♪ yvonne: 7:00 a.m. here in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man. welcome. president trump signed $50 billion in tariffs against china and it says there is more to come. and a measured response is expected, with china buying more american goods. and from global headquarters, i'm betty liu, it is just after 7 p.m. on this thursday. the u.s. ambassador calls on the white house, saying china is not afraid and will defend itself. the news reverberating through the market, sending stocks down the most in six weeks, the yen

strengthening through the 105 level. level. ♪ ramy: it seemed -- betty: it seemed like this appeared an possible, but we are getting closer to this with the intraday chart on the terminal, showing you how the yen, as we mentioned, the dollar has in the 1.05 level against the yen. 1.0565, theyrt at did not go into a freefall, but level thatkey traders have been watching for. more bad news on the trade front. i imagine strengthening yen and what damage it could cause the japanese economy. yvonne: it is not just the trade side, we have gotten ugly news

for the traders to contend with, jay powell signally there is no slow down. facebook as well. revolving door in the white house, it does not stop. the lawyer for donald trump stepping down, and mcmaster. so all of this worried to contend with. betty: a wall of worry, iguodala's situation -- a goldilocks a situation. let's take a look at how we closed today. across the the red board, down 2.5%, dow losing a quick 700 plus points, nasdaq also falling by almost 2.5%. the dropbox -- and dropbox pricing their ipo above the range. so business is still happening. diving deeper into stocks and what happened in the market. sue? >> ugly close by any standard, but technically we will go to

the snapshot again, because we saw the yield down for a second day, following the fed retreated to 2.8%. dollar, thed the yen is a safe haven. 724again, this was a reasons for the bulls to be concerned in terms of the decline of the dow, the biggest drop in six weeks. and it clearly speaks to the investor sentiment where you have a tightly wound investor who is not too difficult to unwind their trades. it looks like everybody had the sell button, with the exception of apple. facebook down again. the concern that regulatory -- will befall these firms. take a look at the other stocks

that sold off and it shows the breath of the market. industrials and financials, financials hit the most. boeing down 5%. these stocks got hit hard and the selloff was deep. i want to go into the bloomberg. 5784, this is a day where the smart money on the street takes a look at the technical. a lot of times they can tell us what is going on. this is likely on the way, bank of america, merrill lynch global financial risk index, showing the stress points. the highs and the lows for the market. you can see that we are very close to the top here. this is going into today. were we to fall back toward this, it would signal a steep decline ahead. check out the second technical chart, perhaps more telling, this showing a lot technical traders, they will look at the

diamond, bull and bear between the sellers, sellers winning out. another signal that more selling could be ahead. betty: i think that will be the mantra today. yvonne: more selling. taking a look at new zealand, the index really taking a hit, down more than 1%. milk of the movers, producers, big exposure to china. those are really weighing on the benchmark. qe holding at 72.19. a little bit of a bid for the kiwi here this morning, trading getting underway in australia. commodities hit hard by the rising pressure with a chinese tensions. crude dragged lower overnight. of ae see this down 9/10 percent. and take a look at the commodity index, down a third of 1%. also looking at the open in japan, talking about the yen,

features indicating that this could fall below the two day moving average for only the second time since the u.s. election. 105.reaking below betty: more news on the tariff front. not getting news china is planning tariffs on u.s. steel products and also on aluminum products, as we heard even from the white house, the expected a response pretty quickly from china. a measured response. and so far this seems to be what we have. u.s. steel and aluminum subject to tariffs. yvonne: tit-for-tat. talk about what we heard from the president earlier, he signed tariffs against china, take a listen. >> we will be doing a section 301 trade action. $60 billion.bout

but that is really just a fraction of what we are talking about. to our editorgo right now, joe, we heard from the global secretary say that he expects the chinese response to be measurable. betty: and we are looking at the tariffs on aluminum products. yvonne: is this measured in any way? >> it is more symbolic than anything else, just to show that china is ready to respond. if they had really wanted to put hurt on the u.s., they would probably go after agricultural products, and they could still do that and to do it rather quietly. soybeans, they soak up about a third of the u.s. crop. it is a big item for agricultural states that supported president trump. china could shift the going to brazil or make it more difficult for soybean exporters in the

u.s. to get their product there. so i think that the -- there will be time to figure out how much of follow-up will be by but the u.s. and china. betty: a lot of follow-up. is there anything that will happen between now and the 15 days the u.s. pr office is going to be doing this, putting together the list? could anything happen that could reverse what donald trump announced? joe: we have seen it happen before, if you look at the terrace -- tariffs he imposed for the u.s., there have been a number of exceptions already, the impact of it lessened quite a bit. there will be a 30 day comment period after the products are listed by the trade representative, in which of the companies, there are many of them in the u.s., and trade

organizations will make appeals for exceptions. that gives time for them to talk, perhaps china comes along and does something the u.s. can say, ok, there is progress and we will negotiate further. but we have seen sometimes the initial bark is not, is a little stronger than the ultimate bite. betty: we have definitely seen that pattern. thank you, joe, our editor here on the news today on president trump and the tariffs. the question now, how will china respond? and congress victory wilbur ross telling us he expects a measured response. expect there will be a measured response. these are very thoughtful it very serious people. they know the president as being very thoughtful and very serious. and i do not think that anybody is just going to have a

knee-jerk reaction to any of this. yvonne: let's discuss the implications with senior fellow mary lovely. could it be the case as joe was outlining that the bark is going to be worse than the bite? worsei think it could be than the by, although we are in for a rocky period where we see how this is going to turn out. betty: absolutely. in two weeks we will hear about the products that will be targeted. how do you think the u.s. will make their selections? mary: we have word that there will be two criteria, one they will try to hit the relevant products, which we can assume would be high-tech products or those in which we feel the chinese have in some way appropriated our technology by whatever means. the second criteria is to pick

products that will put maximum pressure on china and do minimum harm to u.s. consumers. this is explicitly mentioned to buy the ambassador, for selling the promises will be tough however. yvonne: what kind of products are we talking about? mary: the high-tech front it is difficult to say exactly where they are going. some products mentioned are products china does not export much of yet. for example, there was a mention of new energy vehicles and we know that there are really no exports of these from china to the u.s. yet. much of the document that was released today does seem forward-looking in that it appears to be a response to plans.nt xi's 2025 it is looking ahead and is seen

that china -- seeing that china wants to be a dominant force of high-tech technology in the future and laying down a marker that this will not happen by appropriating u.s. technology. so it will be tough, what are the products we actually trade that can be hit today that will have a minimum affect on the u.s. consumer. betty: mary, hold on one moment. we are getting more on the riffs from ta china, on u.s. pork and pork products. what do you make of this tit-for-tat coming from china? it has been measured so far, but does it seem like it appears that they are trying to diffuse tensions by offering more concessions, or are we looking more at a full-scale retaliatory action from beijing? mary: i believe the chinese have been trying hard tro diffuse

tensions. we know that they sent high-ranking officials to the u.s., who did not meet with the president. as well as efforts by a variety of chinese diplomats. so the chinese feel they have tried diplomacy india this action was taken. it targets exactly president which he platform, on has based a lot of his support. that is moving the economy in a way that produces higher-paying jobs for chinese citizens. and it is going to be very difficult for them not to retaliate in a way. i am not surprised they have announced this as a sin as possible. i think we took it to the brink and here we are, we have a response. yvonne: right. it seems like we have a couple more in with u.s. wine, fruit and nuts. more coming through from china,

a list of them. i want to talk about something you mentioned, perhaps donald trump is playing president xi's hand. you mentioned that 20 25 program, so this is an opportunity for the chinese president to boost innovation at home. he said he wants to open up the economy, but these are sectors that serve their interests, like the banks for example. so the president of china could still hold off on reforms and is still play the innocent victim. mary: we have given him the opportunity, although they have offered to open more sectors than just finance, however meeting obligations and services sectors would be an importance step. so we have strengthened his hand and we will see what happens with our allies. unfortunately, we are also at the point where we are not playing nice with our allies on the tariffs for steel and

aluminum. by this.me may gain yvonne: does this make the wto look a little bit irrelevant here? mary: the trump administration has been making it look irrelevant for quite a few months. there was mention today in bringing the idea of licensing agreements and what they feel are chinese forcing american company to transfer, porcine licensing agreements that are not at market rates. there was talk in the actual -- that were released today, bringing that to the two. -- t wto. i do not know how it will work out, but it is a very of hope for them today. -- is a ray of hope for them today. betty: thank you. mary, on the news here. we are continuing to get more from china on the tariffs.

now courtney collins. courtney: more turmoil at the white house. president trump replacing national security advisor h.r. mcmaster in a move that was flagged in recent days. it is the latest shakeup ahead of talks with north korea. his replacement will be john bolton, a former ambassador to the u.n. he would become a frequent behind the scenes visitor to the president and had campaigned openly to replace mcmaster. president trump's lead attorney against the russian inquiry has resigned as a new lawyer joins the team. he had maintained a position of corporation and difference toward robert mueller's investigation, but the hiring of another lawyer suggests a more confrontational approach. he has publicly claimed that the president was framed by the justice department. and mark zuckerberg has been

summoned by congress to explain the data scandal at facebook. he has said he is happy to testify, if he is considered the right person to do so. the house energy and commerce committee says he is the right person and his a staff briefing on wednesday left questions unanswered. frank pallone says the panel is not issuing a subpoena, but "it is always possible." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. yvonne: coming up, things are heating up for mark zuckerberg. he gets a call to answer questions in congress over the data leak crisis. yvonne: up next, another mother and another deadline on capitol hill. we will ask if lawmakers can get on the same page and prevent a shutdown. this is bloomberg. ♪

>> a recap of what we are breaking from the chinese response to the terrorists -- ta riffs. it is not just for steel and aluminum, pork imports as well bid is with response from beijing. china taking legal action against the u.s. under the wto framework, so we are hearing plenty of action from the china response this morning. betty: we are. it is swift right now and we what or howe to see many more will be added on. in washington, the senate executive -- is expected to vote on a $1.3 trillion spending bill that would avert a government shutdown, increase funding for the military, border security and other domestic programs. the budget director hasn't said that president trump will sign the bill. joining us now is dan college or nd teacher of public policy

at georgetown university, working for many years as a budget aide. lawmakers have a lot on their plate, everything from the ta riffs, facebook and now the budget deal. before we get to the budget, i need to ask about the tariffs and how you think congress is going to react to what the president announced today. stan: we've already seen on the republican side, which is where it counts, we have seen negative or people whogs should be supporting the president, who have said he is out of his mind to doing this and i suspect more negative comments tomorrow based on what you have been reporting. the better question is, will there be anything beyond that reaction? beyond the soundbites. it is probably, the answer is probably not. betty: why?

stan: it does not look like the congress is willing to take on the president. and on anything come on in the issue, whether it is the robert mueller investigation, the hearings by the intelligence committee, they seem to be looking the other way and not doing any congressional oversight that was envisioned in the constitution. unless they really get harmful, the tariffs, where they do real damage, they were probably go without congress doing anything. betty: you can convince and you can do things if you have a lot of money and i think about the u.s. companies who have all voiced concerns and are they of said it will be very damaging, can't they get something done with all of that money that they put into washington on the lobbying front? stan: there is a difference between can't and will. at the moment, the same corporations were supporting the president and they did not have the ability to turn him around on this issue.

you have to keep in mind, congress has been busy, but it leaves tomorrow for two weeks vacation, what they call a district work period, and they have 45 legislative days left. unless there is a crisis, they will not do much on anything. betty: what do you think they will do in the budget? will they pass it? stan: probably. i say probably because we of two things to watch. first of all, there seems to be a lot of democratic support for what was in the bill, and therefore they do not need just republicans, but it would only take one republican like rand paul to slow things down. we could end up having a technical government shutdown tomorrow night at midnight eastern time, the same way we did last time, because one senator gets his or her nose out of joint. the other thing to watch, the president is so erratic, i know he said and did the white house has confirmed that he will sign

the bill come up that it is not inconceivable that between now and the time they pass the bill he will change his mind. i do not think it is a big likelihood, but i say there is a 5% chance this collapses -- 25% chance this collapses. yvonne: it does seem to be doing better with the democrats, then with the conservatives. but without any compromise on immigration, can the democrats make up the difference at this point? stan: he will only -- the house has already passed it by a big margin with the ultraconservative freedom caucus stomping their feet and going off and sitting in a corner somewhere. they could not stop it in the senate. there is not the kind of cohesive conservative group that would stop it from happening, and even if there was, there is not enough of them to overcome what would be democratic support

for the legislation. betty: this is the last piece of legislation we will see before the midterms, at least among the biggest legislation that we will see. how much leverage to the democrats have after the elections in alabama, what we saw a couple weeks ago in pennsylvania as well -- do they have more leverage than the latest round? stan: not really. they had leverage because the bill could've been filibustered, it is not like the tax cut where they used special procedures to avoid the filibuster. there are a lot of things the democrats got. the republicans did not get all what they wanted. and this is because a procedure, not with the elections outlook will become a but i can tell you as we get closer to the there is going-- to be more incentive for nobody to do anything in washington, the republicans not wanting to anger their base, and democrats not want to do the republicans

the ability to get anything done. yvonne: a stalemate. one thing that is moving is all the people in his cabinet. we just had the news out that mcmaster is going to be leaving. betty: he has john bolton coming on in that position, a hardliner. he seems to be the surrounded himself with more hardliners. what do you think the effect of that will be? stan: a couple of different things, first, whether or not the president will admit it, he is hiring a number of people who have not worked out well for him, so his legendary ability to act on instinct is not working well, either for himself or the country. you are right, whether it is his new hard-line tv telegenic attorney who he hired yesterday or the day before, the john bolton -- betty: or kudlow. stan: right.

he is surrounded himself with people who will tell him what he wants to hear. that is the point. when those kinds of situations takeover, that is the point at which congress will either reassert itself or it will fade away into the woodwork, and he was see a lot of executive orders from the president rather than legislation going to congress. betty: thank you so much for joining us. good to have you, stan. executive vice president at corvis. much more ahead. the latest read on japanese inflation, cpi data will be due in the next couple minutes. how much will it affect the markets when you have dollar-yen going lower and lower amid the tit-for-tat between the u.s. and china on trade. we will look ahead to the market open in tokyo. this is bloomberg. ♪ mom, dad, can we talk?

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. yvonne: we are taking a look at tokyo, beautiful look this morning and we are getting the inflation numbers for the month of february and they are bang in line with estimates, inflation up 1% for the mother of february, higher than what we saw for january, and headline inflation and line at 1.5%. and if you take a look at the core inflation, fresh food and energy come also in line with what the economists expected, .5% of , so things moving in the right direction. we are still halfway on the mark when it comes to reaching the 2% target. betty: it sounds like we are

repeating ourselves all the time, far away from the 2% target in japan, but today will talk ony be the tariffs the minds of investors. yen trading after surging through the 105 level against the dollar. right now, hovering as we have seen from the open, hovering 104.76 level. let's take a look at how else asia is reacting to the news. yvonne: take a look at what could be driving the numbers, headline inflation, you have higher prices coming to mobile phones and hotels. fresh food prices driving the headlines sharply in the last month, second quarter could look a little bit harder to match what we have seen previously given the year on year comparisons, they will get tougher. and the rest of asia, trade war

heating up and we want to bring in sophie on what could drive the markets and take a look at what we see with the yen. little chance of a happy friday. >> no happy friday. risk aversion is the name of the game and investors looking for safe havens. this morning we learned that china is planning tariffs on u.s. imports including steel and pork products. and we're pulling up the board to check on futures. net cake could fall as much as 3% at the open. and although south korea and australia are escaping the steel and aluminum tariffs. we still see those sliding. and plans to put tariffs on japanese deal, that is a blow to abe and they will feel the pain today. checking in on the terminal. the drag in tokyo, it could knock the topics back to an october low. looking to push past the 200 day

moving average, we are shy from the low a hit this year so far. and yen adding the pain for equity investors. another chart, yen below 105 for the first time since november 2016 and rising against the euro and the aussie dollar, a hint that the investors are moving into risk aversion mode, which could prompt japanese officials to attempt a verbal intervention. yen not running into much friction, so it has further to go. betty: thank you, sophie. let's get the first word news with courtney collins. courtney: first up, president trump has taken his buddha steps yet to level the economic playing field with china, ordering sweeping tariffs on a range of products in a move that could escalate tensions between though biggest economies in the world for the president instructed the u.s. trade representative to levy tariffs

on chinese imports and produce a list of targets in the next two weeks. >> with china, we will be doing a section 301 trade action. it could be about $60 billion. that is really just a fraction of what we are talking about. expects awilbur ross measured response to the tariffs , saying that leaders on both sides are thoughtful and serious. the administration is looking for a $100 billion cut in the trade deficit with china, which hit a record $375 billion last year. ross told bloomberg one of the solutions would be for china to import more american goods. >> various agricultural products could be more purchased from the u.s. than they are at present. and there are a number of agricultural products that so

far being relatively resisted by the chinese for meaningful import. they could relax those restrictions. the goldman sachs ceo says he will have the discipline to lead with potentially no plan b. he says a lack of clear options for a second career means he will need to leave the bank before he has something else lined up. he says he plans to step down this year, that speculation is wrong, but may become right once he makes a decision. david solomon has been named as his likely heir apparent. and qantas preparing to launch the first nonstop flight from australia to the u.k. the 14,500 columbia trip from perth to london will put the financial capital one flight away from them. dreamlinero use a pact with top-tier passengers,

almost a third of the seats will be in business or premium economy. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. china has announced its first response to the tariffs. it is imposing duties on u.s. steel and aluminum. and china says it will defend its encz -- its interests. now tariffs on $3 billion worth of imports from the u.s.. tom from beijing. wilbur ross says he expected a measured response, is this measured? tom: did seems to be fairly measured, $3 billion versus $60 billion from donald trump. they are talking about 25% tariffs on pork imports and 15% tariffs on imports of steel, food and wine from the u.s. of course, there are broader

measures that china could take, but $3 billion is not a huge amount. with pork, china produces quite a lot of pork itself and in terms of food and wine, it is the upper-middle-class in beijing and shanghai that could feel the squeeze, so it will not hit a lot of the population. it seems more symbolic at this stage, but they said they would hit back and they have done. they could up the ante down the line if they wanted to buy targeting companies like boeing, for example, it was suggested that they could switch up boeing orders for airbus orders and they could target apple as well, who gets a big chunk from the chinese market. they could take other unofficial measures, where it is like making life more difficult for those companies in china, like issuing licenses, where restricting visas.

there are a number of measures china could take, but it seems like they do not want to exacerbate it too much. they want to take the issues to the two they upset -- wto they've said and they are called on dialogue with washington to work on the dispute. betty: we have talked about the negative effects, but is there a scenario where they could be positive effects from this? tom: well only in as much as it may reconfirm to some in the chinese elite that the long-term strategy that has been outlined by president xi called made in china 2025, to see china developing as an industrial giant, particularly around artificial intelligence, chips and electric vehicles, that this is worth pursuing because if donald trump takes the moves to restrict further chinese investment in high tech products in the u.s., then there will be

a view here that they need to develop that technology in-house in order to properly compete, move their economy up the few chain. it also allows -- food chain. it also allows china to play the victim, it is something they push out in propaganda fairly often, so maybe they can use that to forge alliances with the european union. and it may also see the chinese being less willing to open up areas of their economy. they have -- at the end of the people's congress, they promise to open up certain sectors introduce tariffs on electric vehicles, so maybe they will be less willing to do that given the pressure they are under from the u.s., but certainly there will be a view that will underscore the strategy, the question is whether they have the expertise in china, the capital and innovation to do that, because there is a view that they need that technological expertise from the

u.s. in order to upgrade the economy here. betty: thank you so much, tom mackenzie on the chinese response to the trade war. as the for shots are fired in what could be a trade war, what does that mean for central bankers? our economics and policy editor is here with a look at what the fed and others might do to react, if anything? >> or what they will not be able to do as the trade war unfolds. it is one thing to put tariffs on steel and aluminum and a say it would not have an impact, but if we are going toward a trade war that is a horse of a different color and the question now is the fed left open the door for rate hikes, 3 in 2019 and 3 for 2020, so will they be they be ableill to walk through that door now with the tariffs? after the fed policy meeting, powell said that trade,

according to business leaders, has become a concern. not surprising. bill gross was on bloomberg television on thursday and he bonds rallied because the stocks fell hard, but they could be affected by the fact that a trade war could slow growth, but maybe they are ignoring the fact it could have an upward impact on inflation. i want to share with you some comments. -- notes that trade was cause economies to slow, because they cause exports to dry up. this is a big deal, look at this, the stock market route has the potential to put those two other rate hikes this year that the fed forecast yesterday in the rubbish bin in a hurry. what a difference a day makes, i am glad americans got those tax cuts, because we just lost it all in the selloff. this is somewhat reminiscent at the end of 2015, when the fed

was looking to do three rate hikes. the chinese stock market fell off, caused volatility, and brexit in the summertime, only one rate hike came in december of that year. iss is not 2016, the economy stronger and many things are working in favor of the u.s. economy, but if growth does look like it will slow down, this could cause fed officials, if it lasts, it could cause them to rethink the rate hikes and what they can achieve. yvonne: we talked about the effect on china and perhaps even when it comes to the effect on china gdp, it is meaningless, 0.1% if we see the tariffs. what does this mean for global recovery, the fed looking for faster growth. >> i think it is a broader question than just what it means for gdp, what it would do for exports broadly, business confidence, if there is a retaliation? i think people are afraid of

when they say trade war that is could escalate and drag and other countries. in terms of the central banks on thursday, the bank of england met two of their members dissented in favor of rate hikes. at same time, and their policy statement they warned that rising protectionism could hurt global growth. we had a story today talking about global growth is it showing cracks, just as we see the trade war looming. let's take a look at the cracks. sagging german business confidence, that is based on a survey, slower output growth. that got a little bit weaker. germany, and we saw the purchasing manager and japan, we saw the index falling. if a trade war hurts japanese exports and it hurts growth, that will make their struggle to try to get to the 2% inflation target that much harder.

and we see with all the risk aversion, what it is doing to the japanese yen. that gets in the way of the boj. so the trade war is a lot more than just some tariffs thrown on goods, it really can reverberate. yvonne: they can disrupt the whole asian supply chain. caf au lait, thank you. quick check of the latest business headlines. -- group said any attempt to force liquidation after defaulted on a bond payment will fail. holders of a 20 game bond who have not agreed to a restructuring plan can try to take action, however the board has been advised it will be difficult it wind up the company because of the reorganization. on that basis, noble says it is satisfied they will remain in business. betty: and china rewarding shareholders by paying out the 2017 net income in dividends, the biggest oil and gas companiesbusiness. betty: saying it will send investors about $3.6 million,

adding to a surprise payout from the result in august. petrochina is recovering from its worst ever performance the previous year. the rally in oil prices exploration and production. steve wynn cutting has is taken the company he founded after settling a court battle with his ex-wife. he sold more than 4 million shares exploration and production. at $180 a piece. and his holdings went down the list and a percent. his former wife as an eight -- 9.3% stake. and they are looking at a takeover of the company. yvonne: facebook is in crisis mode, mark zuckerberg summoned by congress and a-shares falling. we will take a look at the data fallout, next. this is bloomberg. ♪

>> this is "daybreak asia." betty: i'm betty liu in new york.

mark zuckerberg is being summoned to capitol hill, having failed to satisfy that critics in the data scandal. he says he will take steps to make sure it does not happen again. >> this was a major breach of trust. and i am really sorry this happened. we have a visit responsibility to protect people's data and if we cannot do that then we do not deserve to have the opportunity to serve people. betty: was that going to be enough? i want to bring in our digital content net ceo jason kim. did you watch the interview? >> i did. yvonne: was it enough? >> he said he was sorry, but the on that we are far from seeing the end of this. betty: when you say that, what do you mean? >> he has opened himself up to regulation and i think he would dream it would just be political ad regulation club but there is much larger regulation he is walking into. betty: we have heard this

before, do they need to be regulated, but let's get more granular, what regulation could hit the bottom line? >> the data. his ability to use data and how face but uses data. this is the core of their entire business model and it is upwards of 100% of their revenue, and it is collecting data across the web, so that they can target ads. betty: when you say that, how feasible is it -- it feels like the train has left the station on that, is there any way to roll it back? >> it is. there is new regulation coming in may that has concerned facebook and it will go global overtime and this could accelerate that. betty: he is now being summoned to congress, what other questions do you think you must answer for? >> he is not answered a lot of the questions about everything on the election, so they've been slow to release information and it typically comes out because of good reporting or because of congress. betty: what happened in that big

-- >> yes, a lot of questions in that and i think that cambridge analytica will spiral in a bigger way good -- way. yvonne: does it need to reshape its business model overall? we have a chart that shows what we have seen when it comes to activity on the site, already showing stalling as the daily active users, that has gone sideways at 55.7% right now. do you think the scandal could slow down user growth, will it change engagement, and what does it mean for the advertisers? jason: it is changing up on the growth story. last august, roughly, they started seeing decline in the time spent per user. not the active users were spending as much time on a rigler bases on the core facebook app. so this has been going on for nearly eight months. they have been trying to explain it away to the market and the decline interest has already

started to show in the research, so this creates much more significant issues for the company. as you take a look, this could actually hit advertisers as well, but there is no alternative to facebook mother is no rival, so in a way are the earnings shielded from this as well? jason: good question, the business is still the targeting of advertising, so there is google who does a lot of the same things facebook does, that is an interesting part of the discussion, how this will affect google. but you have amazon getting into the advertising business and they have an opportunity to shape how they want to operate in this marketplace, maybe in a different way from facebook, from a social networking for effective -- networking perspective you do have instagram and is not chat. other opportunities -- and snap chat. opportunities to take advantage of this. yvonne: are there other bad

actors involved in the scandal? is there a way that facebook can claim is all up ahead of the midterm elections? jason; not ahead of the midterms. they will try to do an audit of every company that had access to their data. the question is, what were the consumers' expectations? they did not expect their data to be handed over to other companies, let alone one that would use of a type of things that cambridge analytica was involved with. so they will audit the companies, that will take a long time. betty: what happens to all of the companies that are so reliant on facebook for their marketing efforts, further publishing efforts, what happens to these companies? jason: i think we will have a gut check, do they want to continue to fuel and pay for this type of marketplace. is the economics of targeting individual users and the policy issues that come with that, the

creepiness of it at times, are those worth it? or will they not go after general markets? betty: that will only happen if they see the users come off of the network because of this, hasn't -- jason: we have seen that, the data shows they are leaving facebook. if you are an advertiser, do you want your brand running on a product where people do not have the same level of trust. they start to ask questions. betty: they do, but to be honest, they have a very efficient advertising platform, are there others that could replace with facebook offers all of these advertisers? jason: they have the scale. betty: they really do. jason: that is where it is a gut check on the ethics, do they want to make a stand? we saw mozilla pull advertising off of facebook, that was the first company, maybe there will be more. betty: jason, thank you so much. digital content next, developing

research and policy guidance for the digital content industry. for more breaking news wherever you are, bloomberg and twitter have launched the first global news network design for social media, offering live field coverage and hourly updated top news reports. jump on twitter and follow tictoc by bloomberg. this is bloomberg. ♪

>> this is "daybreak asia." betty: i'm betty liu in new york. let's get a quick check of the latest headlines. dropbox raising seven is your $56 million in its u.s. ipo, procedures, already increased range. the committee told 300 million shares at $31 a piece. based on the number of shares outstanding after the offering, they should make their public company debut on friday at a

market value of about $8.2 billion. nike popping in late trade after third-quarter revenue beat estimates, right below $9 billion, forecast in the domestic market and across the world. north american sales declined for a third straight quarter, but the ceo says the picture is brightened by the end of the. period. deutsche bank raising $1.7 billion, in its just over 22% of its operation. the ceo announcing the sale a year ago as part of a larger restructuring plan. they will not receive anything from the ipo and does not plan any large-scale acquisitions at present. coming up in the next hour of daybreak asia, find out how rising tensions, a possible trade war could affect currency markets. we talked with the head of global currency strategy at bbh, mark chandler, how much more downside we could see with dollar-yen. and we see the outlook for the

bank of japan after inflation data out of tokyo. core inflation hitting 1%, halfway through the 2% target. this is bloomberg. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. 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. >> tight end aaron hong kong. we are alive from the asia headquarters. i'm ivanka. welcome to daybreak asia. story, markets have losses after president signed carrots on china. the yen is strengthening. the first of many measures worth up to $60 billion and warns there is more to con. betty: i'm a little in new york just after 8 a.m.. says it is not scared and will defend the interests. it has announced there are

already a range of u.s. goods they are putting tariffs on from steel to wine. >> the bumbling of a trade war, as we hear more from beijing on these tit for tat tariffs. we heard from the u.s. and how they plan on targeting some of these imports from china. you mentioned port, line, nuts, and not exactly the politically sensitive targets. charger, you can see the clear example of china is perhaps targeting the low hanging fruit right now. given imports already being fall,, that's being on a this is just a measure from beijing. they could target companies like

boeing and the fix on the yen could be interesting. is a greatink that chart. it follows along on the theme we have been hearing from some of our guests's. perhaps the bark will be worse than the bite. when you really read between the lines, and do research, you'll end up that it will not be as worse as one thought. we still have, of course, a number of days before we get the complete list from the u.s.. that will be much more clear on whether this trade will -- trade war will be back. yvonne: we see the markets ignoring and seem to be quite serious about these trade tensions. we would get the latest when the market opens. >> trump leading through with these terrorists, and investors are hoping to have fingers crossed.

that is the case we are seeing trump coming out with these measures against china. aluminum tariffs will take place this friday so we are seeing losses across the region. in japan, they were indicating a drop of nearly 3%. sliding -- theas slid down. check out the yen. belowtrading at 97 back 105 for the first time since november 2016. this indicates risk aversion among investors on the yen as well. they lose over 900 points according to bochum international how hong. terrace,omes to the

south korea made it on the exemptions list but that is not the case for japan. checking in on steelmakers, we a pandora box of retaliation was warned against. steel is adding to the losses it had this year and is down over 20%. -- itks like in the lobby looks like shinzo abe's events -- let's flip the board to check in on korean steel players. steelmaker is losing 2% but we are seeing gains for other steel players in korea. it is a bit of a mixed bag. let's chicken on sydney. steel here.gkuk before i go, quickly checking in on chipmakers in tokyo.

this is after macron reported results and forecasted third-quarter sales that may disappoint. semiconductor players are under pressure so far this morning. betty: we're getting more news thing steve wayne, the founder has agreed to sell the remaining shares of this company. wind resorts. sell the mainl stake in wynn resorts. this past fall of him, last month, amid all of these allegations of sexual misconduct. and it lookswn like he will be selling the remaining shares of wynn resorts. a slight decline, but of course, many of the shares in the u.s. were in the red.

china has announced its first response to president trump's carrots. the minister of commerce is saying they are imposing duties on u.s. steel, aluminum, saying china will defend its interests. tom mckenzie is joining us now. wilbur ross expected a measured response, with discount as a measured response from china? you compare 3 billion to the proposed $50 billion in tariffs that trump is signing off on, it seems to be measured. the opening boat, from china, there is a lot more they can do. $3 billion on tariffs like steel and fruit and wine. pork, sofs on u.s. they can serve as own needs on that front. wine, affs on fruit and bit of a hit for california. not much of a hit to the pockets of most chinese.

areas they can take a tougher line on. we heard from the u.s. ambassador to china -- the china ambassador to the u.s. that they wanted to avoid a trade war but would not back down it one was initiated. china also said they will work through issues through the legal processes through the wto and they want to see dialogue to scale back these tensions. in terms of further pressure point, key is agriculture. there is about $140 billion worth of goods imported into china and that includes soybeans. that is another potential pressure point. clearly, china -- and we heard this throughout the congress from policymakers and leaders, they want to avoid a trade war and will take a measured approach for now. they've also said they will not

back down if trump escalates this. yvonne: perhaps this is the warning shot from china, tom. do we get a sense of how far china is prepared to go? they have touted a list of other pressure points in the past that they could apply on the u.s. should they choose to. they would escalated if they were to switch boeing orders to something else or start targeting companies like intel, apple, or cow come which get a lot of their revenues from the china market. then there are the steps they , the overt measures to put stumbling boxes into place. theher that is slowing down issue of the licenses or making it more difficult for these issuances. they can do those measures and they -- there are areas they from the past.

those are areas to look for. it also raises the question on how china response broadly to this escalation. out a strategyd to focus on industrial areas like artificial intelligence, asotics, electric vehicles part of their made in china 2025 mission. it will play to some here that this is a strategy they need to escalate because they seem to see, from the u.s. side, increased barriers in the u.s.. whether or not they can upgrade the industries without that technology in the u.s., is another question. >> do they have the capability to do it on their own? tom, thank you. is joining us live from singapore. we have been watching the moving dollar yen. we're back above 105 but how

much more downside could we see? >> potentially a great deal. the fact that we broke through the levels that we had last seen in late 2016 is quite significant. there is a lot of volatility at the moment and dollar yen, but it has probably further to go. 2016, the dollar yen had an extraordinary. where the range was wide when trump was being elected. if you look at the mid-point of the range, we could be looking at a downside for dollar yen. if people continue to have this risk aversion mode, and we are seeing its broad-based as your colleague in beijing said, china has responded already and maybe others will as well. currently, the mood is bearish and the dollar yen is the first place people go as a defensive measure. yvonne: speaking of bearish, we

see the u.k. -- betty: we see that drop 60 points plus. that is setting the tone at the start. how do you think the equity markets will of this news for the session today? >> it is a bad start. it is those a prize that asia has continued that as well. one of the things we have been looking for is whether or not the chinese market will get support. the chinese see government increasing fund managers to buy the local markets there. the markets are probably opened we may see support coming and that could be a good sign for asia. the predominant theme is bearish as well. to five of for example in japan is likely to close the day below its 200 day moving average. people would take that as a significant sign.

reflected right across asia. the other markets in hong kong also will be a very strong indicator of just how bad people think of his fallout will be. it looks as if it will be a really black friday. we are watching, the commodity space. >> indeed. people are optimistic at the beginning of the year that world growth will be good in 2018. one of the places you can see that is in commodities. it started the year well, but it is starting to roll over. we are seeing copper prices are starting to tumble as well. it is spreading across iron or, and a steel will get caught up in those tariffs. commodities is probably the next one to watch. it does not look good. it won't be too long before the

treasury market turns into a bull market as well. then people will really know that even with the fed raising rates, things are going bad. there's a lot going on. >> mark, thank you. coming through on tencent, the company saying they will raise billions of hong kong dollars by selling shares. we learned about this yesterday when he first made the announcement that they will be selling its stake in is equal to about 2% of total issued share capital, and cutting holdings to around 31%. -- it willw sell sell more shares in the next couple of years. we co politics percent in the one week total. margins are certainly compressed and it could be that we could see pressure. se pressure.

a milestone day for japan, they have now seen inflation halfway. consumer prices, excluding fresh food growth matching forecasts, however the banks goal is to remain as far away as ever and the strengthening of the yen complicates the richer. issident trump is replacing h.r. mcmaster in a move in recent days. it is the latest shakeup with the talks of north korea. will be aement conservative, the former ambassador to the u.n.. had campaigned openly to replace mcmaster. president trump's league attorney has resigned as a new high-profile lawyers joins the team.

john had maintained a position of cooperation and indifference toward robert mueller's ofestigation, but the hiring him suggests a new confrontational approach. have claimed the president was publicly -- mark zuckerberg is summoned by congress to explain the scandal on facebook. sucker versus he is happy to testify. the house energy and commerce committee said he is the right person to testify. questions.any global news, 24 hours a day, powered by more than 2700 analysts and journalists in more than 120 countries. i'm paul allen, this is bloomberg. thank you, paul. japan's inflation makes it halfway to the 2% inflation target.

we explain what that means. >> plus, how a potential trade war and roar markets. the global head of currency strategy, mark chandler joins us next. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne in hong kong. betty: where getting more lines here. on reaction from japan. the trade minister is saying retaliation could lead to collapse, he's talking about the trade war between the u.s. and china, collapse of the trade system. he doesn't see too much impact on the japan steel industry and will respond to any of this within the wto

framework. tariffs are sidelining any due process within the wto and there is always questions of course of this tit-for-tat of the u.s. and china and how it will affect allies. list onwe looked at the steel and tariffs -- steel and aluminum tariffs. japan is not so much. they're tipping the line saying the chance of japan being exempted is high. they need ahink leverage to join the crew. given the political scandal in japan, there is not a whole lot of leverage for japan at the moment. certainly a lot of headwinds there. betty: absolutely. that is reflected in the japanese yen. trade is escalating between washington and beijing. let's look at where china could

trump those tariffs. select charts that we need to know to give a better picture of this. we are seeingse, the $3 billion tariffs being thrown on the united states on china.$60 billion we are talking about automobiles, technology, and possibly foreign-exchange. sector --nto the act ag sector. we have been talking about soybeans in the past few hours, will it be a factor in the trade war? the u.s. sends out the most soybeans in the world to china and they -- china takes in 4.6 -- rather $14.6 billion or so which is one third of the values u.s. send out there. look at the white line, this is china's production of soybeans and they are producing like it

is 1970. froms not gone very high where it is been over the past 30 years. the purple line is you is production, the blue is brazilian, and people are saying in china, if they decide to not use u.s. soybean, they could go to brazil. brazil also has seasonality issues. see if look ahead to that affects anything. my next chart will be pork. , you went into it but i will go into it more on g #btv 4587. bars indicate what china is importing and the white bars are what the u.s. supplies to china. you can see it is not very much. it is 25% or 30% or so. there could be leverage the china has. we will not take your pork products, china could say, we will affect the farmers that are

producing it for us. a lot of those folks are in the heartland states which are donald trump's supporters. chart, this is technology and revenue for apple. and is a total revenue here we might fill a bars so you get an idea of how much china affects this. this is china's revenue and yellow. it has been rising over the past several years. to put this relatively to the americas, we see the americas are about the double what china is right now. finally, they wrap this up, possibly some competition when it comes to the yen. 1922.s g #btv in yellow, since the 20th 17, -- since 2017, currency manipulation has been a huge thorn for the trump administration. if they try to weaken the yen, you can be sure that donald

trump and his team will have something to say for it. will be very interesting. we will see a that is the next morning shot from beijing. tensions mightde have on trade, we bring in mark chandler. on dollarve to focus yen. we have been thrown around 105 at the moment and how low -- how much more down can we go? >> i'm not convinced yet. i think that if we do get a convincing break here, we might close a week below 105, we could see 100. thate: why are we seeing the patient at the moment after we does 105? are we lacking clarity or flying blind here? i think the key issue is,

people are comparing this to a trade war. i think this is an exaggeration. the exaggeration, embellishment. trade war requires an tally asian -- retaliation. caps onrge bush put the steel, nobody cried trade war. this is likeg happy valley, but there will be no winners. are making they small symbolic actions, not a trade war. -- we think a trade war are talking about the few parts of trading focused and it is being focused and very particular goods sectors. yvonne: what do you had at the moment then? volatility is spiking up and we taken off this being the table, where you see potential safety havens? mark: i see people talk about

how people are buying the yen, they're not buying the yen has of the japanese assets, the stock is down 3% today. what is happening is the yen is used as a funding currency. highople liquidate the risk assets, they have to buy back the currency. -- doestypically do is well. japanot like complete to so i think this is the arbitrage type play. perhaps when all of his bluster, in your view goes away or we have digested it, how do -- how do youllar think the dollar will react? >> i think the markets really

red towels it correctly -- read ell correctly. it will not change the underlying trajectory of the u.s. economy. it will be short-term growth not boosting inflation. this is a gradual approach to this. greenspan was tightening 25 basis points every meeting. market -- the one innovation we can count is maybe ad in june press conference after every meeting to give them more degrees of freedom. there are eight meetings this year and the press conference only follows four of them. increases the likelihood of maximizing the degrees of freedom that the fed has. i think they need to have these meetings more often. he seemed comfortable in front of the press. this is not a man that is shy. how do you think he did? do you think he said -- sent a

clear message as the new fed chair? governor, at his first meeting announced qqq eu. the other president cut interest rates. powell was rebel -- was able to cut rates at his first meeting. this tells us the federal reserve is committed to the path that has been laid out in yemen. the gradual rate increases will reduce the balance sheet. it is a very cautious approach. yvonne: there's someone in the camp that thinks narrow trade deficits could favor dollar yen strength. your physical stimulus, and what does it all started matter -- when does it also to matter? mark: i was challenged last year, and earlier this year, but i have levels. euro is a bunch

of technical areas coming in around there. levels, through these my divergent stories over. >> we leave it there, mark. this is bloomberg.

>> the beautiful city outside this morning. we are a half an hour from the open of trading. the markets are not looking pretty, betty, as we see asian markets reeling on trouble's tariffs. betty: worried about the ripple effects of that. you're watching daybreak asia. let's get to the first word news of paul allen. president trump has taken his boldest step to level that economic playing field with china ordering tariffs on a range of products in a move set to escalate tensions between the world's two biggest economies. the president instructed trade representatives to produce a

list of targets in the next two weeks of tariffs. we will be doing a section 301 trade action. billion,be about $60 but that is really a fraction of what we are talking about. wilbur ross expects what he called a measured response to the tariffs saying leaders on both sides of the argument are thoughtful and serious. the administration is looking for a $100 billion cut on trade deficit of china. sources told bloomberg one of the solutions will be for china to import more u.s. goods. various agricultural products could be more purchased from the u.s. than they are at present. there are a number of agricultural projects that are

being relatively resisted by the chinese from meaningful imports. they could relax those restrictions. china has reacted swiftly and the ministry is saying they are imposing reciprocal tariffs on $3 billion on u.s. tariffs including nuts and wine. the embassy in washington said they were strongly disappointed in the u.s. tariff action urging the administration to cease and desist saying china is not a trade -- afraid of a trade war. global news, 24 hours a day, powered by more than 2700 analysts and journalists in more than 120 countries. how the asian markets are shaping up this morning on those tariffs. let's get the latest with soapy. >> the tumble on wall street had

its worst drop in six weeks. bonds are climbing. you have the 10 year treasury toward just over 2%. japanese saw, sliding. this is the yen hovering over the 105 handle since november 2016. with the yen at a 16 month high, back and see japan lower their guidance for the next fiscal year. automakers,u have the biggest drag, and both of them are headed there. this is trading at 1080 a dollar . samsung is dropping over 2.5% as we learn at the deliberations

and the company is expecting protectionism to continue. they are saying the lead demand has slowed in the first half and is seeking new sources of demand for those screens. checking in on japanese steelmakers, let's highlight who is highlighting the points but they are losing over 20% hitting a peak back in january. this morning, we heard from the trade minister in japan sankey does not see much impact on the local steel industry and the japan will continue to work on the issue. cases of japan goods being accepted, that is high. we are seeing the mood looking dire in tokyo. steelmakers.n on korea got a temporary exemption that will end april. we have a comparison here. we have korea and australia being exempted temporarily and we are seeing pain among steel players. >> thank you so much.

there is more of a downside for the equities markets. we get more clarity from the trade tensions but in the meantime, trump shaking up the administration replacing the white house national security aviser with john bolton, former u.s. ambassador to the united nations known for his hawkish views. we get the details from jodie snyder. john bolton is a contentious president bush had named him as part of the administration and named him to be a u.n. ambassador. it atually ended up making problem because he was concerned. that's concerned with competition.

this is clearly a move to the right and foreign policy for the administration. by firing rex tillerson and putting mike pompeo in his place. now john bolton instead of h.r. mcmaster. these are clearly people who don't want to negotiate on iran, who had taken a hard line on north korea. they both had statements that were tough on north korea. this is an interesting time with north korea talks. i'm glad you mentioned that, what do you make of the timing of the move? administration, president trump is sending a statement that he wants there to be voices in a line with his on foreign policy. that he wants it to be a hawkish foreign policy administration. there were these talks that he wants to have with north korea will be talked. it comes also in may that he has

to make a decision on the iran nuclear agreement. this looks more and more like the u.s. will be recommended they walk away from the agreement. many share that view. it is a move away from that. it is interesting timing with these moves and what is going on at the white house rather than rubber mueller investigation. muellerseen -- robert investigation. that is seen rather than the investigation. we had mark saying this was not a trade war and we are making too much out of the headlines. as a trade war started in your view? >> it is interesting. ore say it is a skirmish, maybe a prelude to a trade war. these are serious amount of terrorists that we are talking about. the president is talking about

as much as $60 billion in tariffs. the chinese are talking about 3 billion and they are going to the wto to weigh in. in on top of the aluminum, steel tariffs that are not just targeted at china but tight -- china is a target of those. these are a lot of tariffs and blocking when it comes to making it tougher for each trading partner to do trade in that area. i don't know if you call it a trade war, but it is certainly leading in the direction. we will have to see the effects on both sides. jody, thank you. about the trade war and how it will play out in the auto sector. ands bring in steve manske, we see these tariffs on steel and aluminum, how will these

hit? >> on the surface, this seems to not be a lot of impact. war, if thea trade trade war escalates to a major this fight between the two nations, then there will be huge impact. a lot of u.s. lawmakers in china u.s.se chinese can boycott goods including u.s. autos. just as you see last year in -- southea and autos korean autos, the chinese boycotted those items. same thing in 2012 where they boycotted japanese autos because of a dispute in the east china sea. yvonne: what are the needs for chinese carmakers themselves to want to go to the u.s. market as well, how does it impact of them? you can consider be why

deeper the entrenched in the u.s. market. particularly in the west coast. howheard news recently of one auto company is breaking into the u.s. market. they have not done much with that yet. i think the bigger story here is does love. tesla. they have been negotiating with the chinese government on how to do that. that may put gretchen and delay into that process. yvonne: elon musk is tweeting president trump and they have been having a bit of a conversation on some of these tariff as well. in terms of who can benefit from this, is there anyone who could win? >> if it does escalate into a major trade war, you would see the japanese auto probably picking up the slack in china. the same thing with the south korean autos.

the other has been a huge gm, toyota, and volkswagen as the largest automaker in the world in terms of sales read -- sales. steve, thank you. our reporter. why growth trends seem to be broken, after the break. this is bloomberg. ♪

betty: this is daybreak asia. yvonne: i'm yvonne in hong kong. lines are coming through from the trade minister of japan -- unfortunateg it is that tariffs are being put on japan but retaliation could

.ause a collapse we look into the inflation that came through earlier. let's unpack this all with and heschulz joining us joins us live from tokyo this morning. martin, let's start off with these intentions. it seems that it has been a tip this between u.s. and china. how can japan get caught in the crosshairs of a potential trade war? trade: the start of the war is focusing on steel and aluminium. it targeted a very limited sector with an interface between ages specifically. makers have a strong interest in the u.s. market. production is heavily affected by tariffs and japanese steel is very sophisticated. it is not stuff that can be replaced.

this is driving the cost of the other become makers -- automobile makers. hang on one second. we have headlines coming out from china on this trade dispute thing that they won't be afraid of the trade war, it opposes the u.s. measures on trade tariffs, and they are reiterating headlines we have seen before. also warning to not bring trade ties into a "dangerous area," and hoped the u.s. is cautious in their decision-making around these tariffs. we were just talking about the fallout to other countries, and in particular, japan. far andhad guests on so the headlines sound worse than the reality. how soon do you think we will see of these headlines will be worse than the real economic impact?

this is not coming slowly. china was preparing for 1.5 years on these measures. the start on steel was not important. was about the life building. now china has to do something to show it will be reacting, but it has to be very muted. to the u.s. are actually asian exports to the u.s.. we have a strong focus on partners that have supply chains ending in china as part of the discussion now. that means china is really between the u.s. and china right now. the is probably because u.s. is not excluding japan in the affair. it is it's it for tax and everybody is positioning -- it tit-for-tat cap - and everyone is preparing. with the steel and

aluminum tabs that could hit japan as well, what do you make about this relationship between trump and abe? . martin i'm afraid is it a triple whammy because you saw billion dollar rate broke through the 105 barrier like nothing today. that is a big concern with japan and for the growth oriented policy that relies on growth in the asian markets. react.as to it will line up with the u.s. because that is a big market. this is where the line has to be. asian side, focusing on trade, trade relationships, together with other countries, australia, and this will be highly coordinated with china. this is a very complex structure right now. >> in the meantime we are seeing

inflation, we see things going in the right direction, martin, but we are halfway to reaching the 2% target. using this will be sustainable? we were mentioning before we came to you that you said this trend was broken as we headed into the second quarter. when the trade war is brewing, what you want is a strong domestic economy. the numbers are good. 1.5 inflation is where the bank of japan was to go. 1%1%, it will go for inflation for the core index. the problem is we are seeing these trends broking. is aspanese economy stimulated as it can be so the bank of japan has little wiggle room here. here which is trade related and wages are not going up strongly enough. there is very little that could be done on the domestic side. that makes this affair even bigger for japan.

what youm curious think about the moves that we have seen in the dollar yen. and whether the more headline risk we see out there, the dollarwe will get to 100 yen. if we do, what happens then? martin: at 105, the bank of japan is already up in arms. in the trade disputes, there is little that can be done because to safety. that is important so that the bank of japan cannot react immediately, but it has to position itself. when it falls below, there will be measures and the bank of japan will be going all out to get in as they did last year. betty: what kind of measures specifically could we see an do you -- what do you think of the oj could be positioning itself for? martin: expect the language

focusing even more on inflation. inflation is so low, the yen could be even stronger. on bank of japan could focus that they are the guys you could trust and they could go forward fromeven more bonds out the government and probably pushing the government toward more physical measures on their account as well. betty: martin, thank you so much. just a reminder again, those headlines coming out from the chinese ministry saying -- warning the u.s. not to bring trade ties into dangerous territory. don't forget, our interactive tv function, tv go, you can watch is live and catch up on past interviews. any of thedive into functions on the bloomberg at that we talk about. check it out. this is bloomberg. ♪

yvonne: this is the aggregation. i'm in hong kong. betty: i'm betty lou. headlines,ck of the china is rewarding shareholders by paying out its entire 2017 net income in dividends. the biggest oil and gas company in china said they will get investors $3.6 billion for investors.

china is recovering from its worst performance in previous years. the prices of oil bolster production. wynn sold his stock and cut his ties to the company he founded. he stepped down as ceo in the month after denying claims of sexual misconduct. he gave a competitive -- competing company a 5% stake in the company. their pricing shares are range atincreasing $21 apiece based on the number one -- dropbox should make it debut on friday in the market value is it about $8.2 billion.

yvonne: i will take it from here. from the look in the next couple rich.rs, let's bring in the former if a senior official and former ambassador to vietnam, we will be talking about the impact in this part of the world and what can be retaliated with. he is a senior vice president of the business and we will talk about that. we're looking at this a bit more in detail. we will be also talking about the trade side of things and the trump administration changes with mcmaster going to be replaced by john bolton. that is a controversial choice. he says trump's trade bark is

worse than the bite. does this change things as far as the bite goes? we have a former indonesian who will bewell along as well to talk about the challenges facing the country. >> to her that from mark chandler as well. it's not so much of a trade war, more bark than bite. we look forward to that, rich. one of the top reporters of californian wine brought in millions of dollars last year. let's get closer to where one country is. we are in san francisco there with lynn, and how big of a hit will this be? >> thanks for having me. it is safe to say it will have that the effort big deal for california wine country. sent almost $79

million worth of wine to china just last year. the country was the fifth largest importer of u.s. wine, globally. it accounted for 5% of all imports of u.s. wine. that the wineting institute, which represents all of the california wineries, released all of this data three days ago protecting that china's thirst will continue to grow for this wine. this proved to be very, very unfortunate timing for the industry. be morerowth will difficult to tackle with these tariffs going forward. yvonne: who are the other markets for california's wine? .> that is a good question perhaps what will happen is some of the wind wind up in other destinations instead of china. china is the fifth-largest which means there are four other regions that are still buying more california wine than that country.

the european union, canada, hong kong, and japan. we will see if these tariffs shift those trades to those countries instead. lynn, thank you for joining us from san francisco. i think i'm going to start planning my napa trip now. [laughter] you just came back from there, right? >> that's right. i'm glad i bought my wine before all of this. that is all i have to say. [laughter] it for us at daybreak asia, our markets cover continue on markets next. he did here. this is bloomberg. here.p it this is bloomberg. ♪

♪ the words black friday war.ing, a tariff the yen strengthening through 105. president trump signing measures were at $60 billion and says it is the first of many. beijing saying it is not scared and will defend its interests. it has retaliated on a range of goods from pork, steel, to wine. i am rishaad salamat. haidi: the fallout at facebook continues. congress says mark zuckerberg leaves many questns