yvonne: it is 7 a.m. in hong kong and we are live bloomberg asian headquarters. the top stories this friday, it is official, president trump tariffs on steel and aluminum, saying they are a vital part of u.s. national security and he says he will be selectable. canada and mexico are exempt and other american allies may be spared. and in new york, it is the past 6:00 on thursday, 11 remaining tpp members have signed their sweeping agreements. reform, washedd

and tackle bureaucracy to give corporate america a leift. ♪ ramy: a very good morning to you, yvonne. i am looking at the markets in the u.s. as i handed over to you, it is a bit of a surprise because the markets ended in the green despite donald trump finally signing and ceiling the proclamations -- signing at sealing. was this preston, there was a bit of a compromise, but one compromise is in the bloomberg terminal. take a look at this, with titles like this, who needs enemies? , that is canada

getting an exemption. the next one in pink is mexico, also gaining an exemption. when we talk about trade tariffs and trade wars we think about china and the back-and-forth there. china is in blue, number eight, and there is a lot of act and forth and fear that this could escalate into a trade war. in the past we talked about some of the sectors that could be had, possibly soybeans and a starbucks,rospace, and westinghouse. they could push back if they wanted to. yvonne: that was the most aggressive stance we heard from the chinese delegation so far. the reliefioned, rally we saw on wall street is perhaps because we saw all of branches when it comes to countries like mexico and canada. but it is going to be a very long and tedious process, which

countries are going to be excluded or not, i'm guessing australia will be on the top of the list in terms of negotiating with the u.s. we saw the relief rally in the dollar as the president spoke. and finally, he confirmed those --rs and we did see a rally he did confirm those tariffs. is the mexican peso happening in the past two days in light of these, and perhaps we are seeing a bit of upside. here is where we are filtering through in the asia-pacific, following through and new zealand is flat at the moment. is getting underway and that can be a key to watch, especially in the resources space. yields heading slightly higher -- lower i should say.

also take a look at japan. boj day-to-day, and you saw a temper down, hawkish statements. and we're expecting no change from the boj. now.0 for the yen right ramy: the meantime let's get more on u.s. market reaction to donald trump's tariffs that are now signed, sealed. , and delivered. is the fear about a possible trade war coming off? romaine: a little bit. let's make it clear that we know that trade is going to be a risk of this market going forward, in striderket took it and as yvonne put it, you had all of branches put out there. with also saw a little bit

earlier today in asia and even in europe as well. in the u.s. and s&p, 10 of the 11 sectors were higher, most of them led by consumer staples. one caveat i would add is that one volume was lower than normal below the 20 they average, and that could suggest maybe the by is not as strong as it could be. banke saw apple and alfa and macron -- and the want to put up a chart on the screen right now about how tech has performed since we hit this market correction in february. that white light is the nasdaq 100, and it moved in tandem the s&p and dow transports, but since then it has peeled away from the pack, up 10.5%. the s&p in that time is up 6%. the dow is up about 3.5% in that time.

a lot more attention is being put back into these tech names. have the mystery out of the way of what is going to be in the trunk tariffs, -- iffs, maybe they will enter back to the corporate profits picture. yvonne: a lot going on ahead of the jobs report, and will watch wage growth numbers later on friday. in the meantime, president trump exempted canada and mexico, leaving the door open to spare other nations in the face of national security. tariffs will take effect in 15 days. protect and build our steel and aluminum industries will at the same time showing great flexibility and cooperation to those who are both on a trade basis and military bases. is. bloombergt's bring in

political editor, joe, we got these tariffs but it came with caveats. tell us about the process moving forward. a long the beginning of and tedious process of how these countries are going to negotiate with the u.s. on trade. mentioned, president there will be flexibility for allies, and that is a fairly they but. to apply forable exemptions -- i would think that would probably mean the eu, south korea, would be among those who are substantial suppliers of these products to the u.s.. will be looking for exemptions, and they are indeed national security partners of the u.s. and economic partners. how much the tariffs will bite remains to be seen.

china is the big target of trumps rhetoric. that of the republicans and democrats congress, and china exports only about 2% of the u.s. steel consumption. that is a fairly small bite out of that. it is unclear who is going to be applied and how quickly those applications can be processed. so there is still a little bit to spin out but it appears that the bike will be somewhat less than it had been anticipated when trump announced a week ago that he was going to apply across the board tariffs on steel and aluminum. the press watched conference a couple of hours ago and you saw the numbers of u.s. steel companies and employees talk about her own personal stories. on the other side, there was the trump administration as well, wilbur ross and such, and in

terms of what this means for congress as well, republicans have been opposed to these trade tariffs. does the watered-down version satisfy them? the initial reaction is no, it doesn't supply this item -- it doesn't satisfy them. jeff flake said he will introduce a position and other republicans who will join him in that -- there were several house speaker paul ryan who is usually circumspect of his criticism of the president. he said he opposed this move and he said separately when he was atking about two employees home depot and atlantic that they will look for ways to get around it and ways they could mitigate it. it did not satisfy the republicans ing

congress and they're looking to do something, primarily because they are worried about their message for the reelection campaign that is coming up, with the tax cuts and the economic benefits of the tax cuts. they are concerned this could constrain the economy in some way and raise prices, which nobody wants to see when comes to election day. ramy: while you are chatting we were rolling the signing there from donald trump and one person who is conspicuously absent is gary cohn. we have some color from our report saying he stood in the back of the room. i did wonder what is going through in his head. looking ahead to new tariffs, we are also reporting donald trump had an act reciprocal tariffs. be first and would foremost? would this be china? joe: i think that would probably be the way to go with china. trump made an offhand reference

of what he called a reciprocal tax, which is basically a tariff on goods or particular products that are brought into the u.s. that faced tariffs when they are sold and made in the u.s. and sold another country. is one area where you can target china. that was with the solar panels and washing machines which he did previously. he could expand that and wants to expand that into other areas, although he was not specific and white house officials don't have any plan to roll out out. that may get more support from republicans in congress who are calling her a surgical action that is specifically targeted. ramy: what surprised me is elon musk at tesla said he agreed with donald trump on those 25% tariffs, especially because tariff is taxed so much in china.

joe, thank you as always. first wrote news now with courtney collins. say u.k. sources doesn't anticipate a brexit deal , with generate a more realistic date, and the chief negotiator michelle barnier has said he wants the agreement done by october so they can go to the european and u.k. parliament. any delay will prolong uncertainty with businesses we need to know what roles they will face on brexit day. the ecb unexpectedly dropped its long-running pledge to wrap up sayingying, improvement justifies the requirement. the change in language was a unanimous decision among his team that wants risks to remain with rising protectionism, high on the risk of threats, and gave up those gains later. jimmy dimon as

that there issaid a possible correction inequities. predicts more upside in the months but warns a deep turnaround is coming in two or three years. presidentations of trump's protectionism was cited. nations have signed a sweeping trade agreement on the same day president trump site new tariffs on steel and aluminum. he pulled america at of the tpp last year, but the remaining members pressed ahead and are opposed to protectionism. aey have been given comprehensive transpacific partnership. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. am courtney collins. this is bloomberg.

coming up on "daybreak tariffsore on trade and and one of australia's top investment advisors -- life the global forum in the sydney. ramy: and how a potential trade war cap affect the fed outlook. this is bloomberg. ♪

yvonne: this is "daybreak asia" and i am yvonne man in hong kong. ramy: central banks around the globe are assessing president trump's tariffs and their potential to spark a trade war. let's discuss the impact with former adelphia president -- former the delta fed president

-- i want to get your thoughts now that we have seen trumps tariffs signed and sealed. how much time do we have to wait until we see a possible impact on the fed outlook, if at all? >> it will be a wild. hile. before, and they were gone, so i think there is a lot of uncertainty of how this plays out. frankly, the steel tariff --mselves and alumina metals the economic impact of these things in the aggregate economy is not going to be that great because they are not that big at this point. -- is this aanger foreshadowing of things to come and how much is it to come? that is the bigger worry rather than the tariffs themselves. kathleen: people have been ricochets, if this

that it could turn into a trade war. concerned because prices go up, or is it a concern of forward growth because it hits or is it mainly a concern about financial instability because it will hit stock markets and bond markets? it will depend on what central bank you are talking about, [laughter] the inflation impact is going to be minimal and the reason i say that is because raising tariffs one time will be a one-time change in the price level, not a source of sustained inflation. it is important to make that distinction. is more going to be about the consequences of the overall economy. not so much a consequence of inflation but perhaps maybe for the employment side of the mandate. the real economy.

i think we are a long way away from something like that happening. these tariffs come and go sometimes and i am not as nervous about a trade war as some people seem to be. thanks so much for joining us on the program. you mentioned the inflation picture and it seems like tariffs will induce supplies in the form of inflation. what can the fed do to trigger a more demand driven inflation? charles: i don't distinguish between those two things were much because i don't believe we can control the separately very readily. the forecast for inflation is going to remain where the fed has it for now. i don't think it is going to change very much. i think the prospect for that is pretty good, but, i would say that the fed is going

to have this feud there is upside risk to the economy in general. i want to talk about wages, we have the job support ahead on friday, and the number of jobs created, there is plenty of those. but wage inflation, i'm going to bring up this chart, a simple one, average earnings, which is everybody. butumped up 2.9%, production workers are stuck at 2.4. how would you counsel jay powell hast wage inflation as he to lead them towards three or four hikes in 2019? charles: i would advise him that wage inflation does not cause an inflation, what we know is the growth in wages follows inflation and it has been a particularly in an

empirical matter to focus on wages. wages are a lagging indicator of inflation. we have to be careful of not be obsessed with what is going on with wages because i don't think it is a very good forecasting tool when it comes to inflation. look atat said, when we markets, in january the s&p fell off of that much better than expected consensus that the number comes up for wage growth tomorrow. to what extent do you care about market volatility, or do you say that will get past this? charles: i think that market volatility doesn't concern me very much. there has been years now of extraordinarily low volatility. it doesn't surprise me that every once in a while will have a breakout of volatility for a while. i think the question will be for the markets, not monetary policy

so much, but to what degree we return to a normal level of volatility, or is this a temporary blip and will go back to something more stable? is jay powell going to be tested by a white house that might stand in his way or a congress that is going to encroach? charles: i am very worried longer-term about the fed independence, both in the administration and congress, on the right and left. thee are moves taken in last several years there are encroaching in serious waste on fed independence. an example that comes to my is $30015 when congress took billion away from the fed to fund the transportation bill. they are using the fed balance budgeto conduct off

fiscal policy. this past january, when they did the reconciliation and try to continue resolutions, they went to the fed balance sheet budget fiscal policy. again at another $2.5 billion. i am worried there is a trend growing were congress in particular is envisioning the piggybackeir large and use it for other purposes other than monetary policy. that is very dangerous for the fed and for the economy. ramy: and that is a question will have to wait for another time, but it has been terrific talking to you. thank you for looking ahead to the february jobs report. global economics editor -- kathleen hays. subscribers, go to tv

on your terminal, and it is also available on mobile in the bloomberg anywhere app and you can customize your settings on the assets you care about. this is bloomberg. ♪

ramy: welcome back. headlines to they were dominated by president trump's tariffs, but have a world away they are singing a different tune and signing a different kind of document. not beat the transpacific trade agreement that is there trouble dump when he took office. paul allen has details here. before we get to the nitty-gritty, who was at the signing and who was happiest to sign here? all 11 countries who showed up to sign the agreement,

chilies foreign minister said that free trade is alive and that is not with running the events we saw at the white house earlier on. step is to get the tpp agreement ratified by the parliament of the countries, and that needs ratification from the six countries to take effect. it looks as if it cast your eye zealand, china, and in australia it is a government where the majority senate minister says that this is a good day for trade. ramy: australia is hopeful of winning an exemption from president trump's tariffs, right? paul: he said there could be caveats, and he said who is paying the bills and not paying the bills, and in terms of australia he says the two countries have a close relationship. he is saying we could look at something with them. leave it there,

paul allen from sydney, thank you. and the bank of japan is expected to stay on course. will look at governor kuroda's options next. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

yvonne: happy friday, a sunny look outside of the victoria harbour this morning, but don't let the sun full you, it is cold. ramy: we got you covered here. is 6:30 p.m. on thursday in new york. i am ramy inocencio in new york. yvonne: and you are watching daybreak asia. let's take you to first world news. courtney: president trump made good on his pledge to impose tariffs on steel and aluminum

imports while exempting canada and mexico and leaving the door open for other nations on the basis of national security. he signed the order in a meeting with workers at still companies imposing duties that he promised with his plan at the start of the month and they take effect in 15 days. i am defending america's national security by placing tariffs on foreign imports of steel and aluminum. we will have a 25% tariff on foreign steel, and 10% tariff on foreign aluminum. muskney: tesla boss elon joined the lobby and asked president if he thinks u.s. and china should play by the same rules on cars. months of struggles in beijing inrturned his plans to build tesla factory in china and pointed out that beijing charges a 25% duty on cars, 10 times the

amount the u.s. flax cars made in china. aramcorabia says that ipo will be pushed back. it was confirmed that the internationalny names later, if at all. saudi officials are saying the ipo is on track and on time for 2018 that the deadline is looking hard to meet. weakenshong kong dollar to a fresh three decade low, edging closer to the level of which the authorities will step in to set the currency. monetary authority chief there willaid that no plans to sell additional debt, a move that could tighten liquidity and prop up the exchange rate. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries.

collins. this is bloomberg. let's get to your markets right now on this friday morning. to the latest with sophie cameroon. the traits implemented not only by the u.s., but the boj. we will see if it will be a easy friday for us as they will talk about inflation prospects for japan and the outlook for stimulus. i am going to be keeping an eye on japanese banks -- you can see japanese banks in blue on this chart are underperforming the broader topix index almost 20% since the end of 2016. of thed to the rest

topics, banks are close to their lows in the first quarter of 2016. banks are wondering if there will be a scope higher for japanese yields what could help that space. i also want to highlight what is happening on this plot that is beginning -- we have the yuan the romance for north korea, and not only translating into fresh levels -- most analysts are skeptical about progress that givenoost the yuan much the poor track record. we had tillerson complaint the talks in the near term, but this morning we got reports that trump received a hand delivered letter from kim jong-un and where waiting from announcements from sunscreen officials tonight tonight.fficials

how are the tariffs plane down in that gallery? could find their escape route here, mexico and canada were offered a reprieve from the nafta negotiations and trump highlighted that close relationship with australia. we see shares led higher by tech, but still players are feeling the pressure. taking a look at the breakdown, you have copper mining and steel down. iron,want to highlight the prices and producers are futures inure with singapore -- weighing the risk of chinese inventory.

investors tried to figure out what will happen when they are listed on mills on march 15. ramy: we have a breaking news right now crossing the bloomberg terminal. it seems kim jong-un is set to invite u.s. president donald trump to meet. this is according to fox news. kimll say it one more time, jong-un has invited donald trump to meet, saying we were expecting something happening at 7:00 local time in the eastern seaboard. and is in 25 minutes time, you can see that apparently kim jong-un is set to invite donald trump to meet face-to-face. we will get more on this as it happens. clearly some huge news crossing the terminal. yvonne: we have more news coming from wynn resorts have agreed to

pay a settlement in this lawsuit with universal entertainment over the forced redemption of ko machinese pechang makers. we are seeing wynn resorts shares up, and this is a long fight that we have been seeing for years now. with started as the acrimonious falling out with steve wynn and his business partners, some more to watch here. meantime, a hawkish tweet on thursday, as mario draghi remain cautious of the inflation outlook. global economics and policy advisor kathleen hays is back with a review of the bank of japan policy decisions. tariff tensions and the possibility weighing on the boj. kathleen: i think it is a

question of any big central bank, with the ecb meeting on thursday. ofy did drop their pledge up boosting bond buying, and the doves of the ecb are trying to placate the hawks. i think what has the headlines that caught the attention at the press conference, when mario draghi was asked about tray tensions on the ecb, here is what he said. >> disputes should be resolved in a multilateral framework. unilateral decisions are dangerous. certain worry a or concern about the state of international relations, because, if you put tariffs against what are your allies, one wonders who the enemies are. kathleen: who will be the enemy?

ecbng the conclusion -- the listing bias is gone but tightening. yvonne: still in the middle there, kathleen. the boj in the middle as well on policy changes, but signals should we look out for in the meeting? kathleen: i don't think we will get signals on anything that will happen today, but governor kuroda will start the second of his five-year term, so anything he says about policy is very important. we know he's a little chance of anything happening in fiscal year 2018, and will move until fiscal year 2019 when he thinks inflation will be closer to the 2% target. stronger yen field inflation, even though gdp has strengthened. -- wheno go to a chart

you think about tariffs and how important they are, you see that exports are clearly something that is driving gdp higher in japan. that is important and boosting inflation. 1.6%, soumber went up i think this is another issue. how do you know you can boost inflation, you need to do more -- i am pretty sure he too will get questioned about traits tension. japan, like so many asian nations, depended on exports and trade. is ais does escalate it big deal for all central bankers around the world as well. yvonne: it certainly will be and we look forward to the press conference. we are going to hear from the china central bank chief later on with a news conference at the national people's congress in beijing.

thererrespondent is covering the event. many were expecting that this was possibly a sign he is retiring but what can we expect to hear from him today? song.s could be his swan the lineup is just outside of the door where he will have what is likely to be his last press conference as the longest running central bank governor in china. has been in the office since 2002 when china was the number six economy. now it is number two and perhaps on its way to be number one. he oversaw a number of different reforms as well. that is his legacy and regarded as a reformer and oftentimes going chest to chest with some ideological differences. he wanted to internationalize and oversaw that de-pegging

versus the dollar and 2005. he has listened interest rate control and he is well regarded economist and extremely friendly human being. i have known him for a number of years, my 15 years at bloomberg, he is the only chinese central bank governor i have known. and he is well regarded. the question is who is going to replace him? there are three names bandied about but we won't know until march 19 or the end of the national people's congress when we get an announcement. chong leong -- is a regulator in china. and another possibility could be picked as the pboc party chief instead.

who went on the high-profile trip to washington is president xi's economic advisor and he may take a different position as the head of the financial stability and development committee. the currentule out deputy governor of the pboc. ramy: interesting to see the possible successor of power there at the pboc. looking at the relationship between the u.s. and china, taking is drying on the proclamations the president trump sign. any chance we can see something from beijing? we could get a reaction, and we got the most forceful words yesterday from the foreign minister, say trade wars are not the answer. he also said it was fundamentally wrong, some of the comics yes heard coming from the white house that china is a

strategic competitor. i was doing data on the bloomberg terminal, steel exports from china to the u.s., or the other way around, u.s. imports of steel and china is only 2% of the demand last year. of aluminum was just 7%, so it is not a big portion, but the bigger question is if the white house is going to expand those tariffs to other products that the u.s. buys in more mass quantities. ramy: and whether that will start a trade war. stephen, accuray much. -- thank you. gary cohn's departure from the white house, and the interview next. this is bloomberg. ♪

yvonne: this is daybreak asia

and them yvonne man in hong kong. ramy: jpmorgan's jamie dimon has criticized saying the world's biggest economy is in great shape them a that he told bloomberg that gary cohn's departure from the white house is a big loss with a potential trade were a real threat. >> if it continues and gets worse, it will hurt growth not just in the united states, but elsewhere. the positive tax reform. is a strong proponent of economic growth and quite knowledgeable and he was good happened in the white house. he knows that she knows how to run an economy and how to make it healthy for all americans, and he is not there, and it is unfortunate. i called and wish them all the

best. >> what does gary do next? >> he did not tell me, but i am sure you will have plenty of opportunities. [indiscernible] >> i don't know, i haven't thought about it very much, i hope it is somewhat knowledgeable and a strong. the president likes strong people, and hopefully he will understand markets, global, and our allies around the world. is important we maintain allies around the world. the united states is exhilarating from 2% to 2.5, and i'm hoping it will do 3%, it is amazing to me that people think that you can some out want an uncompetitive tax system, and that is good for the country. on may have different views

the individual site, but i think when importing reform -- think of it as bureaucracy reform. it is so crippling, in america, it took 12 years to build a bridge. it is disgraceful. we have to get wiser of how we run the economy for the benefit of all the people. yvonne: in that was j.p. morgan chase ceo jamie dimon. we will hear exclusively from one of the top investment advisors and australia, seattle joe jacobs joins us next. this is boomer. ♪

yvonne: you are watching thereak asia, let's go to global forum in sydney, what is the reaction so far of donald trump's parents there -- donald

trump's tariffs? off of arkets back trade war, and my next guest has a lot to say about inflation, and from allison capital, great to have you. that start with trade. in this complex with so many moving parts. how does this drive the potential of a trade war? u.s. coming out and aluminumteel is not something that is going to move the dial anywhere. i don't think china is going to be one iota worried about it. as far as an australian perspective, australia has a unique relationship with the u.s. about be confident that any australian interest will be

looked after. the only worried that has come out of it, which is sort of a piece of string that is sticking out, his gary cohn resigning. what is not clear is why he resigned. the impact on china is going to be negligible. everybody understands that there is a populist base that has the play to and there's not a lot of damage done to any chinese company we have spoken to. i think at this point in time, i would not get too worried about. haidi: are you worried from the perspective --? >> what he has achieved is amazing. and it through tax cuts going to kickstart the u.s. economy. his achievements are tremendous.

are trump'sey achievements, but gary cohn stepping down at the moment of his greatest trade -- that is not well understood. duei: credit is credit is -- credit where credit is due, you said inflation will be the undoing, and what we saw in january and february, was that your prediction to trade? >> definitely not yet. clear is when you have these big asset bubbles, how long they last for. it is easiest to get off the train to early, i may be bearish from a long-term perspective but i want to remain invested. if you look at -- the two things that has changed since the or four years ago is that the u.s. economy has reached a lift off and the global economy is marching forward like we have never seen.

the biggest economies in the world are growing. that is the big positives. so we have lift off. the big negative is we are -- and to three is a headwind. banks look at the central in the world buying back $50 billion worth of securities a month, that is why hundred 50 a month in total, which is $1.8 trillion a year, and it will be zero by june, and europe and to 2019, so at one point in the future will see central banks selling one in $50 billion worth of securities per month, which is 1.8 trillion a year, so that is a $6 trillion swing between demand and supply over a four or five year. . not is a headwind, which is

significant enough to be a problem because this positive today. qe -- and0 billion of a scenario like this, if there is no inflation and inflation is kept under control, that is still very positive. haidi: where you see opportunities? we have beens, through an extremely inflationary. period. there are 27 components to it, 65% overhas fallen by the past 10 to 12 years. when you look at a graph of any asset, see a line that is going up, and when you look at this one, see a light has gone down tremendously.

if you think inflation is coming back, you have to have the assumption that yet to be invested in commodities or cyclicals or businesses that are exposed to the rising commodity prices. haidi: will have to leave it there. the cio and chairman of allison capital. haidi, great conversation there, joining us from sydney. live pictures -- and we expect sarah sanders, and she told reporters earlier that the south korean national security advisor would make an atouncement at a location 8:00 p.m. in asia. fox news is reporting that kim jong-un is set to invite the president to meet. this is unprecedented.

unprecedented is the word to describe this because the last time any president sitting -- never active, was jimmy carter -- and those pictures are live. will be back. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ >> you are watching daybreak asia and we are awaiting a potentially historic news conference coming out of the white house. you are watching live pictures were south korea's national security adviser is about to make an announcement. fox news just reporting north hasan leader kim jong-un invited u.s. president donald trump to a face-to-face meeting. we are waiting on that momentarily. an unprecedented historic milestone, if indeed this becomes reality. tween theany talks u.s. and north korea, we talked about how unprecedented this is.

we have not seen it in decades. jimmy carter was the closest, but the white house has declined to say whether this report is correct. we are waiting for clarification. earlier the president said we should expect a major announcement. we will bring it to you when it happens right here on bloomberg television. this comes on the back of what we heard earlier this week from the south korean envoys that said they were ready to talk denuclearization. we were skeptical about some of these headlines. some say it could be typical pyongyang diplomacy. but perhaps it can be a breakthrough, and olive branch handed down by pyongyang and kim jong-un after we did see sanctions implemented by the u.s.. certainly a lot of questions. let's get a market check with sophie kamaruddin. happening today. not just with geopolitical tensions, but trade. >> we have a lot of moving parts.

this soon after tillerson downplayed the hopes for a breakthrough with pyongyang. today we do have the kospi opening higher, about 0.3%. the kosdaq edging higher. the nikkei 225 adding 1% at the open. this is waning after the scope tariffs, milder than expected. kuroda is not expected to rock the boat. later today, chinese inflation will be key. we have stocks in sydney adding 0.2% ahead of that. the forex market having its share of the action. a look at how the yen is faring. we see weakness coming through for the japanese currency. it is headed for a weekly loss. this dims prospects of a full-blown trade war. the korean won slighting a

second day. but it has been range bound, with a little gains seen from pyongyang's all the branch -- olive branch. i also want to quickly highlight what is happening with the peso, leading gains in global currencies. we do have the mexican peso softer by a touch. the reprieve may be fleeting from the trump tariffs, as nafta risks linger. the conditional exemption puts more pressure on canada and mexico as it highlights they may face a more protectionist u.s. if they do not play ball with nafta. key in focus will be the korean won and the potential, the impact from this upcoming announcement from south korean officials in d.c. ramy: we want to get back to that. another line crossing the citing cnn,rminal, north korea said to offer to suspend its missile -- its

missile tests with any talks that may come out what we are expecting to see. you are looking at live pictures out of the white house. we are expecting some kind of announcement off of the reports from fox news, saying it kim jong-un has invited donald trump to a meeting to discuss the future of u.s.-north korea ties. definitely unprecedented. north korea now offering to suspend missile tests with talks here, citing cnn. yvonne: we were talking to guests throughout the week, talking about it is important not just for moon jae-in but president trump distress, what are the concessions going to be? are these just freezes when it comes to helping the missile tests? north koreaht now offered to suspend missile test for now. it will be a big development because we heard during these meetings in pyongyang with south korean envoys, they could

consider halting that program if the u.s. can guarantee the regime.f cam -- kim's it get updates with enda curran. potential he could come out of these talks. enda: certainly a very significant development. quite --need to be there would need to be significant concessions on the table for the president is it down with his north korean counterpart. they will not sit face-to-face unless there is significant hope of progress, around dropping are giving up on his nuclear missile ambitions. the biggestn one of clouds hanging over the world economy and geopolitics the last year or so. perhaps it is a sign kim jong-un is serious about that direction. there is skepticism when it comes to north korea, some believe they are playing for time and want easing of sanctions. yvonne: we saw a change in tone

after the olympics. everyone thought we would see the military drill come back, return back to normal, with escalating tensions. what do you think changed from kim jong-un in particular, in terms of his behavior? some were saying perhaps these sanctions are starting to bite. enda: it is a dramatic change of tone. at the new year he said his finger was on the nuclear weapon. sanctions have been quite punitive on north korea. perhaps they are hit harder. they areconomically talking about currency reserves dwindling. enda: that is right, so much harder to get their hands on hard cash, hard currency, goods and materials they need not just for the nuclear program, but their economy. on the ground, ordinary people are suffering. perhaps sanctions played a role. say, always, a significant degree of caution and skepticism, as to how this might

play out. ramy: skepticism is the word we definitely have to keep. this is not the first time north korea has promised and then reneged on things. the big thing that comes to mind, the dismantling of the nuclear reactor, nothing came of that. that said, there is hope. jae-in, someon type of sunshine policy was 20 years ago. riding onriting -- his political career. enda: there is a lot riding on everyone's local career. the last time a president sat down with a north korean president it did not result with a tangible outcome. it is a very high-stakes game for all involved. for this meeting to happen, you would have to assume before then

a lot would be agreed on all sides. yvonne: stay with us for a second. a will bring in our guest, chief economist. we are still waiting for clarity here. sense that after the olympics, these geopolitical tensions in the region have gone down and could be good for all of the region at this moment? it does look quite good. clearly there is going to be a major announcement. even if the source of the announcement or genesis of it is the weakness in some of the actors in this story, there are differences in perspective -- whether some of the allies want regime change or not. anpushes them to find agreement or position which allows them to find victory. in short-term the news looks good. elsewhere in the global economy, geopolitics remain difficult.

aree are other issues which still capturing our attention, unfortunately. enda: richard, what do you think it means for the global economy and global trade story? a feeling north korea was a key factor in the u.s.-china u.s. trade tensions, and one of the reasons the u.s. was holding back. development mean a change for the u.s.-china trade story? richard: probably not. it is certainly taking president trump at face value, his views of north korea seem to be driven -- a trackround u.s. record of the u.s. as a global military power, rather than the trade story in isolation. trade deficitthe is still getting worse in the u.s. and the bilateral debt with china is trending the negative direction, it won't do much to change. we have to see something remarkable on north korea driven by the chinese for trump to feel

he owes them something on the trade side. yvonne: looking at what we have seen when it comes to some of these trade pairs that finally came through, the president putting money where his mouth is, with of exclusions on mexico and canada, given the fact china is ats was what drove synchronized story, how much does this muddy the trade picture for you now? richard: it definitely muddies it. confidence is not the issue. global trade in steel and aluminum does not drive the trade saga. trade as a buffer between countries, trade allows some countries do benefit when they might be economically quite weak. it drives higher standards of living over time. these things are now up in the air as we work out how this new regime works.

a full-blown reversal of globalization of the last few decades is unlikely. at the margin, we are shifting away from that kind of regime. we do not have new rules of the game. that is where the uncertainty lies. it felt like, we don't want to ofertake investment because significant, medium-term questions about these strategic issues. trade is added to that list now. yvonne: i want to interrupt real quick. we are seeing the south korean national security advisor speaking now. let's take a listen. >> i have the privilege of greeting president trump on my recent visit from pyongyang, north korea. i would like to thank president trump and his wonderful national security team, including my close friend. leadership and his maximum

pressure policy, together with international solidarity. jae-inssed to moon gratitude for president trump's leadership. i told president trump we are he isg kim jong-un, committed to denuclearization. he stressed north korea will refrain from any further nuclear missile tests. he understands that routine joint exercises for the recovery must continue. eagerness tohis meet president trump as soon as possible. president trump appreciated the meeting and said he would meet kim jong on -- tim johnson -- kim jong-un to discuss

nuclearization -- denuclearization. we remain committed to a of thee denuclearization korean peninsula. along with president trump, we are optimistic about continuing a diplomatic process to test for the possibility of a peaceful resolution. the republic of korea, the united states, and our partners, stand together. [indiscernible] and that the pressure will continue until north korea matches its word. thank you. yvonne: chung eui-yong, the south korean national security

adviser at the white house has confirmed that after his meeting with north korean envoys and kim leader, the north korean is committed to denuclearization. and president trump after his meeting with of the national security advisor has agreed to meet with him jong-un by may -- by may.h kim jong-un they are confident they can maintain this. cooler heads, we see potentially some sort of breakthrough here. direct talkse, between the u.s. and north korea. ramy: it was really interesting to hear what he had to say in terms of pressure. there was maximum pressure as well as international solidarity. what we are seeing is almost a direct line between the u.s. as well as north korea, something that is very rare. sayingth korean envoy's it was not just south korea or the u.s., it was everyone together in international solidarity.

the commitment to denuclearization unprecedented. meet the u.s. president, the first time ever for a sitting u.s. president, is remarkable. the commitment to the diplomatic process is something. branch,ere is an olive rok andy is saying the partners. from the team on national security, joins us from washington. tell us the significance of this development today. >> i think you hit on it right off the top. this would be the first-ever meeting between a north korean leader and a sitting u.s. president. in the past when u.s. envoys have gone to north korea, whether to help get prisoners out or try to broker talks, they have almost always been former officials. oneleine albright went debt

point. bill clinton went to north korea after he had left office. this would be unprecedented. there is a lot that remains to be seen about whether this will hold until may. the u.s. and south korea are scheduled to do joint military drills that have always angered north korea. that is set for the next month or so. there are little barriers that could crop up between now and then. but it is quite a dramatic this one on to hear one summit of some sort between president trump a north korean leader may take place in the next few months. ramy: i am surprised about the concession north korea is it saying, with regards to those military drills. it almost seems as if they are laying everything on the table here. what do you think will be the next step, aside from that meeting we are talking about, in

may? bill: i think there will be a lot of devil in the details. we will need to see how this plays out over the coming weeks. north korea has a long history, has a longasty history of edging toward talks, and then finding a reason to step back and cancel. going to suspend of their work on their nuclear weapons program, their missile program? that is something the u.s. security establishment will be looking very closely at. i suspect despite this optimistic statement, you will hear a lot of caution from senior pentagon officials, senior intelligence fit -- officials. there is a feeling we have been down this road before and it has not worked out well. although frankly, where -- we have never seen a proposal of this kind before. kim jong-un is not his father

and he is not his grandfather. it could be signaling a shift in how north korea looks toward relations with the u.s. do -- how realistic do you think a deal could be cooked by may? what happens if we fall short of a deal by then? i think we need to keep our expectations pretty temporal in what a deal is. the two leaders of north korea and the united states in a room would be a considerable achievement, regardless of what else takes place. when you think back to major summits and watershed events like the meeting between president reagan and president you don't expect to solve all your problems in one meeting. but i do think a lot of people will see it as a positive sign these two leaders, who spent the last year insulting each other

-- as north korea really ramped -- to weapons tests, can see this as a positive step. ramy: we are seeing this happen before our eyes, live. but this is possibly the tip of the iceberg. i am talking back channels. can you shed any light on what may have transpired behind the scenes? clearly this did not happen overnight. bill: there were a lot of expectations when the winter olympics were going on that vice president mike pence might meet with the north korean delegations. there was a lot of chatter before hand about that. we believe something was in the works, and found out afterwards the meeting had been talked about. from the u.s. side, they say north korea canceled that. the u.s. and north korea have long had a channel of communication open at the united nations. they work through other countries. that channel has oh is used for

talks about u.s. detainees in north korea. been a channel that was used to lay the groundwork for that. we are working for the white house. that moves very rapidly on some of these things. in the past, would have taken more time and more formal diplomacy. this seems to be a case where maybe they have bypassed that a little bit. yvonne: who takes credit for this? is it the u.s. or more south korea? bill: i think there will be a lot of people trying to claim credit for this. we know the south koreans did make a reference to president trump's pressure being a big part of this. south korea's president moon jae-in took office, offering a af to the north. there is a long history of north

and south korean relations. -- neither approach has worked historically. i think south koreans will take some credit. president trump his team will certainly take credit for ramping up the sanctions pressure at the united nations, putting a crimp on north korea's financing. they will argue the sanctions have shown some affect, and help to bring kim jong-un to the negotiating table. yvonne: thank you, joining us from d.c. on the latest. you can hear president trump has agreed to meet with kim jong-un by may. they have set a date. let's bring in our guest and chief economist, richard. i know you are an economist. but given market reaction we have seen so far, we largely see markets shrug off this geopolitical risk. now that we have seen a

breakthrough, could this lead to up citing korean markets are here in asia? richard: for korean markets, yes. there is some north korean risk premium in their -- there. but from my perspective, and there are some who know much more than me, but south koreans holding a press conference in front of the white house, there is a desire to share the driving force between the south korea and the u.s. it is notable they are taking the front running on that. far, from my perspective, a big win for north korea. a sitting u.s. president for the first time has offered to meet them. they have made a vague assurances they are committed to denuclearization, which they have issued words of that sort historically and quickly backed away. it strikes me, i am assuming

nothing. if we get a great outcome over the next few months or years, that will be fantastic. but i think that would probably be a surprise rather than an expectation. richard, geopolitics and north korea have been a big worry for investors this year. do think we are potentially about to remove one of the big question marks over the world economy and investors might embrace in that way? or do you think we will remain in a wait-and-see mode, and continue to have this big question mark over how korea plays out? is,ard: i think the problem we are in a more difficult phase for the global economy. everyone is talking about the recovery. but this recovery is very old. even in europe, it has been falling for more than five years. on that basis, i think the

global economy is already in a more difficult spot. in the sortk it is of space that inspires more business confidence. funding is more difficult to get. you can see what is happening on the front end of the u.s. yield curve. what we are seeing globally and the geopolitical implications that have not improved at all, particularly around north korea. almost everywhere you look, politics is difficult and complicated. that is going to keep business investment on the back foot, unfortunately. yvonne: i want to bring back bill from our washington team to talk more about what to expect. who really ising, driving these conversations for the u.s. and president trump, because he still has not filled that position for a u.s. envoy in south korea. bill: i believe there is an acting ambassador. the idea of staff vacancies in

the white house is a big one. the u.s. envoy to north korean talks just announced his resignation two or three weeks ago. actingsident has an ambassador, susan thorton. her nomination has been sent to the senate. i imagine she will be heavily involved. that she is not confirmed in the job. a lot has been written about the vacancies throughout this administration. this is exactly the time when you do not want those kinds of openings. i imagine the u.s. security council will have a heavy hand in these talks. secretary of state rex tillerson and susan thorton, who i previously mentioned. when you get down to working out the nuts and bolts, basic things about the protocol, the u.s. does not have a lot of people who fill those traditional roles.

maybe that will be were south korea's diplomacy comes in, to fill the gap between north korea and the united states. yvonne: i want to bring in our seoul bureau chief to talk more about these developments. you were talking about this announcement. how important is it as a developments, and what are you hearing on the ground at the moment? meeting does it take place, it would be unprecedented. the u.s. sitting president has never met with a north korean leader. the question is, where are they going to meet? the most recent visit was by former president clinton to pyongyang. historically, it would be significant. it,o what will come of again, there are skeptics that believe this is again, another tactic by kim jong-un to buy

more time, to fully develop its nuclear missile. again, we will have to see what happens. ramy: north korea has in the past asked and asked again to get direct talks with the united states and those have been hit back, the fear it might legitimize the regime. has washington, has the trump white house, given away a huge playing card here? peter: in some ways, yes. but you have to remember, north korea has conceded, that they will freeze their nuclear development program, as well as allow the u.s. and south korea to conduct its military drills. north korea has always ifntained they will not talk the u.s. and south korea continues with this joint drill, which they believe is a prelude to war. or agreedhad conceded

to freeze their nuclear program at least until the talks began, it is a significant development. if you look at it that way, it is a diplomatic victory, or minor victory for the trump administration. ramy: if there was something missing off of these offers from south korea, i would say it is a lack of access to nuclear missile sites across the country. what else would you say is missing from this? peter: that will be part of the discussion i presume between , what kindim jong-un of access. obviously over the decades, there have been several denuclearization agreements. nothing has come of them. the devil is in the details, so to speak. we will see what kind of agreement they come up with. i am pretty sure trump and his folks are aware of the

historical failures in these agreements, and they will probably make sure that does not happen again. yvonne: we have been talking about how kim jong-un is not like his father, grandfather. president, and unpredictable leader as well. do need someone unpredictable like president trump to speak to someone unpredictable like kim jong-un? peter: [laughter] image-wise and the way we have per trade kim jong-un, he does seem very unpredictable. to some people, crazy, madman. trump has said as much. you follow, listen to observers of north korean politics, they will say he is thatlly pretty shrewd, and there is an actual reason to his madness, so to speak. characterize -- yes, the rhetoric is crazy and silly, but beyond that, it is

very well calculated. peter, stay with us. i want to bring in kathleen hays. were talking about the boj and ecb until this breaking news emerged. sitting here thinking, remember when donald trump took office and he started railing against north korea, he was going to get talks, and everyone throughout their hands, my goodness, he is going to start the third world war. an now it has started impact. i wonder if trump's foray into tariffs, which has so many a gas, may have an impact on trade deficits and so much more? that is possible. countries have been moving toward a model where they are more suspicious about free trade and globalization, but asking questions about how it will benefit not just their economies, but their people. been antrump's move has

extension of a process which is already been trained. like other u.s. leaders have not tried to generate sustainable improvement. where they have not gone is to have formal ways to see the president in north korea. it strikes me, so far north korea has given up nothing. they have made commitments to allow military exercises to go ahead. the reality, they could not stop them anyway. they made a commitment to halt some testing may be for two already seemthey to have nuclear weapons, which are missile-capable. we will have to see how this transpires. guess is, north korea has the political upper hand, rather than the u.s.. ramy: bill, i want to head over to you. i want to bring in the angle of china, pressure from beijing.

they're the biggest trade partner. hop into the bloomberg terminal, g #btv 3725. possibly are we seeing pressure because of u.s. exports also falling, headed toward north korea? you can see in the first quarter of 2018 at their lowest. at least ever since 2013. possible angle on china pressure and pulling away? bill: absolutely. we know from official chinese trade data there has been a big slowdown in both exports to north korea and imports from the country. the big question has long been, how much of that is being made up for by smuggling? we know even some of the ships involved in smuggling have been either detained in chinese ports or elsewhere, or prevented from doing trade with north korea. there has definitely been an impact and china has always held the trump card, as a non-expression to use right now. but they have oil had the

leverage over north korea, given they have an oil pipeline going into the country that north korea heavily depends on. they have been key in all this. even the u.s. has acknowledged the u.s. leverage has always been limited to trying to deal with ancillary sources of income to north korea. the chinese have long played a heavy influence. they may have well said to kim jong-un's regime, this is an opportunity, you should take it. you have maybe a less predictable president in the white house, and we do not know for sure where this is headed, if you don't try to change the paradigm, the way things have been going the last year. yvonne: i want to bring in sophie kamaruddin to talk about the market reaction. obviously sing a turnaround. we were first focused on trade concerns, but we see tailwinds.

sophie: a positive reaction across markets. you have equities gaining ground, higher in tokyo and seoul. on inout what is going korean paper, the five year yield jump over 11 basis points. keeping a close eye on a korean debt default. we see this fall quarter days through thursday. check out what is going on with about kospi in particular. i want to pull up g #btv 5383. we did see a pop in korean stocks following the south korean envoy announcement that the northwood cease missile tests and trump would meet with kim jong-un in may. we have been seeing this range up most of this week. not much impetus provided despite what we got earlier in the week. we are seeing a slight pickup in the korean won. with china's track record,

analysts remain skeptical about how that -- how much of that may provide support to the korean won. let's check stocks on the move in seoul. hyundai elevator jumping 7% in seoul. it holds a stake in hyundai assan. ei chemical exports fertilizer to the north. oneas negotiating to buy million metric tons. the korean won gaining ground on the back of south korean envoy's announcement. yvonne: let's get to our chinese correspondent, our chief and north asian respondent, as well. any responseeard from the chinese yet on these latest developments of the president trump meeting with kim jong-un. what is your take on all this so far?

we did hear from the foreign minister yesterday, who spent most of his time talking about the trump issues and potential for trade war. he did also talk about the north korean issues, saying the talks were negotiation to get north korea back to the bargaining at, in his estimation, a critical stage. a critical moment, he said. china does play a significant role, in perhaps as our previous in suggestingd, the time is right now with the rapprochement from the olympics. keep in mind, the south korean and u.s. militaries will be resuming their military exercises. it comes at a time when sanctions are really biting in north korea. know china has been on board with those u.n. resolutions to limit coal imports from north

korea, also oil. i believe upwards of 90% of oil has been restricted out of north korea. china has been on board -- or into north korea, i should say. china has been on board with those restrictions. the foreign reserves are dwindling, estimated at only four to 5 billion u.s. dollars. this deficit they are running with china, the tune of a $1.7 billion deficit. they will be burning through their reserves quickly at that pace. ramy: in terms of leverage, china is the only country that has the most leverage. hop into the bloomberg terminal, i want you to see this function. trade flows happening. north korea is where i positioned this. china, $6.1 billion. the latest year we have is 2016.

it dwarfs everything in the philippines, etc.. how much of an issue has it been from china's point of view in getting north korea to do something? you think it has been china all along pushing this? stephen: i think china is playing a significant role as the main lifeline to north korea. we have heard in the last year or so various comments china has been losing patience with pyongyang. there is been quite a bit of pushback from beijing on these missile tests, especially over the last six months. yvonne: thank you, i want to bring back peter pae. it is interesting because president trump is likely to claim that this all a success on his part. given the developments we have seen, a lot of it has been driven by kim jong-un himself. he was the one initiating this,

driving these conversations. he has decided how fast these discussions are going to progress. in a way it seems it is kim jong-un who is driving this. again, it depends which side of the fence you are sitting on. you can see it that way. on the other hand, you can see trump and his hard-line pressure, maximum pressure strategy, you can argue that has worked, mainly because it was able to convince china to really sanctions.ing the that in many years china ignored or was loosely following. -- orct that china did trump convinced china to really clamp down on these sanctions i think did have an impact on north korea. trumpe ways you can argue did successfully pressure north korea's kim jong-un to come to the table.

we just got breaking news. the white house and now saying the time and place of the meeting is yet to be determined. we still don't know the location and where these talks will be taking place. but you will except to this meeting with kim jong-un, according to the white house. we have a date potentially, peter. do we know where this could take place, a possible scenario? peter: we don't. i think they are trying to work that out. this is moving very quickly. we don't knoway, if that is the end of may or beginning of may. we probably will know in a day or two exactly the location and timing and all that. meeting isany historical, unprecedented.

as to what the outcome will be is uncertain. we will get a lot of different pundits chiming in saying no, this is north korea's doing, no, this is trump's doing. two, theret month or is an easing of tensions. being zaidi level has been reduced. you see that in the markets how they are reacting to these news. it is early days to talk about -- we are talking rapprochement. mind, manyto my people on both sides that would love to see happen. it makes me think of east germany. it was a long, difficult, costly process. how does this play out to the unification,nd

even further resurgence in the asian region, its something like this actually moves forward? the current south korean president moon jae-in has that as one of his key policy moves, to seek reunification of the peninsula. however, we have a regime, dictatorship, with its own agenda. even ification process, there was an agreement for denuclearization, family reunions, the fact that two countries could actually get together, i think we'll take a very long time. there is all kinds of complications, economic, for instance. we sell reports recently to say,

to bring north korea up to south korea's gdp, the country would have to spend almost $13 trillion to bring them up to the level -- i am sorry, $3 trillion, to bring north korea up to south korea's economic level. i am on policy guidance, going through my head here. trying to go through the people that are still left, because of the bleed over the last year or so. victor shock, he was not nominated to be the ambassador to south korea. your head, could be running this, at least from the white house side? peter: that is a good question, because obviously the other day resign.ohn tillerson seems to still be on top of this thing. mcmasters will have a debriefing with the united nations on monday i believe.

there is at least a core group of people who have been there, a very short time, the past year, as all these negotiations have been happening. in some ways you can say, yes, there are veterans that will stay on and take this through. yvonne: it is interesting though. i think it was 24 hours ago peter, we heard rex tillerson speaking. talksled these direct between north korea and the united states a long ways away, and it should be realistic. is there still a divide among the trump administration on what they should do with north korea, and that the president is perhaps deciding this on his own? peter: [laughter] that happens quite often with donald trump. as far as i have seen over the

last year or so, the trump administration and the south korea have played with this backtalk routine. you have this fire and fury speech, and a moment later they say, we are willing to talk. we will keep the maximum pressure, but are willing to have negotiations. they have this constant back-and-forth, which it seems to indicate there is some kind of conflict, that there is a disagreement with regards to north korean policy. there might be, but it seems to be working. want to go back to the dearth of people guiding this. this transcends party lines. democrat, itn, not is an issue of national security. is it worth it for the trump administration to reach across party lines, bill richardson, who has been an envoy, the jimmy carter, who has said he wants to go back to help?

is this something in your opinion he should consider? peter: i think that should be a consideration. however, they will face a lot of criticism. argue thesewill folks were involved in failed, they would view that as failed attempts for the denuclearization of north korea. agreements these folks have reached in the past have not yielded much. you could have a faction on the trump administration cited that would be against that move. it will depend how far they reach over to the other i'll -- aisle. yvonne: i want to thank our team, kathleen hays, our global and economic policy editor, and enda curran as well. we continue to follow this story here on bloomberg television. later on, we hear more from

thomas byrne and later, we go live to seoul, with a professor. stay tuned for that. forum back at the wharton to discuss outlook for the city over the coming decades. this is bloomberg. ♪

♪ we have been recapping all our the latest headlines from the white house, where president trump has accepted an invitation from kim jong-un to meet him by may. a lot could happen before that time. we have been talking about where this would happen, what will be discussed, will denuclearization be on the table, and how permanent could that be when it comes to north korea's nuclear weapons program? we have a lot more context and guests coming to talk more about this.

ramy: truly unprecedented. if this happens, it will be a historic milestone, having never been done. ever since the korean war in the 1950's. a lot of questions. isess to nuclear sites something i would like to see, regardless of what north korea says with the defense exercises. they said they were still ok to happen between the u.s. and south korea. many questions as to what the back channels are regarding this. and a question as to who is leading this, not just from south korea and north korea, but the united states. we are seeing the bleed over the last year from the trump white house, gary cohn being the most recent. was a presumed a nominee to be the south korean ambassador to the u.s., but that did not happen. who does donald trump have to rely on, in order to make the

best possible choices, moving forward? yvonne: that is right. we are getting lines from japan, --re shinzo abe has said he the prime minister saying the president plans to go to the u.s. and visit the president in these talks before supposedly are going to happen between the u.s. and north korea. a lot hanging on that conversation as well. particularly when it comes to what japan can be. there is a lot of geopolitical risk in the region, how china factors into all this, as well. there will be a lot of negotiations leading up to these direct talks. saw falling exports from china to north korea in the terminal. we will get back to this in a second.

joining us on the phone, ian bremmer, president of the eurasia group. thank you for getting on the line with us in this developing story. looking where we are right now, what is your initial reaction? let's start there. ian: clearly president trump deserves credit for this opening. the fact that kim jong-un has expressed a willingness to engage in talks, that he is also willing, as long as talks are continuing. it looks like unilaterally icbmng nuclear missile, and missile tests. it is unprecedented. did not get it under obama, did not get it under bush. it is a big deal, no question it is a positive move. but let's be clear. if we are to have a direct meeting between trump and kim,

the likelihood of a diplomatic breakthrough from an american president who wants a deal is reasonably high. it is higher than it has been at any point since the conflict started. i don't know if that is 20% or 30%. that also, a possibility it could go badly, that trump could be embarrassed, that they make an agreement kim jong-un backslide on. president trump will be much more invested as a consequence. the likelihood of confrontation also goes up, the likelihood this goes to war. we will be paying more attention to north korea and trump will stake more of the success or failure of his presidency on this deal. given the fact north korea is one of the most intractable and dangerous problems in the world, and that trump has no experience erratic,ield, and is

to say the least, it is a very dangerous thing. yvonne: this could be a very big gamble. we are hearing from some who are saying, we are seeing a white house and south are be a, not proactive when it comes to north korea. drivingis kim jong-un these conversations, initiating them. is this a gift pyongyang? ian: there is no question there is an opportunity for pyongyang. the fact that south korea has felt alienated by the united states, both in terms of the fire and fury comments from for thend the potential strikes that feel like america first, does not feel like a south korea first policy. workhave felt the need to with north korea, irrespective of what the u.s. has the same. also the trade issues, steel and southum, undermining

korea's strong trade relationship with the united states. that provides more space for kim jong-un. but let's be clear, the sanctions against north korea have stepped up dramatically under the trump administration, and in large part because of the trump administration. china, thee on pressure of preemptive strikes against north korea, led the chinese to take the issue more seriously, and led them to support greater sanctions from the un security council, unanimous sanctions driven by the u.s. they have cut back on smuggling. they have started cracking down on joint ventures between china and north korea. none of that is good for north korea. we should not be looking at this as early, pyongyang is getting the better of this deal so far. ramy: very quickly, china's role in this? how much does the international community have to think china for what is happening?

ian: the chinese have the most at stake, they're the ones you have been funding most of the north korean economy. they have the most to lose. they have been constructive. i would expect the u.s. and trump will be more cautious about the tariffs they are thinking about rolling out against the chinese, as well as restricted access of chinese companies into the u.s., if they are expecting china to continue to play that role. a bit captured by it. ramy: we have to leave it there. thank you for your time and analysis on this quickly developing situation. you can turn to your own bloomberg for more. get commentary and analysis from bloomberg's expert editors. let's take a quick look at markets, trading in the asian pacific. you can see green across the board.

japan's nikkei up 2%, the kospi up 1.7%. i have to say we are looking at a tailwind, optimism there could be a breakthrough between the u.s., north korea and south korea. yvonne: we certainly start the day worried about trade tensions. it has shifted to geopolitical tensions that have eased, given this headline. we are seeing a relief rally. the nikkei 225, gains up 2%. it looks to be tracking. we continue to follow this, our bloomberg markets with rishaad, will have more on north korea. this is bloomberg. ♪ mom you called?

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>> history in the making. president trump is to meet kim jong un, the unprecedented talks expected by may. it's a remarkable turnaround for the north. kim is said to be halting his weapons testings and is committed to denuke larization. such a meeting with rewrite geopolitical rules. no sitting american president has ever met with a north korean leader. in hong kong, this is "bloomberg markets." >> we're srt