daybreak asia." i am yvonne man in hong kong. -- this is "daybreak asia." i am yvonne man in hong kong. betty: founding member of the e.u. has tilted to the right eurosceptic,ort of anti-immigrant voters. ramy inocencio joining us now. matteo renzi stepping down as the defeated leader. ramy: when you take a look at the election results, they only got about 23%. less than 23% of the total result. this is the worst showing for the central left coalition in history. it is no surprise that matteo renzi is saying timeout. take a look at what he actually had to say. >> it is obvious as a consequence of this result, we the leadership of the democrat party has -- ramy: renzi is out. the big question here is who is in?

no one knows. we have a few weeks at least of horse trading. let me get you back up to speed on where we are in terms of the vote shares that have come out so far. you can see on your screen, 37% is the,