yvonne: 7:00 a.m. here in hong kong. i am yvonne man. welcome to "daybreak asia." the top stories this tuesday, risk-off trading is back. weakness in cap sparked a route. president trump resumed his attacks on amazon. stocks slump at the beginning of the new quarter. the clients are the worst since the start of the great depression. bloomberg's global headquarters, i am betty miller in new york, where it is after 7:00 p.m. on monday. model t production failed to hit the target. a lot more money may be needed. apple breaking up with intel and

wants to put its own chips and by 2020. we will find out what caused this split. we have got breaking news right now on the south korean front. inflation data looking pretty tame. so far from the 2% inflation target set by the bank of korea. inflation month on month coming in at a decline. 0.1%. expectations were for a marginal gain of .1%. it represents quite a decline from the prior month of february when inflation was hotter than what economists had estimated. 1.3% for south korean inflation. that is below what economists forecast at 1.4%. again, well below the targets

set by south korea and the bank of korea. it shows you how hard it is for the central banks to get those inflationary numbers up. that will be a damper on many of these economies. yvonne: that will be more of the concern. the goldilocks scenario. out with allthrust these tech selloffs. a lot of front and center news when it comes to not just trade wars but tech as well. i love this call from our micro man thing this week, we are not going to be watching with the cpi, inflation, or drop reports are. it will be about mark zuckerberg testimony to congress. absolutely. this will be the show for us geeks

watching that stuff. in the meantime, nobody likes watching the markets in the u.s., of course. at least, if you are able. the s&p down to point to prevent two point 2%. it climbed off the lows of the session, but not by much. the nasdaq and tech shares, again, plummeting down 2.7% on the nasdaq. let us dive into this their issue. we have factors that gave investors a cause for concern aside from the trade war, the tech route, speculation about regulation. the s&p breaks below key support levels, langley signaled more selling ahead. i just want to pull up a chart here. we have got it here. shows you inhich this chart on the far right that for the first time, we closed below the 200 day moving average since 2016, looking like a bearish signal.

su keenan here with more. how significant is this? su: it looked like it would break below the support. it gave way. that is cause for concern and it means that, perhaps, the long-term buyers are drying up. we know the moving average, which is the sellers, clearly have conviction. a market snapshot. to safety.light safe place such as gold, which was higher in the regular session. you saw crude down a bit. we will get to that in a bit. the big story here is the size of the selloff in tech. let's go some of the big movers. you're seeing a big drop in amazon.com. that was one of the stories of the day as trump continues to layer on the tweets, which are raising concerns. intel under significant pressure, as was the entire chip sector. they will make their own chips

by 2020. tesla getting it from every angle, and credit and bonds under pressure. concern about the crash and delivery dates. concerns about its ability to answer some of the major questions investors are asking. general election starting to -- electric selling off pieces. that stop under pressure. let's go into the bloomberg. g #btv 2729. all good things come to an end. trillion you from your stocks in february. oft is an enormous amount market cap that has disappeared in the selloff. us up as we talk about the dow, the s&p, reporting first quarterly losses. we are entering correction territory, and that is giving pasta the bulls in a very big way -- pause to the bulls and a very big way.

yvonne: you could blame tech on that. you talk about this renewed trump attack on amazon. to decline.tinued >> the stocks continue to be under major pressure. there is a lot of speculation that these stocks as a group will break away. let's go into the amazon chart is this kind of says it all. there is an amazon chart, if we can go to the way it has performed in the past. sincesinc it was reported that trump is obsessed with amazon. the white house backed away with that. the continued tweets indicate that trump believes amazon ,nderpaid the post of davis which there is no support for. it is causing concern for investors and speculation that

there could be scrutiny for amazon and a lot of these other stocks. let's take a look at the story. apple reporting its plan to move to its own chips and away from intel by 2020. under other chips pressure as well. you can see the size of the moves adding cause for concern. yvonne: so much for a quite start to the second quarter. that's take a look at how is it is set up here today. looks like the tech route have a lot of big market coming back into focus your today -- here today. the kiwi holding steady at 72.13. take a look at australia here. traders getting an extra hour. .ointing up .1% the aussie holding steady ahead of the rba decision that we are not expecting so low to do much to do much.

to japan, where we did see a selloff. but he marginal yesterday. looks like that could intensify your today. dollar-yen once again seeing a bit of a rush to safety back below 106 against the dollar. let's get you the first word news. jessica summers is joining us from new york. jessica: the trump administration is said to be pushing for the u.s., canada, and mexico to reach a nafta deal. april 13 through 14th. negotiations resume in washington this week to reach agreement on significant remaining differences that would allow the president and other leaders to make a positive statement while the technical terms are hammered out. meanwhile, tesla fell again as elon musk's april 4 phil flat. his bankruptcy -- april fools so flat.

they must raise $3 billion because the slow build have limited return on investment the company made. tesla is accepted to say that output is below target. smartphone makers support china's plan to the were tech companies back home -- to lure tech companies back home. companies are allowed to issue cd-r's. he described the plan as a great innovation. he is said to be preparing an ipo that could be the biggest since alibaba $25 billion debut in 2014. relaxy, regulators are to vehicle emissions standards. the timeline put in place is too high. the epa decision follows intense lobbying by the auto industry to roll back anti-pollution measures. the widely anticipated decision has drawn criticism from consumer and environmental groups. the agency may also revoke

california's emissions rules. wellness, 20 four hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. the trump administration is said to be making a new push naftae an outline of a deal agreed. us fromo joe, joining the sea. d.c.om i guess president trump wants to get this all done before then. how likely is this? joe: the administration has got a lot of balls in the air. the trade tariffs with china -- tiff with china. was announced there

agreement in principle, though not some of the details. this will probably result in announce in want to peru that we reached a breakthrough point, and we just 's. ino cross the t the past several weeks talkre has been a lot of on the negotiations getting underway despite the fact that the president continues to pact.ize the the agreement in principle did not move a whole lot beyond from where they were when they started. a few things were given up, so they have been able to move on. that is apparently what they want to do here. betty: it is all bluff, joe? all bluff that president trump wants to pull out of nafta? abouthere is no real talk

them pulling out of nafta at this point. there was another round of negotiations set to come about. some of the trade ministers will be in washington, apparently, in the coming week. it's never too late for another bluff, but it appears at this point that they are wanting to make progress and have something in hand. yvonne: thank you so much. our bloomberg congress editor in washington with the latest on trade talks and particularly nafta. still ahead, investors failing to see the funny side in elon s tweet.pril fool betty: up next, more on tumbling tech. what today is route signals about the wider economy. this is bloomberg. ♪

yvonne: we are counting you down to asia's first major market opens this morning. japan futures looking pretty ugly this morning. ..5% drop at the open dollar-yen. we are seeing some strength in the yen for a fourth straight day. 105.81. this is "daybreak asia." i am yvonne man in hong kong. betty: dragging down in tech shares in asia. york.etty liu here in new speaking about how the markets ended in the u.s. and how that will affect asian trade, a quick look at the boards and how the index has finished the day. the s&p down over 2%. the dow losing 500 points. the nasdaq also down. you can imagine the worst among

the index is given the tech two .7%.wn this having an impact on other markets, of course, including the dollar and bond market. i want to bring in the chief economist, head of credit portfolio management. he is also a bloomberg view, columnist. this risk-off sentiment is everywhere. >> m.d., it's everywhere, indiscriminate almost. looks like a global economy. it should be impacted by the latest trade spat between china and the u.s. and level equity markets under pressure. the market assessing. there is one country looking to narrow the straight balance. hence why we are seeing the selloff today. betty: it's kind of indiscriminate. i want to pull up this chart. if you look at the investment-grade credit market,

g #btv 6823 in the etf that tracks the high-yield and ig credit markets. money is just pouring out of his 's indiscriminately after quarters and quarters of inflows in the markets. does this make sense to you? is this an over exaggeration? ben: there is an important signal from that. the credit markets have been very good over the last number of years. a lot of demand for credit. that is changing. also an assessment of economy itself. the credit will change to. if you look at this historically, whenever the credit markets post negative returns, it is not a signal that we are dealing with economic uncertainty. that is what we are saying. markets and investors are

pulling out of those particular sectors because of the valuation concerns. i would not expect someone to continue. you should see a widening of credit spreads from here. yvonne: is this the start of a bear market in equity markets? are we seeing 2008 or 2000 all over again? ben: i do not think it is 2008. you can be visiting the 2015 scenario. chinese devaluation. what will happen here is the market is looking at what is happening globally within the economy. a nice, synchronized global recovery. that is shifting. you will see central banks responding to this by incorporating global developments in the statements and responding to these tighter financial conditions. were are tighter than we

used to, which means lower equity prices and likely wider credit spreads. yvonne: we got the many capturing data and we saw with this terror announcement, prices are going skyhigh, and people are still not getting that wage growth to match that. if you add all the trade impact, can the fed respond to that? can they? ben: i would think not, yvonne. there is not a whole lot they can do about trade itself. they can only respond with either not hiking or biking more. g more.e -- hikin there are watching it for the ultimate negative impact on the economy given how financial markets have responded so far to the trade dispute. .t has been a negative reaction how much will that focus to the economy? some first signs of this. consumer confidence numbers, leading indicators that are

slowdown happening. it could be related to the volatility as a result of what we are dealing with in the trade dispute. all i can do is that, watching. yvonne: i know you have been watching not just with these fang stocks, but what is going on with these things bonds -- fang bonds, which held up as well. we are seeing a broad base. that was the one today. what does that tell you about this deterioration we are seeing in the credit market and the tech selloff and stocks? important, yvonne, because basically, that segment of the credit market will have high-quality borrowers. the valuation has been quite rich if you think about it that way. therefore, the correction that is happening sets the tone.

if you have high-quality borrowers in the market, that allows lower tier issues to come to the market and borrow. i think this is changing the dynamic of that if you get pressure that the credit markets up gets pressure and therefore it changes the accessibility to the credit markets and tighter financial conditions. this is what the fed will carefully watch just like in 2016, getting that sort of pressure. this could be a scenario that could play out this year. yvonne: what about when it comes to the things in general. to put these in one brush now. it seems like there is an individual narrative for each company, whether it is the social media companies, software companies, electronics. that is how we differentiate trade tech now? ben: i think that is a way to

differentiate. isknow that the fang having an important impact because of the market cap association. there is a whole lot of other issuers. it is not dominant that way. i do think that the tech sector .tself is going through changes the changes are being recalibrated. there was a major rally since 2016 because of their contribution to the market. ofis shifting as a result having to adjust to a new environment. as you mentioned, yes, everybody will be watching mark zuckerberg in congress, really because it could lead to regulatory changes involving tech companies. betty: pivotal testimony from zuckerberg. people,uickly, watching you mentioned before in a note about this news one hour ago. street bankerl who will be nominated to be the youty treasury secretary --

say this is quite significant as it pertains to the fed as well. ben: it does. there is one significance of it. the former banker being part of the treasury. people have linked that to more deregulation. at the same time as i understand still inice chair play. we don't really know who that it ise, and i believe partly related to the fact that there is the deputy secretary. it may not make it clear it paves the way. should see this short-term anyway because it has been sometime that the position has been bank in. -- vacant. yvonne: thank you so much. you can get around up of that story and many more you need to know to get your day going in today's edition of daybreak.

bloomberg subscribers can go to dayb on the terminal. you can customize your settings so you only get the news on industries and assets that you care about. and tomorrow on "daybreak australia," we are going to speak with warren buffett's son, howard, on his new book on failing order policies. what does he have to say on the border? that is at 6:00 a.m. hong kong time. it :00 a.m. if you're watching in sydney. this is bloomberg. ♪

yvonne: a quick check of the latest business flash headlines. snapchat parent sank. users do not like its redesign. middle and high school students and college graduates all complained about the way contacts are ordered, stories losing their page, and the rising number of alerts.

snapchat is dominant with middle school schoolers but instagram is becoming a contender. betty: they sell the most -- 2009.he most since india's enforcement directorate looking into a $.5 billion loan to videocon group. they claimed a relationship. yvonne: carrying supplies to the international space station. the falcon nine lifted off from cape canaveral with its dragging caps off pact with nearly three tons of equipment. 30 launches this year, up from a record 18 last year. this latest mission takes the 2018 tally to seven following friday's launch of 10 satellite. apple wakes up with intel, planning to use its own chip as early as 2020. intel stocks plummeting.

we will look at the split and why it is happening. this is bloomberg. ♪

yvonne: 7:30 a.m. tuesday. could be in for a rude awakening in the market because of the tech selloff in wall street. the third worst selloff we saw in u.s. stocks this year. this is going to be a pretty ugly one, betty. betty: pretty ugly indeed. 7:30 p.m. monday in new york. the snow melted off your the gains in the market also melted off. just declines here. , 2%. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you're watching "daybreak asia." first word news with jessica summers. jessica. sophie: u.s. manufacturing

expanded at a slower pace in march. terrace helped with the materials prices to a seven-year high. 59.3.dex at that is below forecast. lowest slipped to the since august. the prices paid index rose for a fourth straight month to the highest since april 2011. an. based harbor energy made improved offer for australia's number three producer. the bid is worth $13.5 billion aussie. they granted harbor due diligence after receiving a new offer. was a major casualty of the oil route, falling at a 248 two years later. shares have been suspended since thursday. the bank of japan is offering a rather negative view on

cryptocurrencies. the downbeat q&a for those seeking information. -- whether profits can be made. boj governor haruhiko kuroda expressed apprehension about corrupters. it could destabilize financial markets. are said tomakers have agreed on a maximum three casinos. the party member told reporters that number will be reviewed seven years after the first location wins the green light. they are yet to agree on entry fees, and the continuing debate on the tax on gross gaming revenue. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. we are counting down to

the top of the major market open in the asia-pacific. we had some major markets like hong kong coming back online here today. let's get the latest with sophie kamaruddin. it was hardly a quiet start to the second quarter for wall street. what is the set up here in asia today? jessica: the pressure is going to be on after u.s. stocks fell to gretchen territory through the nikkei and kospi set to lose over 1% at the open. tech stocks will be in the crosshairs today. most inpmakers fell the two years on the report that apple plans to use its own chips as soon as 2020 rather than processors made by intel. keep an eye on the tech heavy kospi. foolsusk's april joke. saw shares fall over 10% last month. lost 7%.ie

-- tire lost 7%. crude slipped the most. cryptocurrency markets may be dented from the boj's warnings. ionne: australian markets -- forgot about that. the clocks have changed. what is the set up ahead of the rba? sophie: given the backdrop that we have got here, we have record low interest rates, a week all gauge ofand a australian manufacturing soaring to a record in march. this is something aussie invest can latch onto today. futures indicating a positive open, but when you take a broader look at all the shares your today, they have lost 5% compared to the 1.5 percent decline in global stocks. not looking too lucky with analysts turning less bullish compared to the g7 peers.

it is expected to rebound over the next of months compared to the average 17% gain for the other g7 nations. that could keep australian shares under pressure for now given the global trade tensions we have had, yvonne and betty. betty: thank you so much, sophie kamaruddin. amazon shares have been on a rough rides lately. he had a later twitter rant. they lose a fortune. this will be changed. fully test paying retailers are closing all over the country. not a level playing field. this is spencer soper. know trump has been obsessed, it seems, against amazon. why the of session here?

he conflates amazon with the washington post, which amazon's ceo, jeff bezos, also owns. it is hard to untangle whether his obsession with amazon would be the same if it were not for basis's ownership of the washington -- jeff bezos's ownership of the washington post. yvonne: this is really perhaps a rant against fake news and the media in his view. is there any legitimacy to the concerns you outlined that retailers are going bankrupt and that the post office is losing a ton of money, owing to amazon? >> there is truth to some of the criticisms. in response, you have to look more broadly at e-commerce and the shift of consumer spending from department stores like jcpenney, sears, macy's, to websites like amazon, but also walmart.com and other things.

what that has done is it has transformed the labor market. formed thousand people since 2000 have lost jobs and department stores. that is about the same number that have been gained in warehouses that their companies like amazon. so it's really kind of transformed the labor market rather than really inflicting pain. postal rate,the amazon gets a better deal than it would get from ups or fedex on a lot of these deliveries, so the question is can the government squeeze amazon a little bit more for a little more money on those deliveries? yvonne: how likely is president trump to be able to regulate amazon? is it much different from what we see for scrutiny for other tech companies? >> the big concerns on amazon are antitrust, but it is hard to way the rulesthe

are currently defined. they don't really have a monopoly on anything. any product you want to buy on amazon, you're likely to find an alternative place to buy it. they do not have that kind of monopoly power the way that is regulations are currently enforced. it would be a question of whether they try to reapply the regulations in a different way. it could lead to trouble for them if they have an acquisition or something. it could make it more complicated for them to get an acquisition through. yvonne: talk about the attachments are for the retailers. it certainly is one for the consumers because most shoppers like the cheaper prices. our bloomberg tech reporter joining us to talk about the amazon fallout and bigness from the world of high-tech. apple is planning to use it them computers as early as 2020, moving away from its reliance on intel processors. let's bring in been kaine, joining us more about this.

why is apple domestic? -- doing this? >> apple's tragic take back control of its platform like the rest of the industry. apple is on the same sort of cycle companies -- intel comes out with a new design that is a little bit faster, a little bit better, and everyone refreshes their lineup and moves forward. to differentiate itself and make its products and out more. they are following the natural path of going alone here. >> could this be a big setback for intel? reliable is apple given that its revenue contribution is in the single digits? sound like aoesn't

brutal blow, but what the issue is here is that it could represent a validation of the ability to go it alone. intel, as you know, provides most of the chips. the pc industry has a better reputation for manufacturing and products into the market if a company like apple can say that we can do our own come other concern is why would not other company start to do that? yvonne: what implications might that have for the asian ?uppliers and the impact today >> apple does not make chips themselves. primarily, it is working in historically is using samsung electronics as well. this could be a fantastic move forward for them. the perception has always been those companies were not good enough to compete with intel and manufacturing. and these guys

are good enough. we have nothing to lose. we are just using our own designs. that sends a message to the rest of the industry as well. >> thank you so much. ownking on apple and its impact on chips. staying on tech. is elon musk the april fool? our next guest says tesla could in the nextfor real six months. this is bloomberg. ♪

>> it is a company that has a massive vision for the future. in the here and now, it has a lot of issues with keeping enough capital on a balance sheets to be an ongoing issue. so i think that when we think about tesla, you have to separate that from the rest of the high yield bond fund it. i do not think it is necessarily

a symptom of something larger. >> tesla share price will stabilize. the management we need to address it is a proper funding plan. not just for the next few months. they have got the funds to even potentially announce some further delay in the ability of production. >> he got the liberty wanted from the credit markets, but he is going to start having to pay some attention. over $8 billion in debt right now. trading below par. >> they are embarking on something that is truly more complicated than they assumed a few years ago. the automation in this facility with the model three is going to be in your best in industry. i don't think if they could go back in time that they would do that again. betty: lots of reaction we have

had on bloomberg television to that turmoil at tesla as we were showing here now. shares closing down more than five percent today. this is daybreak asia. i am betty liu in new york. yvonne: tesla investors did not think that elon musk's april fools tweet was very funny. its first miss quarter deliveries. ramy inocencio has more on this right now. investors not being very kind today. ramy: not at all, really. talking about the 5% down close, shares fell as much as 8%. they did pare some of those losses. the headline that everyone is talking about is that no one expects tesla to hit those weekly targets reportedly targets. bring in my first mind chart. bloomberg model three tracker that we just weked off early this year,

are expecting 1190 cars per standard week. we know the target is 2500. than, he has pushed more 2000. a peak rates. we are waiting for numbers to drop. it is as early as tomorrow. today,gs go as planned we will comfortably exceed that number over a seven-day period, but looking at the quarterly number as well, first quarter production, we are expecting that to come in at 9285. the actual target is 10,000. you can see where the 10,000 member lies. those yellow bars for the fourth quarter, miniscule compared to the 10,000 lower. we are going to get there. betty: it certainly seems that way. what about the issue of the cash

flow which we heard several of the guests had mentioned? ramy: based on bloomberg estimates, it looks like this could be the third-largest cash burn. g #btv 2434. i want to show you this redline on the right-hand side of your screen. $1.173 billion is the estimated cash burn. you can see that in the third quarter of last year, that push past the $1.4 billion mark. this is one issue here. there is also a knock on effect. there is no cash flow. those both came out saying they need to raise $3 billion in more capital. especially when we are seeing investors flee tesla. can they even raise that? as tesla is also having an issue , there is also the fall of the market cap. just about two weeks ago, one

week ago, it was the biggest automaker by market cap. slide. see it it is now number three. 42.6 billion dollars. not only that it will more final one. as the cash flow issue is happening for the company, there is also a cash flow issue for elon musk as well. this is the bloomberg billionaires index. he is now at number five. lost $2 billion of his worth. he has a current fortune of more than $14 billion. betty: ramy inocencio with the latest on tesla. not my thing. our next guest says tesla could go bankrupt perhaps in the next three months to six months. joining us from chicago is john thompson, who was quoted in a bloomberg story talking about this. months to six

month after seeing some of the more data coming through, are you in the three-month or six month cap now? -- camp now? >> probably six months. a highly cyclical business. finance almost entirely with debt, which is coming due. i think their suppliers are going to start to worry that tesla will not be able to pay them, and if you look at the suppliers like goodyear tire, they had a 2% profit margin. good yourself tesla $100 million of tires. the upside is to make $2 million of profit and the downside is they may lose $100 million as tesla goes broke. what you see happening in these types of scenarios is the suppliers like to say what are we doing here? what only get cash up front?

that cash demand could not be met by tesla today. if the suppliers acted that way, and i think they will eventually. betty: they certainly could have every right to do that, john. i want to pull up this nifty tesla model three tracker we have here on bloomberg. it's pretty cool. i mean, right now, as ramy has shown us as well, tesla is making just under 1200 model threes per week. that is less than half of what elon musk has promised of 2500 model threes per week. but he is getting closer and closer to that. at what point do you think that the creditors might step up and say -- hey, you know what? that would be the pivotal moment if they say we need to be paid now. hn: you just had moody's downgraded from be minus two triple c plus.

that is a horrible credit rating. i mean, that is like seven stages below investment grade. if i was a credit manager at one of these suppliers, i would be quite worried. going back to the tire delivery thing, whether they do 2500 cars per week or 5000 cars per week, tesla has an enterprise value of $42 billion market cap plus eight ilion dollars of debt -- $8 billion of debt. $30 billion. ford is making 150,000 cars a week. tesla is not even close, you know? we are focusing on a very small data set here. the big picture is they are a very small company, financed with debt, with this massive market cap which i think is -- as this thing is popping, it could unravel quite quickly. that is why we are short the stock. yvonne: i know you have been

short the stock for years now and now, it seems like people are starting to listen and join your camp, but there are a lot of diehard loyalists to tesla out there. we did speak to someone who said it is going to get worse, but it will look worse before it gets better. here is what he has to say. >> it is really that you have a car that has preorders that the model three has. it is probably somewhere around 400,000 preorders. there is more demand than supply. longer-term, they ramp production. the stock will quickly reverse. yvonne: what do you say to that, john? john: 400,000 cars in the scheme of the car industry is really nothing. it is a pretty car. all their cars are pretty. from my understanding, the quality issues they have been having our material. if the company does

get more and more enjoyable, demand for those cars has fallen off a cliff. the use value of these cars -- if you look atsaab that -- at bankrupt, she lost 75% of the value in 1.5 years on the car. people will start to worry about this, i think, over time, and it is a real worry. betty: it is interesting, though. if you look at the analyst community on wall street, there is only nine sells on tesla shares. john: wall street is in the business of selling stuff. ever ask ad do you barber if you need a haircut? ofse friends want to be part the financing, which they know tesla needs to do. they have to raise equity.

moody's explicitly said they have to raise equity. downgrading them even further. you know, they all caps on of that see but with the stock acting the way it is anna mart - and the stock market acting the way it has, it will be interesting. then, there is another problem of they have had three of their senior accounting people quit in the last 18 months. the cfo, the chief officer, and director of finance, which tells me there is something fishy going on there. yvonne: what about the demand overseas? it has been reports that he tends to open a factory in china. those plans have stalled right now. if president trump gets his way with trade, could that strengthen the hold in china? john: for my understanding, there are 15 manufacturers of electric cars in china. there is something like 120 new

electric car models coming out from the big auto companies. audi, mercedes, honda, toyota. how to makeies know cars and know how to make them very well with a lot of quality. putting an electric motor and battery in a car is a relatively easy thing to do. what these companies did not think is that there was a market for electric-only cars that took four hours to charge. musk's credit, proved there is a market for a really nice electric cars that to hundredve and go miles. he found a market that no one else thought existed but the ishnology to surpass tesla actually quite easy. >> we have got to leave it there. capitalmpson from vilas management, ceo. this is bloomberg.

♪

we are coming down to the open in australia and japan. -- .5%.f about .4% this is bloomberg. ♪

yvonne: 8:00 a.m. here in hong kong. i am yvonne man. welcome to "daybreak: asia." trading is back as weakness sparks and equity market row. declines client on the s&p were the worst since the start of the great depression. i'm betty liu. it is just after 8:00 p.m. on this monday. looking for a fast deal on nafta. president trump's once -- president trump once in ts anncement -- wan

announcement by next week. ♪ yvonne: new quarter, but volatility still here to stay. hopping back up to 24. the tech selloff was the culprit of all of this. are absolutely was. the index spiking yet again. it has really been the tech shares that are the culprit here in the market. that is what is driving these yields down in treasuries and driving the flows from credit markets to stocks. it does not look like it will end any time soon. it is an in a spacious -- inauspicious start.

it could be a volatile session here. sophie: look at the mood in japan. futures indicating a drop for the nikkei 225. that has come to pass. riskng for a second day as sentiment is weakening. backe welcoming australia to the fray of all the shares -- aussie shares. something for aussie investors, we have the manufacturing gauge jumping to a record high, reflecting low interest rates and stronger global demand. is losing close to 1%. you do have energy and health care, the biggest drags. i.t. shares falling.

chipmakers will be the section to watch, under pressure among reports that apple plans to use its own ships as early as 2020. investors have the latest inflation data to consider. kia andching carmakers hyundai. watching group shares. will investors be able to look through the unit, posting profit that think to record low level, given china's latest signals of wanting to reconcile? a series of blunders with elon musk. we do have getting -- panasonic derives about 1.5% of

its revenue from tesla. productions three face more hiccups, that could weigh on new orders. improved to $10.3 billion for the energy producer. that is something to keep an eye on. overall, we have quite a few things to consider in asia today. tech shares certainly in the spotlight. we have our lives strategist mark cranfield in singapore. mark, just watching the tech selloff, is that the biggest source of concern in the market? and trade areech the two things people are most worried about. there have been concerns about major tech companies. it started with facebook and

seems to be spreading to amazon as well. companiesery major and they have an influence on the market. china has retaliated with some trade measures of their own. who knows where the u.s. china trade standoff will go? it is important for global markets. if china and the u.s. cannot agree on how to do trade with each other, it affects everybody in the world. people are watching that very carefully. so far, the numbers involved are not that huge. you do not really know where it can go. it is a very predictable outcome. -- and unpredictable outcome. unpredictable outcome. yvonne: what is the explanation there? >> it is partly because over the , as they made

such fantastic profits, they were able to retain a lot of cash on their balance. i do not need to borrow a great amount of money in the corporate bond market. even though interest rates are rising in the u.s., they are not a big user of bond markets anyways. it is quite opportunistic. they do it when they see a in -- see an attractive deal for themselves. they have so much cash on their balance sheets. betty: i thought this was quite interesting, this piece about how the korean won is a nice barometer for the global macro picture. why is the currency such a good indicator? korea ink south general is a very good indicator. south korean market, south korean trade arrives at the forefront of what is happening

in the world. if you watch the south korean export numbers, they train very closely with the trains in world growth. that feeds into the south korean market. whether it is the equity market or the currency, it is all closely aligned to one another. if we see troubles sparking in south korea, that is not a good sign for the global market. if we see equity markets have a , that is aquarter signal that people are giving up on the idea that world growth will be as strong. some optimistic forecasts were that 2018 would be a better year than 2017. keep your eye on south korea, it will be a good indicator. yvonne: thanks so much. you can follow all the day's .rading on our blog

you can get a market run down in one click. there is commentary and analysis from expert editors, c can figure out what is affecting your investments right now. -- so you can figure out what is affecting your investments right now. pushing to reach a nafta deal in principle. that will be announced at the summit of the americas in peru. negotiations resume in washington this week to reach on significant remaining differences. that would allow the president and other leaders to make a positive statement while technical terms are being hammered out. tesla fell again. -- bankruptcy three moody's say that tesla may need to read -- raise more than $3 billion.

they have limited returns on investment the company have made. output is still below target. supportse maker china's plan. cofounder and ceo added his backing to the plan to allow companies to issue cd-r's in chinese markets. he describe the plan as a great innovation. thatare planning an ipo could be the biggest since alibaba's debut in 2014. finally, u.s. environmental and regulators -- environmental --ulators will relax the ep relax measures. the decision has drawn criticism from the consumer and environmental groups area the agency may revoke california's

right to set its own emotion -- emission tools. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. the trump administration is said to be making a new push to have an outline nafta deal. they will make the announcement at the summit of the americas next week. tony snyder joining us right now. -- jodi schneider running us right now. what does president trump want to get out of this? >> he would like to have some kind of agreement to show that they have made progress and that there is something in the trade front that is more positive, given the tariffs that were announced and attacked by many countries, including at the recent summit. they are getting a lot of

criticism on the world stage. it would be good for the administration to have something good to say. this would be, if this were to happen, it would be broad outlines. they have not really reached an agreement. yvonne: what is going to be the agreement when it comes for funding for the wall and immigration? that is tied into all of this. --they obviously have they're not been the closest of friends lately. there are more technical details. the u.s. wants there to be a major change, a major increase in the amount of u.s. content in automobiles. ony get a lot of pushback that from canada and mexico. there are kinds of things on the table for that part of the talks. this would be the eighth round of talks. has not beenmp

somebody that has been for this agreement. on the campaign trail, he railed against it. this would be a switch up. it comes against all this other trade protectionism, getting a lot of criticism. how is all of this connected to the tariffs president trump has announced and is going to announce? trying toeally about look like there is some positive news on this. president trump has proposed is gettingfs, but he a lot of pushback. it is a midterm election year. this is not something that is playing well in some parts of america. members of his own party on capitol hill. if there was a trade deal to announce, that could mollify some of that criticism or blunt

it to some degree. yvonne: some shakeup in the white house as well. reporting that the white house is firing scott pruitt from the epa. we will continue to see this fallout in this revolving door. there was a lot of talk about that. there has been a lot of criticism of some of the trips he has taken and bringing his family members on some of these trips. if you were to leave, this would be another. the v.a. secretary, we had the secretary of state, rex tillerson, the national security gary cohn.d it is one person after another. the top strategist has now left.

she left the other day. it is said to be a period of a lot of shakeup and uncertainty at the white house. thesead to fill positions. mike pompeo will go before the senate for a confirmation hearing. he served in the house, so he is expected to do pretty well in confirmation. ciacia, the potential director to replace him is expected to have a much harder time. we will see some of that play out. we will have to have confirmation hearings for the v.a. secretary. yvonne: still no by fed chair as well. vice fed chair as well. up next, markets reacting to president trump's latest attack on amazon. this is bloomberg. ♪

betty: this is "daybreak: asia." get -- aftercould averageclosed below the . a renewed trade tension going into the second quarter. joining us for more analysis is .annah anderson welcome to the program. we were just talking about hoping for a quiet second quarter in asia. the u.s. returns and boom and we see volatility back in the picture. >> we will continue to see volatility throughout 2018. that is a story that has been developing for a wild. 2017 was abnormally -- for a while. 2017 was abnormally low in

volatility. see forwhat do you pressure point? does that change the level of risk you will take in 2018? >> what we are seeing is opposing forces. it is playing out the respective balances. the economy, you are seeing the fed versus inflation. while our view is still very positive and will be positive throughout 2018, investors need to be aware of these opposing forces, along with a lot of the headline risk when it comes to trade and regulation, and how that will impact their portfolio. yvonne: every time we get a trump tweet him of it is just noise, but people are saying we are being indiscriminate about what the president says.

>> the key differentiation between last year and this year is last year was a lot of headlines. this year, the headlines are the result of action. there is a difference when it comes to trade between and announce policy and a policy that ends up being implemented. a safehannah, is there place to hide at all? we have been looking at charts after charts where investor flows are leaving every single asset class, it seems. investors should remain invested. that is the only way to guarantee a long-term successful strategy. they need to look through the volatility and focus on the fundamentals. for active investors, knowing what you own could make a huge difference in assessing these impacts and avoiding the sectors and companies that will be worst impacted. betty: what does that mean

exactly? >> that means having done your duty lujan's and looking behind the headline numbers and overall sector of the stocks and bonds means having done your due diligence and looking behind the headlines numbers and overall sector of the stocks and bonds. betty: does it make sense that they have reacted so violently to the trade news? is a direct it reaction to the fallout in trade or is there something else owing on -- going on? >> there is a good amount going on in tech. production global and sectors most impacted by trade, tech is top of my mind because of how integrated these production cycles have become

over the last decade. yvonne: do you say in chinese tech? we have seen that rollover to this part of the world in trade concerns and tech selloff. , these arencent leading the offshore stocks for last year. >> what you will see through 2018 is companies with domestic production and a domestic consumer base really outperformed the other companies that are more globally integrated because of the rise in connection costs. yvonne: talking about earnings as well. upgrades have slowed after the spike we saw earlier this year. is there still a question about whether these expectations are too high? could we see a little bit of a letdown? >> expectations are reasonable. you will see a rollover in the momentum.

they are reasonable right now. will not be negative. we will see continued, strong earnings growth, but not the momentum that we saw coming through last year that got investors so excited and pushed through some of that headline news. yvonne: biggest conviction trade for you? what are you seeing and opportunities in asia? >> consumer-oriented equities, outside of your major asian markets. in southeast asia are really going to benefit and be shielded from some of the trade news that will particularly affect the north asian equity markets. last year, it went up a lot but they are more exposed to trade skirmishes. yvonne: thank you. great to have you here.

are,ing news wherever you we teamed up with twitter to launch kickoff. we are offering wide video coverage and hourly updated news. make sure you follow tick-tock. this is bloomberg. ♪

yvonne: this is "daybreak: asia." they: a quick check of flash headlines at this hour. facebook mark zuckerberg finding himself few friends in the tech world. they have all weighed in on the user data scandal with cambridge analytica. others have kept quiet. zuckerberg is expected to testify to congress next week. yvonne: alphabet is changing a

measure of google's business. it could make income more volatile. this will no longer be reported on a click basis. on impression, the number of times the ad is used. -- is viewed. betty: focusing more on software instead of devices is uncertainty -- is uncertain and will need time to bear fruit. in february, a reported sales amidst estimates during the holiday quarter. yvonne: let's take you across for markets this morning. the tech selloff in the u.s. is coming through and spreading to asia once again. the nikkei 225 leads the losses. the dollar-yen, we are seeing a fourth day of yen strength.

kospi seeing shares down as well. betty: the risk feeling and equity markets being felt right now in the currency market. you can see that strengthening of the yen against the dollar. , as watching the korean won we were talking about earlier. it is becoming a proxy for the macro view of the economy, whether text cycles or trade disputes. weaken seeing the won against the dollar. that is a quick check of the foreign exchange markets. indicators of tariffs listing prices. we will discuss what that means for central-bank policy. this is bloomberg. ♪ retail.

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

yvonne: 8:30 in singapore. half hour away from open there. betty: you are watching "daybreak: asia." let's get to the first word news. ramy: the u.s. manufacturing expanded. -- a slightly slower pace in march. raw material prices at a seven-year high. that is just below forecasts. new orders slipped to the lowest since august.

the bank of japan is offering a negative view on cryptocurrencies. others couldin and be considered money, whether profit can be made or whether they will be hacked and stolen? kuroda has expressed apprehension. they could destabilize financial markets. japanese lawmakers have agreed on a maximum three casinos, is gambling is ultimately approved. told reporters that number will be reviewed seven years after the first location gets the green light. they have yet to agree on entry fees, and the continuing debate maybe think the tax on growth gaining revenue. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

yvonne: thank you. time to see how the asian markets are shaping up on this tuesday morning. volatility coming through after this tech selloff. what is going on? sophie: we will all take a break. after that miserable monday on wall street, it looks like we just need to take a break. losses continue for the nikkei 225, down 1.5%. investors taking that opportunity to sell. the korean won coming under pressure. the currency is sticking near a 2014 high. aussie investors are playing

catch-up. the aussie dollar keeping study, but eying a 2018 low. even a stronger gauge of manufacturing activity is unlikely to affect the rba. tech stocks are weighing the most, losing about 1 -- about .5%. let's take a look at the breakdown of the kospi. samsung leading the drop in terms of the index points. the likelyhs saying recovery in the second half will offset the softer earnings. target reiterating its start price at 3.4 million one. let's check in on the leaderboard. we have stocks continuing to climb. on monday.ts 5% rise

pushing to another record close in korean airlines. we have red velvet continuing diplomacy. betty: kickoff diplomacy. thank you so much. k-pop diplomacy. thank you so much. our reporter gerry williams has more on this story. it looks like the price is much better. >> indeed, betty. quite a bit better. an offer around 7.2 billion last august that was diebold's and ejected in november.

extra 3t was hiked an billion. we are looking at $10.3 billion for this intricate is proposal for santos. they clearly like these assets and want to get their hands on them. yvonne: how significant would it be for this acquisition as the industry as a whole? australia is the third-largest oil and ask company. the reason harbor is so is they havesantos a pretty good fit on the goal liquefied gass -- assets. in papua new guinea, they have a stake in that project as well. linda cook, who is the ceo of

shell, used to work for for many years. she is familiar with the sector. we spoke to her and she said she is watching santos for three years. this is not something that she just suddenly left on -- leapt on. they seem confident of success. yvonne: thank you. joining us from sydney. mark zuckerberg says it could take years to solve facebook's problems. he has been pushing back against accusations that the social network cares about paying customers. >> reality is that if you want to build a service that helps connect everybody in the world, there are a lot of people who cannot afford to pay. of media come having an advertising supported

model is the only rational model that can support building the service to reach people. with us now to dig into dan.is we have been watching a lot of the drama in facebook. u.s. actually outpaces the in terms of data input. what are the ambitions for ai -- what does the scrutiny what impact does the scrutiny have on the world? to it --term, it was wants to increase revenues. we are looking at 100 billion u.s. dollars. it definitely wants to be a leader in this field. trade,e latest on into's 301 investigation

china. a lot of the restrictions he is looking at is with ip related to these high-tech fields that both countries are in a competition to dominate. yvonne: if you look at the regulations involved right now, what are the standards for privacy and protection? >> europe has some of the tightest restrictions. china has tried to make their privacy restrictions between europe and the u.s. they wanted the new restrictions coming into effect. they want them not as strict as you up. europe requires you to click a button to consent for your data to be used. china will allow implied consent. that is more in line with the u.s. depending on how tight these things are, it allows -- if it

is too restrictive, they cannot use the data in ways that are revenue-generating. that wehat is the risk over regulate social media companies? companiesk for these is that they cannot use this data to appeal to advertisers. if they are restricted in how they can use it and store it, to really sell targeted advertising around the world, it limits that pool and the revenues they can bring in. betty: thank you so much. trump's trade not hitting stocks and bonds. raising questions about what that may mean for central-bank policy. kathleen hays is here with more. kathleen: according to the u.s. purchasing manager put together .very month, yes

prices are starting to rise. be the match? let's take a look at the chart. 1525, the turquoise line is the main faction with -- manufacturing gauge. new orders are strong, production is strong. here is the number that is really causing people to wonder. prices for raw materials go into production. 78.1 from 74.2. the highest since 2011. from itsets comments members. it seems people are saying that the rising cost we are seeing for raw materials has something to do with panic buying before

.he tariffs would be put on this survey was done before they were instituted. 32% of the comments they got from their members were concerns over tariffs. businesses are getting concerned. prices higher is too early. it is certainly something that businesses are watching. betty: what does that mean for the fed rate hike? kathleen: at this point, it does not mean anything. you have certainly downplayed the tariffs. problem for farmers and other agricultural producers, but the lot a big impact is what they are thinking. if you ask about the global and trade war, that could make a difference.

financial instability is something that has to be on the fed's radar screen. another thing is this yield curve. let's look at 5126. treasuries is now at its flattest, it's tightest in more than 10 years. when the crisis was first starting is when we had a yield curve this flat. that is the concern it raises. this question about what tariffs will do to the economy is the kind of thing that has to be in play when people are getting nervous, not so much about where the economy is now but where it might be next year if tensions continued to escalate. yvonne: what does it mean for the rest of the world, especially asia? kathleen: asia nations are certainly exporters. they are watching very closely. we are getting ready for the policy decision from the reserve bank of australia.

they are not expected to do anything, but after the last --ting, the head of the traders see no rate hike until the third quarter of 2019. inflation is below the 2% to 3% target range. wage growth is curbing the consumer. help boost aussie exports, but this is on so many asian nations mind. business sentiment and japan is still very strong despite a rising currency. we also know that prime minister the steele discussing and aluminum tariffs when he meets with donald trump at mar-a-lago. -- not they are still on on that list when it comes to

steel and aluminum. coming up next, we will speak with paypal and its decision to cash in on asia. ♪

betty: this is "daybreak: asia." facebook users scandal is prompting caution among users and demands for tougher regulations out there. let's discuss the impact. thank you for joining us. let's start off with what we are seeing in this text selloff. paypal is also a victim. given the headlines on facebook and data harvesting, could that have a wider impact? as a company, i think we are

actually pretty big on security and privacy. thery to make sure that customers data is protected. this is the most valuable resource for our customers. we have invested in making sure that the data belongs to our company -- customers and it is protected well. we do not share with third parties without their consent. let's talk about where their information is landing in or heading to. is that -- it is unlikely. we have been operating for almost 19 years. in doing so, we have always been on their side. we have showed them that their data is protected and secure. paypal is all about security all around the internet area --

internet. from a commerce perspective, it theirut consumers filling information on every site. we show them that when they go , they see aant side paypal transaction id that protects the financial credentials of the tumors on every single transaction that we do. yvonne: let's talk more about your asia strategy. you are basically allowing merchants outside of china to set payments the wallet. china, wherein alipay still reigns. >> it includes various partnerships.

also, acquisitions that we make over a period of time. in terms of the partnership .elf, we have a good ecosystem we are trying to make sure that we build on the foundation that we have created in china for the merchants areas or than a decade we have supported chinese merchants. -- for the merchants. for more than a decade, we have supported chinese merchants area -- chinese merchants. we operate in more than 200 markets and currencies. we find is that customers in every part of the world are different. you need to make sure that the product caters to the needs of the consumers.

is probably a little ahead in terms of online commerce and the trust in online partners. -- commerce. a global platform. we need to make sure that we cater to the customers in each of these locations. at the same time, work with regulators around the world to protect their customers and make sure that the commerce is safe for them. it is something that we obliged to and can deliver for the customers in each one of these countries. i can imagine it is a regulatory nightmare when you are dealing with so many different countries and regulations. made abouteen bitcoin, cryptocurrency, blockchain, the new technology for payment. what is your view on that? >> most of the news around

cryptocurrencies has been about anddrastic increase decrease in the value of these cryptocurrencies. currently, they are so volatile that they are not reliable for consumers around the world yet area and if you look at the underlying technology like blockchain, i imagine -- the world yet. if you look at the underlying , ihnology like blockchain can see enterprises using those underlying technologies to make sure that they can digitize asset plans for supply chain shipping, payments and things of that nature. themselves mays not have a future. right now, it is too volatile. talk about your strategy in asia. you do not have a big hold in

any off-line market. this is where we see alibaba putting a lot of money into it. you arean area that looking at in terms of acquisition or technological enhancements? projects we various are looking at. we want to be a payment platform that supports payments no matter where they happen between consumers and. merchants.s and it is important to pay attention. what digital payments has done, it has moved people back to physical boundaries. look and have started to do a few things in terms of off-line commerce. i will not rule out the partnerships that we are building that will help us get more off-line come in terms of payment volume as well. yvonne: great to have you.

do not forget our interactive tv function, tv . you can watch as live there. you can dive into any of the secure bloomberg fractions that we talk about. -- functions that we talk about. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

betty: a quick check of the flash headlines. likest says users do not it's redesign. middle and high school students all complained about the way contacts are ordered, stories losing their page and a rising number of alert. snapchat is still dominant with middle schoolers, but instagram is becoming a contender. most -- ollowing the local media says they are looking for a loan. they also claim a relationship --ween the neocons chairman

and china.n -- between the chairman. betty: spacex is targeting about 30 launches. the latest mission takes the 2018 tally to seven, following friday's launch for communication. at whatnow for a look is coming up for the next two hours. what are you watching here today? -- el: somethingt was quite as we had a 2.9% fall on the nasdaq. it was terrible. we're going to look at what the market is pricing currently.

a former china specialist at the treasury looking at what could be a terrible trade war. looking at the moving parts. he will be on and about 10 to 12 minutes from now. a story about china wanting to bring back some of the security risks back home. the thing there and the issues surrounding that as well. that is a look at what is going on in the next couple hours. thank you so much. we will be watching bloomberg markets asia with rish and haidi. we will see you tomorrow. this is bloomberg. ♪ retail.

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

. rishad: 9am right here, 8-9 o'clock in new york, having at what we have coming up asia."oomberg market us stumps slumping on day one. s&p 500, the e worst since the depression. hit the n fails to target. nd the company may need more money. heidi: here in sydney, apple intel and th intending