yvonne: it is 7:00 a.m. here in hong kong. i am yvonne man, welcome to "daybreak asia." a second day as congress prepares an investigation into the mishandled data scandal. the company at the heart of the uproar suspended ceo of cambridge analytica, saying it alexander nix's secretly recorded comments are unacceptable. betty: i am betty liu, in new york. the finance minister failing to block president trump's tariffs. they also blocked their resistance to protectionism. yvonne: it is all go on amazon,

their market caps surpassed google's parents, alphabet, for the first time. ♪ betty: as amazon shares continue to rise, we see facebook shares continue to fall for a second day in a row. that led other tech stocks down. i want to pull up a chart, g #btv 3295. that despite the drops we have seen in technology shares, the nasdaq 500, the 60 day moving average seems to be a support level. a buyinghere is still opportunity even amid some of this turmoil caused by facebook. yvonne: we talk about how these are stock-specific moves we have seen.

divergent today from facebook, the rest of tech doing much better today. to find to dig deeper winners and losers in all of this when it comes to you westech overall. betty: looks like most stocks managed that rebound. ending adding on points, up almost 0.2% higher. the dow rebounding 117 points. nasdaq, splitting from facebook, rising 0.3%. we might be setting up for a higher open over there in asia. yvonne: looks to be the case. new zealand we are seeing shares of 0.4%. 148 for the kiwi. the dollar catching a rally ahead of the fed. we wait to see if jay will signal three or four hikes. stocks up to 13 points in the asx 200.

7688, pretty steady for the aussie. up australia 10 year yield two points. japan, closed for the vernal equinox day. still holding around 106 territory for the dollar-yen. holding on to the gains we did see. you euro, around 1.22. the yen still theeuro, haven of choice amidst volatility. we did see risk aversion in the markets. let's get the first word news with jessica summers in new york. failedfinance ministers to block president trump's protectionist plans, that despite warnings that tariffs will undermine the global have littley

concessions. the u.s. ended the day co-opting allies that were lobbying for exemptions. it removed previous pledges despite protectionism. tensions are set to rise between washington and beijing as president trump goes ahead with tariffs on china products. it could be imposed as soon as friday, a punishment they perceive -- for what the administration perceives as intellectual property theft. president trump welcomes the saudi crown prince as a friend of the u.s. and "big purchaser of american arms and investments." riyadh finalized the buying of $12 billion worth of planes from american companies. he is thinking of u.s. investment opportunities.

shooting at a maryland high school left two students wounded and the suspect the dead. a teenage boy brought a handgun and shot a girl, before fatally wounded by a school resource officer. it is not clear if the boy took his own life or what shot by the officer. the 16-year-old girl suffered life-threatening injuries, and a 14-year-old boy was also wounded. 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. ♪ investors have wiped $50 billion of value off facebook shares in just two days as anger grows over information on tens of millions of users ended up in the hands of a research firm, accused of dirty tricks. a group of investors is suing over the losses. they are investigating the social network, along with

privacy watchdogs. joining us with of the details, tom giles, from san francisco. it seems facebook is struggling to put out multiple fires. in terms of investor sentiment, what are the most negatives, where is the pain at the moment? tom: you are seeing it show up in the stock. the biggest pain is from concerns over lawmakers scrutiny. the concern is you will see facebook executives not only hauled before congress, but that these regulators may take steps that rein in facebook and its ability to make money from users and advertisers, the way it has done so well for so many years. u.s.are getting it from congressman, the ftc. -- it is hardn is

to see congress doing a lot right now. they have trouble doing their business on a day-to-day business, given the gridlock in washington, d.c. however, it is agencies like the ftc that make a difference. they could have a dissent decree, whereby they do a better job of protecting consumer privacy. and you could see tighter regulation around exactly what facebook can and cannot do with the information we do -- we so readily give to it. yvonne: i think facebook would like to put all the blame on cambridge analytica, but it does not seem that is the case. we know how the political firm got the data in the first place? was, thishappened researcher by the name of alexander kogan created this out -- app that was sent to many facebook users. it was a personality quiz.

he later handed that data over to cambridge analytica, who was then supposed to use it in a way that would somehow benefit the trump then-candidacy for u.s. government. it does not sound like with the conversations we have had with those familiar that it was that helpful. they are in hot water over information that, far as we can tell, did not do a lot to help the trump administration, but nevermind that. do aact facebook did not good enough job of following this data once it left of the data -- they were told it was deleted, but now it turns out, that according to published reports, it was not deleted. havefaith -- does facebook control over the information, our private details, when it is on the platform? and more importantly now, when

it is taken off facebook and used by third parties? betty: it is fascinating, there are so many different parts of the story. i am curious about facebook internally. is there criticism they are not reacting fast enough? there are not people being held responsible? the sentiment about facebook and how they are reacting to this? tom: we are hearing a lot of outcry from both individuals on twitter and lawmakers speaking publicly, saying, we want to hear from zuckerberg. we want to have these hearings, and don't want them to just send a legal counsel or some engineer. we want zuckerberg to come and answer for this company he founded more than 10 years ago. this was a big criticism. there has been absolute radio silence from sheryl sandberg, mark zuckerberg, the two must public faces of the facebook. what we are told from facebook,

those executives are avoiding public statement until they can conduct their own investigation of what went down, what went wrong. i anticipate we will hear a lot from them eventually. it does not need to take that long. can't you, if you are sheryl sandberg or mark zuckerberg, make a preliminary statement aimed at reassuring advertisers, investors and users like you and me? betty: absolutely. particularly for two pretty savvy, media savvy people, it is surprising to see they have not come out publicly yet, tom. we have seen the stock price get how, but how damaging -- damaging our analysts saying this will become a business-wise, to facebook? spoken to a lot of analysts, read through, consumed research reports. there is a lot of overhang as we wait and see how toothy the regulation may be.

what they are also saying is that the underlying business remains strong. they have no reason to believe yet, have no reason for concern, that advertisers will leave that facebook in mass numbers. american users are going to leave the platform? see anecdotally people getting up in arms about it, disconnecting their facebook accounts. there is a lot of chatter on twitter, but is that translating to a mass movement that will hurt facebook and its ability to attract advertisers? it may be a while before we see how big the impact is. betty: certainly this is an ongoing story. tom giles, bloomberg technology editor. diving into the broader market action outside facebook, most edge higher, leaving facebook to deal with its own problems. energy shares providing a big lift, oil futures at a

three-week high. tomorrow on the fed. su keenan with more details on the market. >> we did see the market struggled to shrug off monday's strong tech selloff. the bulls are going to take the green on the screen. the dollar did show strength ahead of the fmoc -- ahead of the topix -- ahead of the fomc meeting. hadoil at a three-week high a lot to do with anticipation of wednesday possibly surprise data. hit, andaking a big many drug distributors down in a big way on president trump's opioid drug crackdown. let's go to g #btv 3732. he talked about how facebook is being left to fall over.

you see the drop from yesterday, where all the things -- where all the fangs were over. many of the fang stocks, particularly amazon and netflix, going higher. we did see apple and google relatively flat. many analysts are saying you're likely to see more of a divergence. after hours trading, american express up. they had a record shipping period for the holidays. while they reported tax gains that came out later, they may be offset by the tariffs situation. you can see the stock is turned lower. yvonne: that certainly is one to watch. su, thank you. friday, deadline day in washington once again. the upcoming federal spending and ask if congress can

move past stopgap measures. decision, as a jay powell heads his first meeting. this is bloomberg. ♪

♪ my personal outlook for the economy has strengthened since december. each member of the fomc will be appropriate monetary policy as we go into the march meeting. what we have seen, incoming data suggests a strengthening in the economy. we see strength in the labor market. we have seen data that, in my case, will add confidence to my view that inflation is moving up to target. while many factors shape economic outlook, some headwinds the u.s. faced in previous years have turned and the tailwinds. fiscal policy has become more

stimulative and foreign demand for u.s. exports is on a firmer trajectory. by continuing to gradually raise interest rates over time, we are trying to balance those two good things and achieve inflation moving up to target, and ensure the economy does not overheat. betty: some of the recent views from the new fed chair jay powell ahead of his first policy meeting tomorrow. let's take a look at the fed's decision with a chief financial economist, chris rupkey. we're also joined by kathleen hays. going to be a busy day tomorrow. chris, we had a guest earlier that said, it does not matter to me whether powell is hawkish or not or if there is enough slack in the labor department that tells me we are going to see probably three rate hikes, and forget about the fourth one. lowestunemployment the in decades, 1.4%, that is crazy

stuff. crazy saying if there are no wages -- betty: not u6. chris: don't forget they pushed back schumer saying, we won't wait for wages before pushing off, so i think it is settled. three or four rate hikes is important. powell just said the economy had strengthened. since he said that, retail sales have fallen three consecutive months. consumers are no longer spending their massive tax cuts. the two inflation readings, have come down. they were 1.9%, now they are 2.6%. powell giving more confidence that inflation was coming back. kathleen: let me jump in here with a bloomberg chart. we love this, because it talks to what you were mentioning now. it is g #btv 2315.

let's see if i can get this lower. what we're looking at is payroll growth. the last one was 313,000. and the moving average, 250,000. wages are stuck -- may be averaging 2.6%, year-over-year. they have not accelerated. the argument for three seems to me, would it hurt to wait? hike rates in march. is there any urgency to move now? isn't, ande really it comes down to, what did powell say? i am sure if you asked him off wayrecord, he would say, no did i suggest four rate hikes. we will see. one issue for me is, what is the neutral level of rates on the part of the fed? it is 2.75 at the moment.

if they are only going to go to 2.75, why do they have to go 100 this year? i am shooting my argument in the foot. i do not think they should be data dependent. do it at a measured pace. kathleen: not data dependent? chris: no, the 10th year of the expansion starts in july. can they do it, can the economy take it? they covered it already, cyclically. yvonne: i think we are all scratching our heads, the way you were, about what we have been seeing with just how much of a spiked. i have a chart that highlights this, g #btv 2835. this is a live overnight trade swap. it has blown out more than 50 basis points. usually there is reason to panic, but it seems it is driven more by supply than demand. is there reason to be worried? chris: in the old days they

would take euro futures or libor, and say, if it widens, there was a problem with the bank system, where people think banks are suspect, so they markup borrowing costs. it seems to be going up -- i am not sure why it is going up, but it is definitely discounting a second rate hike. libor right now. when they raise it tomorrow, it will be 50 basis points above the new fed target. that means we are already discounting another rate hike in june. i don't know why the market has gotten so excitable, i don't understand it. kathleen: i want to get an economist's, take on this chart g #btv 2420, back in the labor markets. this argument from some, there is slack in the labor market.

the yellow line shows the u.s. job openings. as you might expect, reflects this robust jobs market, and unemployment rate at 4%. line, seems white to be flattening. star rise here, but has been flattening out over the last year or so. why is that? we have job openings, but slow hiring. millionhat is a joke, 6 job openings. you put that against the unemployed in america, the unemployment rate would be nonexistent. just came out. she is already speaking out. she has come out and said jobs creation hiring is going to slow. that is why last months number was funny, 315,000. we are pretty much on the same page that, because the unemployment rate is so low, there is no one left to employ,

no one left to participate back in the economy. i think yellen's comment was in sync with the most economists. 90will slow jobs creation to to 120 per month, the next few years, steadily. what do we do? do we say the economy is slowing? kathleen: if -- maybe that national rate is even lower? chris: it could go lower. that is no argument against the jobs coming down to only 100,000 per month. kathleen: you don't think there are more on the sidelines? chris: lots of people are retired, under 18 years old, they can't get childcare. kathleen: maybe they will give up drugs. chris: there are not that many men out of the labor force, i disagree with powell on that. people on the labor force, 95 million.

the people that say i am out of the labor force and one a job, it is only 5 million. it sounds like a lot, but it does not change that often. there is no sign of economic distress i can see in the fact that there are people out of labor force. i don't buy it. betty: we will see what howell has to say tomorrow. chris, thank you so much. bank rupkey, mufg union economist. don't forget dayb . watch us live, watch past interviews, dive into bloomberg functions we talk about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪

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

kong. programs ofalted its autonomous driver, after an autonomous vehicle and uber knock-down a woman in arizona. they are not speculating on what it means for the self driving sector. but it said it could have an emotional effect on test drivers, so they are putting the program on hold temporarily. after noble group suing defaulting on a debt payment. goldie block -- goldilocks filed a suit. noble has struggled ever since their accounting was questioned. they cut the credit score to a level signifying default, it was $379 billion. amazon delivering again. shows its market cap exceeding that of alphabet. this is bloomberg. ♪ retail.

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. ♪ yvonne: 7:30 a.m. wednesday in hong kong. the sun is out, but the temperature is dipping. 30 minutes away from asia's first market open. p.m. tuesday in new york. the s&p up 0.1%. the dow adding on over 100 points. i am betty liu in new york. man in hong yvonne kong. let's get the first word news with jessica summers. >> facebook is said to be drawing scrutiny from the u.s. privacy watchdog and congressional committees over its mishandled data scandal. the federal trade commission is

investigating whether facebook violated a 2011 decree over handling personal information. cambridge analytica has suspended ceo alexander nix, saying his it secretly recorded comments are unacceptable. the european union preparing to offer the u.k. only a bare points -- a bare-bones deal after brexit. only as long as it considers british rules to be equivalent. the u.k. government is propped up by the democratic unionists in ireland. leader arlene foster says dublin should relax its approach to brexit. the italian finance minister says it could be weeks or a couple months before new government is formed. some groups have claimed victory, yet neither has established a parliamentary recovery. the centerleft democratic party will go into opposition once that happens.

it follows the worst ever elections result. >> investors should expect a resilient economy, which continues to be resilient. it is not unusual in europe. we see many examples. the latest is germany. why should italy be different? >> authorities are investigating an explosion at a fedex facility in texas. ity say it is not clear if is linked to bombs that killed two people in austin earlier this month. when fedex employee was injured in the blast. it used a sophisticated tripwire trigger. police have said they fear a serial bomber is at work in texas. 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: jessica, thank you. bracing for the fed decision.

japan closed for a holiday. let's bring in sophie kamaruddin to see what she is watching this wednesday. >> jay powell is the man in the spotlight. while we wait to see what the fed decides, we have earnings to preoccupy us in asia, particularly from china. we have the relief filing from washington that could boost to the mood in asia. let's see have futures in seoul are playing out. aussie stocks rising a second day with a miners in the lead. eco-agenda, it is a light day-to-day. thai trade among the highlights. take a look at australia. oil companies are climbing, tracking their best over their u.s. peers. myer having a good start to the day, the retailer climbing,

despite selloffs from the first half, due to store exit costs. the earliest sales have improved. trade protectionism women -- remaining above their. i want to show you g #btv 6652 korean heavyweights. have a falleno 13% from their february high. rankingheir number five under samsung biologics. 240% since then. that threatens hyundai motor's spot, the line in yellow. the automaker has been under pressure, that trump tariffs will harm their production and expansion plans. tencent up to bat, as you can see on g #btv 9484. analysts have raised the price target consistently.

earlier this week, goldman hiking their forecast by 22%. that is not even the most bullish prediction, that is morgan stanley. as you can see on the bottom half of this chart, tencent once again overtaking facebook, as the zuck's dad week continues. betty: thank you so much, sophie kamaruddin, checking on the markets. amazon vaulting ahead of google's parent now for that in market value for the first time, a sign of growing investor optimism. milestone was reached as amazon steps into new markets, groceries, health insurance, consumer devices. .et's get the san francisco fascinating, i think apple is only company ahead of amazon now? >> that is right, there is a photo yesterday on twitter of

jeff bezos with a robotic dog. it was developed by a google company. image, as google is the top dog right now. betty: what does it say? retail a proxy on the space, or is it much more than that? >> to start with it is something like that. amazon's addressable market is huge. it is a giant company with lots of revenue, but it only accounts for 10% to 15% of the retail market in the u.s.. there are a lot of questions about whether they will be able to get into physical retail as with ofit has done whole foods grocery acquisitions, the potential is there. when you compare that to google, which has a massive share of the digital advertising market, their suggestible market is not

as big as amazon. betty: it is surprising amazon has grown this far this fast, particularly in recent years, without getting a ton of scrutiny from regulators. now that it continues to vault to this top position, are you going to start seeing more jabs at amazon? far, amazon has exerted downward pressure on prices for consumers. is the main that test, antitrust regulators. amazony antitrust case has been involved with was to do with apple and the regulators sided against apple in that one. that was in the e-book market. other than that, it has a small share of a giant market. yvonne: we talked about e-commerce, how much they have stated my top position.

when it comes to google, what should they be worried about when it comes to amazon? is it the massively they have in the cloud, or amazon echo? alistair: google is probably third in the public cloud market. amazon is way in front. you have to look at google's search engine and massive advertising business behind that. nowadays in the u.s. when people search for stuff to buy, often they go straight to the amazon app and don't bother to go to google search. some of the problem, the front end is fine. the problem starts to happen when you want to buy that and one it shipped to your home. right now, google replies on other retailers like target and walmart. they have to ship it. google has no shipping infrastructure like amazon. ultimately, amazon is getting more of the valuable search results and search queries, so

it knows more about what people are doing. it will add in advertising business on top of that. yvonne: is there anything that can get into amazon's way? they have gotten into health care possibly, e-commerce, grocery stores. alistair: i think grocery in physical retail approach they are making, there are still big question marks over that. they have been doing grocery delivery for a decade, never made any money on that. it is not clear how good the whole foods business will be. they have massive shipping costs still. everyone thinks everything they do is amazing, but they will hit problems for sure. yvonne: thank you, alistair barr, joining us from san francisco. switching gears to billionaire james packard. he has quit as the director of crown reports, citing personal reasons.

we have more on this. there is only a brief statement we got from crown. a we heard from packard himself he set a turbulent couple months in business and his personal life. does this come as a surprise? angus: as you say, we have not gotten details from crown resorts, but we have a statement from crown's private investment company come the major shareholder of crown. a spokesperson said the billionaire is suffering from mental health issues and is stepping back from all commitments. as you say, it is a short statement, we don't have full details. the last few years have certainly been turbulent for packer.cker -- he had an engagement with mariah carey that collapsed, and then

his crown resorts international empire unraveled after china. ofwas detained -- a group employees was detained and jailed last year. he has had to reassess his old gaming empire, from macau, las vegas. he was divorced previously twice. the man has been under a huge amount of private send business pressure. james packer is a very private man. it is unusual for him to come out with a statement like this, and acknowledgment of mental health issues. it is progress in itself. betty: it seems they revealed a sentences.e two it is not the first time, though. he has had an on and off relationship with crown resorts, hasn't he?

angus: he has. crown resorts is synonymous with james packer, but in 2015 he stepped down as chairman and then director that year. he was attempting around that time to buy back crown assets. he came back to the board last year to get a tighter grip on the company, because it was battling so many problems in china. it was threatening the existence of the international assets and his vision. that has not worked out. now he stepped it down completely. it is not yet known whether he will retire, for the extent of his illness. betty: thank you, there certainly seems to be a lot more to this story. vu all over again with the

u.s. government on the verge of shutting down. this is bloomberg. ♪

♪ trade and tariffs were top of the agenda at the g20 as financial leaders met in argentina. steve mnuchin addressed at the meeting saying washington is not afraid of a trade war. we have the report from buenos aires. >> the g20 ministers agreed trade matters, but how much it has to enhance its value remains the dispute. in their communique, the ministers highlighted the importance of international trade and said we are working to strengthen the contribution of trade to our economy. >> there was a lot of attention,

it was very constructive. in this understanding that trade is good for all countries, and we have to deepen that, in a way that is a win-win situation for all. >> tensions were evident as participants expressed frustration with an american thread they said could upend the theal economic growth, ministers say is otherwise set to accelerate this year. >> the u.s. is the largest trading market and will continue to be. this administration will make sure we are treated fairly. i think that is the message the g20 heard last year, and have heard loud and clear again today. >> the language on currencies was little changed, with a promise to refrain from competitive devaluation. for the first time, the g20 statement made mention of crypto assets and the need to regulate the risks they pose. the group took no position on

taxing digital companies such as amazon or google, saying the impacts of digitalization on the economy and tax system remain key outstanding issues. michael mckee, bloomberg, buenos aires. betty: that was mike mckee on the g20 talks. first, another deadline looming in washington, unless lawmakers agree on a spending bill by friday, the government is going to shut down again. let's cross over to d.c. and speak to a policy analyst, terry haines. at it again? >> it is a gifted that keeps on giving. [laughter] yvonne: indeed. are we going to become numb to this? what could be the fallout if we get to the point of another shutdown? a marketom perspective, i think the markets are already pretty numb to it.

my view is that we are 90% no shutdown. the difference between mid-march and mid-january when we did have a brief shutdown in washington is that democrats have pretty much given up on trying to leverage the spending bill. on dreamers, republicans have given up on trying to leverage it for additional border security. both parties trying to come together before the end of the week and figure something out. i think it is very likely they will. betty: if they figure something it going to be -- for how long is the question? are we going to be seeing groundhog day over and over again? terry: [laughter] to i think what we are going get is a full year spending bill for fiscal 2018. they have kicked the can down the road for six months, but we

are going to get a final bill. if you don't see one by the end of the week, it is largely because we are going to have a major storm in the east. that might delay things a bit. both sides are committed to coming up with something before the end of the week. betty: you mentioned the markets are shrugging off this news. they were rattled a little by the mueller investigation, now seem to have pushed that aside as well, in favor of facebook today. and the other day could be about trade. why do you think the news in ishington, noise as well, not at this point affecting the larger market sentiment and overall economy? terry: i think markets have become largely inert, not only are they numb to it.

in the year plus of this administration, markets are getting smarter about exactly what is consequential for markets and what is not. markets seem to want to forgive an awful lot that happens in washington, for the sake of getting economic growth. they have sure gotten it. between tax legislation in the spending deal, which was first telegraphed in february, we think adds an extra 30 basis points to growth overall. plus, toone on a year be worrying about overheating. yvonne: now we are worried about a potential trade war. steve mnuchin says he is not afraid of one, or the u.s. is, at least. we heard from the chinese -shing offering a long-standing grievance, saying china made further protections

for foreigners investing in the economy. could we expect a water down 301 on friday? our view, we see no trade war, but no trade piece. it does not mean that one be tit-for-tat. it does not mean you will get relatively small actions, where lots of exemptions will happen. i don't know that you get 301 by friday. any 301 action will be a springboard. that is something washington wants. judging by recent comments of the investor, the chinese want. i think it will actually happen. it is ins believe their best interest not to precipitously or

quickly. we look forward to a negotiation. yvonne: on the russia investigation, we heard silence from members of the republicans. i guess the exception was lindsey graham, about protecting mueller from being fired. are we getting closer to that? terry: to mueller being fired? yvonne: yes. all.: no, not at my view of this is that questions keep being asked but all. the bottom line is, if you watch it steadily, there has never been a significant move by the white house to try to fire mueller. they suggested to the justice department that they do so. the white house continues to assure through white house is in privately that people like speaker ryan and leader mcconnell, they are not going in that direction. you have a lot of political smoke, but no fire. yvonne: thank you.

continues.- mueller for bloomberg subscribers, go to dayb on your terminal. this is bloomberg. ♪

♪ saudi arabia's richest man speaking publicly for the first time since the 10 week jailing. he told bloomberg he bears no grudges and is planning to raise that to fund new deals. >> it is ranging $1 billion to $2 billion of debt. we are looking for a second deal.

last year we made a few big deals. it is market in the u.s., not -- i would not say overvalued. we would like to get some firepower ready for us. yes, i think we are on the verge of getting the yuan to financing facilities. >> you are thinking of a deal of what size? $200 billion to $300 billion. >> in what industry? >> we are open. i have heard you were working with goldman sachs. blankfeinthanked mr. personally for the previous deal, for this stake in the saudi bank. we are working through them and

others. [indiscernible] would you consider ever restructuring kingdom holdings to make it a little bit easier for people outside saudi arabia to understand? taking perhaps the domestic projects and domestic real estate, and turning it into a rate? an astute not only reporteran, but asttue reporter. there will be real estate, the tower, and our other holdings. it is ongoing. we have an ongoing discussion. betty: that was saudi arabia's prince alwaleed.

more ahead. a banking giving its view on asian tech, as facebook and apple cast a shadow of some of the region's biggest companies. this is bloomberg. ♪

yvonne: 8:00 a.m. here in hong kong, live from bloomberg's asian headquarters. i am yvonne man. welcome to "bloomberg daybreak: asia." aia-pacific markets set for small advance as investors set off from the tech selloffs at the start of the week. still loom over facebook after congress prepares an investigation into the mishandled data scandal. betty: from bloomberg's global headquarters, i am betty moved in new york, after 8:00 p.m. on tuesday evening. planning to block president trump's tariffs. ,nd a new act in the drama

goldilocks investors suing over allegedly inflated profits. yvonne: it really is going to be a tale of two cascade tech giants today. we are talking about facebook still in the doldrums from the scandal. earnings report today at the end of the close in hong kong will be a big one. how bifurcated these companies are at the moment. analysts are so excited about this stock, goldman raising the pot -- price target more than 20% ahead of the earnings for tencent. capcan see the market falling below the half a trillion mark for the first time since the fall. it shows the asian tech still

has legs to go today. betty: those who have been watching asian technology, the development has long been saying, stop talking about facebook and google. talk about tencent and alibaba baidu. you mentioned looking at the market cap of facebook, they have been criticized for so long , and it seems like this will be the moment they really take a hit on this news. will be.erhaps they we will see how things are looking here in asia as well. we are setting up with many where i leave -- many rallies here ahead of the fed. latestkamaruddin has the today. reporter: japan, the yen store trading ahead of the fed decision. we are seeing modest advances, the cost be -- kospi adding a 10th of 1%. sydney, aussie stocks

higher by resource players. the budget adding a third of 1%. when it comes to the ego agenda, it is day-to-day in the region. we just had malaysia inflation and high trade along with the highlights. tencent results today. checking on the risk radar, 10 year treasury yields around 2.9%. the yen, softer by a touch as the dollar holds steady. the timeline for market rebalancing, bringing it forward to september. that is helping give it a boost today. for another gauge of risk appetites, let's bring up this chart. to -- powell expected

widening has more than doubled since the end of january. we haven't seen this level since 2009. should the spread remain elevated after the possible rate something more structural may be taking place as conditions can become sharper than anticipated. betty: thank you so much. investors are now waiting for jay powell's take revealed -- big reveal. why are you -- why is it hard to get excited about what's going on with the fed? >> this is very much going to be a traders meeting rather than investors meeting. it will all be short-term stuff. will be hot be raised in terms of the terminal rate being higher, or are they going to move to live meetings the of conference?

all these are important to look at, but they are mainly going to call short-term volatility. i don't think it is a dominant issue economic. the main chefs will be negative, if anything. they make every press conference live. that will increase in pied volatility -- implied volatility. the other thing is they will squeeze with -- liquidity by being more hawkish. the surprise site is to be negative for risk assets and equities, and investors should be focused on bigger issues, like trade and politics, and the fact that over global monetary policy is tightening. betty: what if powell comes out and does not appear to be more hawkish? how will that be interpreted by the market? >> that is a very valid question. that will provide short-term support if he was a little more

dovish, but within a week we will not be focusing on the anymore. the bigger reaction in yields will be at the long end. it will be a real shock at the notet if he says they will hike even three times. if he says that, that will be worrying for the u.s. economy. i think the dovish surprise will be felt at the long end of the .ond curve i think in one week we will not be focusing on the issue. yvonne: one thing you are working -- worried about, we were showing industrial metals. how this has been breaking down right now, there are concerns about global growth, china specifically here. given how correlated we have seen the commodities index, that means more downside. >> absolutely, this is a very worrying chart. that gives the global economy another boost. it sends the message the u.s.

administration could get policy past. now, looking a lot more negative. that's because there is a shadow of trade tensions looming. we don't know what the u.s. will implement in terms of trying to punish china, but that is risking a serious escalation of trade wars. that is negative for global growth. at the same time, this is worrying for china going forward. is there a slight slowdown? overall, the commodities is important to watch. this can send a negative message for equities and the global economy. yvonne: we have actually seen oil hold up quite well in spite of what we are seeing. is that a sign of relief, or -- endhat end following up following what we see? >> it is a sign of relief, but it's interesting what we are seeing for diversion.

it's not sustainable for two reasons. we'll is the biggest cost for the extraction, production, distribution of most other commodities. it is where you see oil going one way and the commodity index going the other way. this means that it emphasizes weak other commodities are beyond oil, which is negative. it also suggest they will go the same way again. everyone is watching now, will oil drag of the rest of the complex, or will it be the next thing to think? -- sink? yvonne: mark cudmore, our bloomberg news markets live macro strategist. you can check out our markets, get the market run down in just one click with commentary and analysis from mark and his team of experts. find out what's affecting your investments.

check first word news with remy inocencio. reporter: g20 finance ministers have failed to block president trump's protectionist plan, despite warnings that his tariff s threaten to undermine the global economy. they had little to show it with discussions from secretary mnuchin, and the u.s. ended the day co-opting for allies lobbying for exemptions. the closing statement removed previous pledges to fight protectionism. tensions, meantime, set to rise between washington and beijing as president trump forges ahead with broad tariffs on chinese products. we are being told measures worth $60 billion could be imposed as soon as this friday. for what thehment administration perceives as intellectual property theft. the u.s. says american companies are forced to hand over tech know-how as it price of doing business in china. now to tech, facebook is said to

be drawing scrutiny from the policy watchdog and powerful congressional committees over the mishandled global scandal -- data scandal. investigatingis whether facebook violated a 2011 decree over data. at the same time, cambridge analytica has suspended the ceo, saying his secretly reported conference -- comments are unacceptable. and a shooting at a maryland high school left two students wounded and the suspect dead. police say a teenaged boy shot and other students before being confronted by a school resource officer. it's not clear whether the boy took his own life or was shot by the officer. a 16-year-old girl suffered what has been described as life-threatening injuries. a 14-year-old boy was also wounded. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

i am remy innocence you. this is bloomberg. betty: thank you. headlinesd, positive beating estimates. but up next, talking tencent as analysts raised price targets. this is bloomberg. ♪

betty: this is "bloomberg daybreak: asia." i am betty liu in new york. yvonne: i am by man in new york. chinese tech juggernaut tencent reports fourth-quarter results after the market closes in hong kong later today. let's get to stephen engle, here with a preview. we have to say this every year when it comes to tencent, but 2017 was quite a year. reporter: it was. they announced as well, we cap, global users surpassing one billion -- one billion.

that has created a giant ecosystem. their bread and butter often times is the mobile gaming and pc gaming, but they are also spreading quite far and wide, like alibaba is doing, into faster growing and margin squeezing businesses like mobile. that's why we might see a squeeze and the payments. we can see where we are seeing the tumbling growth margins -- gross margins for tencent. we can see a downward slope, but that's why they are spending more in other businesses that are not returning as much as the gaming businesses right now. we are expecting gaming to have a pretty good quarter. fourth-quarter net income expected to come in about 16.6 billion yuan, more than 16

billion u.s. dollars u.s.3 billion in the third quarter, it was 65.2 billion yuan. if you look at the top end of the range, 70.8 billion, that would be an increase from the previous quarter of about 8.5%. they are doing pretty well on the gaming and mobile gaming. yvonne: but there is still more competition. reporter: the margin will be squeezed because of the other areas. betty: speaking of the other areas, mobile gaming, as you mentioned, the bread and butter. what about other services? stephen: the payment business will be key, and the music business and video streaming. they have the periscope or instagram version, and also tencent music. new is a based in

other spin off of other divisions. tencent also like alibaba is going into many different areas, including traditional retail. alibaba has a new retail concept. tencent is playing catch-up. they have an arrangement with a superstar. they are investing in china. they are leveraging off of the ubiquitous mobile offerings and he payments in china. yvonne: thank you, stephen engle there. let's bring in the managing director and head of asian media at macquarrie bank. us here inor joining the hong kong studio. the interesting you think stock will outperform, but the target price you have is lower than what we are seeing in the current price. what does this mean? >> that means we are still positive on tencent in the is -- term, and tencent

in the near-term, for the near-term, we are seeing weakness. this is actually weak for the pc games. game, the one mobile dau number jumped off in the fourth quarter. looking to q1, we noticed [indiscernible] game, the dau number jumped off in the fourth quarter. for the other business segments like advertising payments, tencent will competition and challenges, especially for the payment. this has become increasingly important, and is contributing more than 20% of revenue. pboc has issued regulations targeting the payment platform. it declined from 5 billion

quarter to only 500 million. yvonne: the big news we got was the money gram and financial deals collapsing in the u.s. does that give tencent the upper hand in the competition when it comes to payments space? >> both tencent and alibaba are trying to do global expansion. theaba is probably having first over there. that will give tencent sometime to catch up in terms of international expansion.in terms of geographic coverage, tencent is still in asian countries in terms of payments, but alibaba has gone global. yvonne: tell me a little more wichat itself. there are rumblings that they reached their peak. do you think the company is better when it comes to monetizing the chat system? >> the amazing thing about tencent, every time you think tencent products is reaching the

aging stage, they come up with something else. the surprise we got in the past six months is this embedded feature in the chat system. it opened a new door for tencent to connect their online merchants and users with off-line services. the traffic has more than doubled in the past three months. i think with this program, that will probably revised the chat wichat, and offer more in e-commerce and off-line services. was a great chart in the diverging fortunes, looking at tencent valuations versus facebook, and you continually see that. more and more analysts are talking about paying more attention to tencent, alibaba, and baidu. do you think the problems we are

seeing with facebook and other tech companies, being an opportunity for these tech giants? >> in terms of divergence, it is level,at in terms of the tencent is trading at 40 times this year versus facebook, only in the mid-20's. however, i think this valuation is consistent with earnings growth the companies can deliver. if you look at topline growth this quarter, it should be 60% and earnings should be over 40%. that's why the market's giving them over 40 times pe. one thing the two companies share in common is that both are trying to do the international expansion at this stage, and both companies are seeing the margin of contraction due to expansion into the new areas, and new countries. i think international expansion a move forwill be tencent, and that is why we hear

that they are hiring more talent from different companies, including overseas companies. a great point. tencent, as you mentioned, these companies so far have been living up to those high pes. how long do you think that is going to continue? >> i think for internet giants like tencent, alibaba, and facebook or google, they are already reaching a stage that they cannot really sustain this of high earnings growth simply with their own organic growth. that's why you're seeing tencent actually is stepping up their m&a activities. the tencent president made comments not too long ago that the total market cap of the investors have surpassed that of tencent recently. with these privacy

issues surrounding facebook, do you think that actually applies for chinese tech companies in any way? >> i think the product issue always -- privacy issue always exists in the internet space. i came across an interesting movie on an airplane, called "the circle," which is basically a story about facebook anyway. it's how the internet can make a balance between monetization and also protecting privacy. at the end of the day, it is the user's choice. if you want more free services, there is something you need to give up. by the time the internet users have more awareness about privacy, probably by that time, they also need to pay more for those services that they used to enjoy for free. yvonne: we appreciate your insight, managing director and head of asian internet and media and macquarrie ventures. check out all the big news of the day on bloomberg radio.

also you can download the app, bloomberg radio plus, or bloombergradio.com. this is bloomberg. ♪

betty: i am betty liu here in new york, where the problems keep piling up for noble group. they are being sued by one of their top investors. ramy inocencio has been following noble. big surprise.a also not a big surprise that noble is not going to take this lying down. crossing the bloomberg terminal, noble group said it will "vigorously push back against this lawsuit." not only that, they say we

haven't been served this writ, but bloomberg has seen it. is a 72 page document. the allegations go from accusations of inflating how much they are making, salary,ons of too much also accusations of a cover-up. i want to show you a little bit more in terms of the details. i call this goldilocks versus the three bears. the top defendants have a name. the founder, cfo, and ceo. they want noble to admit they against fiduciary investors. they also want $169 million paid to their executives. thatnteresting thing is there is also a ratings cut that happens. snp cut the credit score to a d from a double seat, which is signifying a default.

double c, signifying a default. we will see how this trading fairs ahead in asia trading, but this could signify investors are seeing some commitment to the restructure. betty: what does this mean for the big restructuring noble is hoping to clinch? reporter: i want to show you that this could all be possibly not happening. the analyst over at i fast court credit has said this will drag out the debt restructuring and increases uncertainty on the outcome. definitely not good news for noble. my big question is that goldilocks is just one of the top investment companies. will these others follow? i will leave that with you. much.: thank you so

just ahead, a case of you are either with us or against us. the g20 failing to stop president trump's tariffs and traditional resistance to protectionism. 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: you are watching "bloomberg daybreak: asia." i am yvonne man in hong kong. betty: i am betty liu, you are watching "bloomberg daybreak: asia" in new york. let's get to first word news with ramy inocencio. reporter: the european union is preparing to offer the u.k. a bare-bones breaking deal after brexit. this will allow access to financial markets only as long as it considers british rules to be equivalent. the u.k. government is propped up by the democratic unionists in northern ireland. the leader arlene foster says on brexit.ld relax

the u.k. finance minister says it could be weeks or months before a new government is formed. the anti-immigrant league and skeptic five-star movement have claimed victory, but neither has established a parliamentary majority yet. democratic party will go into power after the worst reason -- election results in history. >> investors said should -- should expect a resistance. the fact that this is not unusual in europe. cases, as withy germany, where months were needed to find a stable government. why would italy be different? reporter: president trump prince from crown saudi arabia and welcomed a big purchaser of u.s. weapons and investments. riyadh has finalized the purchase of more than $12 billion worth of planes, missiles, and warships from american companies.

prince mohammed says the kingdom is considering u.s. investment opportunities of up to $400 billion. authorities investigating an explosion at a fedex facility in texas say it is not clear it is bombs to a series of past that killed two in austin earlier this month. one employee was wounded in this blast. it used relatively sophisticated tripwire triggering. the simple package bombs were in austin. police say serial bomber could be at work. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. yvonne: thank you. let's see how the asian markets are shaping up so far. japan is closed. let's get the latest with sophie kamaruddin. reporter: investors bracing for the fomc direction.

in sydney, shares are being led higher by resource players. morgan stanley forecasted an increase in coal prices through 2019. i'll extending the climb on a three-week high at opec, rejigging expectations for rebalancing the market. rising for a kospi second day. when you took best take a look at the leaders in index points, lg gaining ground and reports that a 13 trillion won electric car battery order with volkswagen, yet to sign a contract. they are at the top of the leaderboard in terms of points. we have other algae related stocks also gaining ground.

motors, up 7/10 of 1%. let's switch it out to check in on laggards in korea so far today. sharesighlight samsung that have been fluctuating down 2/10 of 1%. this morning, we did get the latest health check on korean trade. the first 20 days of the month saw exports rise 9.3%, picking up on the reading in february. checking in on the korean won, 1071 a dollar handle. our colleague mark cranfield could start -- won

to enjoy a peace dividend as leaders in japan and korea meet ahead of the trump-kim summit. longer-term for the korean won as the economy is expected to keep on moving. yvonne: sophie kamaruddin checking the markets. the finance ministers meeting has tried to stop the president trump's tariffs. the final communique also abandoned traditional opposition to protectionism.

what exactly did the u.s. secure at the g20 event? reporter: they went up when osiris and doubled down on the message that they want to shrink the u.s. trade deficit, and do it through whatever means they can. yvonne: it seems like people were focused on the exception listed then reigning back on the protections. reporter: it's interesting, because outwardly, they are looking at free-trade and liberalism. have two dynamics going on at this time. at the on goods, but same time, back channels and can we get examples -- exemptions to these? , there isr backstory wholesale agreement, but the markets could open up a bit more with a freer flow of goods. betty: certainly when you get past the headlines, there are issues that need to be tackled. li addressingmier

the trade that in his q and a? reporter: really interesting. there was something of a conciliatory tone. we know there was $60 billion worth of tariffs on chinese goods. we just have an expectation it is coming. protect,ed china will but will not force technology transfers, open up the transfer, -- there's aerally feeling that when and if mr. trump does move on china that perhaps the first thing china does do is offer concessions to ease tensions rather than immediately go down the road of a tit-for-tat trade war. we don't know yet until mr. trump acts, but that's the mood. betty: and you keep hearing that the trade war will be devastating, but describe devastating are damaging. would it be? reporter: there's no doubt a

float -- full-blown trade war will be damaging, but we are still a long way from that. ,etty: thank you so much bloomberg's chief asia economics correspondent, making sense of all these headlines. china continues to promise it will protect the intellectual property of foreign investors. we reiterate that we want to avoid that trade war with the u.s. bloomberg spoke to the president of the u.s. china business council who says beijing should remember that actions mean more than words in this growing that -- spat. >> a few weeks back, there were and there aluminum, was initial discussion of a trade war with china. my perspective, they were not as much about a direct china trade approach by the trump administration as they were more about the trump administration's approach on trade war generally. trade casecalled 301

over intellectual property protection and transfer of technology here that is required for market entry, those are issues that are directly related to china, and any actions taken would be directly at china. i think you are in a different situation. there's no doubt u.s. companies feel tuitions are important. intellectual property protection is something that needs to be further improved. for the technology transfer issues, it's not something every american company faces, but the ones that do tend to be in sectors that are more strategic, and if they have to give over technology for market access, that is a very acute problem for the companies. reporter: do you think they will be assured by what the premier said about insisting that in fact technology transfers would not be forced upon western companies now? >> that's fine. we are glad he is saying those things, but thinking about what is the practical solution here, here's what i am hoping might be done. joint venture requirements.

why don't we remove those? if the companies can invest 100%, that is something that would remove some of the therage that might give government the ability to force technology transfers, or on the licensing side. in order to get a license, the government has to approve it, that's another way there might be leverage to acquire -- require a company to bring over more technology. those are the practical focused solutions we would be looking for that would address the problem. reporter: do you think president to -- xi jinping being able rule for life, is that a short-term positive for investors in the china market or a longer-term significant risk? >> as i mentioned, there is uncertainty about the policy direction. we've learned a lot about reforms but have not seen much action. that's undermining confidence in the business community. what matters is china moving forward with actual

implementation. that is the biggest thing. reporter: do you think centralized leadership allows china to do that now? >> it could, but we have to see how they roll things out. i will give you an example. one of the big issues is regulatory uncertainty or regulatory consistency, rules being interpreted or implemented in different ways, maybe across agencies or localities. centralization would result in less of that regulatory inconsistency. that could be a positive thing. we will have to start looking at what are the result of what we have seen happening in the past two and a half weeks. again, i would come back to the point, the hope is that china will actually move forward, because that's what's necessary to restore business confidence in china's policy direction and remove that uncertainty. i think it would help >> that was president john fris

bie. how the merger is affecting risk. this is bloomberg. ♪

>> this is daybreak asia. i am betty liu in new york. income rose highlighting a push in the technology to drive earnings. by chiefined strategist james garner and also bringing in insurance analyst stephen lamb. thanks her joining us. we have been talking about how the business has done well but the real issue has been sent tech and the company talk about getting the part -- tech

potential that the company is being undervalued. how are you assessing the situation? last two, -- the finance one is worth. we are not a traditional financial institution but we straddle the financial services and digital divide. we are hybrid but what is significant is we have been investing. last year we spent 10 billion .&b something that is striking is the value from technology is not just the incubation and listing

of the health businesses. it is empowering. i will give you one powerful statistic. last year we acquired 46 million new financial customers. 40% came from five you could -- internet ecosystems. that you haverisk been sailing -- is selling to your rivals, we are taking a picture at a car accident and it gives you are a pair cost and an estimate. is there a risk that you are eroding your insurance business when you are offering technology to your rivals? >> not at all. the opposite. it is opening up new revenue streams. we will see how much we can see the pnc -- make from business. it is subject to the profitability of how much it earns but now through why

connect we are selling our technology services to over 400 chinese banks, 14 insurers and one of the offerings of the 14 insurances are unique image based claims assessment technology. by setting these services it is opening up new revenue streams. >> jessica 10 mentioned the target was to generate half of your profits from technology. how close are you? >> there is still a gap. last year was a breakthrough for us. we went from an operating loss of 3.4 billion to of 3.3ating profit billion. it was a turning point last year. to be clear, some of these businesses which we have been incubating, some of them for seven years are still, some of them are building platforms. the next step is acquiring users and attaching revenue and it is

making profit. some of them are making profit. some of them are acquiring users are generating revenue states. ideal what would be your mix between traditional insurance and your traditional operations and technology. is there an ideal goal or an ideal mix here? >> know, we do not have an ideal mix. the group is to transform from being a capital driven enterprise to a technology driven enterprise and over the next two years you will see the contribution from technology be a more material component of earnings and valuation. we have come off the mpc and saw this merger of the insurance and banks and regulars. how is that going to impact the sector as a whole?

stephen: this is a good thing because what it does is basically disciplined the sector in terms of controlling the asset risks. and also the product that they are trying to sell. the whole industry is toward a long-term protection. putting themng is the b under one roof helps. a lot of these insurance companies have substantial stake in the bank. they have more clarity into the streamlining approval processes, communication, those are important things. have impact when it comes to premiums? down on theped ability of insurers to pay survival benefits in the first

five years. projected selling these -- products and started preparing for a more challenging opening campaign. so far it seems our performance has done relatively well. ven's point,to ste ping an is not focused on market share. we are -- the regulation document positioned the industry to focus on high-margin protection. yvonne: the crackdown has benefited. >> they operate in a different market segment. we are not focused on very high premium saving products which create little value for our shareholders. protection is our focus and 70% of our value came from protection. 1.i want to add is last year we grew our numbers by 25% to one

point three 9 million. on top of that we grew the productivity by 7%. yvonne: i have a question for steve. saw in the moves in the last few weeks in the mpc. see on the do you insurance industry when it comes to asset allocation? >> the key take away here is that the government wants life insurance companies to be specific for longer duration aspects -- assets. such as helping rmb sciences and technologies. there is a lot of questions about ipo plans but

before your earnings came out we heard from your a share investors voted against a plan in the goodck doctor upcoming ipo. my was the vote against and what were they voting against exactly? this vote against means we can proceed. it clears the process. yvonne: a does not derail it. >> we can proceed with that ipo for good doctor. just to be clear, good doctor is one of several businesses that we are look -- looking to ipo. there any reasons to consider -- we saw that there is a big push from china for some of these tech companies to come back home. >> we have not communicated

anything at. ipoing.en they are one have you seen unexpected the improvement in terms of trends in the past few months? >> i have not seen any unexpected improvement. we had higher hopes for the four of them. a financial situation like ping an has managed to incubate uniforms, it speaks volumes for our abilities. of severals four others. yvonne: march come. us.ks for joining , you canv watch us live and catch up on the past interviews.

bloombergr subscribers only. make sure to check it out. this is bloomberg. ♪

this is daybreak asia. keep getting headlines from noble group and the noble founder is resigning as a nonexecutive director.

this is at a time as we have isn talking about noble running out of time after missing that bond payment, $379 million that was due earlier. more continued troubles for noble. we can see the fallout and this was one of the things, i do not know if the market was pricing in but you see richard ellman, he was the ninth executive director. he fought to restructure this company. the departure of him, he remains a top shareholder syria this is statement toing a the singapore exchange. this is a day after we heard the group slid into a default. cutting noble groups credit rate to a level signifying default. we will see what next -- what is next. betty: this is by far not the end of the story at all.

lawsuit, shareholders the goldilocks investment lawsuit. let's check out how the markets are trading around outside of this news. asx 200 and s&p 500, japanese markets are closed. this carried over from today's trade-in the u.s. it is facebook that continues to see down days. we are seeing a bit of upside. futures pointing to gains in the next couple of minutes. this is bloomberg. ♪

♪ >> facebook is continuing to dominate the headlines. .ritics demanding answers tech selloff, investors looking ahead to the federal reserve. the g20 drops its traditional opposition to protectionism. says washington is not scared of a trade war. i am rishaad salamat. a new act in up, the drama at noble. this is "bloomberg markets: asia." ♪