♪ haidi: talking trade that the u.s. is having productive negotiations in china that might avoid a damaging trade war. betty: president trump ready to get rid of russian diplomats in response to a nerve agent attack in the u.k. a new governor pledges to serve the economy. he says china is able to stand death withstand threats. betty: qantas celebrates the first nonstop flight between australia and the u.k.

haidi: hello from sydney where it is passed 9:00 a.m. this is daybreak australia. we are an hour away from the open. betty: it is after 6:00 in new york. i am betty lou. we are looking at how all the action on wall street will play into the asia-pacific trading day. i guess if you wanted to hide from the news, you would take that perth to london flight so that you might not have to hear and read about all the noise in the markets. we had quite a day on friday. let's take a quick check on how we ended the session. the s&p down 2%, the dow losing again over 400 points. the nasdaq also lower by almost 2.5%. the worst week we have had on the s&p in two years. lots of ways to measure it, but the bottom line is a pretty scary risk off trading session on friday. haidi: yeah, you had that

classic sort of sinking into safe havens with gold seeing a bid, treasury seeing the rally. another sort of monstrous set of options set this week. take a look at the set up in asia. we are looking lackluster as we go into what will be a holiday shortened week even though we have easter weekend. shattering global markets including australia and new zealand. the new zealand bank think it will pull ahead of the expected move to a deal mandate later. the kiwi dollar at 72.34. trader just reading futures continuing to a lot. monitors prices and sydney goures looking weaker as we into trading. the aussie dollar not gaining much momentum. 77.03 after hitting the new lows in last week's trading. 1.0 647.e kiwi

1.0647. crude at 65.87. we have aia inventory reports do this week, but the biggest weekly gain since july for crude. sellers are heading for the exits. iron ore looking weaker as is coke and coal. .- coking coal stephen mnuchin saying he is cautiously optimistic the u.s. can reach an agreement with china on terrorists. joining -- tariffs. does that mean the trump administration is backing away is startingn, or it negotiation? mark: it sounds like a starting point. stephen mnuchin was very clear this morning that the u.s. will proceed with the tariffs unless there is an acceptable agreement

the president can sign off on. he did say he is having productive conversations with the chinese vice premier. he is trying to come to an agreement that could forestall the tariffs that he wanted to impose on china. haidi: what about the trade deals, because trump said the u.s. is closed to a deal with south korea? what do we know? mark: treasury secretary mnuchin said that essentially an agreement has been reached on revising the six-year-old bilateral trade deal known as chorus as well as the tariffs on steel imports that trump wanted to impose. this had also been confirmed by the south korean trade minister. we don't have a lot of the details yet about what this agreement might mean for both the trade deal and for the didffs, but stephen mnuchin say today that south korea will reduce the amount of steel that they sent to the u.s. as part of the agreement.

poisedpresident trump is to take his most aggressive actions yet on monday against russia. he is likely to announce the expulsion of dozens of diplomats in response to the nerve gas attack on a former russian spy in the u.k. how do we expect them to react? mark: this was a good skewed bloomberg had yesterday that this action is coming from the white house. we could see real have -- we could see retaliation by vladimir putin. he has retaliated these actions before. it is a bit surprising to see the trump administration moving in this direction, if only because what we have heard from the president for a long time is how important it is to have good relationships with russia. he treated to that effect as late as wednesday -- tweeted to that as late as wednesday. they have not had further conversations about the u.s. meddling, or the most recent episode with the spy in britain

and his daughter. so this is an aggressive move by the trump administration that we can expect to see russia push back against. betty: thank you so much, our editor there at bloomberg talking about the events over the weekend. let's get to first word news with ramy inocencio. ramy: first to tim cook because he saluted china's growing tech prowess as the trade war looms. forum inhe business beijing that the 2 million strong app developer community earns more revenue and makes more downloads than any other single nation. cook said china longer simply builds things, it dreams rings as well. chinese state media has listed companies that would be most vulnerable to the trade war and apple was on the list. china's incoming pboc governor said the country will ease access to us financial sector and introduce more from -- more

currency reform. he said they will stay neutral. he pledged to maintain the bank's work on diffusing risk. these are his first public comments since being appointed earlier this month. risksany external threaten china, i think the ,urrent banking system insurance, and securities market and the controls in place leave china well-placed to mitigate those risks. ramy: to japan, and shinzo abe have again apologized for cronyism that opposition lawmakers say could hit his chances of changing the countries pacifist constitution -- the country's pacifist constitution. they said he altered papers regarding to a land sale linked to his wife and sent his poll numbers plummeting. he told the annual convention that such a thing would not happen again. protesters angry at the arrest of a former catalonian leader

and have clashed with police in barcelona. the person was living in exile in brussels since the declaration of independence, but was arrested in germany and may be sent back to spain to face trial. he has been traveling around europe to press the case for catalan independence. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. inocencio. this is bloomberg. you.: all right, thank last week was a rough one as you mentioned for the bulls, the s&p losing the most in over two years. it is behind us and analysts are looking at j.p. morgan. su keenan is here with more. these are going into the second quarter with a huge but the tradeg, war could screw things up. let's take a look at how we things -- how things closed

friday. rough ride, big losses in the s&p and dow. worst for the s&p in two years. what j.p. morgan chase is saying, their top analysts, that forecast conditions are needed for stability. the samewkish fed, inflation, and the trade war could blow things up. take a look at possible trade war wounds already, where we saw some of the biggest chinese retailers take hits as president trump went after chinese products and imports. we saw china come back with a deal to hurt material companies in the u.s. bloomberg, #btv 9677, this is a gold chart showing a strong showing with bullion backed etf's the highest in five years. this is a safe haven place.

and definitely in terms of international holdings we have seen them the highest since 2013. that tells you that there is a concern about what is around the corner. quickly take a look at earnings which are ahead of the holiday. the market will be closed friday. companies from monsanto to blackberry will be coming out with earnings. and a final chart, we have got a couple of economic pieces of data coming out including u.s. spending, consumer spending sought to have risen but tamer, perhaps on the robust rise we saw in the prior forecast. betty: thank you so much. we will be watching for all of that is coming week. su keenan on the market. we will look into the future or futures as china watchers is -- launches a new yuan denominated oil market. haidi: the treasury secretary says he is optimistic about getting a deal with beijing. this is bloomberg. ♪

♪ responded very modestly given the potential weapons it has at its disposal in terms of countervailing tariffs and its possible shift in purchases in the u.s. treasury's. -- treasuries. ifre is plenty more to come the u.s. chooses to stay with us reckless policy. moving towardsen domestically driven demand. it has been part of the agenda for china for a long time. this will accelerate that pace. and china has the resources and to tools with which

withstand the kind of aggressive action. for growth,good won't be good for geopolitical reasons. so why at this point in time we don't see financial markets being overly impacted by this protection by weight. i think it keeps going on, it could be very disturbing. betty: some big guests and voices talking about the potential fallout between the hit the china which markets friday. to dig deeper into this potential trade war, we are joined by a guest from washington, and to others. others. let me start with you because we had steve mnuchin on fox news sunday say that, the u.s.

doesn't want a trade war. that is not their objective, but it feels like or seems as if everything they are doing is taking this into a trade war. you believe him? >> i think we need to take a big, deep breath and count to 10. clearly what they are doing is taking the unsustainable status quo into a new state where we are coordinating with allies and working with them on our common trade problems with respect to china. so i would take mnuchin, someone i tend to criticize, at his word at this point. it will not start a war but create a new set of facts on the ground. sayy: william, would you judging by the actions that we have seen so far from china, i relatively modest $3 billion of tariffs thrown back at the u.s., is that perhaps the same idea or view from the chinese side? william: the chinese don't want

to trade war. -- a trade war. they are being the adult here. chinese officials that i talked with, they all have the same talking point. the folks i talked with, they are talking -- taking the long view. they don't want to have a bad relationship with their major trading partner. so yeah, they are being very moderate in their response. unmeasured has been the response and retaliatory packaging tariffs, pretty understated. how far can beijing be pushed in the context with gdp coming into play as well? you are right. i don't think our folks in washington are too focused on that. xi jinping needs to have a way withouthis, and so far

communication between the two governments, and there is very little of that, but it doesn't look like they are really giving the chinese a way out that would save face with their population. haidi: james, i have been thinking about the question whether beijing actually knows what the u.s. wants and whether trump knows what he wants out of beijing in terms of our tariffs focus tariffs going to it on the structural problems and sort of non-tariff issue, the bigger issue here? james: i think you hit the nail on the head. trump has woken everyone up by talking about tariffs, but the reality is there are other structural issues, particularly issues pertaining to china's mercantilism and overcapacity that needs over concerted effort by the worldwide coalition,

consisting of china's major trade partners. so the problem with the wto is it is not equipped to deal with state directed economies like china or even economies that incorporate a lot of state direction. tariffs are a signal that we need to do something, and yet they are probably not be appropriate tool to get the results we want at the end. james, earlier you said everyone needs to take a deep breath and count to 10. stephen mnuchin suited to allude to this when he said there were negotiations going on right now. i want both of you to listen to what stephen mnuchin said earlier today. mr. mnuchin: we are having negotiations with the chinese to see if we can have an agreement. the president has said we want to cut the trade deficit $100 billion over the next year. we want to eliminate forced

technology and we are having good conversations with them. i am consciously -- cautiously hopeful, but if not we are proceeding with the tariffs. betty: the outline very specific things that the u.s. side wants. what do you think the nature of those negotiations are right now, and can those specific things, $100 billion reduction in the deficit and an end to the joint ventures, can they be delivered? james: you have got to take trump seriously but not literally. trump really wants to get action done. remove problems, and company,an adversarial so we don't need since early this we don't necessarily need to stop china from doing things. they just need to infect stop doing it. that is the way forward. but as the way they should

conduct their business. -- they should conduct their business differently. you can't really tell where it is going. perhaps trump himself hasn't got a settled set of tactics in mind but doesn't want to announce that. we are entering into an area where both sides need to have daily communicative exchanges. betty: i saw you shake your head after i played that comment. what was going in your mind? about thee have heard emissary for xi jinping who came to washington to try to work this out with a detailed and met, and basically with mnuchin, met with gary cohn, met with light heiser. what i have heard from many sources is that the u.s. really was not in a mood to talk. what i have also heard is they are still not in a mood to talk,

so i'm not sure where these negotiations are going on. that have heard nothing there is communication going on. william, to the sort of aspects taken by some of the companies and individuals you represent out of china, how much concern are you hearing that we know it is not easy all the time to do this is in china at the best of times. how much concern is there that it could get harder? beijing making it difficult for american companies in china? william: there was a lot of concern. the companies do have -- they understand that status quo is difficult. i would say not sustainable for a lot of companies because they are here, but there are a number of american companies that are not here because of the difficulty in working in this market.

market access issues and so forth. polled oure have membership, and what they are looking for, the major things they are looking for from the u.s. government for help, is to level the playing field and to have a relationship, commercial relationship with china based on fairness and reciprocal treatment. they don't like the tariffs either. they can see that it is counterproductive. they would really rather have us focused on reciprocal treatment, opening up chinese opening up where the u.s. has opened and having a fairer relationship. haidi: do you think in the trump administration there is an appreciation or at least an understanding that these tariffs could come back and end up hurting american consumers? james: i think they have been told that. i think they understand the

argument. i think they have chosen to disregard it. but is really where we are. tariffs aret the end of a attack than an state. and tariffsp wants are the way to get there, it is not the be-all, end-all policy. betty: william, you get the final word. american companies that are operating in china or looking to expand, is this going to derail any of their long-term strategic plans? william: i don't think it will be real long-term plans, but in the short-term, and you know american companies are for the most part sure -- focused on the shorter term, it is going to cause a lot of indigestion. at the same time, the company's do to a great extent -- companies do to a great extent

agree with the trump administration's direction, but the actions being taken, they don't agree with. betty: william james, l for partner, senior political analyst. .- alpha partner thank you for joining us today. you can always find in-depth analysis in the days big newsmakers on bloomberg radio. tune in to daybreak asia from 6:00 hong kong time, nine clock a.m. sydney. you can download the app, bloomberg radio plus are accessed via radio.com. this is bloomberg. ♪

♪ haidi: i'm haidi lead in sydney. mark: i am betty -- a check of the earning stories at this hour, the biggest refiner will play a record high dividend after a jump in employer profits. 8.8me climbed almost 10% to

-- $8.1 billion. this is the most expensive listing. sinopec flag $3.5 billion in impairment, mostly in upstream operations where it is sweet -- shifting to natural gas. haidi: china's biggest coal miner has reported their highest 2012, and the government's job to rein in overcapacity helped. the net income rose to $6 billion from $3 billion a year ago. coal prices climbed last year as china attacked overcapacity by restricting imports. betty: office equipment maker ricoh has cast a four-year long $1.6 billion after taking impairment charges. they said they would break even $96 million.expect

ricoh has struggled to grow revenue. they cut more than 3000 jobs in japan in the next year. dialing back the rhetoric, larry whyers tells bloomberg washington and beijing should lower the tone. this is bloomberg. ♪

haidi: it is 9:30 a.m. in sydney where the markets open in 30 minutes' time. looking lackluster into the start of trading. upney futures are shaping like this after we had the drop for the s&p last week, the worst in two years. i am haidi lun in sydney. in newi am betty liu york. you are watching daybreak australia. let's get to first word news. thank you. the u.s. treasury secretary is optimistic about a deal with china that would stop the imposition of the trade tariffs. stephen mnuchin told foxnews the two sides are engaged and productive conversation. he is hopeful of agreement.

you will remember trump announced measures that would lead to $50 billion, punishment for alleged intellectual property theft area trump is expected to take his most aggressive action against russia later monday with the likely expulsion of diplomats after the nerve gas attack on a former spy in the united kingdom. that would mean retaliation from moscow, but does line the u.s. with its allies. several countries are expected to it announced their own expulsion of russian diplomat's in tandem with the u.s. u.k. brexit secretary david davis said the two sides are edging closer to a deal that would prevent a hard order. he told the bbc the implications are good but the client to go into detail. this is the fault months now down to the split -- this is the 12 month countdown to the split. he wants people to ratify it. davis is optimistic things are coming together.

likely outcomes, and overwhelming likely outcome is option a. that is we get the free trade agreement. we get a customs agreement. all of those will make the northern ireland issue much easier. ramy: facebook has taken out ads in the u.s. and the u.k. to apologize publicly for not doing more to prevent the mishandling of user data by cambridge analytica. mark zuckerberg has been called to congress to explain what he is doing to improve safety. facebook has fallen 13% since the scandal first broke. social media companies are under increasing rusher to ensure user confidentiality -- pressure to ensure user confidentiality. vonage reducing 17 hours a trip that once took more than 12 days . the first direct nonstop flight between london and heathrow -- australia first took flight. want us is betting it can make

money from the fly-by stripping weight from the boeing dreamliner and feeling that with top-tier business passengers. >> the kangaroo rooms in 1947. back then it was four days and seven stops to get here. until today we came on the fastest way of getting from australia to the u.k., the u.k. to australia. ramy: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am ramy inocencio. this is bloomberg. ♪ betty: thank you so much. former treasury secretary larry summers said the u.s. and china need to dial down the rhetoric in the growing trade tensions. speaking to bloomberg at the china development forum, he said tariffs may have a bigger psychological impact on the markets. larry: i don't think trade sanctions need to have a large impact on the global economy, but the psychological impact of the degree of friction there is

now could be quite serious for markets. so it is a matter of what actually happens in terms of tariffs and the psychology. i hope the temperature will get very far down on both sides. >> the chinese are going to excellent [indiscernible] -- larry: i will not handicap what the chinese will do. i hope everyone will react with restraint. >> [indiscernible] larry: i certainly hope it is a negotiating stance. as long -- as ronald reagan said, trade wars must never be fought. >> in terms of enforcing how this factors in [indiscernible] fed policy at this point? larry: the impacts are not large enough to affect review on the fed. friday, doelloff on you think it was a reasonable move by investors, or are they overreacting?

larry: a lot of uncertainty. john bolton is a contributor to uncertainty. the markets respond to that kind of thing. i don't think the direct impacts of the trade measures on profits are likely to be nearly large enough to justify the market move, but it is understandable and could be significantly psychological. haidi: the former u.s. treasury secretary speaking to our own tom mackenzie. let's get you updated as we get the trading week underway. looking pretty lackluster. new zealand trading lower, 0.7%, the kiwi dollar 72.43. futures in australia looking negative. we are heading into a holiday shortened week for the easter weekend coming up, closing many global markets. aussiets lower, the dollars 77.07, failing to gain traction. the dollar-yen is want to watch. 104.77.

stoller -- sterling 41.49 as we get into another round of talks. yearis where the u.s. 10 sits, and we have a monstrous week when it comes to treasury results. -- record six-month offerings as well. a litmus test there in terms of where yields will be sitting. as a reminder, the s&p 500 closing out last week down by close to 6%, the biggest decline in two years. let's get more on what we should be watching in asia for the brand-new week. we have adam haigh here with what is going into the asian trading day, given the turbulence and pronounced decline. adam: it is really that selloff into the backend of friday trading that is a bit of a worry and overhang in the sense of that kind of disappointment in asia. it does look like it will open up slightly lower but the fact

the s&p futures are kind of flat, they were a little bit up when i left my seat a few moments ago. there was a sense some calm is starting to build in. what larry summers was saying when he speaks to the heart of the problem is, how do you make an assessment on how this affects profit growth at the moment given so many uncertainties and questions around the chinese response and the u.s. response to that? also the other u.s. allies in other parts of the world? still difficult of course, and coming off the back of a terrible week for sentiment, i think this chart is great. 6450. it shows you the magnitude of that selloff we experienced in u.s. equities here and the global equity story. is hit sentiment that that hard, you get levels of momentum and trading indicators that is those two oversold levels. -- to oversold levels.

bere is an opportunity to buying back into the market at these prices given the magnitude of the selloff. that may be appealing to some people as we go into that shortened trading week this week. ofare still largely, a lot people viewing the golden trading environment intact, global growth still ok. it does not get completely decimated by this kind of a reaction. you have to dial back the margin. for sellingcase completely out of equity. as the jpmorgan folks are saying, stay invested in equities and you can still sell on a relative global asset perspective. with equities, one of the most significant declines was in the banking shares. they are cheaper now. does that mean bargain hunters are going to pick them up? adam: yeah, they certainly are cheaper, but whether or not they

are cheap enough for some people on the value and of the investing spectrum -- end of the investing spectrum is a neat point. banks have a lot of things going for them as the fed gets deeper into the tightening cycle, and people extrapolate from that. the kind of advantages that can give to the credit environment, to the consumer space and bank profits as a function of that. the moves have been significant as this chart shows. very pronounced moves in banks. so you know, on the back of those moves, there will certainly be people. whether that be the bulls who want to incrementally add to positions given the selloff, or other investors, they start to come in and look at these things discounted values, it is really a lot of what the fed is doing as well as i alluded to in the

interest rate discussion. with the 10-year yield back here, it is not signifying any kind of rampant pushes in inflation. essentially policy remaining reasonably as we have seen it very gradual, which could be continuing optimism for banks. ,etty: thank you, adam haigh bloomberg global markets editor. two days after the fed hike, signaling more in the pipeline. three officials underscored the policy path is not yet set in stone, and that will be determined by growth, inflation and the potential for trade war they have put a long time -- kathleen hays is here with more. you spoke to the minneapolis fed president. what did he say? kathleen: the first thing i wanted to ask him, you dissented in december against a rate hike. you would assume he dissented in march. he is not a voter now but it matters. they go around the table. voter or not you say i support

this move or make all the arguments why you shouldn't. what surprised me and others was that neel kashkari told me he supported this. >> sitting in a chair, i would raise rates because we told market we are going to raise rates. for continuity i am in support of it. [indiscernible] i look at the data, i don't think the data itself supports rate increases at this point in terms of [indiscernible] i personally would like to see more wage growth [indiscernible] in the labor market. and i will support more interest rate hikes. kathleen: let's look at what neel kashkari is referring to, #btv 9867. one point seven, that is the headline number. 1.5 is the core. it is interesting that neel said i supported this eight hike for continuity from fed chair yellen into jay powell, and because the markets expected the rate hike,

but i need more inflation to support rate hikes in the coming meetings. president ofc, atlanta, who is a voter this year and was speaking on friday, he has seen three. he said it could be cointreau or wo,, defendant -- four or depending on the data. -- two, depending on the data. another man said three hikes, but that could be amended depending on the data. it will be interesting to see if this forrs play into more hikes. obviously that is the direction the markets are still questioning as well, but interesting that neel kashkari in the interest of the historic transition, got on board and supported jay powell at least for now. this could speed up the pace of tightening, but what could slow it down? kathleen: that is another thing i asked with regards to the potential for a trade war.

i pointed out officials have shrugged off the aluminum and steel tariffs, but i asked, could you shrug off something that looks like a trade war? there was a full-fledged trade war, it would have dramatic negative impact on the global economy, and we could not shrug it off and look at what it means for the outlook for inflation and the outlook for growth. kathleen: i asked if this was discussed, the trade war potential and the potential on the outlook. he said yes, it was. six months ago we did not have to talk about trade wars as a downside risk to the economy. we are looking at that potentially now. raphael bostic also called it a counterbalancing downside risk. kaplan had a different view. he said we could be seeing negotiating tactics, and with secretary mnuchin hopeful that the deal on trade and tariffs can be reached with china, maybe

that is the prudent way to look at this. it is not over until it is over. even though the markets sold off on friday, maybe people are wondering if that is not the likely outcome. haidi: the optimist view. thank you so much for that. coming up, china has been waiting for 25 years to launch a domestic market to trade oil futures. coming hours that dream will become a reality. the applications for london and new york. this is bloomberg. ♪

♪ i'm haidi lun in sydney. betty: i am betty lou in new york. you are watching daybreak australia. the u.s. dollar has long been established of the mobile currency of the oil market, but china is going to challenge that . the shanghai international will bexchange or ine

opening in a few hours. here is what you need to know. ♪ haidi: joining us for a closer look at the new oil trade and the implications of global markets is the asia analyst and energy aspect joining us.

want to get going, clearly getting started, but once it gets going, is that a did -- is it a game changer? reporter: i think the ine is a bit of a paradox because they certainly see this as a hedging tool for traders and refiners in china, and they see it as you mentioned as a global benchmark, sort of a reliable testament to demand in asia and an outlook for investors. it has been so long in the making that the fact it is launching is momentous, but to achieve any of these goals, it will take quite a bit of time. haidi: right, so in terms of pricing, is it the same as elsewhere for the time being? michal: it is still ti and brent that make the benchmarks. domesticbecome the chinese benchmark. it could be the signal for the price that chinese refiners and traders pay for crude oil. if china was the basis, but it is telling from what we know

17%y, and there are roughly of people who have signed on our retail investors. another 10% asset managers. the number of people with access -- actual physical oil exposure are limited. the independent refiners still have not signed on because they are cautious and want to see how this plays out. could the much development or launch of these futures market, how could that take away from the market share of the futures market in the u.s. and in europe? michal: in the short-term it is unlikely to take a big market share. in terms of speculative trading we are going to see it be very volatile in the month. but the contrast from september, it is going to be open until august. in the next 10 months it will go up and down and only in august will we be able to see the appetite for physical deliveries into this contract. betty: why now?

this has been talked about for many years. what are the conditions that ake it, that make this sensible decision to go ahead with? michal: we'll see how sensible after the trials and tribulations of the first few months. got to be launched sometimes, and we will see the teething pains, but china is in a place where it feels much more powerful and emboldened. it is the first consumer of oil globally. it has surpassed the u.s., and it feels prices are being made elsewhere. it is the biggest buyer. the domestic chinese market has evolved, and there are a large number of actors. they have not signed on yet, but they will because it is very appealing for them to have an r&d denominated contract. it is much more liquid. -- renminbi denominated contract. it is more liquid. betty: it will be a few months, but if this goes up with success, is this going to have

any considerable impact on oil prices, on the cash market? -- can'te can exclude exclude that. most western servers so say you cannot short oil now with trenton -- with china launching this. looking at the chinese middle markets when they launched, they have dragged global crude prices up with them. but i think those are more to do with corks desk works in the contract in the first months and uirks in the- with q contract in the first months and years. it is still far from being transparent and liquid. there are a number of actors that dominate the storage. we see in wti that delivery is a part of the efficiency of the contract. we are far from that in china. haidi: in the context of china's opening up and reform ambitions as well as the looming trade war

with the u.s., do you think this takes on significance? michal: symbolically it certainly is a very strong position by china to say, we are not buying into all this protectionist talk coming from the u.s. we are buying, we are inviting foreigners. we are making great efforts to liberalize and open up. but in terms of sort of actual impact, first of all we will see exactly what the trade war means and if it is a bargaining position, or does it become stickier. regardless of that, u.s. flows into china will even triple this year because refiners are looking for more u.s. grade. let's put that in context. perhaps a 300,000 barrels a day when china is importing 8.6 million of oil. there will be a lot of rhetoric, then there is reality. haidi: great to have you on for us. the asia analyst, ahead of

trading starting in china at 9:00 today. rio tinto is concerned about trade tensions between china and the u.s.. their product moves between those countries. the talked to tom mackenzie at the forum in beijing and say the trade war would affect global gdp. trade is absolutely essential. we believe and fair trade, free trade. if you look at history, there is no doubt we want to trade well. free trade is a very positive driver. if you look at the exact that example of the mining business, it is essential. we have two key drivers for business. one is gdp which is doing good, and the other is trade. lenny give you an example. -- 80% of 90% is rio tinto moving from one country to the other, so it is essential. in light of the announcement of

night, we werest watching a very carefully for this reason because of the importance of the global economy. if we stand back, both china and the u.s. say they are great trading nations -- if we understand the role of trade in terms of increasing living standards and therefore our hope, and i believe common sense will prevail. i believe those countries will sit down together and work out their differences. i would say we are concerned, but let's see what happens and the next 45 to 60 days will be essential in that regard. in terms of the tariffs on steel and aluminum by the trump administration, how much impact will that have on rio tinto's business? jean-sebastien: the real question will be in relation with canada and the usa.

we have a strong alumina business in canada. we supply 30% of all the aluminum concerns in the usa -- consumed in the usa there is a direct impact for the aluminum business in canada is very small. question,revious [indiscernible] we could have an issue and impact on gdp. that is something we are watching carefully. tom: do you start to plan contingencies? jean-sebastien: absolutely not. as you know, aluminum is a great business. however gdp, we believe aluminum will go faster. ands about climate change the vehicles that use aluminum. the first quarter [indiscernible] it is a grain aluminum. it is a very efficient the cost of the carbon footprint.

are we concerned for the future of aluminum in canada? no. we see a lot of prospect. betty: breaking news from state tv in saudi arabia. ,hree of -- three missiles three out of a number of missiles had been intercepted over the capital of riyadh, intercepted seven missiles fired yemenis, killing one, injuring two according to state tv. years-longart of the lict between the .audis and yemen three of them have been intercepted over riyadh, and it has killed one and injured two according to state tv. haidi: this long-running civil war the saudis have attended to intervene in, but this is not

the first time riyadh has been attacked. her have been several instances. watching developments for sure. in the meantime, getting ready for yvonne and betty up next to kick off the trading week in asia with daybreak asia. yvonne: we continue to watch trade headlines from steve mnuchin. he is hopeful a truce can be reached on a china trade deal. we were talking to a china spokesperson saying we have nothing any medication at this moment -- any communication. treasury secretary is joining us next hour. betty: we will hear from sergio ermotti, the ceo who talks about the impact on the market of the impending trade war between the u.s. and china haidi:. lots to talk about. we talk about the executive director and the global head of international offices. taking a look at the market reaction, we expect this is just the starting point very taking a

look at more precaution. this is it for daybreak australia with action on daybreak asia, futures looking pretty stinted. this is bloomberg. ♪

♪ >> 7:00 in hong kong. live from bloomberg's asian headquarters. welcome to daybreak asia. steve mnuchin says the white house is having productive negotiations with china, which might just avoid a damaging trade war. president trump is ready to expel russian diplomats. moscow's expect -- is expected to hit back. it is just after 7:00 p.m. this sunday. says china is able to withstand external threats. investors brace for another rough ride after global stocks su