senator: thank you mr. zuckerberg for your patience and testimony. the end is near, three or four people. that is good news, to get out of this hearing. to clarify one of the comments about deleting accounts from facebook, in the user agreement it says when you delete ip content it is deleted and an amount -- a manner similar to in aing recycled content computer. but it may be kept for a certain period of time. how long is that? know,ckerberg: i do not but the idea is to get the information out as soon as possible. ipator: it talks about content, is that the same as user data that can sit with backup copies? mr. zuckerberg: i think that is probably right. i am not sitting here today having full knowledge of our current date of the systems

around wiping all of the data out of backups. i can follow up with you afterwards. senator: doo-wop backups get wiped -- do all backups get wiped? has there ever been a failure of that? mr. zuckerberg: i do know. if we tell people we are going to delete their data, we need to do that. you, mr.thank zuckerberg. i think that gets to the heart of this expectation gap with users. you are logged in in a separate browser and log into another article, open a new tabs in the browser with your facebook cap open, the new button, you track the article you are reading, is that correct? i think there is functionality like that, yes. senator: do you think users

understand that? mr. zuckerberg: senator, i think there is a reasonable -- i think the answer is probably yes for the following reasons. on awe show a like button website we show social context. it says, here are your friends who like that. in order to do that, we would have to -- have yourut if you facebook browser open and open an article in the denver post with the facebook button on it, do you think consumers, users know, that facebook now knows what article you were reading in the denver post? we would need to have that in order to serve up the like button and show you who your friends were who had also like to that. -- liked that. senator: i do not think consumers, users understand that. we do need a lawyer to understand that.

i hope you can close the expectation gap by simplifying the user agreement, make sure people understand the privacy. has there been a violate -- violation outside the talk of cambridge analytica regarding privacy settings? has a privacy setting violation occurred outside of cambridge analytica? mr. zuckerberg: i am not aware we have had systems -- senator: the systems a user uses have always been respected? there has never been a system where those violation -- privacy settings have been violated? mr. zuckerberg: it is my understanding. you come to facebook, share a photo or send a message. senator: has there ever been a breach of facebook data? hack? um, there have been -- i do believe there has been a breach of data we are aware of. senator: has there ever been a hack? mr. zuckerberg: yes.

senator: have those hacks accessed user data? mr. zuckerberg: i do not think so. in 2013 someone was able to install mall where -- malware on a few employee computers and accessed content on their computers. senator: never affected the user page? mr. zuckerberg: i do not believe so. senator: has the government ever asked to have a page removed? mr. zuckerberg: senator, i believe so. warrant can you get a to join a page, to be on a page come up pretending you are a separate user, to like, can the government do that, the fbi, anybody? mr. zuckerberg: i am not sure i fully understand. senator: we can follow up because i have one final question. a couple days ago facebook talked about it would label advocacy as political ads.

for instance, if the sierra club were to run a climate change at, that would be labeled a political ad. if the chamber of commerce that would have an impact on climate change impact, that would be labeled as political, which is different than current standards of what is political and what is labeled advocacy. is it your intent to label things political that would be in contradiction to federal law? mr. zuckerberg: senator, the intent of what we are trying to is, theis -- get at foreign election interference we have seen has taken more the an directssue ads th political advertising. isause of that we think it important to extend verification and transparency to issue ads in order to block the kind of interference the russians attempted to do, and i think

likely will continue to attempt to do. that is why i think those measures are important. >> thank you, senator gardner. i want tohank you, thank you for being here today, mark. i appreciate you coming in. i hope this is not the last time we see you in front of committee. i know this is approaching five hours, it has been mental gymnastics for all of us. i want to thank you for being here. facebook is an american company, and with that i believe you have a responsibility to protect american liberty central to our privacy. facebook allowed a foreign company to steal private information, allowed a foreign company to steal private information from tens of millions of americans, largely without any knowledge of their own. shared how we choose to our opinions is a question of personal freedom. who we share our likes and

dislikes with is a question of personal freedom. episodea's -- troubling that completely shatters that liberty, so you understand the magnitude of this. montana is deeply concerned. they are deeply concerned with this breach of privacy and trust. you have been at this nearly five hours today. steps, taking reactive and i want you to be as concise as you possibly can, what are you doing to make sure what cambridge analytica did never happens again? mr. zuckerberg: thank you, senator. there are three important steps we are taking. for cambridge analytica, we need to finish resolving this by doing a full audit of their system to make sure they delete the data they have and we can fully understand what happened. there are two steps we are taking. the most important, restricting the amount of access to

information developers will have going forward. in 2014 news here, back we had already made a large change to restrict access on the platform, that would have prevented this issue with cambridge analytica from happening again today. we had not done that soon enough. if we had done that soon enough, we probably would not be sitting here today. it is largely a change we made back in 2014. there are other parts of the platform we similarly can lock down now to make sure other issues that might have been exploited in the future won't be able to. we have outlined those steps in my written statement as well. senator: appreciate that. you feel confident actions you have taken thus far, weather back in 2014 or what you talk about now, locking down other parts, will adequately protect the folks who use facebook? mr. zuckerberg: senator, i believe so.

security is never a solved problem. senator: all i need. you talked about a full audit of cambridge analytica systems. can you do a full audit if it is stored in some other country? mr. zuckerberg: senator, right now, we are waiting on the audit because the u.k. government is doing a government investigation of them. i do believe the government will have the opportunity to get into the system, even if we can't. senator: if it is stored in the u.k., but what about some other country? what if the information is a stored in some other country -- is an audit even possible? mr. zuckerberg: we believe the information we will be able to audit -- you raise an important question. if we have issues, if we are not able to do an audit to our satisfaction, we are going to take legal action to enable us to do that. also i know the u.k. and u.s. governments are involved in this as well. senator: i have faith in the u.s. government, i have faith in

the u.k., too. there have been claims this information could be stored in russia, anywhere in the world. i don't know how you get access to that information. i am not as smart as you are as text -- in tech information. i do see howis, you can perform a full audit if they have stuff stored somewhere else we do not have access to. maybe you have other ideas on how to do that? mr. zuckerberg: i think we will know once we get in there if we feel we can fully investigate everything. senator: quickly, a senator asked a question earlier about data and who owns the data. i want to dig into it more. you said, i think multiple times during this hearing, i own the data on facebook if it is my data. i will tell you, i think that sounds really good to me. but in practice, let's think

about this for a second. -- are making $40 million at $40 billion a year on the data, i am not making anything on it. it feels you on the data -- own the data. the data breached through cambridge analytica, which impacted, some 80 million is few if my guess any new that information was being breached. if i own that data, i know it is being breached. can you give me some sort of idea how you can honestly say it is my data, when, quite frankly, they may have goods on me, i do want them having information on me. if i own it, i can stop it. mr. zuckerberg: yes, senator, when i say it is your data, what we mean is, you have control how it is used on facebook. you clearly need to give facebook a license to use it in

our system, or the service does not work. senator: i will be quiet in just one second mr. chairman. the fact is, the licenses very -- license is a very thick, may intentionally so. people get tired of reading it. thank you. >> mr. zuckerberg, thanks so much for being here. i think it is important you are here. your social media platform happens to be the ubiquitous social media platform. there is not a sender you heard from today that is not on facebook, that does not communicate with the constituents through facebook, we have to be on it. it is especially important you are here not just for facebook, before our country and beyond. the threshold question that continues to emerge here today is, what are the reasonable expectations of privacy that

users ought to have? my neighbors are unsatisfied by an answer to that question that involves, take a look at the user agreement. i think there has been a fair amount of discussion over whether people read that user agreement. i would encourage you to survey that, get all the information you can with respect to that, and make sure that user agreement is easy to understand and streamlined and so forth. mr. zuckerberg, earlier in today's hearing you drew a distinction i thought was interesting and caught my attention. it was a distinction between consumer expectation of privacy, depending on whether they were or the pipes of the internet, as you described it, or on an edge platform like facebook. i find this distinction somewhat because most folks

who use the internet think of it as one place. the think of it as internet, as opposed to various places requiring different degrees of privacy. could you speak to this issue, and indicate whether you would support a comprehensive privacy policy that applies in the same manner to all entities across the entire internet ecosystem? mr. zuckerberg: senator, sure. expectations of how they use these different systems are different. lightweight, very and you can fully encrypt the data going across them in a way the app developer or pipes, in isp case, probably should not be able to see any of the content. you probably should have a full expectation no one it will be looking at that content. senator: give me other quick

examples, if you could? mr. zuckerberg: when data is going over the verizon network, i think it would be good for that to be as encrypted as possible. verizon would not look at it. that is what people expect. i do not know if it is required to deliver their service. that is how whatsapp works, it is a very lightweight app. it does not require us to know a lot of information about you. we can offer that with full encryption, therefore we do not see the content. for service like facebook or instagram where you are sharing photos and people access them from lots of different places, people want to store that in a central place so they can access it from lots of different devices. in order to do that, we need to have an understanding of what that content is. the expectations of what facebook will have knowledge of versus what an isp will have knowledge of are just different.

senator: that needs to be clearly communicated to your users, we will leave it at that. those different levels of the user can expect to enjoy when they are on your platform. i would like to take a different policy.internet privacy might we create stronger privacy rights for consumers by creating a stronger general property rights regime online, say a new law that states unequivocally something that you said before, that users own their own online or through stronger often requirements on platforms like yours? if we were to do that, would you need to retool your model? if we were to adopt one of those two approaches? mr. zuckerberg: can you repeat what that approaches where? senator: one is to create a

stronger property rights for the individual online, a law that states unequivocally, users own their data. the other, a stronger affirmative opt in requirement to be a user on facebook. would you have to fundamentally change the facebook architecture to accommodate those policies? mr. zuckerberg: senator, those policies and the principles you articulated are generally how we view our service already. depending on the details of what you -- what the proposal ends up being, the details matter a huge amount, it is not clear it would be a fundamental shift. the details really matter. if this is something you are considering or working on, we would like to follow up on, because it is important to get right. senator: i am out of time, thank you. >> senator, we have closing comments. i have a process statement for everybody to listen to. >> mr. chairman, thank you.

thanks to our members for their patients. particularly along hearing for you, mr. zuckerberg. thank you for sitting through this. i do think it is important. i have a letter from the motion picture association of america i would like to get into the record. wrapup question, if you will, maybe one quick comment. you have answered several questions today about efforts to keep bad actors, whether a tour -- terrorist group or militia off of your platform. you heard concerns of bias that facebook, particularly bias against conservatives. this is a final question, can you assure us, when you are improving tools to stop bad actors, you will err on the side of protecting speech, political speech, from all different corners? mr. zuckerberg: senator, yes, that is our approach. if there is an imminent threat

of harm, we are going to take conservative position on that and make sure we flagged that and understand that more broadly, but, overall, i want to make sure we provide people with the most voice possible, i want possible expression and i do not want anyone in our company to make decisions based on the political ideology of the content. senator: one final observation chairman grassley, mr. zuckerberg has answered a lot of questions today, but there are also a lot of promises to follow up with some of our members. sometimes on questions about --ebook actresses that seems seem straightforward, it'll be hard to fashion solutions to solve this stuff until we have some of those answers. you had indicated earlier you will try to find out who among these other analytics companies may have had access to user data they were able to use.

hopefully as you get those answers you will be able to forward those to us, and it will shape our thinking in terms of where we go from here. overall, very informative hearing. i am ready to wrap it up. your response to him in regard to political speech, i won't identify the ceo i had a conversation with yesterday, but one of our platforms, he left thano being more right. i am not asking you what you are, but just so you understand, probably as liberals have a lot about the leaning of fox news or conservatives have questions about the leaning of

msnbc, let's say, it seems to me, whether it is from the right or the left, i'm speaking for you from your platform, there is a great deal of cynicism in american society about government generally. when there is suspicions, legitimate or not, that maybe you are playing it one way unfairly toward the other,'s seems to me that everything you do to lean over backwards to make sure you are fair in protecting political speech, right or left, that you ought to do it. i am not telling you how to do it, and i'm not saying you do not do it, but we have got to do something to reduce cynicism. at my town meetings in iowa i always get this question, how come you guys in d.c. can't get along?

meaning republicans and democrats. they get anto them, -- what would you say, review of what goes on here, because controversy makes news. if people are getting along you never hear about that, so you get a distorted view of that. congressman get along more than the public thinks. public wetudes of the have got to change. people of your position and influence, you can change this. i know you have plenty of time around your corporation, through your corporation or privately, anything you can do to reduce cynicism. we have a perfect constitution -- maybe it is not perfect, but we have a very good constitution, the longest written constitution in the history of mankind.

if people do not have faith in institutions of government, it is our responsibility to enhance that faith so they have less cynicism. a very strong democracy just because we have a good constitution. i hope everybody will do whatever they can to help enhance respect for government, including speaking to myself, i have to bend over backwards to do what i can, so i do not add to that cynicism. sorry you had to listen to me. [laughter] today's hearing. thanks to all the witnesses for attending. the record will be open for 14 days for the members to submit additional written questions and for the witness, mr. zuckerberg, to make any quite -- any corrections to his testimony. the hearing is adjourned. you have been watching

our special extended coverage of first dayuckerberg's of testimony that has just wrapped up. what a day it has been. more than five hours of testimony from mr. zuckerberg. this is just around one. round two at the house begins tomorrow. i am yvonne man in hong kong. betty: i am betty liu in new york. got to hand it to the senators, they covered a lot of bases with mark zuckerberg in those five hours of testimony. he was certainly in the hot seat. it was interesting, you had senators express frustration, said sorry many times. we are likely going to continue to hear that, come tomorrow in the house. also, issues raised in the last hour whether facebook's business model should change, whether

there may be options for a paid version of facebook. we continue to hear zuckerberg reiterate as a free platform, that seems the direction he wants to continue to see facebook going. yvonne: that would be an interesting shift. he was open to many proposals lawmaker suggested as well. multiple times he said, i will go back to my team, follow-up what we get. it raises the question of just how far facebook is willing to adopt any necessary changes after these hearings come to an end. things i was the watching as we were commenting behind the scenes is, i know the privacy questions about and data and how facebook works was the subject of some derision on twitter and other platforms. explaining this, it

is so simple, don't you understand facebook? it points to the larger problem which is, it is very difficult to understand facebook and what is happening with your data. even if it seems straightforward, a large portion of the populace who uses facebook do not understand what goes on with other data, does not understand how it works. that brought it further to light that there is a lot to unpack, it is not as simple as it sounds. yvonne: it raises a lot of questions about regulation. how can you regulate this, and how can facebook self regulate? the narrative has changed from lawmakers that perhaps it is not just a proposal for regulation anymore, that in fact they are looking at some sort of framework, whether it is the europe model or not, certainly seems the question, can it pass? does not seem like conservatives can block this anymore. after-hours trade for facebook minimal.

4.5% gains before the session close on wall street. shares after-hours down just a 0.6%. judging from the increases we saw in the stock price today, it seemed shareholders were going into , felt like the company was addressing some of these issues and the stock itself was riding the wave of buying. i want to play for you apart was zuckerberg said earlier about the platform and the business model going forward. mr. zuckerberg: yes, there will always be a version of facebook that is free. it is our mission to help connect everyone around the world and bring the world closer together. to do that, we believe we need to offer a service everyone can afford, and we are committed to doing that. betty: going back to that point, if facebook were not to be free, or for were that paid version, it brings to question the future

viability of the company. david kirkpatrick saying this would not be the best solution for facebook. they still want to maintain that business model as much as they can. a lot of questions. it will not be the end. tomorrow is the house. it is safe to say he will be returning to capitol hill the next six months before the midterms. betty: indeed. more reaction here among the senators. a tweet from richard blumenthal from connecticut, saying zuckerberg emitted at today's hearing nobody on facebook's team was held accountable for approving the app used to sell user data to cambridge analytica. wondering why not. so i'm i'm. -- so am i. it continues to raise another point. will there be heads rolling at all, based on the ever-growing

problem we are seeing at this company? i want to bring in ionic security founder and chief technology officer, in atlanta. . backed by big names, including amazon and goldman sachs. adam, hearing was zuckerberg said today, how he is reiterating the business model of an ad supported facebook, do you feel this company is going to change its practices at all or make the right adjustments after this testimony? adam: no. if we look back over the last decade, little more over the last 14 years, this playbook by mr. zuckerberg is easy to spot. before facebook, even with the first app he built, scraping

user's photos from harvard websites to create a version of hotness. rate their when he got caught on that 14 years ago he said, sorry, i did not understand, that was not my intent. there have been dozens of instances of privacy violations well within their control to stop and the same playbook of, i am sorry, i did not understand, i will make change, has been rolled out each and every time. go ahead. betty: isn't it different? he has never been rolled out in front of congress. he has got to make some changes if he does not want to end up there again. adam: certainly this seems to be the most looked after event by the most diverse group of stakeholders. it hopefully is apparent to mark

that this time, making change is not an option, it is a requirement. but your question of, whether i believe they will change, i do not. i think the market does not believe they will make change, either. i say that if you look at the stock of being up over 4% today. it is clear what market laid out to congress today and what he will most likely layout tomorrow is that the incentive structure that drives the business of facebook, understanding their user data and monetizing that user data efficiently, is not changing. , what about addressing the point of changing the business model to a premium version? a free and a premium version, would that take care of some of these issues? adam: at a minimum, it is worth a shot. i believe a lot of the discussion today around that topic was treated as mutually exclusive opportunities. i do not understand why there

cannot be an option introduced for those that are willing to pay for service on a monthly that guarantees all of their data is opted out of all andhese profiting regimes, if they ever stop subscribing, they have to opt back in. it does not preclude the service from being free for everyone else who wishes to participate. but market, on multiple occasions today, entertained the idea as if it was an either or. it does not appear from my perspective that it needs to be treated as such. it should be rather simple for them to introduce that optionality into their platform. leave medon't want to to believe they have an understanding of the impact it would have on the frontal -- fundamentals of their business, that we do not. yvonne: why not?

the fact that this could potentially disrupt their advertising business? if you have both platforms, one paid, what not, many might want to pay for it and that could burn their bottom line. adam: it is very possible. think about where most americans and europeans consume media today, most of them consume it across all these digital platforms. in many cases, areas that continually have good media they are paying for. if you look at entertainment like netflix, i personally pay for a subscription to netflix. i would notreason pay for an entertaining subscription to net -- the facebook. it is entertaining, not much use these days. yvonne: i want to bring in sarah frier, joining us from d.c.. she watched the testimony for the last five hours.

what a day it has been. tell us about the performance of mr. zuckerberg, how did he do? he had an easier time than he was expecting to have. a lot of the senators asked him questions he could simply say, this is not true. they asked him why facebook sells data on its users to advertisers? he could say over and over, we do not sell your data to advertisers. people that have a fundamental misunderstanding of how facebook's business works. theirople who did have homework done before the hearing asked very good questions and try to nail some things down like, why was that users were not informed of the breach in 2015, when facebook first learned about it? they said because they considered it a closed case. of interesting

questions about the line facebook draws on content, whether, as that becomes something that moves over to ai, if that is still something that protects people's right to free speech. which is not something a private company needs to protect. it was an interesting debate, but i do not know if it is clear after hearing this back-and-forth, exactly what congress expects to do. inty: it is certainly tbd, terms of what action they will take. what was the most surprising part of the testimony by zuckerberg? what was the most surprising thing you learned? sarah: i thought it was interesting, his response to the monopoly question. abouty graham grow them whether there was any alternative to facebook, isn't that alternative instagram? and is facebook a monopoly?

he said, it does not feel like a monopoly to me. to me, henteresting prepared a data point for senator saying, on average, people use eight different apps to communicate with of their friends beyond the just facebook, that there are a lot of messaging platforms they use. maybe not directly comparable, but competitors in his mind. adam, zuckerberg was asked several times what happens to your data, how does facebook handle it, and what happens when you delete that data? zuckerberg was very firm in saying you control that, you control the privacy of that data. is that true? up to thecontrol it point those controls are exposed. meaning facebook does give you influence through their interface over what does and does not happen within some

spectrum. those controls do not in any way technically limit what facebook does with your data. they are proxies to control which enable you to feel you have influence, but facebook has data sitting in its infrastructure, and it will touch a beyond the workflows those controls scope. betty: how can they? adam: it is not a genuine answer. betty: how can they, if you simply click you do not want your data shared, how can they? adam: it is very difficult from my perspective, to believe, based off all my knowledge how rather complex large-scale distributing applications work, like facebook, when it asks directly you delete your facebook -- your data from facebook.

mark's answer was an affirmative and clear yes. i do not believe that answer can be a clear yes, based off the splitxity of how data is up across the world for performance reasons. and based off the heavy mobile usage of data from facebook, where a lot of the data is distributed, when you look at it and it is stored locally on your device in what is called a cache. there is no that data will be removed from all those different places. it is a very fine line. he just said yes, and i have a hard time believing it. reasonshere are obvious that is not a hard yes. when you leave the facebook, there are still pictures of you your friends posted on you of facebook. there are posts you are tagged

and, your name does not disappear, your image does not disappear from the network. i think he could have been clearer in explaining that. there were a couple points i felt the same way about the answer. when facebook says certain types of content or activity are not allowed, for example, fake accounts are not allowed, i always find that response to be disingenuous because not allowed employ they'd -- implies they block them from happening. they exist, there are plenty of fake accounts. one senator found one of himself earlier today. i have in the past, as well. it is not that they are not allowed, they are against the terms of service. to say not allowed is misdirection as well. adam: absolutely agree. yvonne: i was going to ask you

about regulation. he said as long as it is good regulation, details matter. what does that look like? is congress looking at the europe roadmap, whether you can opt in for data for available third parties? believe mark would invite regulation that bolsters their incumbent, nearly monopolistic position, meaning it would be difficult for new it -- new organizations that existed after it went into place to amass the same data say -- data set facebook has amassed. i would hope our lawmakers introduce it in such a way it requires those who have already created these mountains of data and analyze them in the ways they have, to run all that data back through a framework that validates their possession of it today, is conformed to the new regulation. m, appreciated.

adam ghetti, joining us from atlanta. thanks, sarah frier, joining us from d.c., our bloomberg tech reporter on this grueling day for mark zuckerberg. get you caught up with the first word news with jessica summers. >> the white house says it has been advised president trump has the authority to fire special counsel robert mueller. the president complained again about the russian investigation after fbi agents raided the offices of his personal lawyer. he said it was a disgrace and an attack on the country. he said, we will see what happens. senior republicans said it would be political suicide to fire mueller. trade talks between the u.s. and china said to have broken down after washington demanded beijing curtail industries. -- sources also

say beijing offered to narrow by 50 billioncit dollars by importing more gas, agricultural products, memory chips and luxury goods. russia has vetoed the u.s. draft u.n. -- it also would have established a new body to determine who should be held responsible for chemical weapon attacks in syria. was 13 in favor, russia saying no and china abstaining. issue thatnot an more time or consultation could have resolved. at a certain point you are either for an independent and impartial investigation, or you are not. >> reports from the u.k. said the london offices of rupert murdoch's fox network have been raid by the european

commission. they are likely to remain through wednesday and possibly thursday. it is not clear what they are looking for. fox is trying to win permission to complete its acquisition of sky, as it already has e.u. approval. volkswagen has abruptly ended the tenure of the ceo, saying it once a leader who can implement deeper changes. he led vw through the initial admissions crisis. they have decided they cannot afford to wait until his contract expires. mueller was always a reluctant ceo and agreed to step aside. 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. ♪ betty: thank you so much. a quick reminder on how the markets traded today. that wassolidly up,

the sentiment all day today in the market. butowing to facebook, tempering of the u.s.-china trade tensions. 1.5%, the downg adding 430 points. the nasdaq rising, up about 2%. at least for now, the tensions did not get higher. they either stayed the same or a little lower. that was enough for the bulls to come back in. xi'se: after president speech. you could call it an olive branch to president trump. we are willing to lower tariffs on autos and ip. the question is, how long for these changes. investors eating it all up. we are seeing a positive day in new zealand, we're up 0.2%.

and upside of strength for the kiwi this morning. also trading in australia getting underway in about an hour's time, 15 minutes. pre-much flat when it comes to futures. .7766. unchanged for the aussie tenure as well, 2.71. prices, machine orders coming through in the next couple minutes. futures pointing to a higher open on the nikkei. dollar-yen we are seeing back to a bit of a risk on above 107. betty: speaking a risk on, our next guest made a bold call that the u.s. treasury yield will be above 4% in the next two years. that comes with a caveat, that trade tensions do not escalate. fuss.g us, dan also, kathleen hays.

dan, always good to see you. at least today maybe you got your wish. you do not know how these things will go. in context, if the fed continues to raise rates based on their normal procedures , you would anticipate the short rate will go up another six times or so, may be more. -- maybe more. how high? i do not know. has the 10 year been higher than that? yes, a lot higher. the long end of the market you get quite a bit of purchasing of long bonds of treasuries. corporate's to do liability tight matching for pension funds

for derisking. that is heavy demand. until the treasury's pickup, which they will, we use a treasury-forward forecast, it will be harder at the long end. kathleen: i would like to ask you, this was your annual press function earlier today in new york. you said he could go above 4% by 2020. a very important track that could change that picture. you said your biggest risk is not the economy, it is geopolitics and politics. what is the trap that could stop this rise in the yield and maybe turn it into bonds again? dan: the trap is for the central banks. the major central banks each have their own circumstances that in some cases, like our

own, go beyond their mandate, their normal written mandate. our central bank was formed by the legislature, by the congress. the banking system running. you can be looking at numbers. in fact, i have this queasy feeling today as i see the numbers come out, incremental numbers on inflation. inflation starting to pick up, that would go along with raising rates on a steady basis. arenaf the geopolitical starts to get chancy, do you really want to do something that might weaken your own economy? you might say the numbers say this, but when you look at the if the numbers say it is supposed to be clear today and you walk outside and see the big, black clouds coming,

chances are you grab an umbrella. say, allumbrella is to right, let's pause. i do not know how they will fraser. kathleen: you are saying if they have a trade tensions, less growth, less exports, the feds would logically say, i guess we cannot do two or three more rate hikes. what would that mean for investors and what would happen? dan: [indiscernible] feeling thewing odds are reasonably high because i think what the fed might have to do -- i have not talked to them about it, but if i were them and i saw the clouds out there, the data would indicate warm and sunny, and i saw the clouds coming.

i do see them on the horizon -- this is not something in the way distant future. with theight along power of the emerging meaning the established power. there are many ways people rate -- will react, nations will react, if you put on tariffs, if you penalize them in some way, they can react in other ways in other places that force your hand. once you get to that point, then it gets dangerous. if i were a fed member i would say [indiscernible] we heard from robert kaplan yesterday out of beijing in the dallas fed president mentioned, the fed does not overreacted trade developments like trade.

they also said when it came to negotiations he things these trade issues will be resolved quickly. it seems it is a bit counterintuitive, but at what point do you think the fed will have to act on these trade tensions? oh boy, i don't know. they are going to want to see leasting in the way of at near at hand best guess evidence. they will collect information. depends how it plays out. if it is, i will raise you 10 more or 20 more type stuff, one nation to the other, that is one thing. me the most is, what happens if it takes a one-off? and rather than just raising the

what if italties, this, we,ou are doing most likely china, are going to expand our influence in the area, despite how we know that will upset you. as a matter of fact, we are doing it because it will upset you. that crosses another line. is taiwan.vious places inare other their home area where they can do that and then it becomes, we have all forgotten about the bond market. dan, thank you, joining us. i also want to thank kathleen

hays. our next guest talking more about the trade tensions. good news, he says behind the scenes the u.s. and china are still talking. professor atomics berkeley and author of "the populist temptation." back to daybreak asia. thank you for joining us. president trump applauding xi jinping's speech, saying kind words on tariffs. can president trump really call this a victory? >> president trump can call it anything he wants. i think he will want to call it a small victory. cleverly focused on something president trump understands, automobile production and sales. i think that was expressly tailored to be a peace offering,

but it is really a set of measures china had already promised to place in incrementally. what china is doing, when the u.s. is aggressive, it matches the u.s. publication, dollar for dollar on imports. otherwise, it avoids escalating matters. i think the chinese do want to negotiate some kind of substance-saving compromise. i think that is what president trump will get at the end of the day. he was very aggressive on steel and aluminum and back down on imports from mexico, canada and elsewhere. he was aggressive on nafta and it is clear he is backing down nafta,threat to blow up so i think he will background -- back down on this thread against the chinese, if he can. yvonne: you mentioned the

so-called concessions president xi highlighted, he was undergoing, before these trade tensions began to flareup. at what point does president trump be let down by the fact of whether china will follow through? we did not get clarity in terms of a time frame when these reforms will be implemented. barry: it will take years for there to be a significant difference. our presidentt , if theme patients global trading system is going to survive. importone hand, you can more units of motor vehicles relatively quickly. on the other, if you want to meaningfully strengthen intellectual property protections, that requires changing a lot of laws and regulations and importantly, enforcement.

you really have to go through the wto for it to be credible. wto case on file a chinese intellectual property next month. it will have to go down that route. someone will have to convince the president of the strength of the wto. betty: why does it have to go through the wto? some: because the wto has clear roles of the road, what kind of subsidies and intellectual property infringements are not permissible. every country has its own laws and regulations, but the wto guardrails are really establishing the limits of what can be done. they give you judicial procedure you can use to try to enforce your rights. they give you an alternative to blowing up the world trading system. betty: imagine from trump's

camp, they might reply back and say, we tried the wto route many times before. the definition of insanity is trying to do the same thing again and getting the same result. you try something different and discover it works even less well. there is 50% danger of full-blown trade were between the two countries, but there is also a 50% possibility of a more discriminating approach on the part of the u.s. in turning back to the wto. betty: thank you for joining us, the latest on u.s.-china trade war. coming up, we continue our analysis of mark zuckerberg's testimony to congress. santal have insight from clara university. plus, we will be live at the conference in hong kong to speak to the asia group. this is bloomberg. ♪

>> 8 a.m. in hong kong, we're live from bloomberg's asia had orders. i'm yvonne man. the top stories this wednesday. it is our responsibility. mark zuckerberg says facebook must assess its role in society. asking if facebook and deliver after years of failed assurances. >> it is just after 8 p.m. on tuesday and wall street rallies on remarks from the u.s. and china. that rally may not last. of interest this means the asia-pacific future will

change. oil at its highest in three years. and other we have these two big speeches out of the way, at least the first day for mr. zuckerberg. on the trade front and facebook, the first day for mark zuckerberg, not the greatest public speaker. betty: it seemed like he got a lot of likes from people watching the testimony. they felt that he was very well made some amenable arguments. he continues to really stand by that business model which many say is sort of the whole reason why we are in this mess in the first place. at supported business model.

if that's the case, it will raise questions about of anybody can change at facebook. yvonne: let's get to the first word news with paul allen. paul: trade talks between u.s. and china has seemed to have broken down after washington demanded beijing curtail support. stop subsidizing businesses and links. beijing offered to narrow the gas and importing more memory chips and luxury goods. thathite house has advised president trump has the authority to fire special counsel robert mueller. the president complained after

fbi agents raided the office of his personal lawyer. he said it was a disgrace and an attack on the country. he also said, "we will see what happens." republican say it will be clinical suicide to fire mueller. enacted after the financial crisis. stresse considering a capital buffer that would increase requirements for the large strand. they believe they have enough of a cushion to clear the proposed hurdle. russia has vetoed a u.s. drafted u.n. resolution that would've condemned last week and suspected poison gas attack. it also would've established a in body for who should syria. voting no and china abstaining.

>> this is not an issue that more time and more consultation could have resolved. you are either for an independent and impartial investigation, or you are not. paul: global news 24 hours a day powered by journalists and analysts in more than 120 countries. >> we are seeing stocks higher here. korea as well as australia. >> it could be too soon to say happy days are here again. it is not entirely a rosy bromance. the u.s. and china broke down. asian investors are seeing some are -- some relief. and inflation very much top of 2.1% compared to a

2% estimate. china reports cpi and ppi data to cement. we are seeing treasuries sticking overnight. we do have the focus for the yen on the psychological spot. the aussie did get to is higher. metals and oil rallies. ambitions to get crude prices to support the policy agenda as well as a 2019 ipo. before i go, a quick check so far this morning. we have machinery makers on the

in february up versus the estimate. check in on some of the laggards today. abouttock sliding just .8%. we have some big earnings from retailers. and we are keeping an eye on softbank is left her report that sprint and t-mobile have started. yvonne: we will see if volume remains light. public speaking experts, if you defended facebook on capitol hill. we pledged to correct mistakes. about whether he will

deliver after years of failed assurances that he would protect user privacy. general counsel and executives to reinforce organizational cultures that encourage ethical outcomes. think you joining us. what have we learned today? we learned how challenging it can be to be chief executive officer in the tech industry. zuckerberg did a nice job and came across as authentic. >> the back-and-forth exchange between zuckerberg and lawmakers, there are questions.

i will follow up and come back on that.i is there a risk that he may not be able to deliver on some of these proposals as well? >> making strong commitments to practicesd enforce that they've adopted so far. and that is based on their current business model. and we can learn about it sometimes even when they don't. >> the narrative around congress. >> we have to talk about the framework. and can we actually pass it?

>> the u.s. can learn something from them. that it hasn't been drawn from with the eu has done, and that was referenced more directly today. obligation. he opened by saying his company is idealistic and optimistic. only people can be idealistic and optimistic. greatat may be a representation of his mindset, but he also has obligations to the people that use his company's product. >> and what they may be doing behind-the-scenes. think they are watching it very closely. it is encouraging to hear him except a role that they started the company's impact on society.

research would suggest that is one of the things the company in order to contribute to society in an ethical manner. they have chosen to find themselves platforms. >> the employees are very committed to facebook.

questions of trust in their brand. >> would removing zuckerberg from the company also address this issue.

>> even the most seasoned executive struggle to do that. even someone at a relatively young age, that is asking a lot of one person. but it is the way the company was set up. it would be hard to change if he decides he's willing to do that. >> we heard from senator richard blumenthal that echoed what you were just saying. a tweet just a couple of minutes ago. no one on facebook's team was held accountable for approving the app used to sell user data to cambridge analytica. zuckerberg, they can take responsibility.

>> sticking with the business and this is in concept to one another. >> right here on bloomberg television from 10 p.m. tonight. >> we're joined right after the break.

♪

yvonne: this is daybreak: asia. bloomberg invest asia kicking off in hong kong today, bringing together the most influential figures in global institutional investing. this crossover to the event where rish is standing by. joined by -- informal adviser to john kerry when he was secretary of state. let's start off with the last 24 hours. when we saw that speech by xixi ping. it has been taken as alleviating the tensions out there. >> i think we need to distinguish between the the liberalization

and intellectual property protection. it was made by the chinese government. the packaging or the message we put around it. and i think overall messaging suggests it is not an offer. -- rish: there is a feeling out there that many investors have. kind of a fatigue. there has got to be a point, and inflection point. >> there is a justifiable promise, and that is what

exercise to the trump administration. people have been wondering for about a year now whether donald trump was serious about trade. 2017 passed without anything major happening. , and thatial tariffs is really in! . -- in the exclamation point. given the noises he made about cold war mentality and things like that. >> i think we are entering the third era of economic prosperity. >> they see themselves as a man who will preside. there is a lot of confidence.

rish: does washington at the moment have a china strategy? >> the administration has a series of objectives. the administration actually has a point. in china in any number of ways. if they have been successfully able to build a coalition to support the position. sorry about the noise. we are in position at the moment to go tit for tat for a long time. this is the wrong way of going about it. what would be the right way? >> with the administration could

do is be seen as upholding the wto and the international trade system as opposed to being seen as undermining it. as opposed to hitting them with still tariffs -- steel tariffs. have a positive economic agenda for the region. donald trumpff took was to pull out. they might try to do something to reawaken that as americans. , thissition in that also is not about china, not like japan in the 80's. this is really about asia. is that the way you see it as well? trade specific concern on , the trade deficit in particular which, you know, the president has been very focused

on. not just focused on china. they have accepted a renegotiation of that. and he's asking for bilateral pre-trade agreement and looking at japan. there are any number of asian partners. where does this leave the geopolitical dynamic? on the one hand, we have the europeans, and the wto. a closer and closer set of ties from moscow and beijing. don't think it's the new cold war but i think the overall political dynamic is that are in a period of uncertainty. and we are seeing great confidence in the part of china.

rish: and north korea will be literally. >> the administration figures out what the objectives are and crucially needs to decide what it is willing to give up to achieve. is that really downside for donald trump meeting the north korean leader? and the only upside for pyongyang? >> there are two risks. fail andat the talks the other is that the talks succeed. trump willble that

make a deal so bad that he is willing to give up a lot in terms of the u.s. military or making bigia promises of denuclearization. and if the talks fail, we can set ourselves on a path that would be terrifying, indeed. rish: have inverted -- have inverted. taking a look at this easing of trade tensions and what it means between pyongyang and washington. back to you. yvonne: we will be back at the bloomberg asia markets and look at some of the figures in global institution investing. a roundup of the stories you need to go for your addition of daybreak. it is also available on your mobile anywhere app.

that youthe assets care about. this is bloomberg. ♪

yvonne: i'm yvonne man in hong kong. 's financial said to be in talks to raise $10 billion in a funding round that could value it at about $150 billion. we are told they want to be the lead investor. the funding would make it the in the tech company world. alibaba rose strongly on plans to buy a one third stake in ant. withe: loosening ties russian aluminum tycoon as the u.s. imposed tough sanctions on its empire.

the commodity trader will proceed with a plan to swap a stake for shares in another company. a multiyearhad also deal and was evaluating all contracts. spotify developing a new version of the free music service in what would be the first big change since going public last week. making tweaks to signify the system for users on mobile. and a formal announcement may come in a couple of weeks. spotify needs to attract numbers of new listeners who value the company based on user growth. trump raisesdent words, but will that translate into a cooling? more ahead. this is bloomberg . ♪

yvonne: good morning, it is a 30 a.m. in singapore. betty: you are watching daybreak asia. let's get the first word news with paul allen. rish: mark zuckerberg defended his comely on capitol hill and said the scandal is facebook's fault and the company is responsible for the content on its platform. crisis management experts say it looked shaky at times, but overall's stood a fairly good job. commonhere is a very

misperception about facebook that we sell data to advertisers. we do not sell data to advertisers. >> you certainly rent it. mark: we allow advertisers to tell us who we want to reach and we do the placement. paul: this ecb has disowned comments that said it could raise a positive rate by borrowing costs. -.4% to minus point 2%. the main financing rate. it represents those of the governing council. $4.5 billion in notes and 140 basis points with similar maturity u.s. treasuries. bonds in 2030 and 2049. saudi arabia sold bonds while

qatar is meeting investors in the u.s. and the u.k. ahead of a possible sale. has abruptly ended the tenure of ceo mattias bullock saying that they need a leader that can implement deeper changes. the look led vw through the commissions crisis but key stakeholders say they can't afford to wait until this contract expires in two years time. there was a reluctant ceo and has agreed to step aside. i'm paul allen. this is bloomberg. yvonne: looking at asian markets, shaping up so far this morning. let's take a look and see a little changed at the moment. struggling for direction. chipmakers and moscow for the biggest boost to the coffee so

far this morning. this will look at the commodity's section. given someency space of the catalyst potentially that can move those segments. the cost be adding .2%, but aussie shares are set to step -- snap a rise. and we see the yen picking up some momentum. now looking fairly flat, and still on course for the third day of gains. let's switch it up and check in on tokyo using the function on the terminal. the biggest boost to the nikkei gaining 4.7%, rising the most since june on reports that sprint and t-mobile have restarted talks for a deal. we also see machinery makers after theyn ground became better than expected. that'll players are tracking

gains and commodities. gaining 3.6% this morning, rising for a second day. is it that isn't prices could jump to $4000 in the next few months. the highest level on strong chinese demand. prices have doubled since the end of 2015. checking in on laggards in be sinking over 10% after profit guidance missed estimates. consumer shares are also under pressure. and mangy losing ground in tokyo this morning. those we will be watching consumer stocks. thank you so much. investors and business leaders renewed pledges by chinese president paying -- ping. and also at the forum drew praise from president trump, temporarily easing the trade tensions and lifting the markets here. beijing, is this a

turning point? a thawing of relations? >> it seems unlikely. from was certainly relief the speech of the chinese leader. president trump, as you say, praising xi and was thing for that she talked about tariffs and manufacturing and intellectual property. certainly the rhetoric has cooled between these two sides since this speech by president ping. ofy did lay out a package policies. reduce tariffs on auto imports. to increase the equity holdings in china. access around the insurance sector and the financial services sector.

they would try to increase the number of imports into china. none of those policies were new. will account down to how they have implemented, how quickly they are implemented. even the european commission has said that china has talked the talk and it is time for them to walk the walk. this is how they are addressing these issues. betty: in terms of the trade negotiations of the tariff front, it could possibly be an easier resolve what comes to intellectual property. it could take if not years. there are still a lot of outstanding issues here, tom. tom: there are the key issues. one of them was highlighted by reporting by bloomberg that reported that, in fact, talks

between the u.s. and china broke down last week when the u.s. demanded that china stop supporting the industry. backing affectively number of sectors in a high-tech space around artificial intelligence and electric vehicles. and around robotics. it is a key platform and a key the team.or xi and it seems unlikely they would drastically or radically move away from that strategy. it appears to be a key demand from the u.s.. and it is a key concern among in likes of other officials the trump administration, particularly a security concern. president xi would push back.

and in the commerce ministry as well. the time china would not be initiating any official talks. it would be up for the u.s. to do that. they would need to take time. these were linked to the surface. it would invest in more u.s. assets around the tech space. and washington they are going to go in that direction. lead to work through these issues and the official talks need to stop. yvonne: at least the rhetoric has cooled out of it. correspondent tom mackenzie joining us from beijing. with three tensions between the investors turned their attention to another story. inflation. bring in kathleen hays.

we talking china as well as the u.s. china ppi and cpi? it nice to talk about something the u.s. and china have in common. not wanting it to cool off too much. let's talk about china because we are going to see some sign that it accelerated in february. it it jumped 3.6% year over year. but we are expecting to see is that the china cpi. in march. you've got to watch the china ppi very closely because there's this whole question of industrial production and all of the raw materials. it is a very important part of the story. and with ppi, we seek it is

expected to ease a bit in february because of raw materials. we have seen a percent march year-over-year versus three point 7%. we have seen the metals prices have dropped. i loved this that you can find on bloomberg. it shows that the white line is china cpi. it has kind of been flat and picked up a bit. that line is expected the come down to 2.6. look at those green bars, the nice green bars. you can see the steady deceleration as industrial profits, the prices are so high. are saying,le yvonne, that slowing in the ppi and china is seen as the end of the industrial inflation cycle. and all the concerns about trade, this is something that resonates a little more staying than it would otherwise.

the u.s. consumer price index is out later as well. will that show acceleration? >> the big exciting story is that drop in mobile that janet yellen former fed chair talked about. comparing a year-over-year rate. to get the mobile food prices, right? up 2.1% year-over-year. that would be the fastest rise since 2004.

and it is still a bit lower. like 1.5 and 1.7. mobileg out that funky phone, we see that when numbers come out later this month. they're also born to be getting the seat you morning in the afternoon relief of the minutes from the fed march meeting. they raise the key rate and they also rate their dots. betty: thank you so much, kathleen hays, the global economics and policy editor. the inner anthony pratt is calling for the nation's $2 trillion pension funds.

about why they are pushing for that change. >> it is create more jobs and more investment in australia. secondly, good for the banks for the extent that it is between the bank and the super funds. capital one as much the balance sheet. it is good for the server funds because it is an opportunity to ,iversify away from equities and having that credit expertise in the banks. collective it is a trailblazer in this regard. a bit of a trailblazer in this regard. >> and as we set over here,

somewhat of a 10 year deal. and we are looking at doing another $300 million deal currently in australia is well. a template becomes the way we are doing the super funds? >> i think so. i think it is a great opportunity for all parties involved. used, more choice the us trillion super funds, they are so heavily invested in equities. equities, i think it is a great opportunity to diversify risk. to dold you rather have us trillion markets then go overseas?

>> this is good for jobs and investment in australia. we can raise bonds in iowa, and that it is busy bonds in iowa. >> that was the industry chairman and ceo speaking there to bloomberg paul allen. coming up, the best opportunities for investors given the recent roller coaster ride. we throw that question to the coo of oaktree capital. our exclusive interview is next. this is bloomberg. ♪

betty: this is daybreak asia. on betty liu in new york. yvonne: i'm yvonne man in hong kong. as we've been talking about, our next guest is one of the speakers right here in hong kong.

he runs of, diversified alternative asset management, also known for the distressed debt business and over $100 billion here in the hong kong studio. a lot of market volatility recently and a litany of bad news. trade war ended tech route as well. how are you interpreting everything at the moment. >> a lot of uncertainty and a lot of things to potentially be concerned about. high levels of indebtedness around the globe. a lot of that is tied to floating rates. central banks including our own fed is taking away the punch and that is how it is all going to play out.

rates works the way that gravity acts on mass. is it time to put money to work or not just yet? >> we are very diversified and we have over two dozen strategy. we have been very active and remain fully invested with our clients assets. a whole raft of strategies in real estate, infrastructure, the emerging markets, global credit fund, and infrastructure for example. even distressed debt funds. make you want to diversify even more further in your asset? jay: not really the volatility. we don't really invest in markets or volatility. we invest in individual securities and individual businesses. we determine what we think is

the intrinsic value. assetschasing those below intrinsic values. yvonne: i won't talk about the interest rate environment. he said the fed is on the path of targeting and not exactly good for fixed income and a high-yield but when it comes to private equity. net, is that a positive or negative for oaktree? strategies,e probably more of a positive and for some, more of a negative. the amount of debt outstanding has grown dramatically since global financial crisis. china debts increased sevenfold. the amount of officially recognized nonperforming loans and special mention loans triple to over $1 trillion. start extent, those loans being disposed of or worked out,

we are well-positioned globally and theple relationships on the ground to take advantage of some of those opportunities. yvonne: i'm curious about looking at more of the macro picture. we are concerned about what you are seeing at the treasury markets. not particularly concerned. it is relatively flat. there is no question there is a port pressure on rates. the amount of it that has covenant protection. it used forf dividends.

the business economy environment tends to slow down and it could pose a certain amount of trouble. the particular securities to look at. yvonne: like what, for instance? jay: we are in the private market. the amount of credit at distressed levels is very low. the actual default rates on that is also very low. pocketse idiosyncratic and in particular, we've been focusing on nonperforming loan pools in europe and in asia. as far as industries go, there's no real single industry where it is obviously down for the count, but we've been looking at retail software, health care, a little bit of energy. mainly it is off of idiosyncratic circumstances and in the private markets. yvonne: i will focus on how you at the moment.

it seems like the center of gravity is shifting a little bit more any you focus a bit on china and india. we have a chart that highlights what we're seeing here. the red bar shows the runaway and weird attracting more distressed investors versus the yellow which is in china right now. how much capital are you allocating at the moment? fortunately, we have record levels of dry powder. today we have invested in this region about $500 million. and we are positive about asia. and in terms of fundraising the middle class increasing with ,rowth and savings increasing with many of the institutions in the region allocating more and more of the portfolios to alternatives, it presents a great opportunity for oaktree. on the investment side, you're correct.

and loans tripling over to $1 trillion. throughouthe ground the region, this is the 20th anniversary of doing business with asia. we have seven offices here. and we think that along the way, the economy has developed and there are pockets of opportunity. we plan to be well positioned to take advantage. yvonne: j, we appreciate the time. ceo of a tree capital and will be at the bloomberg hong kong investor conference for big money, big ideas. running a panelist in a couple hours. and later on this week, as well as the event coming up earlier as well. check it out at live go. this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man in hong kong. betty: i'm betty liu in new york. we had over to bloomberg markets: asia and take a quick look at how the markets are trading right now, particularly after this bull session here. nikkei down .1%. the cost be lifted -- cost be listed -- kospi listed.

checking asian features with the markets in just a few moments. still looking for some conviction here book unlikely be a catalyst. we are seeing futures down 73. and these are the futures as well, all following. a lot of the highlights are going to be in the ego data. we have china inflation as well as u.s. inflation in the pipeline as well. that is it for us on daybreak asia and we continue with rich and heidi next. betty: standby for bloomberg markets. this is bloomberg. ♪ retail.

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wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. it is our responsibility, zuckerberg defending facebook. critics demanding more protection has senators ask whether facebook can deliver after failed assurances. in five hours of testimony, lawmakers warned to make sure that the dream does not become a nightmare for users. i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. trade high on the agenda as washington and beijing dialback the rhetoric. investors like that idea.